S-1

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As filed with the Securities and Exchange Commission on February 13, 2006

Registration No. 333-             

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MERRILL CORPORATION
(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction of
incorporation or organization) 5182, 5614, 3231
(Primary Standard Industrial
Classification Code Numbers) 41-0946258
(I.R.S. Employer
Identification No.)

One Merrill Circle
St. Paul, Minnesota 55108
(651) 646-4501
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Steven J. Machov
Executive Vice President, General Counsel and Secretary
Merrill Corporation
One Merrill Circle
St. Paul, Minnesota 55108
(651) 646-4501
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
Bruce A. Machmeier, Esq. Amy E. Culbert, Esq. Oppenheimer Wolff & Donnelly LLP Plaza VII, Suite 3300, 45 South Seventh Street Minneapolis, Minnesota 55402 (612) 607-7000	Thomas R. Brome, Esq. Cravath, Swaine & Moore LLP Worldwide Plaza 825 Eighth Avenue New York, New York 10019-7475 (212) 474-1000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box.    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price (1)(2)	Amount of Registration Fee
Common stock, par value $.01 per share	$253,000,000	$27,071

(1)

Includes common stock issuable upon exercise of the underwriters' over-allotment option, if any.

(2)

Estimated solely for the purpose of computing the registration fee pursuant to Rule 457(o) under the Securities Act.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

        In connection with the registrant's January 2006 acquisition of WordWave, Inc., the registrant reorganized its operations and realigned its management and financial reporting structure. The registrant has reviewed the impact of this reorganization and realignment on its reporting segments pursuant to applicable accounting standards and believes that a change in its reporting segments is necessary. Commencing in the fourth quarter of its fiscal year ended January 31, 2006, the registrant intends to present four reporting segments: Legal Solutions, Marketing and Communication Solutions, Transaction and Compliance Services and Other Communication Services. Prior periods will be restated to conform to the registrant's new reporting segments. The discussion of the registrant's business in the prospectus included within this registration statement reflects these four segments. However, the consolidated financial statements and management's discussion and analysis of financial condition and results of operations of the registrant included in the prospectus included within this registration statement present historical periods through the registrant's third quarter ended October 31, 2005, and therefore exclude the period in which this change occurred. Accordingly, the consolidated financial statements and management's discussion and analysis of financial condition and results of operations included in the prospectus included within this registration statement reflect the registrant's two former reporting segments that were applicable in the periods presented: Specialty Communication Services and Document Services. The registrant intends to file a pre-effective amendment to this registration statement to include the consolidated financial statements for the registrant's fiscal year ended January 31, 2006 and updated management's discussion and analysis of financial condition and results of operations. In conjunction with this amendment, the registrant intends to restate all previous segment information to reflect the registrant's new four reporting segments.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion, Dated February 13, 2006

             Shares

Common Stock

This is the initial public offering of Merrill Corporation. We are offering             shares of our common stock. Selling shareholders, including DLJ Merchant Banking Partners II, L.P. and certain affiliated investors, are offering an additional             shares of our common stock. We will not receive any proceeds from the sale of shares by the selling shareholders. We anticipate that the initial offering price will be between $             and $             per share. We intend to apply to have our common stock traded on                              under the symbol "             ."

Investing in our common stock involves risk. See "Risk Factors" beginning on page 10.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions	$	$
Proceeds, before expenses, to Merrill Corporation	$	$
Proceeds, before expenses, to selling shareholders	$	$

Certain selling shareholders have granted the underwriters a 30-day option to purchase from them up to                    additional shares of common stock on the same terms and conditions set forth above to cover over-allotments.

Deutsche Bank Securities Credit Suisse

Piper Jaffray

The date of this prospectus is                           , 2006.

TABLE OF CONTENTS

	PAGE
PROSPECTUS SUMMARY	1
RISK FACTORS	10
FORWARD-LOOKING STATEMENTS	29
USE OF PROCEEDS	30
DIVIDEND POLICY	31
CAPITALIZATION	32
DILUTION	34
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA	35
SELECTED CONSOLIDATED FINANCIAL DATA	43
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	47
BUSINESS	77
MANAGEMENT	96
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	121
DESCRIPTION OF CERTAIN INDEBTEDNESS	126
PRINCIPAL AND SELLING SHAREHOLDERS	130
DESCRIPTION OF CAPITAL STOCK	132
SHARES ELIGIBLE FOR FUTURE SALE	139
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS	142
UNDERWRITING	146
NOTICE TO CANADIAN RESIDENTS	150
LEGAL MATTERS	151
EXPERTS	151
WHERE YOU CAN FIND MORE INFORMATION	151
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS	F-1

In this prospectus, "Merrill," our "company," "we," "us" or "our" refer to Merrill Corporation and its subsidiaries, except where the context makes clear that the reference is only to Merrill Corporation itself and not its subsidiaries. "Merrill Communications" refers to Merrill Communications LLC, a wholly owned subsidiary of Merrill Corporation. "WordWave" refers to WordWave, Inc., a wholly owned subsidiary of Merrill Corporation. "QMC" refers to Quebecor Merrill Canada, Inc., a wholly owned subsidiary of Merrill Corporation.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should carefully read the entire prospectus, including "Risk Factors" beginning on page 10 and the financial statements and related notes, before making an investment in our common stock.

Our Business

        We are a leading provider of outsourcing solutions for various complex business communication and information management needs. Our services include document and data management, litigation support, branded communication programs, fulfillment, imaging and printing. Our solutions enable our clients to create, access, control, analyze and communicate critical information for key business initiatives, such as targeted customer marketing, complex regulatory compliance and business decision making. We integrate proprietary technologies, industry-specific processes and outsourced services into flexible, easy-to-use, comprehensive service offerings.

        We target specific markets that have complex information, document and communications requirements, including the legal, financial services, insurance and real estate industries. Our clients in these markets typically value accuracy, confidentiality, reliability and responsiveness. Over time, we believe we have developed a comprehensive understanding of our clients' markets, enabling us to align our technology, processes and services with our clients' business objectives. We believe we have also built strong, long-standing relationships with clients who rely on us to manage and communicate important information. We meet our clients' service requirements on a global basis through over 70 domestic and 15 international offices, as well as through selected affiliate relationships.

        We currently conduct our business in four segments:

•

Legal Solutions provides both on-demand and on-site litigation support, information management and electronic and print document management services for law firms, corporate legal departments and professional services firms. Examples of our services include creating searchable litigation document repositories, managing electronic data discovery and providing real-time court reporting and deposition videography.



•

Marketing and Communication Solutions supplies brand identity management, customer communication and packaged direct marketing programs for sales professionals in industries such as real estate, mutual funds and insurance. Examples of our services include customizable corporate identity materials, direct mail marketing pieces and promotional programs supported by web-based technologies.



•

Transaction and Compliance Services offers document composition, filing, printing, distribution and electronic access services to support our clients' transaction and regulatory compliance activities such as securities offerings, reorganizations, mergers and acquisitions, Securities and Exchange Commission filings and other regulatory filings. Examples of our services include EDGAR filings, prospectus printing and creating and hosting online data rooms for corporate transactions and restructurings.



•

Other Communication Services provides language translation, captioning, election services and specialty printing that complement or use the same underlying competencies found in our other segments. Examples of our services include translating product manuals into multiple languages and providing closed captioning for television programming.

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        Throughout our 37-year history, we believe we have fostered a culture of technological and process innovation and client-focused and reliable customer service. Our technology team consists of 280 employees focused on improving, maintaining and expanding the scope of our service offering. We also employ 360 sales representatives and 530 customer service professionals to deliver consistent and reliable service and maintain our strong client relationships. Over the past four years, we have grown our sales force and customer service personnel by 27% to increase our market penetration and enhance our responsiveness. In addition, during the past ten years we have acquired and integrated several specialized service and technology companies that have broadened our service offering and augmented our industry expertise. We believe our ability to identify, develop or acquire, and integrate new services and technologies is a significant competitive differentiator and enhances our growth opportunities.

        Our consolidated net revenues have grown at a compound annual growth rate of 9.5% from fiscal 2003 to fiscal 2005. In January 2006, we acquired WordWave, Inc. On a pro forma basis, including WordWave's results, we generated consolidated pro forma net revenue of $697.6 million for the nine months ended October 31, 2005.

Industry Overview

        Global business process outsourcing is an increasingly complex, broad and evolving area encompassing a wide range of outsourcing functions, including customer service, document management, marketing, logistics, procurement, human resources and product engineering. In an August 2005 report, International Data Corporation estimated worldwide spending on business process outsourcing services totaled $382.5 billion in 2004. This report estimated that the total market for these services grew at a rate of 10.8% in 2004 and will continue to grow over the next five years at a 10.9% compound annual growth rate, with worldwide spending increasing to $641.2 billion by 2009.

        We currently focus on the complex information and document management and communication solutions areas of the global business process outsourcing market. The boundaries of this market are constantly changing, presenting new opportunities and challenges for service providers. The development and proliferation of the Internet combined with new software and digital print technologies have led to a transition from a historically fragmented industry, with separate direct mail, printing and fulfillment providers, toward an industry where companies provide a broad range of integrated document and information management services. In addition, technological advances have led to the creation of new products and services, such as online data rooms and digital on-demand customized printing, and have contributed to the convergence of information management and document service providers. We expect the increasing technological complexity of document and information management will drive continued growth opportunities for business process outsourcing solution providers.

Our Competitive Strengths

        We believe we possess a number of competitive strengths that will contribute to our future growth, including the following:

•

Comprehensive and Integrated Solutions.    We design, package and deliver our products and services in ways that address our clients' unique challenges, providing integrated solutions to their critical business issues. We apply our operational, technological and customer service expertise to deliver easy-to-use, flexible and comprehensive solutions to our clients. We believe our integrated, problem-solving

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approach strengthens our relationships with our clients and differentiates us from our competitors.

•

Vertical Market Expertise.    We approach our target markets by developing a specific understanding of the industry dynamics and the particular needs of the clients within that industry. Once we identify a new potential market, we study factors affecting it and hire professionals with relevant operational and industry experience, enabling us to develop a deeper level of understanding and insight regarding the industry's business decisions and objectives.



•

Tailored Proprietary Technologies.    We believe we have cultivated a strong reputation for innovation through our commitment to tailored and scalable technologies. We apply common technologies across our businesses and then add industry-specific functionality that provides our clients with a flexible platform that can be further tailored to meet their specific needs. We believe our technological innovation, intellectual property and tailored proprietary technologies contribute to the appeal of our offerings for our clients.



•

Strong Client Relationships and Customer Service.    We believe our clients associate our brand with client-focused and reliable customer service. Our commitment, discretion and responsiveness, particularly for projects involving highly sensitive information, have enabled us to develop strong, long-standing relationships with our clients, often at senior levels in their organizations. We believe our ability to retain our current client base and to attract new clients is directly related to our sales force and customer service personnel, and we devote extensive resources to recruiting, developing and retaining experienced sales and service professionals. We also employ creative incentive strategies that align our clients' and our company's success with the personal success of our sales professionals.



•

Experienced Management Team and Ownership Culture.    Our senior management team averages 15 years of experience with our company. Our Chairman of the Board and Chief Executive Officer, John W. Castro, has been with us since 1978 and our President and Chief Operating Officer, Rick R. Atterbury, has been with us since 1976. As of January 31, 2006, we had over 200 employee shareholders and option holders, who upon completion of this offering will hold over    % of our outstanding common stock on a fully diluted basis assuming the exercise of all outstanding options and warrants. We believe our broad-based ownership culture aligns the interests of our employees with our shareholders, driving significant commitment to the long-term success of our business.

Our Growth Strategy

        We strive to grow our business through the implementation of the following strategies:

•

Focus on Selected Growth Markets.    We believe our products and services are well-suited to our targeted growth markets, particularly those markets involving significant amounts of physical and electronic documentation and requiring rapid turnaround of tailored marketing, compliance or business communication materials. We believe these growth markets offer us significant opportunities and we will continue to focus our sales, marketing, research and development resources on providing enhanced and specialized product and service offerings for these markets.



•

Expand into New Markets.    We intend to increase our penetration in our existing markets by expanding geographically and to enter new markets that share similar

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attributes to our existing markets. We believe our existing technology, infrastructure and service capabilities will help us penetrate these new markets.

•

Expand the Range of Solutions Provided to Existing Clients.    We seek to capitalize on our technological expertise and operational competencies to broaden the array of services we offer our existing client base. We believe there are opportunities for us to sell additional existing solutions to our current clients. We also anticipate we will continue to develop new services that can be delivered to our existing client base.



•

Pursue Selective Strategic Relationships and Acquisition Opportunities.    Over the last ten years, we have acquired 14 companies, expanding our service offering and broadening our market reach. We intend to continue to pursue strategic relationships and acquisitions. Given the relative fragmentation of many of our target markets, we believe we will be able to continue to identify and capitalize on complementary acquisition opportunities in the future.



•

Use our Technology and Operational Expertise to Drive Efficiencies.    We believe many of our technology-based services are scalable and require limited incremental capital spending to support additional growth. Since fiscal 2001, we have taken considerable measures to reduce the fixed portion of our cost structure, resulting in increased financial flexibility, higher capital efficiency and enhanced profitability. We plan to continue to identify technology and process improvements that would allow us to become more efficient.

        We are a Minnesota corporation incorporated in 1968. Our principal executive offices are located at One Merrill Circle, St. Paul, Minnesota 55108. Our telephone number is (651) 646-4501, and our website is www.merrillcorp.com. The information contained in or connected to our website is not incorporated by reference into, and should not be considered part of, this prospectus.

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The Offering

Common stock offered by us	shares
Common stock offered by the selling shareholders	shares
Total common stock offered	shares
Over-allotment option from certain selling shareholders	shares
Total common stock outstanding after this offering	shares
Use of proceeds	We intend to use the net proceeds from this offering to repay indebtedness under our senior credit facility and for working capital and general corporate purposes. We will not receive any of the proceeds from the sale of common stock by the selling shareholders in this offering. See "Use of Proceeds."
Proposed trading symbol

        The number of shares of our common stock that will be outstanding immediately after this offering is based on the number of shares outstanding as of January 31, 2006, and excludes:

•

shares of common stock issuable upon the exercise of outstanding stock options (                           of which were exercisable) as of January 31, 2006 at a weighted average exercise price of $             per share;



•

shares of common stock issuable upon the exercise of outstanding warrants as of January 31, 2006 at a weighted average exercise price of $             per share, as adjusted to reflect an anti-dilution event as a result of the issuance of certain additional warrants upon the completion of this offering, as described below;



•

shares of common stock issuable upon exercise of certain warrants that will become issuable upon the completion of this offering at an exercise price of $             per share; and



•

shares of common stock reserved and available for future issuance under our new stock incentive plan and employee stock purchase plan.

        Except as otherwise indicated, all information in this prospectus is based on the following assumptions:

•

no exercise of the underwriters' over-allotment option;



•

a         for         stock split of our common stock that will occur immediately prior to the effectiveness of this offering;



•

the issuance of warrants to purchase an aggregate of                  shares of common stock that will become issuable upon the completion of this offering; and



•

the completion of a plan of recapitalization and adoption of amended and restated articles of incorporation, effective immediately prior to the effectiveness of this offering, pursuant to which, among other things, our outstanding class B common stock will be converted into common stock and a class of undesignated stock will be created.

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Summary Consolidated Financial Data

        The following table sets forth our summary historical and pro forma consolidated financial data for the periods ended and at the dates indicated below. This table should be read in conjunction with "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements, the consolidated financial statements of WordWave, Inc. and our unaudited pro forma condensed consolidated financial statements and related notes, all included elsewhere in this prospectus.

        Our fiscal year ends on January 31. References to fiscal 2003, fiscal 2004, fiscal 2005 and fiscal 2006 in this prospectus relate to the fiscal years ended January 31, 2003, January 31, 2004, January 31, 2005 and January 31, 2006, respectively. We have derived the historical financial data set forth below for the fiscal years ended January 31, 2003, January 31, 2004 and January 31, 2005 from our audited financial statements, which are included elsewhere in this prospectus. We have derived the historical financial data shown below for the nine months ended October 31, 2004 and October 31, 2005 from unaudited financial statements included elsewhere in this prospectus that, in our opinion include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the information for the periods presented.

        The pro forma condensed consolidated statement of operations data in the following table gives effect to our January 2006 acquisition of WordWave and our December 2005 debt refinancing, pursuant to which we financed our acquisition of WordWave, redeemed all of our outstanding senior subordinated notes and replaced our then existing senior credit facility with a new senior credit facility, as if the acquisition and refinancing took place as of the beginning of the applicable period presented.

        The pro forma condensed consolidated balance sheet data in the following table gives effect to our acquisition of WordWave and our December 2005 debt refinancing as if the acquisition and refinancing took place at October 31, 2005. The pro forma as adjusted balance sheet information in the following table reflects the pro forma condensed consolidated balance sheet data adjusted for our sale of             shares of common stock in this offering at an assumed initial public offering price of $             per share (the mid-point of the initial public offering price range), after deducting estimated underwriting discounts and commissions and offering expenses, and the application of the net proceeds from those shares.

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		Year Ended January 31,									Nine Months Ended October 31,
		2003			2004			2005			2004			2005			Pro forma 2005
		(dollars in thousands)
Statement of Operations Data:
Net revenue		$	581,571		$	596,215		$	697,893		$	531,171		$	603,159		$	697,625
Cost of revenues			398,095			411,783			462,410			346,423			390,484			444,208
	Gross profit		183,476			184,432			235,483			184,748			212,675			253,417
Selling, general and administrative expenses (1)			133,318			132,507			166,067			124,906			202,106			238,495
Debt restructuring costs (2)			5,300			—			—			—			—			—
Restructuring costs (3)			932			—			—			—			—			—
	Operating income		43,926			51,925			69,416			59,842			10,569			14,922
Interest expense			39,242			34,981			30,543			23,516			25,623			25,495
Other income, net			(95	)		(1,879	)		(2,191	)		(931	)		(1,963	)		(626	)
	Income (loss) before income taxes		4,779			18,823			41,064			37,257			(13,091	)		(9,947	)
Provision for income taxes			3,400			10,402			19,705			17,762			9,017			10,323
Minority interest			13			18			(11	)		(13	)		1			1
	Income (loss) from continuing operations		1,366			8,403			21,370			19,508			(22,109	)	$	(20,271	)
Cumulative effect of change in accounting principle, net of income tax (4)			—			—			—			—			18,619
	Net income (loss)	$	1,366		$	8,403		$	21,370		$	19,508		$	(3,490	)
Other Data:
Depreciation and amortization		$	14,751		$	15,025		$	14,786		$	10,737		$	12,061		$	13,024
Amortization of intangible and other assets			287			64			363			78			3,036			9,316
Capital expenditures			13,343			13,890			16,026			10,527			15,094
EBITDA (5)			59,046			68,875			86,767			71,601			27,628
Adjusted EBITDA (5)			59,046			69,240			88,548			72,164			80,746
Non-cash, stock-based compensation			—			365			1,781			563			53,118

	As of October 31, 2005
	Actual			Pro Forma			Pro Forma As Adjusted
	(dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	6,009		$	529
Working capital		91,244			104,971
Total assets		374,513			575,607
Total debt obligations, including capital leases		311,960			484,154
Redeemable preferred stock		24,701			24,701
Puttable class B common stock (6)		60,993			60,993
Total shareholders' deficit		(147,342	)		(158,051	)

(1)

Selling, general and administrative expenses include non-cash, stock-based compensation expense associated with stock ownership and option plans that are accounted for as variable plans under APB Opinion No. 25 "Accounting For Stock Issued to Employees" and related pronouncements. We recorded non-cash, stock-based compensation of $365 and $1,781 for the years ended January 31, 2004 and 2005, respectively, and $563 and

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$53,118 for the nine months ended October 31, 2004 and 2005, respectively. Net of taxes, these non-cash stock-based compensation charges were $209 and $1,026 for the years ended January 31, 2004 and 2005, respectively, and $278 and $48,887 for the nine months ended October 31, 2004 and 2005, respectively. Also included in selling, general and administrative expenses for the nine months ended October 31, 2005 are $1,286 of advisor fees and other expenses associated with the potential sale of our company to an employee stock ownership plan, which we ultimately chose not to pursue.

(2)

In 2003, we recorded a charge to operations of $5,300 resulting from legal and advisor fees we incurred in connection with debt restructuring activities.

(3)

During fiscal 2003, we recorded $932 of restructuring costs. These restructuring costs were associated with headcount reductions and accruals of lease obligations for facilities that we exited as part of our operational restructuring.

(4)

Effective February 1, 2005, we changed the accounting for our redeemable preferred stock as prescribed by Statement of Financial Accounting Standard ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Prior to adopting SFAS No. 150, we classified our redeemable preferred stock as a "mezzanine" instrument. Upon the adoption of SFAS No. 150, our redeemable preferred stock, as of October 31, 2005, is recorded as a liability on our consolidated balance sheets. We recorded the cumulative effect of this change in accounting principle prospectively by initially measuring, on the date of adoption, our redeemable preferred stock at fair value using a discounted cash flow approach. The cumulative effect of change in accounting principle, net of income tax, of $18,619, is reflected on our consolidated statements of operations for the nine months ended October 31, 2005.

(5)

EBITDA is defined as net income (loss) before the cumulative effect of change in accounting principle, interest expense, income tax expense (benefit) and depreciation and amortization. EBITDA is not a presentation made in accordance with generally accepted accounting principles, or GAAP, and is not a measure of financial condition or profitability. It should not be considered as an alternative to, or more meaningful than, amounts determined in accordance with GAAP, including net income (loss) as an indicator of operating performance or net cash from operating activities as an indicator of liquidity. However, we believe that EBITDA is useful to an investor in evaluating our operating performance because:

•

this measure is widely used by securities analysts and investors to measure a company's operating performance without regard to items such as interest and debt expense, income tax expense and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired;



•

this measure helps investors to evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and our asset base; and



•

this measure is used by our management, among other operating measures, for various purposes, including as a measure of operating performance to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:

•

EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;



•

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;



•

EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt;



•

Although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and



•

EBITDA is not calculated identically by all companies; therefore, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

Adjusted EBITDA is defined as EBITDA plus non-cash, stock-based employee compensation expense. Adjusted EBITDA is not a presentation made in accordance with generally accepted accounting principles, or GAAP, and is not a measure of financial condition or profitability. It should not be considered as an alternative to, or more

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meaningful than, amounts determined in accordance with GAAP, including net income (loss) as an indicator of operating performance or net cash from operating activities as an indicator of liquidity. However, we believe that Adjusted EBITDA is an important operating measure because:

•

it is used by our management, among other operating measures, for various purposes, including measuring our operating performance, assisting in comparing our financial performance from period to period on a consistent basis and presenting our financial performance to our board of directors for strategic planning and forecasting; and



•

the financial covenants applicable to our old and new senior credit facilities (interest coverage ratio and leverage ratio) are based on EBITDA, adjusted for non-cash expenses, among other adjustments. Therefore, our management and our lenders use EBITDA, as adjusted for non-cash, stock-based compensation expense, among other adjustments, as a measure of our continuing compliance with our financial covenants.

The following is a reconciliation of net income (loss) to EBITDA and adjusted EBITDA:

		Year Ended January 31,						Nine Months Ended October 31,
		2003		2004		2005		2004		2005
		(dollars in thousands)
Net income (loss)		$	1,366	$	8,403	$	21,370	$	19,508	$	(3,490	)
Cumulative effect of change in accounting principle, net of income tax			—		—		—		—		(18,619	)
Interest expense			39,242		34,981		30,543		23,516		25,623
Provision for income taxes			3,400		10,402		19,705		17,762		9,017
Depreciation and amortization			14,751		15,025		14,786		10,737		12,061
Amortization of intangible and other assets			287		64		363		78		3,036
	EBITDA		59,046		68,875		86,767		71,601		27,628
Non-cash, stock-based employee compensation			—		365		1,781		563		53,118
	Adjusted EBITDA	$	59,046	$	69,240	$	88,548	$	72,164	$	80,746

(6)

Our puttable class B common stock, which for corporate law purposes is not considered a separate class of stock, represents shares that are considered "mandatorily redeemable securities" because of the holders' rights to put their shares to us upon termination without cause, death, disability or resignation.

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RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and all the other information contained in this prospectus before you decide to buy our common stock. If any of the following risks actually occurs, our business, financial condition and operating results would be adversely affected. The market price of our common stock could decline due to any of these risks and uncertainties, and you may lose part or all of your investment.

Risks Relating to Our Business

Our revenue from printing transaction and compliance documents is subject to volatility in demand due to rules and regulations of the Securities and Exchange Commission and other regulatory bodies, which could adversely affect our operating results and financial results.

        Our Transaction and Compliance Services revenue is primarily derived from the composition, filing, printing and distribution of documents in electronic and printed form. Demand for the printing portion of this business is affected in part by rules and regulations of the Securities and Exchange Commission, or SEC, and other regulatory bodies. The SEC recently has implemented regulatory changes to move toward electronic delivery of documents and disclosure based on company registration rather than transaction registration. Most recently, the SEC's "access equals delivery" rules became effective on December 1, 2005. These rules, among other things, eliminate the requirement to deliver a printed final prospectus unless a prospectus is requested by an investor. We are uncertain as to whether these rules will impact the final prospectus printing practices of issuers, underwriters, broker-dealers and investors, the financial printing industry in general or our business in particular. However, we do expect a decline in the market for final prospectus printing and, as a result, a decline in our revenue from printing transaction documents. The "access equals delivery" rules could lead to a significant decline in the overall market for printing transaction documents over the next several years. Any rulemaking relating to the manner and timing of the delivery of printed transaction documents could affect the printing portion of our Transaction and Compliance Services business, which could adversely affect our operating and financial results.

        Demand for printing compliance documents, like transaction documents, is also driven by rules and regulations issued by the SEC and other regulatory bodies. Under the "notice and access" proposed rules, companies and other persons soliciting proxies would be able to post their proxy materials on an Internet website and send shareholders a "Notice of Electronic Proxy Materials" at least 30 days before the date of the shareholder meeting notifying recipients of the electronic availability of the proxy materials. If a shareholder requested a copy of the proxy materials, only then would a paper copy of the materials be required to be delivered to that shareholder. If adopted, we believe these rules would reduce the demand for printed proxy materials and adversely affect our operating and financial results.

Our recent acquisition of WordWave, Inc. is significantly larger than any other acquisition we have made to date and we may face challenges integrating this new business into our other businesses.

        On January 3, 2006, we completed the acquisition of WordWave, Inc., a provider of litigation support, court reporting, captioning and transcription services for law firms, courts, governmental agencies and corporations worldwide. This acquisition was the largest acquisition we have made to date. WordWave's operations include businesses in which we have no prior experience. There is a risk that, due to the size of the acquisition and the nature

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of the acquired businesses, we will be unable to integrate WordWave into our operations as effectively as we have with our prior acquisitions. This could result in fewer benefits to us from the acquisition than we anticipated, as well as increased costs. The integration of the WordWave operations and businesses will also require implementation of appropriate operations, management and financial reporting systems and controls, especially since WordWave was a private company and not subject to public company reporting requirements and regulations, including those required by the Sarbanes-Oxley Act. We may experience difficulties in this implementation and integration. In addition, because of WordWave's international presence in countries in which we have no prior operating experience, we may encounter difficulties implementing certain country-specific regulatory requirements. In addition, WordWave has few long-term contracts with clients and thus there is no assurance that WordWave's clients will engage us for future services once a project is completed or that clients will not unilaterally reduce the scope of, or terminate, existing projects. If we are not successful in our implementation and integration of WordWave or if our WordWave operations are less profitable than we currently anticipate, our results of operations and financial condition may be adversely affected.

In addition to WordWave, we have completed four smaller acquisitions during the past 18 months and intend to pursue further growth and diversification of our business through additional acquisitions, which could present integration risks.

        As part of our growth and diversification strategy, we have in the past acquired and intend to acquire in the future other businesses that have technologies and product lines complementary to our core businesses, expand the breadth of our markets, enhance our technical capabilities or offer us other growth and diversification opportunities. In addition to WordWave, we have completed four smaller acquisitions within the past 18 months. We intend to continue to pursue other acquisitions in the future. The benefits of any of these or future acquisitions may take more time than expected to develop, and we cannot guarantee that any of our recent or future acquisitions will in fact produce any intended benefits. In addition, acquisitions and the integration of those acquisitions involve a number of risks, including:

•

diversion of our management's attention from our core businesses;



•

difficulties in assimilating the operations and products of an acquired business or in realizing projected efficiencies, cost savings and revenue synergies;



•

potential loss of key employees or clients of the acquired businesses or adverse effects on existing business relationships with suppliers and clients;



•

reallocation of amounts of capital from operating initiatives and/or an increase in our leverage and debt service requirements to pay the acquisition purchase prices, which could in turn restrict our ability to access additional capital when needed or to pursue other important elements of our business strategy;



•

inaccurate assessment of undisclosed, contingent or other liabilities or problems; and



•

unanticipated costs associated with the acquisition, including additional expenditures related to Sarbanes-Oxley compliance.

        Our ability to continue to grow through acquisitions will depend, in part, on the availability of suitable acquisition candidates at an acceptable cost, our ability to compete effectively for these acquisition candidates and the availability of capital to complete such acquisitions. These risks could be heightened if we complete several acquisitions within a relatively short period of time.

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Portions of our revenue from our transaction services business are subject to volatility in demand due to corporate and general economic conditions, which could adversely affect our operating results and financial condition.

        Unfavorable economic conditions adversely impacting the commercial banking and investment banking industries could harm our operating results. For example, our transaction services revenue depends in part on the volume of public financings, particularly debt and equity financings, and mergers and acquisitions, which are influenced by corporate funding needs, stock market fluctuations, prevailing interest rates and other general and economic factors. As has happened in the recent past, any future prolonged period of capital market uncertainty and volatility could reduce transactional activity and consequently adversely affect the operating results of our Transaction and Compliance Services segment and our financial condition.

We did not file a report under the Exchange Act that was required as a result of our prior registration statements under the Securities Act and we did not register under the Exchange Act when we had more than 500 option holders between 2000 and 2003. Each of these events could cause us and our officers and directors to be subject to an enforcement action brought by the SEC that could result in fines and penalties.

        In May 2000, we filed registration statements under the Securities Act to register the resale and exercise of privately issued warrants and to register the issuance of shares to our employees. As a result of these registration statements, we became obligated to file periodic reports pursuant to section 15(d) of the Exchange Act. This reporting obligation was automatically suspended on February 1, 2001, because as of that date we had fewer than 300 holders of our common stock and warrants. We filed the required periodic reports through the third quarter of fiscal 2001, but did not file (and have not filed) a Form 10-K for that year.

        In addition, Section 12(g) of the Exchange Act requires that companies with more than $10 million in assets and more than 500 equity security holders register as a reporting company. We granted stock options to more than 500 persons in January 2000 which, according to the SEC's subsequent interpretation of section 12(g), required us to file a registration statement on Form 10. As a reporting company, we would have been required to file periodic reports under the Exchange Act. We did not file a Form 10, although as a result of complying with our obligations under section 15(d) of the Exchange Act we filed periodic reports for the first three quarters of fiscal 2001 and several Form 8-Ks through October 2001. In January 2003, we reduced the number of our option holders to fewer than 300, which would have permitted us to terminate any section 12(g) registration. Although we will register as a reporting company under the Exchange Act in connection with the completion of this offering, if we were required to register as a result of having more than 500 option holders from 2000 to 2003, then we failed to register as a reporting company in a timely manner.

        Our failure to file a Form 10-K for fiscal 2001 or to comply with the registration requirements of section 12(g) of the Exchange Act as a result of having more than 500 option holders between 2000 and 2003 could subject us and our officers and directors to an enforcement action brought by the SEC and to fines and penalties. In addition, in connection with our failure to register under section 12(g) of the Exchange Act, the SEC could require us to prepare and file a registration statement on Form 10 and all periodic reports that we would have been required to file as a reporting company had we registered in fiscal 2001. Preparing and filing these reports at this time would be costly and time-consuming, and could distract our management from our operations, which could negatively impact our business. It could also cause us to be perceived adversely by the investment community and cause our stock price to decline.

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Our international operations require significant management attention and financial resources, expose us to difficulties presented by international economic, political, legal, accounting and business factors, and may not be successful or produce desired levels of revenue.

        We derived approximately 7.6% of our consolidated net revenue for the nine months ended October 31, 2005 from operations outside of the United States. Following our acquisition of QMC and WordWave, we conduct operations in Canada, Europe, Australia, New Zealand and Asia. We have offices and a direct sales force in Canada, the United Kingdom, Germany, France, Asia and Australia and we operate a composition and coding facility through a joint venture in India. In addition, we have affiliations with certain firms providing similar services in other parts of Europe, Asia, Latin America, the Middle East, Africa and Australia. As a result of our international presence, our business is subject to political and economic instability, currency fluctuations in various countries and other risks. We plan to expand our international operations, including those in the United Kingdom, and establish additional facilities in other parts of the world, including possibly Asia. The expansion of our existing international operations and entry into additional international markets would require significant management attention and financial resources. There are many barriers to competing successfully in the international arena and risks in operating in foreign countries, including:

•

costs of customizing products and services for foreign countries;



•

difficulties in managing and staffing international operations;



•

increased infrastructure costs including legal, tax, accounting and information technology;



•

reduced protection for intellectual property rights in some countries;



•

exposure to currency exchange rate fluctuations;



•

potentially longer sales and payment cycles;



•

potentially greater difficulties in collecting accounts receivable;



•

increased burdens of complying with a wide variety of foreign laws, which can be more stringent than U.S. laws;



•

increased licenses, tariffs and other trade barriers;



•

adverse tax consequences;



•

unexpected changes in regulatory requirements; and



•

political and economic instability.

        We cannot assure you that our operations in other countries will produce desired levels of revenue or that one or more of the factors listed above will not harm our business.

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Our independent registered public accounting firm brought to our attention a material weakness in our internal controls during the most recent audit of our annual consolidated financial statements. Our failure to maintain effective internal controls could have a material adverse effect on our business, operating results and financial condition and cause our investors, shareholders, lenders, suppliers and others to lose confidence in the accuracy or completeness of our financial reports.

        Presently, we are not an accelerated filer, as such term is defined by Rule 12b-2 of the Securities Exchange Act of 1934, and therefore we are not currently subject to the internal control reporting requirements of the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act requires a company's management to perform an annual assessment of the effectiveness of the company's internal control over financial reporting and for the company's independent registered public accounting firm to express an opinion on management's assessment and on the effectiveness of the company's internal control over financial reporting. Although we are not an accelerated filer, our independent registered public accounting firm identified and communicated to us a material weakness in our internal control over financial reporting as of January 31, 2005. Management has evaluated this communication and has also concluded that a material weakness existed as of that date.

        A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. As of January 31, 2005, our management concluded that we did not maintain a sufficient complement of financial reporting personnel commensurate with our financial reporting responsibilities. Specifically, we did not have a sufficient complement of technically proficient financial reporting personnel to ensure that the valuation and allocation of goodwill and the preparation of our financial statements and financial statement disclosures were prepared in accordance with generally accepted accounting principles. Additionally, this control deficiency was evidenced by errors in the financial statement preparation process, including but not limited to, misclassifications of cash flows from operations and errors in disclosures related to stock compensation and income taxes in the January 31, 2005 consolidated annual financial statements. In addition, this control deficiency could result in a misstatement to the goodwill account or to the financial statements that would result in a material misstatement to annual or interim financial statements that would not be prevented or detected. Accordingly, management has concluded that this control deficiency constituted a material weakness.

        We have taken steps to remediate this control deficiency, including the hiring of a new corporate financial controller in September 2005 and the hiring of a new assistant corporate financial controller in October 2005. In addition, we are making changes in our process for preparation and review of our annual goodwill impairment analysis to be completed as of January 31, 2006 and changes in our process for the preparation and review of our interim and annual financial statements. However, the material weakness will not be considered remediated until our management has developed new or redesigned controls, the controls have been in operation for a sufficient period of time and the controls have been satisfactorily tested. We cannot assure you that the steps we have taken, or may subsequently take, have been or will be sufficient to fully remediate the material weakness identified above or that additional material weaknesses will not be identified in the future, especially in light of our recent WordWave acquisition. Any failure to remediate identified material weaknesses could cause our investors, lenders, suppliers and others to lose confidence in the accuracy or completeness of our financial reports.

        Notwithstanding the existence of the aforementioned material weakness, we believe that, with the processes we established to review our January 31, 2005 goodwill impairment

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analysis and the preparation and review processes we implemented over our interim and annual financial reporting processes, the consolidated financial statements included in the accompanying financial report fairly present, in all material respects, the company's financial position, results of operations and cash flows for the periods presented.

In the quarterly reports on Form 10-Q and the annual reports on Form 10-K that we will be required to file when we become a reporting company, our management may not be able to conclude that we have effective disclosure controls and procedures, and we or our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting. We will also be exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act.

        After the consummation of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934 that require us to file, among other things, quarterly reports on Form 10-Q and annual reports on Form 10-K. Under Section 302 of the Sarbanes-Oxley Act of 2002, as a part of each of these reports, our chief executive officer and chief financial officer will be required to evaluate and report their conclusions regarding the effectiveness of our disclosure controls and procedures and to certify that they have done so. This requirement will apply to our first Form 10-Q for the quarter following effectiveness of the registration statement of which this prospectus is a part. In addition, under Section 404 of the Sarbanes-Oxley Act, we will be required to include a report of management on our internal control over financial reporting in our Form 10-K and the independent registered public accounting firm auditing our financial statements will be required to attest to and report on management's assessment of the effectiveness of our internal control over financial reporting and on the effectiveness of our internal control over financial reporting. This requirement will first apply to our Form 10-K for our fiscal year ending January 31, 2008.

        We are presently performing the system and process evaluation, testing and any necessary remediation required to comply with the management certification and auditor attestation requirements of Section 404. While we anticipate being able to fully implement the requirements relating to internal control and other aspects of Section 404 by our January 31, 2008 deadline, we cannot be certain as to the timing of the completion of our evaluation, testing and remediation actions or their impact on our operations. If we are unable to conclude that our disclosure controls and procedures and internal control over financial reporting are effective, or if our independent registered public accounting firm is unable to conclude that our assessment of our internal control over financial reporting is sufficient or is unable to conclude that our internal controls over financial reporting are effective and therefore issues an adverse opinion, investors may lose confidence in our financial reports and our stock price may decline.

Many of our products and services depend on the reliability of our information technology at all times and if such systems are unavailable or unreliable, they could harm our business.

        Many of our products and services depend on the ability of our information technology to act efficiently and reliably at all times. Our Internet-based document repositories, fulfillment and online data room services are heavily dependent on the reliability of our information technology services. Clients demand trouble-free access to their information at all times. If such access is unavailable for any reason, our reputation and business could be harmed. Certain unexpected attacks, emergencies or contingencies could occur, such as an attack by a hacker, a computer virus attack, a natural disaster, a significant power outage covering multiple cities or a terrorist attack, which could temporarily shut down our facilities and information technology systems. We recognize a need to further improve the redundancy and

15

back-up capacity on a number of our products and services. We are also exploring outsourcing some of our disaster recovery measures for some of our selected products and services. If we do not improve the redundancy and back-up capacity of our systems in a timely manner or if we outsource our disaster recovery measures and this provider fails to perform satisfactorily, our business would be harmed. As with any disaster recovery measures, maintaining redundancy and back-up capacity requires extensive capital expenditures, which could harm our operating results.

We rely on third-party service providers to provide or support some of our products and services and our business and reputation could suffer if these third-party service providers fail to perform satisfactorily or if they are not properly characterized as independent contractors.

        We rely on services provided by third parties to offer some of our products and services. For example, in our Legal Solutions segment we substantially rely on independent contractors to provide court reporting services in the United States, Europe, Asia and Australia. We also outsource a significant portion of our printing to third-party printers. Due to our reliance on third-party service providers, we are unable to directly control the delivery of the final product or service to our customers. Moreover, if these third parties do not perform their services satisfactorily, if they decide not to continue to provide such services to us on commercially reasonable terms or if they decide to compete directly with us, our business could be adversely affected. We could also experience delays in providing our products and services, which could negatively affect our business until comparable third-party service providers, if available, are identified, obtained and integrated. Any service interruptions experienced by our clients could negatively impact our reputation, cause us to lose clients and limit our ability to attract new clients. In addition, we could face increased costs by using substitute third-party service providers.

        Although we believe that our independent contractors providing court reporting services and other services are properly characterized as independent contractors, tax or other regulatory authorities may in the future challenge our characterization of these relationships. If such regulatory authorities or state, federal or foreign courts were to determine that our independent contractors are employees, and not independent contractors, we would be required to withhold income taxes, to withhold and pay social security, Medicare and similar taxes and to pay unemployment and other related payroll taxes. We would also be liable for unpaid past taxes and subject to penalties.

        We also rely on third-party suppliers and key vendors for equipment, maintenance services and supplies, making us vulnerable to supply shortages and price fluctuations. Adverse developments concerning key vendors or our relationships with them could force us to seek alternate sources for our equipment, maintenance services and supplies or to purchase such items on unfavorable terms, leading to deterioration in our financial position.

If we are unable to retain our key employees and attract and retain other qualified personnel, our business could suffer.

        Our ability to grow and our future success will depend to a significant extent on the continued contributions of our senior management, including John W. Castro, our Chairman of the Board and Chief Executive Officer, and Rick R. Atterbury, our President and Chief Operating Officer. Our business also depends on our sales and technical personnel, many of whom would be difficult to replace. We do not have key person life insurance on any of our key personnel.

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        Our future success will also depend in large part on our ability to identify, attract and retain additional highly qualified sales, customer service, technical and managerial personnel. Competition for these individuals is intense, especially in the markets in which we operate. We may not succeed in identifying, attracting and retaining these personnel. Further, competitors and other entities have in the past recruited and may in the future attempt to recruit our employees, particularly our sales personnel. Much of our business is dependent on the personal relationships of our sales personnel. The loss of the services of some of our sales personnel could harm our business. In addition, the loss of any of our other key personnel, the inability to identify, attract or retain qualified personnel in the future or delays in hiring qualified personnel, particularly sales and technical personnel, could make it difficult for us to manage our business and meet key objectives, such as the timely introduction of new technology-based products and services. The loss of personnel and our failure to attract new personnel could harm our business, financial condition and operating results.

We have substantial debt, which could increase our vulnerability to general adverse economic and industry conditions and may hinder our growth and put us at a competitive disadvantage.

        As of October 31, 2005, our total debt, excluding capital lease obligations and redeemable preferred stock, was $309.8 million, which included $9.0 million of borrowings under our old revolving credit facility, $158.0 million of borrowings under our other old credit agreements and $142.8 million of outstanding senior subordinated notes net of an unamortized original issue discount of $2.7 million. On December 22, 2005, we refinanced our outstanding indebtedness by redeeming all of our outstanding senior subordinated notes and entering into a new senior secured credit facility, consisting of a $475.0 million term loan and a $60.0 million revolving credit facility.

        Our substantial debt could have negative consequences on our business. For example, it could:

•

make it more difficult for us to pay our debts and meet our other financial obligations as they become due during general negative economic and market industry conditions because, if our revenue decreases, we may not have sufficient cash flow from operations to make our scheduled debt and financial obligation payments;



•

require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our outstanding debt, which reduces cash flow available for operations and future business opportunities;



•

limit our ability to obtain additional debt financing in the future for working capital, investments, capital expenditures or acquisitions;



•

increase our vulnerability to competitive and other changes in our industry and economic conditions generally;



•

expose us to risks inherent in interest rate fluctuations because some of our borrowings are at variable rates of interest, which results in higher interest expense in the event of increases in interest rates; and



•

place us at a disadvantage compared to our competitors that may have less debt.

17

The restrictive covenants in our credit agreement could limit our ability to conduct our business and respond to changing economic and business conditions and may place us at a competitive disadvantage relative to other companies that are subject to fewer restrictions.

        Our credit agreement requires our compliance with a leverage ratio and an interest coverage ratio. Our financial covenants are derived from a calculation based on our earnings before interest, taxes, depreciation and amortization, or EBITDA, as set forth in the credit agreement. Therefore, our failure to maintain a certain minimum EBITDA, as defined in the credit agreement, could adversely affect our financial condition. Our credit agreement also contains a number of limitations that limit our ability and the ability of certain of our subsidiaries to, among other things:

•

borrow additional money or issue guarantees;



•

pay dividends or make other distributions to shareholders;



•

make investments;



•

create liens on assets;



•

make capital expenditures;



•

sell assets;



•

enter into transactions with affiliates; and



•

engage in mergers or consolidations.

        These restrictive covenants could limit our ability, and that of certain of our subsidiaries, to obtain future financing, withstand a future downturn in our business or the economy in general or otherwise conduct necessary corporate activities. These restrictions could also adversely affect our ability to respond to changing economic and business conditions and place us at a competitive disadvantage relative to other companies that may be subject to fewer restrictions. Transactions that we may view as important opportunities, such as certain acquisitions, may be subject to the consent of the lenders under our credit agreement, which consent may be withheld or granted subject to conditions specified at the time that may affect the attractiveness or viability of the transaction.

        We cannot assure you that we will be able to comply with all of these restrictions and covenants at all times, especially the financial covenants. Our ability to comply with these restrictions and covenants depends on the success of our business and our operating results and may also be affected by events beyond our control. For example, we failed to meet our financial covenants for a period of time beginning in fiscal 2001 and through our second quarter of fiscal 2003 primarily as a result of the soft and volatile financial market and the adverse effect it had on our operating results at that time. A breach of any of the restrictions and covenants in our credit agreement by us or certain of our subsidiaries could lead to an event of default under the terms of the credit agreement, notwithstanding our ability to meet our debt service obligations thereunder. Upon the occurrence of an event of default under our credit agreement, our lenders have available a range of remedies customary in these circumstances, including declaring all such debt, together with accrued and unpaid interest thereon, to be due and payable, foreclosing on the assets securing the credit agreement and/or ceasing to provide additional revolving loans or letters of credit, which could have a material adverse effect on us. Although it is possible we could negotiate a waiver with our lenders of an event of default, such a waiver would likely involve significant costs.

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We have a significant amount of goodwill and intangible assets, the impairment of which may have a significant adverse effect on our future earnings.

        As a result of our past acquisitions, goodwill and intangible assets accounted for approximately 28.0% of our total consolidated assets as of October 31, 2005 and will account for a much higher percentage as a result of our acquisitions of WordWave and QMC during our fourth quarter of fiscal 2006. Goodwill represents the excess of the aggregate purchase price paid for the acquisition of companies accounted for as purchases over the fair value of the net tangible and intangible assets of the acquired companies. We may incur impairment charges related to goodwill in any of our reporting segments or we may incur impairment charges related to intangible assets in the future if the markets in which we operate deteriorate or if we paid more than fair value to acquire these businesses. We may also incur impairment charges if our business deteriorates. The amount of any impairment charges related to previously recorded goodwill or intangible assets and the adverse impact on our earnings will be based on the amount by which the carrying value of our goodwill or intangible assets exceed their fair values. Any such charges would be reflected on our consolidated financial statements as operating expenses, which could reduce our profitability and cause the value of our common stock to decline.

Our industries are highly competitive and we may not be able to compete effectively, which would harm our business and operating results.

        Competition in our industries is intense and varies by segment. Within our Legal Solutions segment, competition varies by type of service. The markets for our on-demand litigation and court reporting services are both very fragmented and we compete with several national and smaller local providers. In our on-site document service center business, our primary competitors are the law firms themselves. For those law firms that choose to outsource their document service needs, we compete with several nationwide services companies, as well as a number of smaller local companies. Within our Marketing and Communication Solutions segment, we compete with clients themselves that continue to perform such services in-house, as well as a wide range of design firms, mailing houses, printers, courier services and data processing companies. In our Transaction and Compliance Services segment, we compete primarily with two or three other large international financial printers. We also compete with many smaller regional companies in the United States. Recently, we have begun to see more competition from public relations firms that have become more active in assisting companies with their Form 8-K filings and could begin to assist companies with free writing prospectuses, especially if the use of free writing prospectuses becomes standard in the offering process.

        Competition in all of our businesses is based principally on price, quality of service, reputation, technological capability and established relationships. Barriers to entry vary from segment to segment and in some areas of our business new competitors could emerge without significant capital investment. Because of increased competition, we may experience pressure to reduce our prices for certain of our services in many of our markets. Some of our competitors have greater financial resources than we do. We cannot assure you that we will be able to compete effectively in all these areas in the future, and our failure to do so could harm our business and operating results.

A breach in our security measures could harm our business and operating results.

        Several of our products and services, such as our Internet-based document repositories, fulfillment and online data room services, require us to capture, transmit, handle and store confidential, personal and sensitive information regarding our clients and our clients' customers. Some of our products and services in the real estate and corporate markets of our

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Marketing and Communications Solutions segment involve the use of credit card information. Any breach in our security systems could severely harm our business and result in costly litigation and potential liability for us should information be inadvertently or intentionally disclosed. A compromise of our security or a perceived compromise of our security could also result in negative publicity causing us to lose clients and business. A party who is able to circumvent our security measures could misappropriate proprietary information that could be valuable to competitors or other similar companies or could even result in the perpetration of fraudulent financial transactions for which we may be found liable. Although we attempt to limit these risks contractually, there can be no assurance that our clients will not demand the elimination of limitation of liability provisions and guarantees against such security breaches in our client contracts. To the extent our competitors agree to unlimited liability, it could affect our ability to retain these limitations in our contracts at the risk of losing the business. Although we are insured against various risks, including theft and negligence, our insurance coverage is subject to deductibles, exclusions and limitations that may leave us bearing some or all of any losses arising from a security breach. In addition, we may be required to expend significant capital and other resources to continue to keep our security measures up to date and to protect us against the threat of a security breach. Increasingly, more of our financial services and other clients have been demanding our implementation of increased and more extensive security measures. The performance of these client audits takes time and requires a significant amount of resources. Our failure to comply with or satisfy these audits could cause us to lose business to competitors.

If we fail to keep our clients' information confidential or if we handle their information improperly, our business and reputation could be significantly and adversely affected.

        Through many of our businesses, we manage private and confidential information related to our clients' finances and transactions, often prior to public dissemination. The use of inside information is highly regulated in the United States and abroad, and violations of securities laws and regulations may result in civil and criminal penalties. If we, or any of our employees, fail to keep our clients' proprietary information confidential, we may lose existing clients and potential new clients and may expose them to significant liability and loss of revenue based on the premature release of confidential information. We may also become subject to civil claims by our clients or other third parties or criminal investigations by appropriate authorities.

Privacy concerns, including evolving government regulation in the area of consumer data privacy, could adversely affect our business and operating results.

        The effectiveness of some of our products and services rely on the storage and use of data concerning our clients and our clients' customers, including financial, personal and other sensitive data, such as credit card information. Recent growing public concern regarding privacy and the collection, distribution and use of certain sensitive information has led to increased foreign, federal, state and foreign scrutiny concerning data collection practices. Any failure by us to comply with applicable foreign, federal and state laws and requirements of regulatory authorities may result in, among other things, indemnification liability to our clients or civil and criminal liability.

        The centralized nature of our information systems requires the routine flow of information about our clients and our clients' customers across national borders, particularly into the United States. If this flow of information were to become illegal, or subject to onerous restrictions, our ability to serve our clients could be impaired. Other changes in the regulation of consumer privacy and data security could likewise have a material adverse effect on our business. Privacy and data security are rapidly evolving areas of regulation, and additional

20

regulation in those areas, some of it potentially difficult for us to comply with, is frequently proposed and occasionally adopted. Changes in the worldwide legal and regulatory environment in the areas of consumer privacy, data security and cross-border data flows, or a failure by us to comply with the regulatory environment, could have a material adverse effect on our business.

We must adapt to changes in technology and client requirements to remain competitive and any failure to do so could have harmful consequences for our business.

        The market and demand for our products and services, to a varying extent, has been characterized by technological changes that can occur rapidly, frequent product and service introductions, evolving client requirements and changing client budgetary restraints. We believe that these trends will continue into the foreseeable future. Our success will depend, in part, on our ability to enhance our existing products and services, successfully develop or acquire new products and services that meet increasing client requirements and gain market acceptance of our new and enhanced products and services.

        To achieve these goals, we will need to continue to make substantial investments in the development of products and services and marketing. We may not:

•

have sufficient resources to make these investments;



•

be successful in developing or acquiring product and service enhancements or new products and services on a timely basis, if at all; or



•

be able to market successfully these enhancements and new products once developed or acquired.

        Further, our products and services may be rendered obsolete or uncompetitive by new industry standards or changing technology, forcing us to ultimately cease offering such products and services, which may harm our business.

As technology continues to advance, our clients may adopt technologies that decrease the demand for some of our services, which could reduce our revenue and adversely affect our business.

        Some of our clients are implementing technologies to enable them to produce and disseminate disclosure documents on their own. The migration from an ASCII-based EDGAR system to an HTML format for SEC public filings may also enable more of our clients to handle all or a portion of their periodic SEC filings without the need for our services. These technological advances and regulatory changes have reduced and may continue to reduce the demand for our transaction and compliance services, which could harm our business and operating results.

        In addition, we target large institutions, such as mutual fund companies, investment banks and law firms for many of our services and we depend on their continued need for our services. However, over time, our clients or their advisors, may acquire, adopt or develop their own technologies that decrease the need for some of our services. For example, it is possible that law firms will develop client extranets that may replace our litigation and repository services. The use of such new client technologies could reduce the demand for our services, pressure our pricing or cause a reduction in our revenue. If we fail to manage these challenges adequately, our results of operations could be adversely affected.

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Regulatory changes such as the Sarbanes-Oxley Act of 2002, have in the past and may in the future adversely affect our business.

        Recent regulatory developments in the United States have shortened the time limits for filing periodic compliance reports, such as Form 10-Ks, Form 10-Qs and Form 8-Ks, and increased the disclosure requirements in those reports. The combination of more required filings of Form 8-Ks, shorter deadlines for Form 10-Ks, Form 10-Qs and Form 8-Ks and more content in such reports may adversely affect our ability to meet our clients' needs in times of peak demand. We may also be required to hire more temporary labor during these times, which could increase our costs and compromise the quality of our customer service.

        Several companies believe that in order to comply with the Sarbanes-Oxley Act, they must solicit competitive bids on all major services. We believe this could put pricing pressure on our services, which may adversely affect our net revenues and earnings.

        Finally, due to significant regulatory changes in the corporate governance area and the increased costs associated with compliance with the Sarbanes-Oxley Act and other securities law requirements, several companies have in the past decided and may in the future decide either to remain private or to return to being private to avoid such costs. This has resulted and may continue to result in a smaller number of public companies than otherwise would exist, leading to decreased transaction and compliance related filings and an overall decrease in the demand for printing transaction and compliance documents.

We rely on our management information systems for inventory management, distribution and other functions. If our information systems fail to adequately perform these functions or if we experience an interruption in their operation, our business and results of operations could be adversely affected.

        The efficient operation of our business depends on our management information systems. We rely on our management information systems to effectively manage accounting and financial functions, order entry, order fulfillment and inventory replenishment. The failure of our management information systems to perform could disrupt our business and could result in decreased revenues, increased overhead costs, excess inventory and product shortages, causing our business and results of operations to suffer. In addition, our management information systems are vulnerable to damage or interruption from natural or man-made disasters, terrorist attacks, computer viruses or hackers, power loss, or other computer systems, Internet, telecommunications or data network failures. Any such interruption could adversely affect our business and results of operations.

The future sale of many of our products and services depends upon the quality of our products and services, the level of our customer service and the strength of our relationships with existing clients and professional advisors who often serve as referral sources; if these deteriorated, our business could suffer.

        A significant portion of our net revenues is derived from business and referrals from existing clients and professional advisors. We intend to continue to focus our marketing efforts on these existing clients and these referral sources. If the quality of our products and services, the level of our customer service or our relationships with existing clients and referral sources were to deteriorate, our business and operating results could be adversely affected.

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Our reliance on trademark and copyright laws and contractual provisions to protect our proprietary rights may not be sufficient to protect our intellectual property from others who may sell similar products and services.

        We believe that our trademarks, copyrights, trade secrets and proprietary technical know-how are critical to many of our products and services. Proprietary rights relating to our products are protected from unauthorized use by third parties only to the extent that they are covered by valid and enforceable intellectual property rights or are maintained in confidence as trade secrets. In addition, we rely on trade secrets and proprietary know-how that we seek to protect, in part, by confidentiality agreements with our employees, consultants and clients. These agreements may be breached, and we may not have adequate remedies for any such breach. Even if these confidentiality agreements are not breached, our trade secrets may otherwise become known or be independently developed by competitors.

We rely on the software underlying our products and services to perform properly.

        The software underlying our products and services, such as our litigation and online data room services, is complex and can contain undetected errors or faults. Although we have not suffered significant harm from any defects or errors to date, we have from time to time found defects in our products and services and we may discover additional defects in the future. We have in the past issued, and may in the future need to issue, corrective releases of our products and services to correct defects or errors. We may be forced to delay commercial release of our new products and services or improvements to products and services until such problems are corrected and, in some cases, may need to implement enhancements to correct errors that we do not detect until after deployment of our products and services. In addition, problems with the software underlying our products and services could result in damage to our reputation, loss of clients, reduced number of referrals, loss of or delayed revenue, loss of or delayed market acceptance of our services and unexpected expenses and diversion of resources to remedy errors.

Potential anti-outsourcing legislation could harm our business.

        Our joint venture located in India performs some of our composition and coding services. The issue of outsourcing services abroad by American companies remains a topic of political discussion in the United States. Measures aimed at limiting or restricting outsourcing by United States companies are under discussion in Congress. There are active bills to restrict outsourcing in a majority of the 50 state legislatures. Any legislation affecting our ability to outsource our composition and coding services or any of our other services that we may intend to outsource in the future may have an impact on our business and operating results.

We conduct our business from several locations in the United States and abroad. Any disruption at any of these facilities could adversely affect our business and operating results.

        We conduct our business from several facilities located worldwide. Any one or more of our facilities may be affected by natural or man-made disasters. In the event one or more of our facilities were affected by a disaster, we could be forced to shift our operations to one or more of our other facilities. Although we possess insurance for damage to our property and the disruption of our business from casualties, such insurance may not be sufficient to cover all our potential losses. Any disruption in our services could adversely affect our business and operating results. Any disruption or delay at one or more of our facilities could impair our ability to meet the short-term demands of our clients, which could adversely affect our business. Our operating results may also be adversely affected if we are unable to cost-effectively expand our existing facilities and move operations between our facilities as needed from time to time.

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Consolidation in the industries we serve could adversely impact our business.

        There has been, and continues to be, merger, acquisition and consolidation activity in the industries we serve. This activity could result in the emergence of larger clients, which could perform for themselves some or all of the services which we currently provide or could provide. A merger of two of our existing clients may also result in the merged entity deciding not to use our services or to purchase fewer of our services than the companies did separately or may result in the merged entity seeking pricing advantages based on its increased size. If that were to occur, it could adversely impact our revenue.

Our business is subject to a number of other miscellaneous risks that may harm our business.

        Our business is subject to a number of other miscellaneous risks that may harm our business, including fluctuations in the cost of paper, ink and other raw materials we use, the financial condition of our clients, the effects of inflation, changes in currency exchange rates, changes in interest rates and the general condition of the U.S. economy and the economies of other countries in which we operate.

Risks Relating to this Offering and Ownership of Our Common Stock

Because there has not been a public market for our common stock and our stock price may be volatile, you may not be able to resell your shares at or above the initial public offering price.

        Prior to this offering, you could not buy or sell our common stock publicly. We cannot predict the extent to which investors' interests will lead to an active trading market for our common stock or whether the market price of our common stock will be volatile following this offering. If an active trading market does not develop, you may have difficulty selling any of our common stock that you buy. The initial public offering price for our common stock was determined by negotiations between representatives of the underwriters, certain selling shareholders and us and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid in this offering. In addition, the stock market has been volatile. The following factors, most of which are outside of our control, could cause the market price of our common stock to decrease significantly from the price you pay in this offering:

•

loss of any of our major clients;



•

departure of key personnel;



•

variations in our quarterly operating results;



•

announcements by our competitors of significant contracts, new products or product enhancements, acquisitions, distribution partnerships, joint ventures or capital commitments;



•

changes in governmental regulations and standards;



•

decreases in financial estimates by equity research analysts;



•

sales of common stock or other securities by us in the future;



•

decreases in market valuations of similar companies; and



•

fluctuations in stock market prices and volumes.

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        In the past, securities class action litigation often has been initiated against a company following a period of volatility in the market price of the company's securities. If class action litigation is initiated against us, we would incur substantial costs and our management's attention would be diverted from our operations. All of these factors could cause the market price of our stock to decline, and you may lose some or all of your investment.

If equity research analysts do not publish research or reports about our business or if they issue unfavorable research or downgrade our common stock, the price of our common stock could decline.

        The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts. The price of our stock could decline if one or more equity research analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing research or reports about us or our business.

Future sales of our common stock by our existing shareholders could cause our stock price to decline.

        If our shareholders sell substantial amounts of our common stock in the public market, the market price of our common stock could decrease significantly. The perception in the public market that our shareholders might sell shares of our common stock could also depress the market price of our common stock. All of our existing shareholders prior to this offering are subject to a lock-up provision in our investors' agreement that restricts their ability to transfer their shares of our common stock for 180 days after the date of this prospectus. Holders of outstanding options to purchase our common stock granted prior to this offering will also be subject to this 180-day lock-up provision upon any exercise of their options during that time period. In addition, we expect that each of our officers and directors, each of the selling shareholders and substantially all of our other shareholders and optionholders will agree to a similar lock-up with the underwriters. Upon expiration of the 180-day lock-up period,                            shares of our common stock may be eligible for sale in the public market. In addition to these transfer restrictions, we have entered into an agreement providing for additional transfer restrictions with our executive officers and some of our other employees holding approximately    % of our common stock on a fully diluted basis, assuming the exercise of all outstanding options and warrants after the offering. This agreement restricts transfers of all shares held by such persons and shares issuable to such persons upon the exercise of options outstanding as of the date of effectiveness of this offering for up to four years following the offering. The restrictions terminate as to one-quarter of such shares on each of the first, second, third and fourth anniversaries of the completion of this offering. The transfer restrictions contained in this agreement may be waived by our board of directors. In addition, we intend to file registration statements with the SEC covering all of the shares subject to options outstanding, but not exercised, as of the closing of this offering and all of the shares available for future issuance under our new 2006 stock incentive plan and employee stock purchase plan. The market price of shares of our common stock may decrease significantly when the restrictions on resale by our existing shareholders lapse and our shareholders, warrant holders and option holders are able to sell shares of our common stock into the market. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities, and may cause you to lose part or all of your investment in our shares of common stock.

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We have broad discretion in the use of the proceeds of this offering and may apply the proceeds in ways with which you do not agree.

        A significant portion of our net proceeds from this offering will be used, as determined by management in its sole discretion, for working capital and general corporate purposes, including the possible acquisition of businesses, technologies and products complementary to our existing operations. We have not, however, determined the allocation of uses of the net proceeds to be used for working capital and general corporate purposes. Our management will have broad discretion over the use and investment of these net proceeds, and, accordingly, you will have to rely upon the judgment of our management with respect to our use of these net proceeds, with only limited information concerning management's specific intentions. You will not have the opportunity, as part of your investment decision, to assess whether we use the net proceeds from this offering appropriately.

Our directors and executive officers will continue to have substantial control over us after this offering and could limit your ability to influence the outcome of key transactions, including changes of control.

        We anticipate that our executive officers and directors and entities affiliated with them will, in the aggregate, beneficially own    % of our outstanding common stock following the completion of this offering, assuming the underwriters do not exercise their over-allotment option. In particular, entities affiliated with DLJ Merchant Banking Partners II, L.P., our principal shareholder, will beneficially own    % of our outstanding common stock following the completion of this offering, assuming no exercise of the over-allotment option. In addition, four of our current directors are affiliated with DLJ Merchant Banking Partners II, L.P. and its affiliates, which nominated these directors pursuant to an investors' agreement. Our executive officers, directors and affiliated entities, if acting together, would be able to control or influence significantly all matters requiring approval by our shareholders, including the election of directors and the approval of mergers or other significant corporate transactions. These shareholders may have interests that differ from yours, and they may vote in a way with which you disagree and that may be adverse to your interests. The concentration of ownership of our common stock may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our shareholders of an opportunity to receive a premium for their common stock as part of a sale of our company, and may affect the market price of our common stock. This concentration of ownership of our common stock may also have the effect of influencing the completion of a change in control that may not necessarily be in the best interests of all of our shareholders.

Several of our executive officers and other employees own a significant portion of our outstanding common stock or hold stock options or long-term incentive units under our equity-based compensation plans. After this offering, these employees may not have sufficient financial incentive to stay with us, we may have to incur costs to replace key employees who leave and our ability to execute our business model could be impaired if we are unable to replace departing employees in a timely manner.

        Some of our key employees hold outstanding common stock which they acquired at a purchase price significantly below the initial public offering price in this offering, options to purchase shares of common stock with an exercise price significantly below the initial public offering price in this offering and long-term incentive units with base amounts below the initial public offering price in this offering. If the price of our common stock trades in the secondary market after our initial public offering at a price significantly above the price at which many of our employees purchased their shares of common stock, the exercise price of their options or the base price of their long-term incentive units and if these employees are

26

able to sell their shares at such higher prices, these employees may not have sufficient financial incentive to stay with us. If key personnel leave our company, our ability to successfully operate our business could be impaired. We also may have to incur significant costs in identifying, hiring, training and retaining replacements for departing employees.

Our corporate documents and Minnesota law make a takeover of our company more difficult, which may prevent certain changes in control and limit the market price of our common stock.

        Our charter and bylaws and sections 671 and 673 of the Minnesota Business Corporation Act contain provisions that might enable our management to resist a takeover of our company. Provisions in our amended and restated articles of incorporation and amended and restated bylaws may discourage, delay or prevent a merger or acquisition involving us that our shareholders may consider favorable. For example, our amended and restated articles of incorporation authorize       million undesignated shares. Without shareholder approval, our board of directors has the authority to create a class or series of shares from the undesignated shares and to set the terms of the class or series, including voting and dividend rights. With these rights, it could be more difficult for a third party to acquire us. In addition, our amended and restated articles of incorporation provide for a staggered board of directors, with directors serving for three-year terms, with approximately one-third of the directors coming up for reelection each year. Having a staggered board will make it more difficult for a third party to obtain control of our board of directors through a proxy contest, which may be a necessary step in any acquisition of us that is not favored by our board of directors. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock.

You will experience immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering.

        If you purchase shares of our common stock in this offering, you will experience immediate dilution of $         per share, because the price that you pay will be substantially greater than the adjusted net tangible book value per share of common stock that you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the price of the shares being sold in this offering when they purchased their shares of our capital stock. In addition, if outstanding options to purchase our common stock are exercised, you will experience additional dilution. Please read "Dilution" for a more detailed description of how dilution will affect you.

The requirements of being a public company may strain our resources, distract our management and increase our costs.

        As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002. These requirements may place a strain on our people, systems and resources and divert management's attention from other business concerns, which could have a material adverse effect on our business, financial condition, operating results and cash flows. In addition, as a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. For example, we will incur additional legal, accounting, and other costs associated with our public company reporting requirements. We may need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. It may also be more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.

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We do not intend to declare dividends on our stock after this offering.

        We currently intend to retain all of our future earnings, if any, to repay any existing liabilities and to finance the expansion and growth of our business and, therefore, do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future. Any payment of cash dividends on our common stock will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, outstanding indebtedness plans for expansion, restrictions imposed by our lenders, if any, and other factors deemed relevant by our board of directors. Currently, our senior credit facility and the terms of our preferred stock restrict us from paying cash dividends except under certain circumstances. Therefore, you should not expect to receive dividend income from shares of our common stock.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that involve risks and uncertainties. These statements involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Forward-looking statements in this prospectus may include statements about:

•

the demand for our products and services;



•

the effect of technological and regulatory changes on our business;



•

our ability to continue to diversify our revenue;



•

the competitive environment in our business;



•

our ability to successfully integrate the operations of our acquisitions into our existing operations and achieve anticipated earnings and synergies;



•

our plans to expand our international operations;



•

our cash needs;



•

our use of the proceeds from this offering; and



•

our financial performance.

        There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss under the heading "Risk Factors." You should read these risk factors and the other cautionary statements made in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus. We cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all. The Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933 do not protect any forward-looking statements that we make in connection with this offering.

        You should read this prospectus completely. In some cases, you can identify forward-looking statements by the following words: "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue," "on-going" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. We undertake no obligation to update these forward-looking statements, even though our situation may change in the future. We qualify all the forward-looking statements contained in this prospectus by the foregoing cautionary statements.

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USE OF PROCEEDS

        We estimate our net proceeds from our sale of             shares of our common stock in this offering will be approximately $             million after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        We intend to use the net proceeds we receive from this offering as follows:

Purpose	Amount
Repay certain indebtedness	$
Working capital and general corporate purposes	$

        We intend to use $             million of the net proceeds of this offering to repay $             of outstanding principal as of January 31, 2006 under our senior credit facility with a syndicate of banks, including an affiliate of DLJ Merchant Banking Partners II, L.P., our principal shareholder that also has representation on our board of directors. Our senior credit facility consists of a $475.0 million term loan and a $60.0 million revolving loan commitment. Our senior credit facility requires that a certain percentage of the net proceeds of this offering, as determined based on our leverage ratio at the time of repayment, be applied to the prepayment of the term loan. We intend to apply the remaining portion of $       million from the offering to repay all borrowings under our revolving credit facility and, once our revolving credit facility is paid in full, we will use any remaining portion of the net proceeds that have been allocated to repayment of indebtedness to make a voluntary prepayment of our term loan. The term loan bears interest, at our option, at the reserve adjusted London Interbank Offering Rate, or LIBOR, plus a maximum of 2.25% or at the alternate base rate plus a maximum of 1.00%. The revolving line of credit bears interest at the reserve adjusted LIBOR plus a maximum of 2.50% or at the alternate base rate plus a maximum of 1.25%. As of January 31, 2006, the annual interest rate on the term loan was 6.81% and on the revolving credit facility was 7.06%. The term loan matures on December 22, 2012 (subject to earlier maturity as described under "Description of Certain Indebtedness") and the revolving line of credit matures on December 22, 2010. The senior credit facility was entered into in December 2005 and was used to (i) redeem the face value of our senior subordinated notes plus a 4.0% call premium plus accrued interest totaling $159.7 million, (ii) refinance $158.0 million of outstanding principal borrowings under our senior credit facilities dated as of July 30, 2004, (iii) acquire WordWave for a purchase price of $157.3 million and (iv) pay transaction costs and expenses in connection with the WordWave acquisition and the redemption of our senior subordinated notes, respectively. See "Description of Certain Indebtedness."

        We intend to use approximately $         million of the net proceeds from this offering for working capital and general corporate purposes, including improving our technology, systems and operating infrastructure, and acquiring or investing in businesses, joint ventures, technologies, products, services or assets that complement our business. We currently do not have any commitments or agreements with respect to any such transactions. Furthermore, we have not determined the amounts we plan to spend on certain of the items listed above or the timing of these expenditures. As a result, we will have broad discretion to allocate the net proceeds from this offering. Until we use the net proceeds, we may invest them in short-term, interest-bearing, investment grade and U.S. government securities.

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        The selling shareholders will receive aggregate net proceeds from their sale of shares of approximately $             million after deducting underwriting discounts and commissions and estimated offering expenses payable by them. We will not receive any portion of the net proceeds received by the selling shareholders from the sale of their shares, including any shares sold pursuant to the underwriters' over-allotment option.

DIVIDEND POLICY

        Following the completion of this offering, we intend to retain all of our future earnings, if any, to repay our existing indebtedness, to finance the expansion and growth of our business and satisfy other obligations. We do not expect to pay cash dividends on our common stock in the foreseeable future. Payment of future cash dividends on our common stock, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, outstanding indebtedness, plans for expansion, restrictions imposed by our lenders, if any, and other factors deemed relevant by our board of directors. Currently, our senior credit facility and the terms of our preferred stock restrict us from paying cash dividends except under certain circumstances.

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CAPITALIZATION

        The following table sets forth our capitalization as of October 31, 2005 on:

•

an actual basis;



•

on a pro forma basis to reflect our January 2006 acquisition of WordWave and our December 2005 debt refinancing pursuant to which we financed the WordWave acquisition, redeemed all of our outstanding senior subordinated notes and replaced our 2004 senior credit facility with a new senior credit facility; and



•

as adjusted to reflect our sale of                           shares of common stock in this offering at an assumed initial public offering price of $             per share (the mid-point of the initial public offering price range), after deducting estimated underwriting discounts and commissions and offering expenses, and the application of the net proceeds from our sale of common stock in this offering.

        You should read this capitalization table together with our consolidated financial statements and the related notes appearing elsewhere in this prospectus as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information included in this prospectus.

				As of October 31, 2005
				Actual			Pro forma	Pro forma as adjusted
				(dollars in thousands)
Debt obligations, including current maturities
	2004 senior credit facility			$	167,038
	Senior subordinated notes, net of discounts				142,802
	Capital lease obligations				2,120
Redeemable preferred stock, including accrued dividends					24,701
Total debt obligations and redeemable preferred stock					336,661
Puttable class B common stock (1)					60,993
Shareholders' equity (deficit):
		Class B common stock, $0.01 par value per share,                   shares authorized;                   shares issued and outstanding actual;                   shares authorized and                   shares issued and outstanding as adjusted			52
		Common stock, $0.01 par value per share,                   shares authorized; no shares issued and outstanding actual;                   shares issued and outstanding as adjusted			—
	Additional paid-in capital				98,438
	Notes and interest receivable				(22,622	)
	Accumulated other comprehensive income (loss)				(591	)
	Accumulated deficit				(222,619	)
		Total shareholders' deficit			(147,342	)
			Total capitalization	$	250,312

(1)

Our puttable class B common stock, which for corporate law purposes is not considered a separate class of stock, represents shares that are considered "mandatorily redeemable securities" because of the holders' rights to put their shares to us upon termination without cause, death, disability or resignation.

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        The number of shares of common stock to be outstanding immediately after this offering excludes the following:

•

shares of common stock issuable upon exercise of stock options outstanding as of October 31, 2005 at a weighted average exercise price of $             per share;



•

shares of common stock issuable upon exercise of warrants outstanding as of October 31, 2005 at a weighted average exercise price of $              per share, as adjusted to reflect an anti-dilution event as a result of the issuance of certain additional warrants upon the completion of this offering, as described below;



•

shares of common stock issuable upon exercise of certain warrants that will become issuable upon the completion of this offering at an exercise price of $             per share; and



•

shares of common stock reserved and available for future issuances under our new stock incentive plan and employee stock purchase plan.

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DILUTION

        If you invest in our common stock, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the adjusted net tangible book value per share of our common stock immediately after completion of this offering. Our net tangible book value as of October 31, 2005 was $             million, or $             per share, of common stock. Net tangible book value per share is determined by dividing (a) our total tangible assets less our total liabilities (including redeemable preferred stock) by (b) the number of shares of common stock outstanding.

        After giving effect to our sale of             shares of common stock at an assumed initial public offering price of $             per share (the mid-point of the initial public offering price range), after deducting estimated underwriting discounts and commissions and offering expenses, and the application of the net proceeds from such sale, the adjusted net tangible book value of our common stock, as of October 31, 2005, would have been approximately $             million, or $             per share. This amount represents an immediate increase in net tangible book value to our existing shareholders of $             per share and an immediate dilution to new investors of $    per share. The following table illustrates this per share dilution:

Assumed initial public offering price per share			$
	Net tangible book value (deficit) per share as of October 31, 2005	$
	Increase per share attributable to new investors
Adjusted net tangible book value per share after this offering
Dilution per share to new investors			$

        The following table summarizes as of October 31, 2005, on an as adjusted basis, the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid by our existing shareholders and by new investors, based upon an assumed initial public offering price of $             per share (the mid-point of the initial public offering price range) and before deducting estimated underwriting discounts and commissions and offering expenses payable by us.

		Shares Purchased			Total Consideration
								Average Price Per Share
		Number	Percent		Amount	Percent
Existing shareholders				%	$		%	$
New investors				%	$		%	$
	Total		100.0	%	$	100.0	%	$

        The tables and calculations above assume no exercise of:

•

stock options outstanding as of October 31, 2005 to purchase                           shares of common stock at a weighted average exercise price of $             per share;



•

warrants outstanding as of October 31, 2005 to purchase                           shares of common stock issuable at a weighted average exercise price of $             per share, as adjusted to reflect an anti-dilution event as a result of the issuance of certain additional warrants upon the completion of this offering, as described below; and



•

warrants to purchase                           shares of common stock that will become issuable upon the completion of this offering at an exercise price of $             per share.

To the extent any of these options or warrants are exercised, there will be further dilution to new investors.

34

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA

        The following unaudited pro forma condensed consolidated financial data are derived from the combination of our historical consolidated financial statements, together with the historical consolidated financial statements of WordWave, Inc., adjusted to give effect to the January 3, 2006 acquisition of all of the outstanding common stock of WordWave and the related refinancing of our debt. The unaudited pro forma condensed consolidated balance sheet gives effect to the transactions as if they occurred on October 31, 2005. The unaudited pro forma condensed statements of operations for the year ended January 31, 2005 and the nine months ended October 31, 2005 give effect to the transactions as if each had occurred at the beginning of the earliest period presented.

        For purposes of presenting pro forma financial statements, we combined WordWave's twelve month period ended December 31, 2004, and nine month period ended September 30, 2005, with our fiscal year ended January 31, 2005, and nine month period ended October 31, 2005, respectively, as these reporting periods are within the 93 day time period prescribed by the pro forma financial information requirements of Article 11 of Regulation S-X.

        The pro forma adjustments are described in the accompanying notes to the financial statements and were applied to our historical consolidated financial statements and the historical consolidated financial statements of WordWave to reflect and account for our acquisition of WordWave and the refinancing of our debt. The unaudited pro forma condensed financial data are based upon estimates, available information and certain assumptions that management believes are reasonable under the circumstances and may be revised as additional information becomes available. Our allocation of the purchase price for WordWave is preliminary and subject to completion of our determination of the estimated fair value of the assets and liabilities acquired.

        The unaudited pro forma condensed consolidated financial data do not purport to represent what our actual results or financial position would have been if the transactions described above had actually occurred on the dates indicated and are not necessarily representative of our results for any future period. The unaudited pro forma condensed consolidated financial data should be read in conjunction with the historical financial statements prepared by us and WordWave, including the notes thereto, our "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the other financial information appearing elsewhere in this prospectus.

35

Unaudited Pro Forma Condensed Consolidated Balance Sheet

As of October 31, 2005

			Merrill			WordWave			Acquisition Adjustments			Debt Refinancing Adjustments (4)			Pro Forma
			(dollars in thousands)
Assets
Current assets
	Cash and cash equivalents		$	6,009		$	1,269		$	(4,184	) (1)	$	(2,565	)	$	529
	Trade receivables, net			131,402			29,121			—			—			160,523
	Work-in-process inventories			18,112			—			—			—			18,112
	Other inventories			12,879			—			—			—			12,879
	Other current assets			22,716			3,246			—			—			25,962
		Total current assets		191,118			33,636			(4,184	)		(2,565	)		218,005
Property, plant and equipment, net				58,830			4,063			—						62,893
Goodwill				86,050			74,245			(74,245 107,689	) (2)   (1)		—			193,739
Other assets				38,515			12,626			(10,476 57,200	) (2)   (1)		3,105			100,970
		Total assets	$	374,513		$	124,570		$	75,984		$	540		$	575,607
Liabilities, redeemable preferred stock, puttable class B common stock and shareholders' deficit
Current liabilies
	Debt obligations		$	1,570		$	5,967		$ $	(5,967 1,550	) (3)   (1),(4)	$	1,630		$	4,750
	Capital lease obligations			945			123			—			—			1,068
	Accounts payable			39,812			6,404			—			—			46,216
	Accrued expenses			57,547			9,640			(365	)(1)		(5,822	)		61,000
		Total current liabilities		99,874			22,134			(4,782	)		(4,192	)		113,034
Debt obligations, less current obligations				308,270			59,289			(59,289	) (3)		15,441			477,161
										153,450	(1),(4)
Capital lease obligations, less current obligations				1,175			—			—			—			1,175
Redeemable preferred stock				24,701			—			—			—			24,701
Other liabilities				26,842			5,528			24,224	(1)		—			56,594
		Total liabilities		460,862			86,951			113,603			11,249			672,665
Puttable class B common stock				60,993			—			—			—			60,993
Preferred stock				—			41,196			(41,196	) (2)		—			—
Shareholders' deficit
		Total liabilities, redeemable preferred stock, puttable class B common stock and shareholders' deficit		(147,342	)		(3,577	)		3,577	(2)		(10,709	)		(158,051	)
			$	374,513		$	124,570		$	75,984		$	540		$	575,607

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

36

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Year Ended January 31, 2005

		Merrill			WordWave		Acquisition Adjustments			Debt Refinancing Adjustments			Pro Forma
		(dollars in thousands except share and per share data)
Net revenue		$	697,893		$	115,757	$	—		$	—		$	813,650
Cost of revenue			462,410			66,327		1,148 527	(5)  (8)		—			530,412
	Gross profit		235,483			49,430		(1,675	)		—			283,238
Selling, general and administrative expenses			166,067			37,533		8,382	(5)		—			211,455
								(527	)(8)
	Operating income		69,416			11,897		(9,530	)		—			71,783
Interest expense			30,543			4,888		—			(14,383	) (6)		21,048
Other (income) expense, net			(2,191	)		264		—			—			(1,927	)
	Income (loss) before income taxes		41,064			6,745		(9,530	)		14,383			52,662
Provision for (benefit from) income taxes			19,705			2,785		(4,036	) (7)		6,091	(7)		24,545
	Income (loss) before minority interest		21,359			3,960		(5,494	)		8,292			28,117
Minority interest			(11	)		—		—			—			(11	)
	Net income (loss)	$	21,370		$	3,960	$	(5,494	)	$	8,292		$	28,128
Accretion of preferred stock			(291	)		—		—			—			(291	)
Net income available to common shareholders		$	21,079		$	3,960	$	(5,494	)	$	8,292		$	27,837
Net income available to common shareholders per share:
	Basic	$	4.00										$	5.28
	Diluted	$	3.49										$	4.61
Weighted average number of shares outstanding:
	Basic		5,270,785											5,270,785
	Diluted		6,038,188											6,038,188	(9)

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

37

Unaudited Pro Forma Condensed Consolidated Statement of Operations

For the Nine Months Ended October 31, 2005

		Merrill			WordWave		Acquisition Adjustments			Debt Refinancing Adjustments			Pro Forma
		(dollars in thousands except share and per share data)
Net revenue		$	603,159		$	94,466	$	—		$	—		$	697,625
Cost of revenue			390,484			52,787		533 404	(5)  (8)		—			444,208
	Gross profit		212,675			41,679		(937	)		—			253,417
Selling, general and administrative expenses			202,106			31,046		5,747	(5)		—			238,495
								(404	)(8)
	Operating income (loss)		10,569			10,633		(6,280	)		—			14,922
Interest expense			25,623			2,811		—			(2,939	)(6)		25,495
Other (income) expense, net			(1,963	)		1,337		—			—			(626	)
	(Loss) income before income taxes		(13,091	)		6,485		(6,280	)		2,939			(9,947	)
Provision for (benefit from) income taxes			9,017			2,721		(2,660	)(7)		1,245	(7)		10,323
	(Loss) income before minority interest and cumulative effect of accounting principle		(22,108	)		3,764		(3,620	)		1,694			(20,270	)
Minority interest			1			—		—			—			1
	(Loss) income from continuing operations	$	(22,109	)	$	3,764	$	(3,620	)	$	1,694		$	(20,271	)
Net loss from continuing operations per share:
	Basic	$	(4.22	)									$	(3.87	)
	Diluted	$	(4.22	)									$	(3.87	)
Weighted average number of shares outstanding:
	Basic		5,237,825											5,237,825
	Diluted		5,237,825											5,237,825	(9)

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

38

Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statements of Operations

(1)

The table below sets forth the estimated sources and uses of funds related to the acquisition of all of the outstanding common stock of WordWave:

(dollars in thousands)
Sources:					Uses:
	Existing cash		$	4,184	Cash purchase price	$	157,334
	Delayed draw term loan			155,000	Transaction costs		1,850
		Total funds	$	159,184	Estimated purchase price	$	159,184

The estimated total purchase price is allocated to the assets and liabilities of WordWave, as shown in the table below, based on their estimated fair values. The purchase price allocation is preliminary and subject to completion of our determination of the estimated fair value of the assets and liabilities acquired. The actual amounts recorded upon completion of the valuation may differ from the amounts presented below.

		(dollars in thousands)
Preliminary Allocation of Purchase Price:
	Current tangible assets	$	33,636
	Property, plant and equipment		4,063
	Non-current tangible assets		2,150
	Goodwill		107,689
	Identifiable intangible assets		57,200
	Current liabilities		(15,802	) (a)
	Other liabilities		(5,528	)
	Deferred tax liabilities		(24,224	) (b)
		$	159,184

(a)

Includes a $365 write-down of deferred revenue to its estimated fair value.



(b)

Represents deferred income tax liability associated with the difference between the book and tax basis of the acquired identifiable intangible assets.

(2)

Reflects the elimination of WordWave goodwill, identifiable intangible assets and shareholders' deficit, including preferred stock. WordWave preferred stockholders converted their preferred stock to common stock immediately prior to the acquisition.

(3)

WordWave outstanding indebtedness on the date of acquisition was repaid in full with proceeds from the purchase price.

(4)

On December 22, 2005, we refinanced our existing senior credit facility and repaid in full our outstanding senior subordinated notes with a new $535.0 million senior credit facility consisting of a $320.0 million initial term loan, a $155.0 million delayed draw term loan that was used for the acquisition of WordWave, and a $60.0 million revolver. The table

39

below sets forth the estimated sources and uses of funds related to the debt refinancing as if it was completed on October 31, 2005:

(dollars in thousands)
Sources:				Uses:
	Initial term loan	$	320,000	Repay existing senior credit facility	$	158,038
	New revolver credit facility		9,000	Repay senior subordinated notes		145,539
	Existing cash		2,565	Outstanding revolver credit facility		9,000
				Call premium		5,822
				Accrued interest—senior subordinated notes		5,822
				Fees and expenses		7,344
		$	331,565		$	331,565

As a result of the refinancing and acquisition of WordWave, our pro forma debt obligations as of October 31, 2005 consist of the following:

		Historical		Refinancing Transaction			WordWave Acquisition		Pro Forma
		(dollars in thousands)
Existing senior credit facility		$	158,038	$	(158,038	)	$	—	$	—
Existing revolving credit facility			9,000		(9,000	)		—		—
Initial term loan (c)			—		317,911			—		317,911
Delay draw loan			—		—			155,000		155,000
New revolving credit facility			—		9,000			—		9,000
Senior subordinated notes (d)			142,802		(142,802	)		—		—
	Total		309,840		17,071			155,000		481,911
Less amounts due within one year.			1,570		1,630			1,550		4,750
	Debt obligations, less current portion	$	308,270	$	15,441		$	153,450	$	477,161

(c)

Represents an initial term loan of $320,000 less $2,089 of discount based on the fair value of the debt. This discount will be amortized to interest expense over the life of the initial term loan.



(d)

Represents senior subordinated note face value of $145,539 less unamortized original issue discount of $2,737. The unamortized original issue discount of $2,737 was written off to loss on debt extinguishment.

The refinancing resulted in a net loss on debt extinguishment which is comprised of the following:

	(dollars in thousands)
Call premium on senior subordinated notes	$	5,822
Write-off of senior subordinated notes original issue discount		2,737
Write-off of deferred financing costs		2,514
Non capitalizable fees and expenses		1,725
Less: gain on debt modification		(2,089	)
Net loss on debt extinguishment	$	10,709

In conjunction with the debt refinancing, $5,619 of additional deferred financing costs were capitalized, partially offset by a $2,514 write off of deferred financing costs

40

associated with the existing senior credit facility and senior subordinated notes, as previously discussed.

(5)

Reflects amortization of intangible assets on an accelerated basis proportionate to estimated cash flows:

		Amount		Estimated Life	Year Ended January 31, 2005			Nine Months Ended October 31, 2005
		(dollars in thousands)
Customers		$	36,300	7 to 11 yrs.	$	6,193		$	4,604
Trademarks			16,600	15 yrs.		1,817			1,276
Covenants not to compete			1,400	5 yrs.		448			125
						8,458			6,005
Technology			2,900	3 to 5 yrs.		1,148			533
		$	57,200			9,606			6,538
Less: WordWave historical intangible amortization						(76	)		(258	)
	Net increase				$	9,530		$	6,280
	Merrill intangible amortization					363			3,036
	Total pro forma intangible amortization				$	9,893		$	9,316

(6)

Reflects a decrease in interest expense attributable to the debt restructuring and WordWave acquisition:

	Year Ended January 31, 2005			Nine Months Ended October 31, 2005
	(dollars in thousands)
Initial and delayed draw term loans (e)	$	18,855		$	20,171
Revolving credit facility (f)		—			599
Accretion of preferred stock (g)		—			2,533
Other (h)		2,193			2,192
		21,048			25,495
Elimination of historical interest expense		35,431			28,434
Decrease in interest expense	$	(14,383	)	$	(2,939	)

(e)

Interest expense was calculated at an assumed weighted average interest rate of 3.98% for the year ended January 31, 2005 and 5.68% for the nine months ended October 31, 2005, which are based on the terms of the amended, restated, and combined credit agreement.



(f)

Interest expense was calculated at an assumed weighted average interest rate of 5.42% for the nine months ended October 31, 2005, which are based on the terms of the amended, restated, and combined credit agreement using historical revolving credit facility outstanding borrowings. This interest rate was applied to our weighted average borrowings during the period. No revolving credit borrowings were outstanding during the year ended January 31, 2005.



(g)

Reflects accreted interest in accordance with Statement of Financial Accounting Standard No. 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" which we adopted effective February 1, 2005.

41

(h)

Reflects amortization of deferred financing costs adjusted for the debt refinancing, capital lease expense and other fees.

A 0.125% change in interest rates would impact interest expense for borrowings under the revolving credit facility and the initial and delayed draw term loans, collectively in the amount of approximately $594 for the year ended January 31, 2005 and approximately $454 for the nine months ended October 31, 2005.

(7)

Reflects the income tax effect of all pro forma adjustments at our statutory income tax rates of 42.35% for the year ended January 31, 2005 and the nine months ended October 31, 2005.

(8)

Reflects reclassification of WordWave depreciation expense from selling, general and administrative expenses to cost of revenues for consistency with our historical presentation.

(9)

As part of the WordWave acquisition, we agreed to issue a total of 250,000 stock options to purchase our class B common stock at $72.00 per share. These stock options did not have an impact on the pro forma diluted weighted average number of shares outstanding for the year ended January 31, 2005 and nine months ended October 31, 2005 because their effect would be antidilutive.

(10)

Total pro forma cost of revenues and pro forma selling, general and administrative expenses include the following amounts of depreciation and amortization:

	Year Ended January 31, 2005		Nine Months Ended October 31, 2005
	(dollars in thousands)
Cost of revenues	$	10,757	$	8,992
Selling, general and administrative expenses		5,308		4,032
Total pro forma depreciation and amortization	$	16,065	$	13,024

42

SELECTED CONSOLIDATED FINANCIAL DATA

        The selected consolidated financial data set forth below should be read in conjunction with the financial statements and related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information appearing elsewhere in this prospectus. The following data has been derived from financial statements audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Consolidated balance sheets as of January 31, 2004 and 2005 and the related statements of operations and of cash flows for each of the three years in the period ended January 31, 2005 and notes thereto appear elsewhere in this prospectus. The selected consolidated statement of operations data for the years ended January 31, 2001 and 2002 and the consolidated balance sheet data as of January 31 2001, 2002 and 2003 are derived from audited financial statements not included in this prospectus. The consolidated statement of operations data and statement of cash flow data for the nine months ended October 31, 2004 and 2005 and the consolidated balance sheet data as of October 31, 2005 are derived from unaudited financial statements included elsewhere in this prospectus that, in our opinion, include all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the information for the periods presented. Historical results are not necessarily indicative of operating results to be expected in the future.

43

			Year Ended January 31,															Nine Months Ended October 31,
			2001			2002			2003			2004			2005			2004			2005
			(dollars in thousands except share and per share data)
Statement of Operations Data
Net revenue			$	649,450		$	602,863		$	581,571		$	596,215		$	697,893		$	531,171		$	603,159
Cost of revenues				448,172			410,846			398,095			411,783			462,410			346,423			390,484
	Gross profit			201,278			192,017			183,476			184,432			235,483			184,748			212,675
Selling, general and administrative expenses (1)				171,882			152,841			133,318			132,507			166,067			124,906			202,106
Merger and debt restructuring costs (2)				181			5,493			5,300			—			—			—			—
Restructuring costs (3)				4,323			1,059			932			—			—			—			—
	Operating income, net			24,892			32,624			43,926			51,925			69,416			59,842			10,569
Interest expense				44,487			45,518			39,242			34,981			30,543			23,516			25,623
Other income, net				(3,624	)		(970	)		(95	)		(1,879	)		(2,191	)		(931	)		(1,963	)
	(Loss) income before income taxes			(15,971	)		(11,924	)		4,779			18,823			41,064			37,257			(13,091	)
(Benefit from) provision for income taxes				(3,366	)		(2,030	)		3,400			10,402			19,705			17,762			9,017
	(Loss) income before minority interest and cumulative effect of change in accounting principle			(12,605	)		(9,894	)		1,379			8,421			21,359			19,495			(22,108	)
	Minority interest			166			51			13			18			(11	)		(13	)		1
	(Loss) income before cumulative effect of change in accounting principle, net of income taxes			(12,771	)		(9,945	)		1,366			8,403			21,370			19,508			(22,109	)
Cumulative effect of change in change in accounting principle, net of income taxes (4)				—			—			—			—			—			—			18,619
		Net (loss) income	$	(12,771	)	$	(9,945	)	$	1,366		$	8,403		$	21,370		$	19,508		$	(3,490	)
Accretion of preferred stock				(6,648	)		(7,144	)		(4,441	)		(243	)		(291	)		(214	)		—
		Net (loss) income available to common shareholders	$	(19,419	)	$	(17,089	)	$	(3,075	)	$	8,160		$	21,079		$	19,294		$	(3,490	)
Net (loss) income per Class B common share:
	Basic:
		Income (loss) before cumulative effect of change in accounting principle, net of income tax																			$	(4.22	)
		Cumulative effect of change in accounting principle, net of income tax																				3.55
		Net income (loss) available to common shareholders	$	(3.59	)	$	(3.24	)	$	(0.58	)	$	1.55		$	4.00		$	3.66		$	(0.67	)
	Diluted:
		Income (loss) before cumulative effect of change in accounting principle, net of income tax																			$	(4.22	)
		Cumulative effect of change in accounting principle, net of income tax																				3.55
		Net income (loss) available to common shareholders	$	(3.59	)	$	(3.24	)	$	(0.58	)	$	1.39		$	3.49		$	3.20		$	(0.67	)
Weighted average number of shares outstanding:
	Basic			5,411,389			5,274,990			5,273,086			5,272,713			5,270,785			5,272,713			5,237,825
	Diluted			5,411,389			5,274,990			5,273,086			5,890,166			6,038,188			6,022,570			5,237,825

44

	As of January 31,															As of October 31,
	2001			2002			2003			2004			2005			2004			2005
	(dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	22,896		$	45,885		$	36,480		$	36,428		$	12,269		$	16,130		$	6,009
Working capital		(253,576	)		(253,491	)		75,027			78,695			66,473			77,572			91,244
Total assets		349,238			333,920			308,159			311,709			327,289			326,505			374,513
Debt obligations, including capital leases		360,558			336,383			339,338			331,223			303,667			304,575			311,960
Redeemable preferred stock		42,345			49,489			53,931			54,174			54,465			54,387			24,701
Puttable class B common stock (5)		—			—			—			507			5,564			429			60,993
Total shareholders' deficit		(143,918	)		(161,674	)		(163,362	)		(154,583	)		(136,842	)		(134,780	)		(147,342	)

		Year Ended January 31,															Nine Months Ended October 31,
		2001			2002			2003			2004			2005			2004			2005
Statement of Cash Flow Data:
Net cash flow provided by (used in):
	Operating activities	$	21,910		$	60,845		$	18,210		$	29,921		$	57,991		$	36,187		$	18,199
	Investing activities		(22,884	)		(11,441	)		(13,107	)		(15,269	)		(45,783	)		(22,527	)		(29,492	)
	Financing activities		7,897			(25,967	)		(14,059	)		(13,603	)		(35,074	)		(33,269	)		3,910
Other Data:
Depreciation and amortization		$	17,046		$	15,711		$	14,751		$	15,025		$	14,786		$	10,737		$	12,061
Amortization of intangible and other assets			6,761			6,757			287			64			363			78			3,036
Capital expenditures			14,004			10,869			13,343			13,890			16,026			10,527			15,094
EBITDA (6)			52,157			56,011			59,046			68,875			86,767			71,601			27,628
Adjusted EBITDA (6)			52,157			56,011			59,046			69,240			88,548			72,164			80,746
Non-cash stock-based compensation			—			—			—			365			1,781			563			53,118

(1)

Selling, general and administrative expenses include non-cash, stock-based compensation expense associated with stock ownership and option plans that are accounted for as variable plans under APB Opinion No. 25 "Accounting For Stock Issued to Employees" and related pronouncements. We recorded non-cash, stock-based compensation of $365 and $1,781 for the years ended January 31, 2004 and 2005, respectively, and $563 and $53,118 for the nine months ended October 31, 2004 and 2005, respectively. Net of taxes, these non-cash, stock-based compensation charges were $209 and $1,026 for the years ended January 31, 2004 and 2005, respectively, and $278 and $48,887 for the nine months ended October 31, 2004 and 2005, respectively. Also included in selling, general and administrative expenses for the nine months ended October 31, 2005 are $1,286 of advisor fees and other expenses associated with the potential sale of our company to an employee stock ownership plan, which we ultimately chose not to pursue.

(2)

During fiscal 2001, we recorded a $181 charge to operations related to the merger of Viking Merger Sub. Inc. with us in November 1999. In 2002 and 2003, we recorded charges to operations of $5,493 and $5,300, respectively, resulting from with legal and advisor fees we incurred in connection with debt restructuring activities.

(3)

During fiscal 2001, 2002 and 2003, we recorded $4,323, $1,059 and $932 of restructuring costs, respectively. These restructuring costs were associated with headcount reduction and accruals of lease obligations for facilities that we exited as part of our operational restructuring.

(4)

Effective February 1, 2005, we changed the accounting for our redeemable preferred stock as prescribed by Statement of Financial Accounting Standard ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Prior to adopting SFAS No. 150, we classified our redeemable preferred stock as a "mezzanine" instrument. Upon the adoption of SFAS No. 150, our redeemable preferred stock, as of October 31, 2005, is recorded as a liability on our consolidated balance sheets. We recorded the cumulative effect of this change in accounting principle prospectively by initially measuring, on the date of adoption, our redeemable preferred stock at fair value using a discounted cash flow approach. The cumulative effect of change in accounting principle, net of income tax, of $18,619, is reflected on our consolidated statements of operations for the nine months ended October 31, 2005.

(5)

Our puttable class B common stock, which for corporate law purposes is not considered a separate class of stock, represents shares that are considered "mandatorily redeemable securities" because of the holder's rights to put their shares to us upon termination without cause, death, disability or resignation.

(6)

EBITDA is defined as net income (loss) before the cumulative effect of change in accounting principle, interest expense, income tax expense (benefit) and depreciation and amortization. EBITDA is not a presentation made in accordance with generally accepted accounting principles, or GAAP, and is not a measure of financial condition or profitability. It should not be considered as an alternative to, or more meaningful than, amounts determined in

45

accordance with GAAP, including net income (loss) as an indicator of operating performance or net cash from operating activities as an indicator of liquidity. However, we believe that EBITDA is useful to an investor in evaluating our operating performance because:

•

this measure is widely used by securities analysts and investors to measure a company's operating performance without regard to items such as interest and debt expense, income tax expense and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired;



•

this measure helps investors to evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and our asset base; and



•

this measure is used by our management, among other operating measures, for various purposes, including as a measure of operating performance to assist in comparing performance from period to period on a consistent basis, in presentations to our board of directors concerning our financial performance and as a basis for strategic planning and forecasting.

EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analyzing our results as reported under GAAP. Some of these limitations are:

•

EBITDA does not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;



•

EBITDA does not reflect changes in, or cash requirements for, our working capital needs;



•

EBITDA does not reflect our interest expense, or the cash requirements necessary to service interest or principal payments on our debt;



•

Although depreciation and amortization are non-cash charges, the assets being depreciated will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and



•

EBITDA is not calculated identically by all companies; therefore, our presentation of EBITDA may not be comparable to similarly titled measures of other companies.

EBITDA is defined as EBITDA plus non-cash, stock-based employee compensation expense. Adjusted EBITDA is not a presentation made in accordance with generally accepted accounting principles, or GAAP, and is not a measure of financial condition or profitability. It should not be considered as an alternative to, or more meaningful than, amounts determined in accordance with GAAP, including net income (loss) as an indicator of operating performance or net cash from operating activities as an indicator of liquidity. However, we believe that Adjusted EBITDA is an important operating measure because:

•

it is used by our management, among other operating measures, for various purposes, including measuring our operating performance, assisting in comparing our financial performance from period to period on a consistent basis and presenting our financial performance to our board of directors for strategic planning and forecasting; and



•

the financial covenants applicable to our old and new senior credit facilities (interest coverage ratio and leverage ratio) are based on EBITDA, adjusted for non-cash expenses among other adjustments. Therefore, our management and our lenders use EBITDA, as adjusted for non-cash, stock-based compensation expense, among other adjustments, as a measure of our continuing compliance with our financial covenants.

The following is a reconciliation of net income (loss) to EBITDA and adjusted EBITDA:

		Year Ended January 31,												Nine Months Ended October 31,
		2001			2002			2003		2004		2005		2004		2005
		(dollars in thousands)
Net income (loss)		$	(12,771	)	$	(9,945	)	$	1,366	$	8,403	$	21,370	$	19,508	$	(3,490	)
Cumulative effect of change in accounting principle, net of income tax			—			—			—		—		—		—		(18,619	)
Interest expense			44,487			45,518			39,242		34,981		30,543		23,516		25,623
(Benefit from) provision for income taxes			(3,366	)		(2,030	)		3,400		10,402		19,705		17,762		9,017
Depreciation and amortization			17,046			15,711			14,751		15,025		14,786		10,737		12,061
Amortization of intangible and other assets			6,761			6,757			287		64		363		78		3,036
	EBITDA		52,157			56,011			59,046		68,875		86,767		71,601		27,628
Non-cash, stock-based employee compensation			—			—			—		365		1,781		563		53,118
	Adjusted EBITDA	$	52,157		$	56,011		$	59,046	$	69,240	$	88,548	$	72,164	$	80,746

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and results of operations together with our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion and analysis contains forward-looking statements about our business and operations, based on current expectations and related to future events and our future financial performance, that involve risks and uncertainties. Our actual results may differ materially from those we currently anticipate as a result of many important factors, including the factors we describe under "Risk Factors," "Forward-Looking Statements" and elsewhere in this prospectus.

Overview

        We are a leading provider of outsourcing solutions for various complex business communication and information management needs. Our services include document and data management, litigation support, branded communication programs, fulfillment, imaging and printing. Our solutions enable our clients to create access, control, analyze and communicate critical information for key business initiatives, such as targeted customer marketing, complex regulatory compliance and business decision making. We integrate proprietary technologies, industry-specific processes and outsourced services into flexible, easy-to-use comprehensive service offerings.

        In connection with our January 2006 acquisition of WordWave, Inc., we reorganized our operations and realigned our management and financial reporting structure. We reviewed the impact of this reorganization and realignment on our reporting segments pursuant to applicable accounting standards and we believe that a change in our reporting segments has occurred. Commencing in the fourth quarter of our fiscal year ended January 31, 2006, we intend to present four reporting segments: Legal Solutions, Marketing and Communication Solutions, Transaction and Compliance Services and Other Communication Services. Prior periods will be restated to conform to our new reporting segments. The discussion of our business in this prospectus reflects these four segments. However, our consolidated financial statements and our discussion and analysis of our financial condition and results of operations included in this prospectus, present historical periods through our third quarter ended October 31, 2005, and therefore exclude the period in which this change occurred. Accordingly, the consolidated financial statements and our discussion and analysis of our financial condition and results of operations in this prospectus reflect our two former reporting segments that were applicable in the periods presented: Specialty Communication Services and Document Services. We intend to file a pre-effective amendment to the registration statement of which this prospectus is a part to include the consolidated financial statements for our fiscal year ended January 31, 2006 and an updated management's discussion and analysis. In conjunction with this amendment, we intend to restate all previous segment information to reflect our new four reporting segments.

Specialty Communication Services

Financial Document Services

        Within our former Specialty Communication Services segment, our Financial Document Services business unit encompasses transactional documents that generally reflect the level of deal activity in the capital markets as well as required regulatory compliance and other repetitive work that is less affected by capital market activity. We experienced a significant increase in transactional activity throughout fiscal 2005; however, we experienced a softening

47

of financial transaction activity during the first nine months of fiscal 2006 as our net revenue from financial transactions remained relatively flat when compared to the same period a year ago. We are also monitoring the effect of governmental regulation on our business, including the SEC's new security offering reform rules, which became effective on December 1, 2005. We anticipate a decrease in our net revenue from printing of final prospectuses as a result of the security reform rules, beginning in the fourth quarter of our fiscal 2006.

        Revenue for financial transactional documents and transaction-based composition and print services in our Specialty Communication Services segment has also historically been subject to some seasonality, with stronger demand occurring during the first and second fiscal quarters. This strong demand is primarily the result of clients' budgeting processes and financial reporting calendars. Historically, we have experienced somewhat weaker demand in our third and fourth fiscal quarters.

        We are continuing to focus on diversifying and expanding our service offerings to reduce our exposure to cyclical economic conditions, government regulation and seasonality. For example, our Merrill DataSite revenues have increased from $2.3 million in fiscal 2003 to $9.5 million in fiscal 2005. Merrill DataSite is an online data room that is used for hosting due diligence documents in merger and acquisition transactions. This product reduces our exposure to the print components of the financial transaction market, but we do anticipate that Merrill DataSite will be exposed to similar cyclical conditions and seasonality as already experienced in our transactional document business in our Financial Document Services business unit.

        On February 28, 2005, we acquired P.H. Brink International Corporation (Brink), a provider of a variety of language services, including translation, localization, internationalization and globalization services, for approximately $14.1 million plus additional consideration of up to $5.0 million depending on achievement of certain revenue milestones. This acquisition complements our existing translation business. Effective March 1, 2005, operating results from this acquisition are reflected in our consolidated operating results.

Strategic Communication Services

        Our Strategic Communication Services business unit provides brand identity management, customer communication, packaged direct marketing programs, compliance filing, composition and printing services for mutual funds, including "intelligent print," where we print on-demand documents for individual investors. These services are contractual with agreements generally having one to three year terms, whereas our composition and printing services agreements are often one-time projects. Sales of compliance documentation and marketing materials for our investment fund clients are affected by capital market fluctuations, as well as general economic conditions. We experienced generally positive results in fiscal 2005 and the first nine months of fiscal 2006. This business unit is also affected by government regulation. For example, SEC amendments and rules to improve disclosures by investment management companies may increase the amount of print, composition or fulfillment work in this area.

        We continue to focus on diversifying our Strategic Communication Services product offerings. On January 31, 2005, we acquired Fine Arts Engraving Company (Fine Arts) for a total purchase price of approximately $20.1 million. Fine Arts is a provider of high-quality, engraved printed products, such as stationery and business cards. These products expand our current brand management offering and are marketed to complementary financial, legal and corporate clients. Effective February 1, 2005, operating results from this acquisition are reflected in our consolidated operating results.

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Realty Services

        Our Realty Services business unit provides brand identity management, customer communication and packaged direct marketing programs to our real estate customers. We have contracts with most large national residential real estate franchisers. This business is dependent on the overall economic health of the residential real estate market. On September 23, 2004, we acquired Jim Laffey, Inc., Ken Freeberg, Inc, Webcopies.com LLC and The Berkshires Homebuyers Guide, Inc. (collectively CfRE), for a total purchase price of approximately $12.0 million. CfRE is an Internet generated printing business, providing marketing materials for the residential real estate industry, particularly independent real estate agents, complementing our national brands/large franchiser focus. Effective September 23, 2004, operating results from this acquisition are reflected in our consolidated operating results.

Integrated Operations Group

        Our Integrated Operations Group earns most of its revenue from internal transactions, as the print provider for our Specialty Communication Services segment. These inter-company transactions are eliminated from our consolidated results of operations. We include election services results in our Integrated Operations Group. California election services revenue generally occurs in the first and third quarters of even-numbered calendar years. Integrated Operations Group also earns revenue from general commercial printing activities, such as the printing of high-end, glossy annual reports.

Document Services

        Our former Document Services segment includes transactional, one-time reprographics and litigation support services, as well as on-going contractual services generated from our on-site document service centers. Demand for these services has historically been influenced by general economic conditions as well as growth in the market for legal services and trends towards outsourcing document facilities.

Recent Acquisitions

        On December 31, 2005, we completed the acquisition of the remaining 51.0% of the equity ownership of Quebecor Merrill Canada Inc. (QMC) for approximately $16.4 million in cash. QMC is a provider of financial transactional and compliance composition and printing services to Canadian issuers.

        On January 3, 2006, we completed the acquisition of WordWave, Inc. for $157.3 million in cash. In addition, there is a $5.0 million contingent earn-out payment to be made no later than April 30, 2007 if WordWave achieves certain financial objectives for the year ended December 31, 2005 and for our fiscal 2007. WordWave is a global provider of court reporting, litigation support, digital recording and transcription services to law firms, courts, governmental agencies and corporations and complements our existing Document Services product offering and services.

Our New Reporting Segments

        Commencing in our fourth quarter of fiscal 2006, in connection with our then pending acquisition of WordWave, we reorganized our business into four reportable segments:

•

Legal Solutions provides both on-demand and on-site litigation support, information management tools and electronic and print document management services for law

49

firms, corporate legal departments and professional services firms. Examples of our services include creating searchable litigation document repositories, managing electronic data discovery and providing real-time court reporting and deposition videography.

•

Marketing and Communication Solutions supplies brand identity management, customer communication and packaged direct marketing programs for sales professionals in industries such as real estate, mutual funds and insurance. Examples of our services include customizable corporate identity materials, direct mail marketing pieces and promotional programs supported by web-based technologies.



•

Transaction and Compliance Services offers document composition, filing, printing, distribution and electronic access services to support clients' transaction and regulatory compliance activities such as securities offerings, reorganizations, mergers and acquisitions, SEC filings and other regulatory filings. Examples of our services include EDGAR filing, prospectus printing and creating and hosting on-line data rooms for corporate transactions and restructurings.



•

Other Communication Services provides language translation, captioning, election services and specialty printing that complement or utilize the same underlying competencies found in our other segments. Examples of our services include translating product manuals into multiple languages and providing closed captioning for television programming.

        Beginning with our fiscal year ended January 31, 2006, our financial statements (and related management's discussion and analysis) will be based upon these four reportable segments.

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Results of Operations

        The following table sets forth, for the periods indicated, our results of operations:

		For the Year Ended January 31,									For the Nine Months Ended October 31,
		2003			2004			2005			2004			2005
		(dollars in thousands)
Statement of Operations Data:
Net revenue		$	581,571		$	596,215		$	697,893		$	531,171		$	603,159
Cost of revenue			398,095			411,783			462,410			346,423			390,484
	Gross profit		183,476			184,432			235,483			184,748			212,675
Selling, general and administrative expenses			133,318			132,507			166,067			124,906			202,106
Debt restructuring costs			5,300			—			—			—			—
Restructuring costs			932			—			—			—			—
	Operating income, net		43,926			51,925			69,416			59,842			10,569
Interest expense			39,242			34,981			30,543			23,516			25,623
Other income, net			(95	)		(1,879	)		(2,191	)		(931	)		(1,963	)
	Income (loss) before income taxes		4,779			18,823			41,064			37,257			(13,091	)
Provision for income taxes			3,400			10,402			19,705			17,762			9,017
Minority interest			13			18			(11	)		(13	)		1
Cumulative effect of change in accounting principle, net of income taxes			—			—			—			—			(18,619	)
	Net income (loss)	$	1,366		$	8,403		$	21,370		$	19,508		$	(3,490	)
Accretion of preferred stock			(4,441	)		(243	)		(291	)		(214	)		—
	Net income (loss) available to common shareholders	$	(3,075	)	$	8,160		$	21,079		$	19,294		$	(3,490	)

        The following table sets forth our statements of operations data expressed as a percentage of net revenue for the periods indicated.

		For the Year Ended January 31,						For the Nine Months Ended October 31,
		2003		2004		2005		2004		2005
Net revenue		100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenue		68.5	%	69.1	%	66.3	%	65.2	%	64.7	%
	Gross profit	31.5	%	30.9	%	33.7	%	34.8	%	35.3	%
Selling, general and administrative expenses		22.9	%	22.2	%	23.8	%	23.5	%	33.5	%
Debt restructuring costs		0.9	%	0.0	%	0.0	%	0.0	%	0.0	%
Restructuring costs		0.2	%	0.0	%	0.0	%	0.0	%	0.0	%
	Operating income, net	7.6	%	8.7	%	9.9	%	11.3	%	1.8	%
Interest expense		6.7	%	5.9	%	4.4	%	4.4	%	4.3	%
Other income, net		(0.0	)%	(0.4	)%	(0.3	)%	(0.1	)%	(0.3	)%
	Income (loss) before income taxes	0.8	%	3.2	%	5.9	%	7.0	%	(2.2	)%
Provision for income taxes		0.6	%	1.8	%	2.8	%	3.3	%	1.5	%
Minority interest		0.0	%	0.0	%	(0.0	)%	(0.0	)%	0.0	%
Cumulative effect of change in accounting principle, net of income taxes		0.0	%	0.0	%	0.0	%	0.0	%	(3.1	)%
	Net income (loss)	0.2	%	1.4	%	3.1	%	3.7	%	(0.6	)%
Accretion of preferred stock		(0.7	)%	(0.0	)%	(0.1	)%	(0.1	)%	—
	Net income (loss) available to common shareholders	(0.5	)%	1.4	%	3.0	%	3.6	%	(0.6	)%

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        The following table sets forth, for the periods indicated, our net revenues by segment:

		For the Year Ended January 31,						For the Nine Months Ended October 31,
		2003		2004		2005		2004		2005
		(dollars in thousands)
Net Revenue by Segment:
Specialty Communications Services		$	457,507	$	465,164	$	562,608	$	430,043	$	486,947
Document Services			124,064		131,051		135,285		101,128		116,212
	Total Consolidated Net Revenue	$	581,571	$	596,215	$	697,893	$	531,171	$	603,159

Nine months ended October 31, 2005 compared to nine months ended October 31, 2004

Net revenue

        Overall net revenue increased $72.0 million, or 13.6%, to $603.2 million for the nine months ended October 31, 2005, from $531.2 million for the nine months ended October 31, 2004. Of the $72.0 million increase in net revenue, approximately $23.4 million was contributed by our acquisitions of CfRE, Fine Arts and Brink. The remaining growth in net revenue of $48.6 million was attributable to our Specialty Communication Services segment in the amount of $33.5 million and by our Document Services segment in the amount of $15.1 million. These increases reflect continued stable general economic conditions despite decreased financial transaction activity.

        Net revenue in the Specialty Communication Services segment increased $56.9 million, or 13.2%, to $486.9 million for the nine months ended October 31, 2005 from $430.0 million for the nine months ended October 31, 2004. A significant portion of this revenue growth for the nine months ended October 31, 2005 when compared to the nine months ended October 31, 2004 was attributable to acquisitions completed in the last year in three of our business units. Our acquisitions of Fine Arts, CfRE and Brink contributed approximately $11.9 million, $5.9 million and $5.6 million of the net revenue growth to our Strategic Communication Services, Realty Services and Financial Document Services business units, respectively. The remaining growth in revenue came from organic sources. Our Merrill DataSite product contributed revenue growth of $9.4 million and our regulatory compliance revenue increased $2.7 million, reflecting a continuing strong demand for these products offered by our Financial Document Services business unit. We also experienced net revenue gains of approximately $23.5 million primarily from existing and new financial services clients in our Strategic Communications Services business unit, particularly from strong demand for our fulfillment services, as well as from increased demand for marketing programs that are directed to our brand management service clients. We also experienced $8.0 million growth in net revenue from our Realty Services business unit from the introduction of several new products, a strong domestic real estate market and successful marketing programs. All of these revenue gains were partially offset by a $9.9 million decrease in revenues from our Integrated Operations Group as fiscal 2006 was not a California general election year from which we generated election services revenue.

        We also experienced some changes to the mix of our revenues generated within our Specialty Communications Services segment as net revenue generated by financial transactions accounted for 50.9% of our total Financial Document Services business unit net revenue for the nine months ended October 31, 2005 compared to 55.4% for the nine months ended October 31, 2004. Our language translation and Merrill DataSite services accounted for 13.6% of Financial Document Services net revenue for the nine months ended October 31, 2005 compared to 7.3% for the nine months ended October 31, 2004.

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        Net revenue in the Document Services segment increased $15.1 million, or 14.9%, to $116.2 million for the nine months ended October 31, 2005 from $101.1 million for the nine months ended October 31, 2004. Approximately $11.0 million of this net revenue growth is attributable to our litigation support business with our reprographic and document services center operations contributing $2.5 million and $1.6 million to the net revenue growth, respectively. The net revenue growth for litigation support, reprographics and document services centers is attributable to a general increase in market penetration.

Gross profit

        Gross profit increased $27.9 million, or 15.1%, to $212.7 million for the nine months ended October 31, 2005 from $184.7 million for the nine months ended October 31, 2004. Gross profit from our Specialty Communication Services segment increased $15.9 million, including approximately $7.3 million in gross profit from our acquisitions, of CfRE, Fine Arts and Brink, and a $12.0 million increase from our Document Services segment for the nine months ended October 31, 2005 when compared to the same period one year ago. Gross profit, as a percentage of net revenue, was 35.3% for the nine months ended October 31, 2005 compared to 34.8% for the nine months ended October 31, 2004. The stable gross profit, as a percentage of net revenue, was attributable to significant improvement in gross profit, as a percentage of net revenue, from our Document Services segment, partially offset by a decline from Specialty Communications Services segment gross profit, as a percentage of net revenue.

        Our Specialty Communication Services segment gross profit increased $15.9 million, including $7.3 million related to the operations of recently acquired businesses, as previously discussed, for the nine months ended October 31, 2005 when compared to the same period one year ago. Specialty Communication Services gross profit, as a percentage of net revenue, was 37.0% for the nine months ended October 31, 2005 compared to 38.2% for the nine months ended October 31, 2004. The increase in Specialty Communication Services gross profit was primarily attributable to increased net revenue, as previously discussed. The decrease in gross profit, as a percentage of net revenue, reflected the decrease in financial transaction revenue, as a percentage of Specialty Communication Services net revenue, as previously discussed. Financial transaction revenue is presently generating higher gross margins than other products or services in the Specialty Communication Services segment.

        Our Document Services segment gross profit increased $12.0 million, or 58.8%, to $32.4 million for the nine months ended October 31, 2005 from $20.4 million for the nine months ended October 31, 2004. The increase in Document Services gross profit was primarily the result of gross profit in our litigation support business for the nine months ended October 31, 2005. Our litigation support and reprographic businesses posted significantly improved gross profit and gross profit, as a percentage of net revenue, for the nine months ended October 31, 2005 when compared to the same period a year ago as we benefited from increased volume of work and better cost management. These factors drove Document Services segment gross profit, as a percentage of net revenue, to 27.9%, for the nine months ended October 31, 2005, from 20.2% for the nine months ended October 31, 2004.

Selling, general and administrative expenses

        Selling, general and administrative expenses increased $77.2 million, or 61.8%, to $202.1 million for the nine months ended October 31, 2005 from $124.9 million for the nine months ended October 31, 2004. The increase in selling, general and administrative expenses was primarily driven by non-cash stock compensation. We have significant stock ownership

53

and option plans that are accounted for as variable plans under APB No. 25, "Accounting for Stock Issued to Employees" and related pronouncements. For the nine months ended October 31, 2005 and 2004, we recorded $53.1 million and $0.6 million of non-cash stock compensation expense under the intrinsic method as prescribed by APB No. 25 and related pronouncements, respectively. Additionally, approximately $7.1 million of the increase in selling, general and administrative expenses was directly related to our recent acquisitions, of which $2.8 million related to the amortization of acquired identifiable intangible assets. A significant driver of the remaining increase in selling, general and administrative expenses related to a $14.5 million increase in compensation expense related to additional sales positions, variable sales compensation and increased marketing and promotion activities, particularly in our Financial Document Services business unit, as we continued to focus on obtaining additional market share for Merrill DataSite, translation services and traditional financial transactional and compliance business.

        Selling, general and administrative expenses, as a percentage of net revenue, were 33.5% for the nine months ended October 31, 2005 compared to 23.5% for the nine months ended October 31, 2004. The increase in selling, general and administrative expenses, as a percentage of net revenue, was primarily due to the $52.6 million increase in non-cash stock compensation expense, as previously discussed. Additionally, the increase in selling, general and administrative expenses, as a percentage of net revenue, was attributable to investments in expanding our sales force and increasing marketing and promotion activities for which we did not experience significantly increased net revenue during the period.

Operating income

        Operating income was $10.6 million, or 1.8%, of net revenues, for the nine months ended October 31, 2005 compared to $59.8 million, or 11.3%, of net revenues, for the nine months ended October 31, 2004. The decrease in operating income was primarily due to the increase in non-cash stock compensation expense of $52.6 million, as previously discussed. This decrease was partially offset by an increase in gross profit. Operating income from our Speciality Communications Services segment was $31.6 million for the nine months ended October 31, 2005 compared to $59.9 million for the nine months ended October 31, 2004. This decrease was primarily due to the stock compensation charges. Operating income from our Document Services segment was $2.0 million for the nine months ended October 31, 2005 compared to a $0.1 million operating loss for the nine months ended October 31, 2004. This increase was primarily due to the growth in our litigation support business, as discussed above. Operating income in our Specialty Communications Services segment was significantly higher than operating income in our Document Services segment as a result of significantly greater revenue and higher operating income margins.

Interest expense

        Interest expense increased $2.1 million, or 9.0%, to $25.6 million for the nine months ended October 31, 2005 compared to $23.5 million for the nine months ended October 31, 2004. Approximately $2.5 million of this increase related to the accretion of fair value of our redeemable preferred stock towards its liquidation value in accordance with SFAS No. 150. Partially offsetting this increase was a $0.4 million decrease in interest expense as our weighted average debt balance was $318.2 million and the weighted average interest rate was 9.0% for the nine months ended October 31, 2005 compared to weighted average debt balance of $325.5 million and weighted average interest rate of 8.9% for the nine months ended October 31, 2004.

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Other income, net

        Other income, net was $1.9 million for the nine months ended October 31, 2005 compared to $0.9 million for the nine months ended October 31, 2004. Other income, net of $1.9 million for the nine months ended October 31, 2005 was primarily a result of recording our earnings from an equity method investment and interest income. Other income, net of $0.9 million for the nine months ended October 31, 2004 was primarily a result of recording our earnings from an equity method investment, realizing a $1.0 million profit from the one-time sale of stock of a private company we acquired in fiscal 2002 as consideration for a product line disposition and interest income, partially offset by a write off of $1.4 million of unamortized debt issuance costs in connection with our July 2004 refinancing of our then existing senior credit facility.

Provision for income taxes

        Provision for income taxes decreased $8.7 million to $9.0 million for the nine months ended October 31, 2005, from $17.8 million for the nine months ended October 31, 2004. The provision for income taxes of $9.0 million resulted from a loss before income taxes of $13.1 million for the nine months ended October 31, 2005. As previously discussed, the significant driver for the loss before income taxes resulted from $53.1 million of non-cash stock compensation expense being recorded during the nine months ended October 31, 2005 of which approximately $43.2 million will not be deductible for tax purposes. The $17.8 million provision for income taxes resulted from $37.3 million of income before income taxes for the nine months ended October 31, 2004. Our effective tax rate of (68.9)% for the nine months ended October 31, 2005 differs from the federal statutory tax rate of 35.0% as a result of the non-deductible stock compensation charge previously discussed, non-deductible business meeting and entertainment expenses, foreign operating losses for which no income tax benefit was recorded and state income taxes. Our effective tax rate of 47.7% for the nine months ended October 31, 2004 was higher than the federal statutory tax rate as a result of non-deductible business meeting and entertainment expenses, foreign operating losses for which no income tax benefit was recorded and state income taxes.

Cumulative effect of change in accounting principle

        Effective February 1, 2005, we changed the accounting for our redeemable preferred stock as prescribed by Statement of Financial Accounting Standard No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement requires that certain financial instruments be classified as liabilities rather than equity or "mezzanine" instruments under previous standards. This statement also requires that we record the cumulative effect of this change in accounting principle prospectively by initially measuring, on the date of adoption, the financial instruments at fair value or by other measurements as prescribed by the statement. In accordance with this standard, our redeemable preferred stock, as of October 31, 2005, was recorded as a component of liabilities. The cumulative effect of change in accounting principle, net of income tax, was $18.6 million, representing the total gain upon initial adoption of $32.3 million, less income taxes of $13.7 million. The $13.7 million income tax was recorded as a deferred income tax liability. Effective February 1, 2005, we began accreting the value of preferred stock to its liquidation value through periodic charges to interest expense. For the nine months ended October 31, 2005, we recorded interest expense associated with the accretion to liquidation of approximately $2.5 million.

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Net (loss) income

        Net loss was $3.5 million, a decrease of $23.0 million, for the nine months ended October 31, 2005 compared to net income of $19.5 million for the nine months ended October 31, 2004. This decrease was driven by significant increase in selling, general and administrative expenses, primarily related to non-cash stock compensation expense, offset partially by increased gross profit and decreased provision for income taxes, as previously discussed.

Net (loss) income available to common shareholders

        Net loss available to common shareholders was $3.5 million for the nine months ended October 31, 2005 compared to $19.3 million for the nine months ended October 31, 2004. The decrease was for the same reasons as the decrease in net loss, including $0.2 million of accretion of our preferred stock.

Fiscal year ended January 31, 2005 compared to fiscal year ended January 31, 2004

Net revenue

        Overall net revenue increased 17.1% to $697.9 million for fiscal 2005 from $596.2 million for fiscal 2004. This increase was due primarily to continued improved general economic conditions and financial market activity, especially creating significant revenue growth in our Specialty Communication Services segment.

        Net revenue in the Specialty Communication Services segment increased $97.4 million, or 20.9%, to $562.6 million for fiscal 2005 from $465.2 million for fiscal 2004. The majority of our growth in net revenue was from growth of existing product offerings, with only approximately $4.2 million of our growth resulting from our acquisitions of Watchdog Print Media and CfRE which were integrated with our Realty Services business unit late in 2004. Our Financial Document Services business unit experienced net revenue growth of $53.6 million in fiscal 2005 compared to fiscal 2004. This increase resulted largely from increased demand in the financial transaction markets, primarily as a result of strong worldwide capital markets. Net revenue in the financial transaction markets for fiscal 2005 increased 42.6%, or $45.8 million, from fiscal 2004 to $153.4 million in fiscal 2005. Corporate regulatory compliance net revenue decreased $2.5 million, or 2.8%, for fiscal 2005 compared to fiscal 2004, due to a slight decrease in the number of compliance jobs in the marketplace. Similar growth was experienced by our Strategic Communication Services business unit where net revenues in fiscal 2005 increased $24.8 million when compared to fiscal 2004. This increase was driven primarily by our increased penetration and business attained from several large financial services clients, reflecting the improved condition in the mutual fund industry, and increased spending on marketing programs among our brand management clients. Higher volumes of business with existing clients and initiation of marketing programs by several clients, in both our financial services and brand management businesses, either because of improved financial markets or because of their internal marketing program implementations, contributed to the overall increase in fiscal 2005. In addition to the impacts of the acquisitions discussed above, our Realty Services business unit experienced $4.1 million of net revenue growth in fiscal year 2005 compared to fiscal 2004, primarily due to the introduction of several new products, a strong domestic real estate market and successful marketing programs with our existing clients. Primarily because 2005 was a statewide election year in California, which occurs every other year, we experienced a $10.7 million increase in net revenues generated by our Integrated Operations Group. Additionally, redistricting in California caused the number of voter information guides to increase significantly in fiscal 2004. We expect net revenues

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generated by our Integrated Operations Group business unit to decrease significantly in fiscal 2006 since it is not a statewide election year in California and we will not generate much, if any, revenues from election services.

        We also experienced some changes in the mix of the revenues generated within our Specialty Communications Services segment as net revenue generated by financial transactions accounted for 57.8% of our total Financial Document Services business unit net revenue for fiscal 2005 compared to 50.8% for fiscal 2004. Language translation net revenue for fiscal 2005 increased $2.6 million, or 29.2%, compared to fiscal 2004. Merrill DataSite net revenue increased $4.8 million, or 203.9%, compared to fiscal 2004. Together these two new products' net revenue increased $7.5 million, or 54.7%, to $21.2 million for fiscal 2005 from $13.7 million in fiscal 2004.

        Net revenue in the Document Services segment increased $4.3 million, or 3.3%, to $135.3 million for fiscal 2005 from $131.0 million for fiscal 2004. This increase resulted from net revenue growth in our reprographics business and document service centers as demand for reproduction services grew. Our litigation support business revenue decreased 7.6% in fiscal 2005 compared to fiscal 2004. Our fiscal 2004 performance led us to focus on operational process and management changes in fiscal 2005, which decreased our selling efforts in this business unit.

Gross profit

        Gross profit increased $51.1 million, or 27.7%, to $235.5 million for fiscal 2005 from $184.4 million for fiscal 2004. The increase in gross profit was due largely to the 20.9% higher net revenue in our Specialty Communication Services segment, which tends to command higher gross profit margins than the Document Services segment. As a percentage of net revenue, gross profit increased to 33.7% for fiscal 2005 compared to 30.9% for fiscal 2004. We experienced a significant shift in our product mix to our higher gross profit financial transaction and financial fulfillment revenues, which in the case of financial transaction revenue tend to be more cyclical and carry higher gross profits. We also experienced increased margins in our Strategic Communication Services business unit in fiscal 2005 compared to fiscal 2004.

        Gross profit in the Specialty Communication Services segment increased $48.2 million, or 30.4%, to $207.0 million for fiscal 2005 from $158.8 million for fiscal 2004. Gross profit, as a percentage of net revenue, was 36.8% for fiscal 2005 compared to 34.1% for fiscal 2004. The fiscal 2005 increase in gross profit in total and as a percentage of net revenue was directly attributable to the $97.4 million increase in the reportable segment's net revenue, the shift in our product mix, as previously discussed, and the associated operating efficiencies achieved with higher business volumes.

        Gross profit in the Document Services segment increased $2.8 million, or 10.9%, to $28.5 million for fiscal 2005 from $25.7 million for fiscal 2004. Gross profit, as a percentage of net revenue, was 21.1% for fiscal 2005 compared to 19.6% for fiscal 2004. The increase in gross profit as a percentage of net revenue in fiscal 2005 was primarily due to our ability to leverage our labor and equipment resources across a higher net revenue base.

Selling, general and administrative expenses

        Selling, general and administrative expenses increased $33.6 million, or 25.4%, to $166.1 million for fiscal 2005 from $132.5 million for fiscal 2004. Selling, general and administrative expenses as a percentage of net revenue were 23.8% for fiscal 2005 compared to 22.2% for fiscal 2004. The increase in selling, general and administrative expenses in total,

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and as a percentage of net revenue, was driven primarily by: (i) increased stock and long-term incentive compensation expense of $2.3 million as a result of an increase in the fair value of our class B common stock resulting from our improved operating results, (ii) increased investments we made in selling and marketing of $19.8 million, including the addition of approximately 30 sales and marketing employees during fiscal 2005 and (iii) increased performance-based incentive compensation of $5.1 million resulting from our improved operating results. These increases were partially offset by a $1.1 million reduction in bad debt expense in fiscal 2005 compared to fiscal 2004.

Operating income

        Operating income for fiscal 2005 was $69.4 million compared to $51.9 million for fiscal 2004. Most of the $17.5 million increase in operating income resulted from the incremental margin realized on the higher revenues, partially offset by the higher selling, general and administrative expenses, as discussed above. Our Specialty Communication Services segment operating income was $68.3 million for fiscal 2005 compared to $47.8 million in fiscal 2004. This increase was primarily for the same reasons that our total operating income increased. Document Services segment operating income was $1.3 million for fiscal 2005 compared to $5.0 million in fiscal 2004. This decrease was primarily attributable to the decrease in our litigation support revenues, as discussed above. Operating income in our Specialty Communications Services segment was significantly higher than operating income in our Document Services segment as a result of significantly greater revenue and higher operating income margins.

Interest expense

        Interest expense decreased $4.5 million, or 12.9%, to $30.5 million for fiscal 2005, compared to $35.0 million for fiscal 2004. The decrease in interest expense is attributable to lower outstanding principal balances. On July 30, 2004, we entered into a $210.0 million senior credit facility with a syndicate of banks and financial institutions. A significant portion of the proceeds from the 2004 senior credit facility, along with excess cash generated from operations, was used to repay $142.9 million of borrowings outstanding under our previous senior credit facility and $38.2 million of borrowings outstanding under our previous 13.0% senior discount notes with related parties. Increasing London Interbank Offering Rates (LIBOR) during the year offset the benefits of lower outstanding principal balances. The weighted average interest rates on our borrowings were 8.82% and 9.43% in fiscal years 2005 and 2004, respectively.

Other income, net

        Other income, net was $2.2 million for fiscal 2005 compared to $1.9 million for fiscal 2004. In fiscal 2005, we realized $1.0 million of profit from the one-time sale of stock of a private company we received in a fiscal 2002 product line disposition. In addition, our earnings from an equity method investment were $1.7 million in fiscal 2005 compared to $0.5 million in fiscal 2004 and our net gain from foreign currency transactions was $0.4 million in fiscal 2005 compared to a net loss of $0.3 million in fiscal 2004. Finally, in fiscal 2005 we recorded a charge of $1.4 million in connection with our July 2004 senior credit facility refinancing, representing the write off of a portion of our previously capitalized debt financing costs.

Provision for income taxes

        The provision for income taxes was $19.7 million in fiscal 2005, compared to $10.4 million in fiscal 2004. This increase was caused primarily by an increase in pre-tax income to

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$41.1 million in fiscal 2005 from $18.8 million in fiscal 2004. Our effective income tax rate was 48% compared to the federal statutory rate of 35%. The primary causes for the higher effective income tax rate includes the impact of incurring approximately $3.7 million of non-deductible business meeting and entertainment expenses, $4.3 million of foreign net operating losses for which we provided a valuation allowance for the entire amount due to uncertainty about realization, and state income taxes. During fiscal 2005, we utilized the remainder of our domestic net operating losses and included a benefit of $0.7 million from the resolution of the Internal Revenue Service audits of our fiscal years 2001 and 2002 federal income tax returns. We believe that the realization of all net deferred tax assets, excluding deferred tax assets associated with our foreign net operating loss carryforwards and domestic capital loss carryforwards, is more likely than not, and, accordingly, there are no valuation allowances associated with these items.

Net income

        Net income for fiscal 2005 was $21.4 million compared to $8.4 million for fiscal 2004. The increase in net income resulted from increased gross profit and lower interest expense, offset partially by the increased selling, general and administrative expenses and higher provision for income taxes, all of which are discussed above.

Net income available to common shareholders

        Net income available to common shareholders in fiscal 2005 and fiscal 2004 was $21.4 million and $8.2 million, respectively. These amounts included $0.3 million and $0.2 million of accretion of our preferred stock, respectively. The increase in income available to common shareholders was attributable to the same factors as those impacting net income.

Fiscal year ended January 31, 2004 compared to fiscal year ended January 31, 2003

Net revenue

        Overall net revenue increased $14.6 million, or 2.5%, to $596.2 million for fiscal 2004 from $581.6 million for fiscal 2003. The increase in revenue was due primarily to improved general economic conditions in fiscal 2004, and a marked improvement in financial transaction market activity in the fourth quarter of fiscal 2004, which positively impacted our net revenue in both our Specialty Communication Services segment, including in particular our Financial Document Services business unit, and our Document Services segment.

        Net revenue in the Specialty Communication Services segment increased $7.7 million, or 1.7%, to $465.2 million for fiscal 2004 from $457.5 million for fiscal 2003. The majority of our growth in net revenue was from growth of existing product offerings, with only approximately $0.6 million of our growth resulting from our acquisition of Watchdog Print Media which was integrated with our Realty Services business unit late in 2004. Our Financial Document Services business unit experienced net revenue growth of $13.0 million in fiscal 2004 compared to fiscal 2003. This increase resulted from higher net revenue in both the financial compliance and transaction markets. Net revenue in the corporate regulatory compliance market increased $7.2 million in fiscal 2004 and net revenue in the financial transaction market increased $1.8 million, compared to fiscal 2003. Corporate regulatory compliance net revenue increased primarily due to the larger number of overall compliance jobs in the marketplace and our successful selling efforts. The increase in financial transaction net revenue was due primarily to the improvement in the capital markets, most notably in the fourth quarter of fiscal 2004 when we realized a $13.4 million, or 61.4%, increase in financial transaction net revenue compared to the same quarter of fiscal 2003. Net revenues contributed by our

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Strategic Communication Services business unit increased $2.0 million in fiscal 2004 compared to fiscal 2003, including a $2.7 million increase in our brand management services where we continued to experience competitive pricing but added new clients. Flat volumes of business with existing clients in our financial services business, due to the softness and competitiveness in the business, led to only a $0.5 million increase in financial services net revenue in fiscal 2004. In addition to the impacts of the acquisitions discussed above, our Realty Services business unit experienced $2.8 million of net revenue growth in fiscal year 2005 compared to fiscal 2004, primarily due to the strong domestic real estate market and successful marketing programs with our clients in fiscal 2004. Primarily because 2005 was not a statewide election year in California, which occurs every other year, we experienced a $10.1 million decrease in net revenues generated by our Integrated Operations Group.

        We also experienced some changes in the mix of the revenues generated within our Specialty Communications Services segment, as net revenue generated by financial transactions accounted for 51.3% of our total Financial Document Services business unit net revenues for fiscal 2004 compared to 55.1% for fiscal 2003. Language translation and Merrill DataSite revenue increased $4.2 million, or 44.2%, to $13.7 million in fiscal 2004 from $9.5 million for fiscal 2003.

        Net revenue in the Document Services segment increased $6.9 million, or 5.6%, to $131.0 million for fiscal 2004 from $124.1 million for fiscal 2003. This increase resulted largely from $5.0 million of net revenue growth in our document service center business, including the addition of three large document service center clients in fiscal 2004.

Gross profit

        Gross profit increased $0.9 million, or 0.5%, to $184.4 million for fiscal 2004 from $183.5 million for fiscal 2003. This increase was due largely to the higher net revenue in our Specialty Communication Services segment, and in particular our Financial Document Services business unit, which tends to command higher gross profit margins than the Document Services segment. As a percentage of net revenue, gross profit decreased to 30.9% for fiscal 2004 compared to 31.6% for fiscal 2003. Decreased net revenue in our Integrated Operations Group business unit as a result of our decreased election services business in fiscal 2004 and continued competitive pricing pressures in the Strategic Communication Services business unit were the primary causes of the decline in our gross profit as a percentage of net revenue. Additionally, the net revenue mix in fiscal 2004 included a slightly larger portion of lower margin Document Services revenue that also contributed to the decline in gross profit percentage.

        Gross profit in the Specialty Communication Services segment increased $2.4 million, or 1.5%, to $158.8 million for fiscal 2004 from $156.4 million for fiscal 2003. Gross profit, as a percentage of net revenue, was 34.1% for fiscal 2004 compared to 34.2% for fiscal 2003. The fiscal 2004 increase in total gross profit was largely attributable to the increase in gross profit realized in our Financial Document Services business. The gross profit increase in Financial Document Services in the fourth quarter of fiscal 2004 compared to the fourth quarter of fiscal 2003 exceeded the full year gross profit increase for this business. This increase was attributable to a higher level of transactional activity in the financial markets.

        Gross profit in the Document Services segment decreased $1.5 million, or 5.5%, to $25.6 million for fiscal 2004 from $27.1 million for fiscal 2003. Gross profit, as a percentage of net revenue, was 19.5% for fiscal 2004 compared to 21.8% for fiscal 2003. The decrease in gross profit in fiscal 2004 was directly attributable to lower gross profit in both the reprographics and litigation support businesses where fiscal 2003 results included several large litigation projects that did not repeat in fiscal 2004.

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Selling, general and administrative expenses

        Selling, general and administrative expenses decreased $0.8 million, or 0.6%, to $132.5 million for fiscal 2004 from $133.3 million for fiscal 2003. Selling, general and administrative expenses, as a percentage of net revenue, were 22.2% for fiscal 2004 compared to 22.9% for fiscal 2003. The decrease in selling, general and administrative expenses in total, and as a percentage of net revenue, was driven by: (i) a $2.4 million decrease in bad debt expense due primarily to our continued improvements in collections and improved credit review of potential new clients and (ii) a $1.2 million decrease in workers' compensation expense, due primarily to a change in the type of program and favorable claim experience. These decreases more than offset the $3.9 million labor cost increase related to the 5.6% increase in the number of our full-time-equivalent employees at the end of fiscal 2004 compared to the end of fiscal 2003.

Debt restructuring costs

        Debt restructuring costs of $5.3 million in fiscal 2003 consisted largely of financial and legal advisory fees related entirely to the negotiation and completion of our debt restructuring. These negotiations began in early 2001 and were successfully completed in August 2002. There were no comparable charges in fiscal 2004.

Restructuring costs

        Restructuring costs, consisting of severance and related costs, of $0.9 million in fiscal 2003 related to our significant efforts to control costs in recognition of the soft demand in the capital markets and the slow economic recovery. We reduced headcount, due in part to technology improvements and decreased sales volume, by 97 employees across all business units in fiscal 2003. There were no comparable charges in fiscal 2004 or thereafter. All severance amounts were fully paid prior to January 31, 2004.

Operating income

        Operating income for fiscal 2004 was $51.9 million compared to $43.9 million for fiscal 2003. Most of the $8.0 million increase in operating income resulted from $6.2 million of debt restructuring and restructuring costs that we incurred in fiscal 2003 with no comparable charges in fiscal 2004. Additionally, the increased revenues achieved in fiscal 2004 drove an additional $0.9 million in gross profit, while total selling, general and administrative expenses decreased $0.8 million in fiscal 2004 compared to fiscal 2003. Specialty Communication Services segment operating income was $47.8 million in fiscal 2004 compared to operating income of $36.1 million in fiscal 2003. This increase was primarily for the same reasons that our total operating income increased. Document Services segment operating income was $5.0 million in fiscal 2004 compared to operating income of $7.8 million in fiscal 2003. This decrease was primarily attributable to the decrease in gross profit described above. Operating income in our Specialty Communications Services segment was significantly higher than operating income in our Document Services segment as a result of significantly greater revenue and higher operating income margins.

Interest expense

        Interest expense decreased $4.2 million, or 10.7%, to $35.0 million for fiscal 2004 compared to $39.2 million for fiscal 2003. The decrease in interest expense resulted from lower interest rates during fiscal 2004 compared to fiscal 2003 and lower principal amounts outstanding under our term loans due to scheduled principal payments made in fiscal 2004.

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Interest rates were lower in fiscal 2004 because, after our debt restructuring in August 2002, we were no longer required to pay interest at higher default rates, and we were able to resume borrowing using variable rates based on LIBOR, as opposed to the higher alternative base rates which significantly impacted fiscal 2003 interest rates. The weighted average interest rates on our borrowings were 9.43% and 10.48% in fiscal years 2004 and 2003, respectively.

Other income, net

        Other income, net was $1.9 million for fiscal 2004 compared to $0.1 million for fiscal 2003. Our fiscal 2004 other income was primarily related to $1.6 million of interest income earned on our cash and cash equivalents.

Provision for income taxes

        Our provision for income taxes was $10.4 million in fiscal 2004, compared to $3.4 million in fiscal 2003. This increase was caused primarily by an increase in pre-tax income to $18.8 million in fiscal 2004 from $4.8 million in fiscal 2003. In addition, the fiscal 2003 provision for income taxes included a $2.0 million benefit that resulted from the resolution of an Internal Revenue Service audit of our fiscal years 1999 and 2000 federal income tax returns. Our effective income tax rate for fiscal 2004 was 55.3% compared to the federal statutory rate of 35.0%. The primary causes for the higher effective income tax rate include the impact of incurring approximately $3.8 million of non-deductible business meeting and entertainment expenses, $2.6 million of foreign net operating losses for which we provided a valuation allowance for the entire amount due to uncertainty about realization, and state income taxes. During fiscal 2004, we utilized all but $0.2 million of our domestic net operating loss carryforwards.

Net income

        Net income for fiscal 2004 was $8.4 million compared to $1.4 million for fiscal 2003. The increase in net income resulted from small percentage increases in net revenue and gross profit, the absence of debt restructuring and restructuring costs in fiscal 2004, decreased selling, general and administrative expenses and decreased interest expense, offset partially by higher provision for income taxes, all of which are discussed above.

Net income (loss) available to common shareholders

        The net loss available to common shareholders of $3.1 million in fiscal 2003 included $4.4 million of accretion of our preferred stock, whereas our net income available to common shareholders of $8.2 million in fiscal 2004 included only $0.2 million of preferred stock accretion. The decrease in accretion resulted primarily from the fact that our preferred stock accrued dividends at 14.5% until our August 2002 debt and preferred stock restructuring at which time our preferred stock ceased to accrue dividends.

Quarterly Results of Operations

        The following tables set forth certain unaudited quarterly consolidated statement of operations data for the eleven most recent quarters. The information for each of these quarters has been prepared on a basis consistent with the audited consolidated financial statements appearing elsewhere in this prospectus and, in the opinion of management, includes all adjustments necessary for the fair statement of the results of operations for such periods. This data should be read in conjunction with the consolidated financial statements

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and the related notes included elsewhere in this prospectus. The operating results for any quarter are not necessarily indicative of our operating results for any future period.

			Three Months Ended,
			April 30, 2003			July 31, 2003			Oct. 31, 2003			Jan. 31, 2004			April 30, 2004			July 31, 2004			Oct. 31, 2004			Jan. 31, 2005			April 30, 2005			July 31, 2005			Oct. 31, 2005
			(dollars in thousands except per share data)
Statement of Operations Data:
Net revenue			$	153,861		$	153,337		$	144,229		$	144,788		$	189,419		$	179,523		$	162,229		$	166,722		$	206,711		$	209,935		$	186,512
Cost of revenue				104,229			106,697			102,485			98,372			119,475			119,099			107,849			115,987			132,057			135,512			122,915
		Gross profit		49,632			46,640			41,744			46,416			69,944			60,424			54,380			50,735			74,654			74,423			63,597
Selling, general and administrative expenses				33,361			33,159			30,322			35,665			42,881			42,002			40,023			41,161			49,888			50,440			101,778
		Operating income (loss), net		16,271			13,481			11,422			10,751			27,063			18,422			14,357			9,574			24,766			23,983			(38,181	)
Interest expense				8,917			8,746			8,481			8,837			8,488			8,380			6,648			7,027			7,839			8,798			8,986
Other (income) expense, net				(594	)		(927	)		(537	)		179			(1,355	)		1,221			(797	)		(1,260	)		(1,080	)		(435	)		(448	)
	Income (loss) before income taxes			7,948			5,662			3,478			1,735			19,930			8,821			8,506			3,807			18,007			15,620			(46,718	)
Provision (benefit) for income taxes				4,372			2,990			2,029			1,011			8,712			4,688			4,362			1,943			9,312			7,415			(7,710	)
	Income (loss) before minority interest and cumulative effect of change in accounting principle, net of income taxes			3,576			2,672			1,449			724			11,218			4,133			4,144			1,864			8,695			8,205			(39,008	)
Minority interest				8			7			(4	)		7			(13	)		—			—			2			1			—			—
	Income (loss) before cumulative effect of change in accounting principle, net of income tax			3,568			2,665			1,453			717			11,231			4,133			4,144			1,862			8,694			8,205			(39,008	)
Cumulative effect of change in accounting principle, net of income tax				—			—			—			—			—			—			—			—			18,619			—			—
	Net income (loss)		$	3,568		$	2,665		$	1,453		$	717		$	11,231		$	4,133		$	4,144		$	1,862		$	27,313		$	8,205		$	(39,008	)
Accretion of preferred stock				(57	)		(59	)		(62	)		(65	)		(68	)		(71	)		(74	)		(78	)		—			—			—
Net income available to common shareholders			$	3,511		$	2,606		$	1,391		$	652		$	11,163		$	4,062		$	4,070		$	1,784		$	27,313		$	8,205		$	(39,008	)
Net income (loss) available to Class B common shareholders per share:
Basic			$	0.67		$	0.50		$	0.26		$	0.12		$	2.12		$	0.77		$	0.77		$	0.34		$	5.21		$	1.57		$	(7.45	)
Diluted			$	0.60		$	0.44		$	0.24		$	0.11		$	1.85		$	0.67		$	0.68		$	0.29		$	4.53		$	1.36		$	(7.45	)

Liquidity and Capital Resources

        Our principal sources of liquidity are cash balances and cash equivalents, cash flows from operations, borrowings under our senior credit facility and lines of credit. Our principal uses of each are interest and debt service, capital expenditures, acquisitions and working capital needs.

        In conjunction with our acquisition of WordWave, we entered into a new $535.0 million senior credit facility in December 2005 that we used to refinance our then existing senior credit facility, finance the acquisition of WordWave and redeem our senior subordinated notes. The material terms of this new credit facility are described below under the headings "—Financing Sources—New Senior Credit Facility" and "Description of Certain Indebtedness." The material terms of our 2004 senior credit facility are described below under the heading

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"—2004 Senior Credit Facility." Our senior subordinated notes are described below under the heading "—Senior Subordinated Notes."

        We believe that we will continue to require working capital consistent with past experience and that our current levels of liquidity will be sufficient to meet expected interest and debt service payments, capital expenditures, acquisitions and other working capital needs for at least the next 12 months, although there can be no assurance that our liquidity requirements will not change.

Analysis of cash flow

Nine months ended October 31, 2005 compared to nine months ended October 31, 2004

        Cash and cash equivalents decreased $6.3 million to $6.0 million at October 31, 2005 from $12.3 million at January 31, 2005. Our operating activities generated $18.2 million of cash for the nine months ended October 31, 2005 compared to $36.2 million of cash provided by operating activities for the same period one year ago. This change was due to a $31.4 million increase in cash usage for operating assets and liabilities partially offset by a $13.4 million increase in (loss) income before cumulative effect of change in accounting principle net of non-cash items, including stock-based compensation. The $31.4 million increase in cash usage for operating assets and liabilities was driven by a $20.0 million decrease in accounts payable and accrued expenses, an $8.5 million increase in trade receivables and a $3.8 million increase in inventories, for the nine months ended October 31, 2005 when compared to the same period one year ago. The $8.5 million increase in accounts receivable and $3.8 million increase in inventories is primarily a result of increased business activities. At October 31, 2005, accounts payable and accrued expenses increased from the January 31, 2005 balances by $4.2 million and $4.1 million, respectively. The increase in accounts payables was driven by increased business activity. The increase in accrued expenses was driven by an increase in accrued interest expense of $4.4 million, which is primarily due to the timing of the June and December semi-annual senior subordinated notes' interest payment.

        We used $29.5 million of cash in investing activities during the nine months ended October 31, 2005 compared to using $22.5 million for the nine months ended October 31, 2004. Significant uses of cash in investing activities during the nine months ended October 31, 2005 included $14.1 million for the completion of the Brink acquisition, and $15.1 million of property, plant and equipment purchases. Significant uses of cash in investing activities during the nine months ended October 31, 2004 included $10.8 million for the acquisition of CfRE, and $10.5 million of property, plant and equipment purchases. The increase in expenditures for property, plant and equipment for the nine months ended October 31, 2005 versus the same period a year ago was the result of the purchase of new production equipment for our new products, such as Merrill DataSite. We expect capital expenditures to approximate $7.0 million during the remainder of fiscal 2006.

        Financing activities provided $3.9 million of cash for the nine months ended October 31, 2005. Net borrowings under our revolving line of credit provided $9.0 million of cash during the nine months ended October 31, 2005. We made $1.3 million of scheduled principal and capital lease obligations payments during the nine months ended October 31, 2005.

        Financing activities used $33.3 million of cash for the nine months ended October 31, 2004, which was primarily driven by our July 30, 2004 debt refinancing. On July 30, 2004, we entered into a $210.0 million senior credit facility (2004 senior credit facility) with a syndicate of banks and financial institutions. Proceeds from our 2004 senior credit facility, along with approximately $23.8 million of excess cash generated from operations, were used to (i) repay $142.9 million of term loan borrowings outstanding under our previous senior credit facility,

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(ii) repay $38.2 million of borrowings outstanding under our previous senior discount notes with related parties and (iii) pay approximately $3.2 million of closing fees. The remaining use of cash related to financing activities for the nine months ended October 31, 2004 related to pre-refinancing scheduled principal and capital lease obligations payments.

Fiscal year ended January 31, 2005 compared to January 31, 2004

        Cash and cash equivalents decreased $24.1 million to $12.3 million as of January 31, 2005 from $36.4 million at January 31, 2004. Our operating activities provided $58.0 million of cash for fiscal year 2005 compared to $29.9 million for fiscal year 2004. This change was due to a $13.0 million increase in net income and a $19.5 million net improvement in cash flow from operating assets and liabilities, offset by a decrease in non-cash operating expenses of $4.4 million. Operating assets and liabilities changes in fiscal year 2005 included an $8.2 million increase in accrued expenses and other liabilities driven primarily from an increase of performance-based incentive compensation and payroll related liabilities for our increased headcount and a $6.2 million increase in accounts payable resulting from increased fourth quarter activity. The related increases in accrued expenses, other liabilities and accounts payable totaled $1.4 million in fiscal year 2004. In 2005, an increase in trade receivables of $2.1 million and inventories of $2.7 million offset the positive cash impact of increased accounts payable and accrued expenses and other liabilities. The increase in trade receivables and inventories in fiscal year 2005 is a direct result of increased activity, even though our overall days sales outstanding continued to decrease, reflecting our continued focus on collection efforts. For fiscal year 2004, increases in trade accounts receivables and inventories resulted in a use of cash of $7.2 million and $4.0 million, respectively. Non-cash operating expenses in fiscal year 2005 were $29.0 million compared to $33.3 million in fiscal year 2004. Significant non-cash operating expenses for fiscal year 2005 included $15.1 million of depreciation and amortization, $5.4 million of deferred income taxes and $4.6 million of non-cash interest costs. Significant non-cash operating expenses in fiscal year 2004 included $15.1 million of depreciation and amortization, $9.9 million of deferred income taxes and $7.1 million of non-cash interest costs. The decrease in non-cash interest costs in fiscal year 2005 versus fiscal year 2004 is due to the payment of our senior discount notes as part of our July 2004 refinancing.

        We used $45.8 million in investing activities for fiscal year 2005 compared to $15.3 million for fiscal year 2004. The major reason for the increase in cash used in investing activities was the completion of the acquisitions previously discussed. Cash used for the purchase of property, plant and equipment was $16.0 million and $13.9 million for fiscal years 2005 and 2004, respectively. The increase in expenditures for property, plant and equipment was due primarily to the growth of the volume of our business.

        We used $35.1 million in financing activities for fiscal year 2005 compared to $13.6 million for fiscal year 2004. During fiscal year 2005, we received proceeds of $160.0 million from our 2004 senior credit facility and used those proceeds and excess cash to repay our previous senior credit facility and senior discount notes and to pay closing fees and legal costs. The remaining use of cash in financing activities for fiscal year 2005 primarily resulted from $10.0 million of scheduled principal and capital lease payments. Scheduled principal and capital lease payments amounted to $13.6 million for fiscal year 2004. The decrease in principal and capital lease payments experienced during fiscal year 2005 versus fiscal year 2004 was due primarily to lower scheduled quarterly principal payments under the 2004 senior credit facility.

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Fiscal year ended January 31, 2004 compared to January 31, 2003

        Cash and cash equivalents decreased $0.1 million to $36.4 million at January 31, 2004 from $36.5 million at January 31, 2003. Our operating activities provided $29.9 million for fiscal year 2004 compared to $18.2 million for fiscal year 2003. Significant drivers causing the increase in cash generated from operating activities during fiscal year 2004 were an increase in net income of approximately $7.0 million, increased non-cash operating expenses of $2.9 million and improved cash flow from operating assets and liabilities of $3.0 million. The non-cash operating expense increase was driven by a $3.5 million increase in our deferred tax provision and a $1.4 million increase in non-cash interest charges, offset by a $2.4 million decrease in the provision for losses on trade receivables, due to our continued improvements in collections and improved credit review of potential new customers. Increased accounts receivable and inventory balances at January 31, 2004 used $11.2 million of cash for fiscal year 2004, whereas for fiscal year 2003, net decreases in accounts receivable and inventory balances generated cash of $7.4 million. The increase in cash usages to fund accounts receivable and inventory balances for fiscal year 2004 versus fiscal year 2003 was attributable to more robust economic conditions. A decrease in accrued expenses and other liabilities of $19.0 million for fiscal year 2003 significantly reduced cash generated from operating activities for the year. The decrease in accrued expenses from January 31, 2002 to January 31, 2003 was primarily a result of decreased accrued interest payable to our senior subordinated noteholders. As of January 31, 2002, we had accrued over one year's worth of interest due under the senior subordinated noteholders because of the default of our old senior credit facility. As a result of the debt restructuring completed in August 2002, all interest due the senior subordinated noteholders was either paid in cash or refinanced as principal by the end of December 2002.

        We used $15.3 million and $13.1 million for investing activities for fiscal years 2004 and 2003, respectively. Expenditures for property, plant and equipment accounted for the majority of our investing activities during these years.

        We used $13.6 million and $14.1 million in financing activities for fiscal years 2004 and 2003, respectively. Scheduled principal and capital lease payments represented the entire cash usage for financing activities for fiscal year 2004. Cash used in financing activities for fiscal year 2003 included $20.0 million in accelerated principal payments associated with the successful August 2002 restructuring of our old senior credit facility, $10.4 million of scheduled principal and capital lease payments and $2.2 million of debt issuance costs, also associated with the August 2002 debt restructuring. As part of the August 2002 debt restructuring, we received proceeds of $18.5 million in the form of senior discount notes from our major shareholder and from our chief executive officer.

Financing Sources

        New senior credit facility.    In conjunction with acquisition of WordWave, on December 22, 2005, we closed on a $535.0 million new senior credit facility with a syndicate of banks and financial institutions. Proceeds from the new senior credit facility were used to: (i) amend, restate and combine approximately $158.0 million of outstanding borrowings and letters of credit under our two 2004 credit agreements, (ii) redeem the face value of our senior subordinated notes plus a 4.0% call premium plus accrued interest totaling $159.7 million, (iii) purchase all of the outstanding common stock of WordWave for $157.3 million and (iv) pay $6.8 million in fees and other expenses. Our new senior credit facility consists of a $475.0 million term loan and a $60.0 million revolving line of credit. At January 31, 2006, Credit Suisse, an affiliate of our major shareholder, was one of the banks in the syndicate holding approximately 16.7% of the revolving loan commitment amount. The new senior

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credit facility is secured by substantially all of our assets and is subject to mandatory prepayments if certain events occur. Also, the new senior credit facility allows for a potential, although, uncommitted, increase of $50.0 million in term loans subject to certain terms. The new senior credit facility contains a maximum leverage ratio and a minimum interest coverage ratio and various negative covenants, such as limitations on amounts of certain transactions, incurrence of additional indebtedness or payment of dividends and other distributions.

        The $475.0 million term loan matures on December 22, 2012, however the term loan will mature on the earlier date of May 15, 2011 unless we have (i) extended the mandatory redemption date of our preferred stock to at least June 22, 2013, (ii) refinanced the preferred stock with the proceeds of common equity or new preferred stock with no mandatory redemption date prior to June 22, 2013 or (iii) redeemed the preferred stock pursuant to a transaction permitted by the credit agreement. Borrowings under the term loan bear interest, at our option, at the reserve adjusted LIBOR plus a maximum of 2.25% or at the alternate base rate plus a maximum of 1.00%. The interest rate spreads above LIBOR or the alternate base rate may decrease if the leverage ratio, as defined in the credit agreement, is less than 2.75:1. The term loan requires scheduled quarterly principal payment of approximately $1.2 million through our fiscal quarter ending January 31, 2012, with the remaining balance due on December 22, 2012. At January 31, 2006, there were $475.0 million of borrowings outstanding under the term loan.

        The $60.0 million revolving line of credit matures on December 22, 2010. Borrowings under the revolving line of credit bear interest, at our option, at the reserve adjusted LIBOR plus a maximum of 2.50% or at the alternate base rate plus a maximum of 1.25%. The interest rate spread above LIBOR or the alternate base rate may decrease if the leverage ratio, as defined in the agreement, is less than 3.25:1. We are also required to pay annual commitment fees at a per annum rate of 0.50% on any undrawn portions of the revolving line of credit. At January 31, 2006, there were no borrowings outstanding under the revolving line of credit. The revolving line of credit also provides for a $15.0 million letter of credit sub limit. At January 31, 2006, we had $5.8 million of letters of credit outstanding.

        Assuming no unscheduled prepayments of the term loan, we are required to make principal payments under the term loan in the following amounts:

Fiscal Year	Amount
	(amounts in thousands)
2007	$	4,750
2008		4,750
2009		4,750
2010		4,750
2011		4,750
2012		451,250

        We expect to comply with all of the debt covenants in our new senior credit facility for the foreseeable future, although there can be no assurance that we will actually be able to do so. EBITDA, or earnings before interest, income taxes, depreciation and amortization, as defined in the new senior credit facility, for the preceding 12-month period, is a critical financial measurement as it is a major factor in computing the financial covenant ratios. Failure to meet any of our new financial covenants could result in the lenders under our new senior credit facility declaring our senior credit facility indebtedness immediately due and payable. An alternative consequence could be the negotiation of a waiver and/or amendment of the covenants, which is reasonably likely to require us to pay a significant amount of fees

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to the lenders and legal counsel and might further limit our ability to make cash disbursements, such as for capital expenditures. However, there can be no assurance that our lenders would agree to such a waiver or amendment of our covenants and our loans may be made immediately due and payable.

        Please see "Description of Certain Indebtedness" for further information regarding our new credit facility.

        2004 senior credit facility.    Our 2004 senior credit facility consisted of a $115.0 million term B loan, a $45.0 million senior discount term loan and a $50.0 million revolving line of credit. At October 31, 2005, an affiliate of Credit Suisse, an affiliate of our major shareholder, was one of the banks in the syndicate holding 20.0% of the revolving line of credit commitment. Our 2004 senior credit facility was collateralized by substantially all of our assets and was subject to mandatory prepayments if certain events occurred. Also, the 2004 senior credit facility allowed for a potential, although uncommitted and unused, increase of $50.0 million in term loans subject to certain terms. The 2004 senior credit facility contained maximum leverage ratio and minimum interest coverage ratio covenants and various negative covenants, such as limitations on amounts of certain transactions incurrence of additional indebtedness, payment of dividends and other distributions.

        The $115.0 million term B loan and $45.0 million senior discount term loan (collectively, the 2004 term loans) were scheduled to mature on July 30, 2009, provided that if the senior subordinated notes were still outstanding on February 9, 2009, the 2004 term loans would have matured on that date. Borrowings under the 2004 term loans bore interest, at our option, at the reserve adjusted LIBOR plus 2.50% or at the alternate base rate plus 1.25%. The 2004 term loans required scheduled quarterly principal payments of approximately $0.4 million through our fiscal quarter ending July 31, 2008, at which time the quarterly principal payment increased to approximately $38.4 million through maturity. The $50.0 million revolving line of credit was scheduled to mature on July 30, 2008. Subsequent to January 31, 2005, borrowings under the revolving line of credit bore interest, at our option, at the reserve adjusted LIBOR plus a maximum of 2.75% or at the alternate base rate plus a maximum of 1.50%. At October 31, 2005, borrowings under our previous revolving line of credit bore interest, at our option, at the reserve adjusted LIBOR plus 2.50% or at the alternate base rate plus 1.25%. We were also required to pay annual commitment fees at a per annum rate of 0.50% of any undrawn portions of the revolving line of credit. At October 31, 2005, there were $9.0 million of outstanding borrowings under the revolving line of credit. The revolving line of credit also provided for a $15.0 million letter of credit sub limit. At October 31, 2005, we had $5.7 million of letters of credit outstanding. The reserve adjusted LIBOR at October 31, 2005, was 4.08% and the alternate base rate was 6.75%. On December 22, 2005, approximately $158.0 million of outstanding borrowings and letters of credit under the 2004 senior credit facility were refinanced with the new senior credit facility.

        Senior subordinated notes.    On November 23, 1999, we sold 140,000 units consisting of 12.0% senior subordinated notes due 2009 and warrants to purchase 172,182 shares of our common stock for $140.0 million. In March 2000, we repurchased $5.0 million of principal amount of these notes and related warrants to purchase 6,149 shares of our common stock for $4.7 million in cash. Interest on the notes was payable semi-annually in cash. As part of our August 2002 debt restructuring, all of the old notes were exchanged for:

•

an aggregate of $25.0 million in principal amount of 12.0% class A senior subordinated notes due 2009,



•

an aggregate of $120.5 million in principal amount of 12.0% class B senior subordinated notes due 2009, and

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•

an aggregate of 245,500 series A warrants to purchase our common stock at a purchase price of $0.01 per share.

        The class A senior subordinated notes and class B senior subordinated notes were scheduled to mature on May 1, 2009 and were guaranteed by each of our existing wholly owned domestic subsidiaries. In accordance with the call option in the series A warrant agreement, we repurchased all 245,500 series A warrants for an aggregate repurchase price of approximately $3.8 million in August 2005. In December 2005, we redeemed all of our outstanding class A and class B senior subordinated notes at face value plus a 4.0% call premium, for an aggregate redemption price of approximately $151.4 million, plus accrued interest of approximately $8.3 million.

        Preferred stock.    On November 23, 1999, we issued 500,000 shares of 14.5% senior preferred stock due 2011 to affiliates of our major shareholder and to institutional investors. Together with the issuance of this preferred stock, we issued warrants to purchase 344,263 shares of our common stock at a purchase price of $0.01 per share. As part of our August 2002 debt restructuring, this preferred stock was amended as follows:

•

all future dividends were eliminated,



•

the per share liquidation preference was changed to $117.72,



•

the liquidation preference ceased to accrete after August 9, 2002, when the aggregate liquidation value was $58.9 million, and



•

the holders of the preferred stock were granted the right to receive approximately 189,000 warrants if the minimum equity value, as defined in the agreement, exceeds $15.00 per share of our common stock and an additional 189,000 warrants if the minimum equity value exceeds $22.00 per share of our common stock.

        In accordance with SFAS No. 150, effective February 1, 2005, we began recording our preferred stock as a liability at its fair value and recorded a gain of $18.6 million, net of income taxes, as a cumulative effect of change in accounting principle. We will accrete the value of our preferred stock to its liquidation value of $58.9 million through November 15, 2011 when we are required to redeem the preferred shares or such earlier date that we elect to redeem the preferred shares. We will accrete the value of the preferred stock through periodic charges to interest expense which will approximate $0.8 million per quarter in fiscal 2007.

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Contractual Obligations and Commercial Commitments

        Our contractual obligations and commercial commitments as of January 31, 2005 are summarized below:

	Payments Due by Period
Contractual Obligations	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
	(amounts in thousands)
Long-term debt obligations (1)	$	363,614	$	1,570	$	3,140	$	300,044	$	58,860
Debt interest obligations (2)		107,648		26,178		52,097		29,373		—
Capital lease obligations (3)		3,005		1,308		1,616		81		—
Operating lease obligations		74,518		21,944		29,252		14,559		8,763
Purchase obligations (4)		2,014		1,048		700		266		—
Total contractual cash obligations (5)	$	550,799	$	52,048	$	86,805	$	344,323	$	67,623

(1)

Long-term debt obligations consist of the term loans under the 2004 senior credit facility ($159.2 million), 12.0% senior subordinated notes due 2009 ($145.5 million), and mandatorily redeemable preferred stock due 2011 ($58.9 million), all as previously described.

(2)

Interest expense related to our long-term debt obligations was estimated using an interest rate of approximately 5.5% on the term loans and 12.0% on the senior subordinated notes. Because certain debt obligations have variable interest rates, actual payments could differ.

(3)

Represents the future payments that we are required to make for an office and production facility and certain equipment under leases that are accounted for as capital leases.

(4)

Represents contractual obligations committed to under certain contracts with our customers and vendors. In accordance with accounting principles generally accepted in the Unites States of America, these obligations are not reflected in our Consolidated Balance Sheet.

(5)

There are other long-term liabilities on our Consolidated Balance Sheet as of January 31, 2005, including deferred compensation and related items, totaling approximately $10.5 million. The timing of payment of these liabilities is either contingent on some other event or otherwise undeterminable as of January 31, 2005 and, as such, they have been excluded from the above summary.

Off-Balance Sheet Arrangements

        We have standby letters of credit committed to in the ordinary course of business. As of October 31, 2005, we had standby letters of credit totaling $5.7 million, which expire on various dates through fiscal 2007. We also have various lease lines of credit with third-party lease financing companies, which totaled approximately $6.0 million as of October 31, 2005 and which expire at various dates through July 2006. In addition, we have certain commitments under selected client and vendor contracts, none of which we believe are material to our financial condition, results of operations or cash flows.

        We do not use special purpose entities or any other form of off-balance sheet financing other than operating leases for certain equipment and historically had not used derivative instruments. Following our December 2005 senior debt refinancing, which had the effect of exposing all of our debt to interest rate risk, we entered into a five-year fixed interest rate swap arrangement on February 7, 2006, as described under the heading "—Quantitative and Qualitative Disclosures about Market Risk." We are involved in certain joint venture arrangements that are intended to complement our core services and markets. We do not believe that any of our joint venture arrangements has had or is reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. We are not the primary beneficiary of any of our joint venture arrangements or any

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other variable interest entity, as defined in Financial Accounting Standards Board ("FASB") Interpretation No. 46R, "Consolidation of Variable Interest Entities."

Critical Accounting Policies and Estimates

        The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect amounts reported therein. Our estimates, assumptions and judgments, including those related to bad debts and sales credits, inventories, goodwill and intangibles, sales incentives, income taxes and legal proceedings, revenue recognition, allowance for doubtful accounts, inventory reserves, accounting for goodwill and certain intangibles, incentive plan accruals, deferred taxes and stock-based compensation, are updated as appropriate, which, in most cases, is at least quarterly. We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies. While we believe our estimates, assumptions and judgments we use in preparing our consolidated financial statements are appropriate, these estimates, assumptions and judgments are subject to a number of factors and uncertainties regarding their outcome; and therefore, actual results may materially differ from these estimates.

        Our significant accounting policies are described in Note 1 to our consolidated financial statements. Some of those significant accounting policies require us to make difficult, subjective or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (1) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made and (2) different estimates that reasonably could have been used, or changes in the estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of our financial condition, results of operations, or cash flows. We believe the following are our critical accounting policies and estimates:

Revenue recognition

        We recognize revenue in accordance with SEC Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition," which requires that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable, and collectibility is reasonably assured. Generally, we recognize revenues related to financial and other printing arrangements when the services are completed or the products are shipped to our clients. Where we have revenue arrangements with multiple deliverables, we utilize Emerging Issues Task Force Issue No. 00-21 "Accounting for Revenue Arrangements with Multiple Deliverables," and recognize each element as it is earned. For our mutual fund clients, for example, we recognize revenue from base print runs we create for our clients and record separately the fulfillment revenues we realize as we store and/or distribute the products. Where we have invoiced clients or collected cash from clients for products or services to be completed in the future, these revenues are deferred and recognized as revenue over the period as earned or when completed. In circumstances where we provide hosting services to clients, revenue is recognized ratably over the term of the arrangement. We record a sales allowance based on estimates derived from historical trends. The allowance is made up of specific reserves, as deemed necessary, on client account balances and a reserve established using our historical sales adjustment allowance experience.

Allowance for doubtful accounts

        We conduct business and extend credit based on a limited review of our clients' financial conditions generally without requiring collateral. We monitor exposure to credit losses and

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maintain allowances for doubtful accounts for anticipated losses resulting from the inability to collect all amounts due to us from our clients. We estimate our allowance needs based on a detailed review of the specific business unit accounts receivable agings, past experience in collecting these receivables, information about the specific clients and their ability to pay, any existing product or service issues with the client and current economic conditions. Our bad debt allowance is made up of specific reserves, as deemed necessary, on specific client accounts and an additional general reserve based on a percentage of the aging categories of the receivables, which we establish based on our historical collection and allowance experience. A change in the financial condition of specific clients or in overall trends experienced or other reasons may result in future adjustments of our allowance for doubtful accounts. In the event we determine that an adjustment is necessary, we record a credit or charge to selling, general and administrative expenses in the period that we make such a determination. As of October 31, 2005, we had $4.7 million reserved against our trade receivables as an allowance for doubtful accounts.

Inventory reserves

        We have inventories that are significantly comprised of capitalized labor and overhead for work to be completed and invoiced to clients. Under certain circumstances, we are unable to invoice and collect for projects, such as when a client is not successful in completing a related, underlying financial transaction. Additionally, we maintain paper inventories as well as semi-finished or finished products in our Strategic Communication Services fulfillment business. We closely monitor inventories and write down carrying values if circumstances are determined to warrant such a write down. Generally, inventories over one-year old are written down to a zero carrying value. We also write down our inventories as we become aware of any situation where the carrying value exceeds the estimated realizable value based on assumptions about future demands and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write downs may be required.

Accounting for goodwill and certain intangibles

        We are required to make judgments and estimates in connection with the valuation of acquired assets and liabilities for initial purchase price allocations and ongoing evaluations for impairment of goodwill and intangible assets. We continue to actively pursue the acquisition of businesses as part of our overall growth and diversification strategy.

        In accordance with SFAS No. 141 "Business Combinations," we allocate the cost of acquired companies to the identifiable tangible and intangible assets and liabilities acquired, with the remaining purchase consideration, if any, classified as goodwill. Our future operating results will be impacted by amortization of identifiable intangible assets and potential impairment charges related to goodwill. Accordingly, the allocation of the purchase price to intangible assets and goodwill has a significant impact on our future operating results. The allocation of the purchase price of acquired companies to intangible assets and goodwill requires our management to make significant estimates and assumptions, including estimates of future cash flows expected to be generated by the acquired assets and the appropriate discount rate to value these cash flows. Should different conditions prevail, material write downs of net intangible assets and/or goodwill could occur. We acquired certain identifiable intangible assets in connection with our recent acquisitions, including client relationships, trademarks and tradenames and covenants not to compete. The valuation of these identifiable intangible assets is subjective and requires significant judgment. While we believe that the valuation methods we selected and the assumptions we used were appropriate for each asset

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analyzed, different amounts would have been reported had we used different methods or assumptions.

        We assess the impairment of goodwill and other identifiable intangible assets whenever events or changes in circumstances indicate the carrying value may not be recoverable. Factors which trigger an impairment review include, but are not limited to: i) significant negative industry or economic trends, ii) current, historical or projected losses that indicate continuing losses and iii) a significant decline in our estimated company value. SFAS No. 142, "Goodwill and Other Intangible Assets" also requires us to assess goodwill for impairment at least annually using a two-step process beginning with an estimation of the fair value of each of our five reporting units. The most recent annual calculations performed as of January 31, 2005 indicated no impairment of our goodwill balances. We estimate reporting unit fair value amounts by discounting estimated future operating cash flows. The first step screens for impairment and the second step, if required, then measures the amount of any goodwill impairment by estimating the fair value of all identifiable assets and liabilities of the reporting unit in a manner similar to a purchase price allocation for an acquired business. Accordingly, the process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment in the analysis. A decline in expected future cash flows, the estimated terminal values or an increase in the weighted average cost of capital could cause reporting unit valuations to change significantly and could result in a non-cash goodwill impairment charge to our net earnings. The carrying value of our goodwill at October 31, 2005 was $86.1 million.

Incentive plan accruals

        We record sales incentives, bonuses and management incentive expenses based on the best information available at the close of the financial reporting period, including estimates of the related liabilities. Some of these accruals are based on actual activity, while others are further refined, as possible, by considering the full-year estimate of related revenues, margins or profits. These accruals are then adjusted based on new data that becomes available during subsequent reporting periods. Total sales incentives, bonuses and management incentives accrued at October 31, 2005 were $17.7 million.

Deferred tax assets

        We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized in each applicable tax jurisdiction. We consider future taxable income estimates, ongoing prudent and feasible tax planning strategies and related tax exposures in assessing the need for valuation allowances. In the event we were to determine that we would be able to realize an amount higher or lower than the net amount of deferred tax asset recorded, a related adjustment to the valuation allowance and to the tax provision (benefit) would be made in the period such determination was made. At October 31, 2005, we maintained a $7.4 million valuation allowance primarily related to uncertainty regarding realization of certain international net operating loss carryforwards.

Stock-based compensation value of common stock

        The valuation of our common stock is a critical factor in determining our stock-based compensation expense. Because there has been no public market for our common stock, we have determined the fair value of our common stock by considering a number of factors, including our operating and financial performance and discounted future cash flows from projected operating plans. We have options and other stock-based plans that are considered variable and as such, the amount of stock-based compensation expense to be recorded in

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fiscal 2006 and thereafter may continue to vary significantly, depending on the then-estimated value of our common stock. We recorded total stock-based compensation expense of $53.1 million during the nine months ended October 31, 2005.

Redeemable preferred stock

        Effective February 1, 2005, we changed the accounting for our redeemable preferred stock as prescribed by Statement of Financial Accounting Standard ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Prior to adopting SFAS No. 150, we classified our redeemable preferred stock as a "mezzanine" instrument. Upon the adoption of SFAS No. 150, our redeemable preferred stock is recorded as a liability on the accompanying consolidated balance sheets. We recorded the cumulative effect of this change in accounting principle prospectively by initially measuring, on the date of adoption, our redeemable preferred stock at fair value using a discounted cash flow approach. The cumulative effect of change in accounting principle, net of income tax, of $18.6 million, as reflected on the accompanying consolidated statements of operations for the nine month periods ended October 31, 2005, represents the total gain upon initial adoption of $32.3 million less income taxes of $13.7 million. The $13.7 million of income tax was recorded as a deferred income tax liability and is included in other liabilities on the accompanying consolidated balance sheets as of October 31, 2005. On February 1, 2005, we began accreting the value of our redeemable preferred stock to its liquidation value through periodic charges to interest expense. This accretion will be recorded until the carrying value of the redeemable preferred stock reaches its liquidation value in November 2011 or upon a change in control, as defined under the heading "Description of Capital Stock—Redeemable Preferred Stock," at which time we will be required to redeem all outstanding preferred shares. For the nine months ended October 31, 2005, we recorded interest expense associated with the accretion of approximately $2.5 million.

Recent Accounting Pronouncements

        In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment," which revises SFAS No. 123, and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Among other items, SFAS No. 123R eliminates the use of the intrinsic value method of accounting, and requires companies to recognize compensation expense for share-based payment awards with employees, based on the grant date fair value of those awards, in the financial statements. The effective date is the first reporting period beginning after December 15, 2005, which would be our fiscal year beginning February 1, 2006. We have not yet determined which of the adoption methods prescribed by SFAS No. 123R we will elect, nor have we determined the impact of adopting this statement. However, we do expect that adoption of this standard will reduce the volatility of our stock-based compensation expense, because certain instruments accounted for as "variable" under APB No. 25 will not be considered variable under the new standard. In March 2005, the SEC issued SAB No. 107, "Topic 14: Share-Based Payment," which addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides views regarding the valuations of shared-based payment arrangements for public companies.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs—an amendment of ARB No. 43, Chapter 4." This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory be based on normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, which would be

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our fiscal year beginning February 1, 2006. We have not yet determined the impact of adopting this statement.

        In September 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections—a replacement of APB No. 20 and SFAS No. 3." SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective applicable is impracticable. The correction of an error in previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by SFAS 154. SFAS 154 is required to be adopted in fiscal years beginning after December 15, 2005. Accordingly, we will adopt SFAS 154 in our fiscal year beginning February 1, 2006. Adoption of SFAS 154 is not expected to have a material effect on our financial position, results of operations or cash flows.

Quantitative and Qualitative Disclosures about Market Risk

        Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in interest rates and foreign exchange rates. We do not hold or issue financial instruments for trading purposes.

Interest Rate Risk

        We are exposed to interest rate risk, which can be measured as the potential negative impact on earnings, cash flows or fair values resulting from a hypothetical change in interest rates over time. Interest paid on our debt and interest earned on our cash equivalents and short-term investments are sensitive to changes in interest rates. We have historically managed our interest rate risk by maintaining a combination of fixed and variable rate debt and most recently using interest rate swap arrangements as described below. Borrowings under our senior credit facility accrue interest at variable rates. We regularly fix the interest rate, for periods not exceeding six months, for a significant portion of amounts borrowed under the term loans by exercising the LIBOR pricing options available under the senior credit facility. Based on outstanding borrowings under the senior credit facility at October 31, 2005, a 0.125% change in interest rates would impact interest expense by approximately $0.2 million annually. As of October 31, 2005, we had $158.0 million in outstanding term loan borrowings under our 2004 credit facility and $9.0 million in outstanding borrowings under our revolving line of credit. We regularly invest excess operating cash in short-term certificates of deposits, commercial paper, or overnight repurchase agreements that are subject to changes in short-term interest rates. We believe that the market risk arising from fixing the interest rate under the LIBOR pricing options and holding cash in short-term certificate of deposits, commercial paper, or overnight repurchase agreements is minimal. On February 7, 2006, we entered into a five-year fixed interest rate swap arrangement that converted $200.0 million of borrowings under our new credit facility from floating rate debt into fixed-rate debt at 5.03% plus the applicable margins, as defined in the new senior credit facility.

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Foreign Currency Exchange Risk

        We derived 7.6% and 6.5% of our total net revenues for the nine months ended October 31, 2005 and 2004, respectively, from various foreign sources. To date, we have not experienced significant gains or losses as a result of fluctuations in the exchange rates of the related foreign currencies. However, if we grow and expand our global presence, this may change. Our international operations are impacted by foreign currency fluctuations since our labor costs in those operations are predominantly denominated in foreign currencies. This exposure is mitigated by the fact that a large portion of the related revenues are also denominated in those same foreign currencies. To date, we have not used foreign currency hedging instruments to manage our exposure to foreign exchange fluctuations. The primary foreign currencies we do business in are the euro, pound sterling and Canadian dollar.

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BUSINESS

Company Overview

        We are a leading provider of outsourcing solutions for various complex business communication and information management needs. Our services include document and data management, litigation support, branded communication programs, fulfillment, imaging and printing. Our solutions enable our clients to create, access, control, analyze and communicate critical information for key business initiatives, such as targeted customer marketing, complex regulatory compliance and business decision making. We integrate proprietary technologies, industry-specific processes and outsourced services into flexible, easy-to-use, comprehensive service offerings.

        We target specific markets that have complex information, document and communications requirements, including the legal, financial services, insurance and real estate industries. Our clients in these markets typically value accuracy, confidentiality, reliability and responsiveness. Over time, we believe we have developed a comprehensive understanding of our clients' markets, enabling us to align our technology, processes and service approach with our clients' business objectives. In the process, we have built strong, long-standing relationships with clients who rely on us to manage and communicate their important information. We meet our clients' service requirements on a global basis through over 70 domestic and 15 international offices, as well as through affiliate relationships.

        We conduct our business in four segments:

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Legal Solutions provides both on-demand and on-site litigation support, information management tools and electronic and print document management services for law firms, corporate legal departments and professional services firms. Examples of our services include creating searchable litigation document repositories, managing electronic data discovery and providing real-time court reporting and deposition videography.



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Marketing and Communication Solutions supplies brand identity management, customer communication and packaged direct marketing programs for sales professionals in industries such as real estate, mutual funds and insurance. Examples of our services include customizable corporate identity materials, direct mail marketing pieces and promotional programs supported by web-based technologies.



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Transaction and Compliance Services offers document composition, filing, printing, distribution and electronic access services to support our clients' transaction and regulatory compliance activities such as securities offerings, reorganizations, mergers and acquisitions, Securities and Exchange Commission filings and other regulatory filings. Examples of our services include EDGAR filings, prospectus printing and creating and hosting online data rooms for corporate transactions.



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Other Communication Services provides language translation, captioning, election services and specialty printing that complement or use the same underlying competencies found in our other segments. Examples of our services include translating product manuals into multiple languages and providing closed captioning for television programming.

        Throughout our 37-year history, we believe we have fostered a culture of technological and process innovation and client-focused and reliable customer service. Our technology team consists of 280 employees focused on improving, maintaining and expanding the scope of our service offering. We also employ 360 sales representatives and 530 customer service professionals to deliver consistent and reliable service and maintain our strong client

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relationships. Over the past four years, we have grown our sales force and customer service personnel by 27% to increase our market penetration and enhance our responsiveness. In addition, during the past ten years we have acquired and integrated 14 specialized service and technology companies that have broadened our service offering and augmented our industry expertise. We believe our ability to identify, develop or acquire, and integrate services and technologies is a significant competitive differentiator, and enhances our growth opportunities.

        Our consolidated net revenues have grown at a compound annual growth rate of 9.5% from fiscal 2003 to fiscal 2005. In January 2006, we acquired WordWave, Inc. On a pro forma basis, including WordWave's results, we generated consolidated pro forma net revenue of $697.6 million for the nine months ended October 31, 2005.

Industry Overview

        Global business process outsourcing is an increasingly complex, broad and evolving area encompassing a wide range of outsourcing functions, including customer service, document management, marketing, logistics, procurement, human resources and product engineering. In an August 2005 report, International Data Corporation estimated worldwide spending on business process outsourcing services totaled $382.5 billion in 2004. This report estimated that the total market for these services grew at rate of 10.8% in 2004 and will continue to grow over the next five years at a 10.9% compound annual growth rate, with worldwide spending increasing to $641.2 billion by 2009.

        We currently focus on the complex information and document management and communication solutions areas of the global business process outsourcing market. The boundaries of this market are constantly changing, presenting new opportunities and challenges for service providers. The development and proliferation of the Internet combined with new software and digital print technologies have led to a transition from a historically fragmented industry, with separate direct mail, printing and fulfillment providers, toward an industry where companies provide a broad range of integrated document and information management services. In addition, technological advances have led to the creation of new products and services, such as online data rooms and digital on-demand customized printing, and have contributed to the convergence of information management and document service providers. We expect the increasing technological complexity of document and information management will drive continued growth opportunities for business process outsourcing solution providers.

        In addition to the broad outsourcing trends described above, each of our four business segments has its own unique industry dynamics:

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Legal Solutions.  According to a study we commissioned, the market for litigation services in the U.S. is approximately $50 billion, based on 2004 revenues, of which outsourced litigation and legal document management services represent $8 billion. These studies show U.S. case volume has grown substantially over the past 25 years, growing from approximately 2.6 million cases in 1976 to 6.3 million cases in 2004. Additionally, trial complexity and average trial length have grown in recent years with larger cases typically involving more parties and in certain instances international considerations. This increase in complexity has resulted in more activity throughout the litigation cycle, including an increase in average depositions per case and pages per deposition. We believe the ability to analyze large amounts of information effectively and integrate multimedia evidence into trial strategy provides attorneys with a distinct advantage. Based on the study we commissioned, in the U.S., large law firms (defined as firms with over 150 attorneys nationwide) represent approximately 30% of civil case volume, but over half of legal services revenue. We believe these industry trends,

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coupled with a fragmented competitive landscape, make the legal market an outstanding opportunity for a sophisticated service provider.

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Marketing and Communication Solutions.  The global marketing and communication market includes a number of specialized services for a variety of industries. Within this broad area, we target the financial services, real estate, corporate and professional services industries. Our experience is that demand in these industries is driven primarily by common customer needs, including protecting and growing brands, managing geographically dispersed sales or service organizations, tailoring messages to target customers and meeting regulatory and corporate requirements for communications. In addition, we find that demand is driven by industry-specific factors such as the growth in mutual fund assets in the financial services industry and the use of the Internet for property listings in the real estate industry. We believe each of these trends has led to an increase in demand for packaged direct marketing programs.



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Transaction and Compliance Services.  We estimate the market for transaction-related and regulatory compliance services is in excess of $1.0 billion annually. The market for transaction and compliance services is primarily driven by regulatory disclosure requirements established by governing regulatory agencies as well as by the level of securities offerings, corporate restructurings and merger and acquisition activity. According to Thomson Financial Securities Data Company, LLC, the number of equity securities offerings in the U.S. increased 25% from 2001 to 2005. We have experienced increases in the number and length of compliance-related filings. In addition, Securities and Exchange Commission rulemaking has increased the disclosure requirements for filing companies. Digital disclosure technologies are becoming an increasingly important part of the transaction and compliance processes. For example, in 2005 the number of pages processed through our Merrill DataSite online data room was over 18.2 million pages. Comparing the fourth quarter of 2004 to the fourth quarter of 2005, we have seen a 176% increase in the number of pages processed. Our average number of pages processed per day in the fourth quarter of 2004 was 21,125 and in the fourth quarter of 2005 was 58,404. The number of active users has increased from 15,538 to 87,506 from February 1, 2005 to February 1, 2006.



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Other Communication Services.  Within this segment, we compete in the translation, captioning, election services and specialty printing industries. According to a third party report, the current worldwide translation and localization market was $8.8 billion, in 2005, with no single provider capturing more than 5% of the total. We focus on product documentation translations for clients primarily in the life sciences, information technology, automobile and manufacturing industries. We also provide language translations for clients in the legal and financial services industries. According to a study we commissioned, the domestic market for captioning services (including sub-titling) is just under $200 million. We believe the greatest growth in the captioning business will be in international markets. We also currently provide election services in California, where election laws require the distribution of voter guides to explain propositions and other information to voters during election periods. Finally, within the broad commercial print market, we provide services in the niche, high-quality, four-to-eight-color sheet-fed printing market.

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Our Competitive Strengths

        We believe we possess a number of competitive strengths that will contribute to our future growth, including the following:

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Comprehensive and Integrated Solutions.  We design, package and deliver our products and services in ways that address our clients' unique challenges, providing integrated solutions to their critical business issues. As a result, we believe we enjoy a strong reputation for quality and innovation. We apply our operational, technological and customer service expertise to deliver easy-to-use, flexible and comprehensive solutions to our clients. For example, in the insurance and variable annuity industry, Merrill Build-A-Book provides our clients with a comprehensive and integrated solution to create, edit and distribute personalized information, enrollment forms and booklets for 401ks and other plans. We believe our integrated, problem-solving approach strengthens our relationships with our clients and differentiates us from our competitors.



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Vertical Market Expertise.  We approach our target markets by developing a specific understanding of the industry dynamics and the particular needs of our clients within that industry. Once we identify a new potential market, we study factors affecting it and hire professionals with relevant industry experience, enabling us to develop a deeper level of understanding and insight regarding the industry's business decisions and objectives. This research-based approach enables us to provide industry-specific solutions. For example, our solutions in the legal industry support our clients' needs for confidentiality, accuracy and speed, while our solutions in the real estate and direct selling markets focus on revenue generation, brand control and inventory management.



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Tailored Proprietary Technologies.  We believe we have cultivated a strong reputation for innovation through our commitment to tailored and scalable technologies. We apply common technologies across our businesses and then add industry-specific functionality that provides our clients with a flexible platform that can be further tailored to meet their specific needs. For example, in the litigation solutions area, we adapted proprietary digital content management technologies used in a number of our other applications to create a litigation discovery management system, now known as Merrill Discovery Navigator. We then redeployed the base technology of this system to create our Merrill DataSite online data room service. Both of these technologies are reliable and highly scalable to accommodate client growth. This scalability allows us to accommodate incremental client volume without incurring significant incremental costs. In addition, using our technology for collaborative Internet-based work environments, we have developed a variety of industry-specific applications that enable our clients to design marketing materials through the Merrill e:Store platform. We believe our technological innovation, intellectual property and tailored proprietary technologies contribute to the appeal of our offerings for our clients.



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Strong Client Relationships and Customer Service.  We believe our clients associate our brand with client-focused and reliable customer service. Our commitment, discretion and responsiveness, particularly for projects involving highly sensitive information, have allowed us to develop strong, long-standing relationships with our clients, often at senior levels in their organizations. For example, in our Marketing and Communication Solutions business, we have maintained a relationship with one of our national franchisor clients for over 27 years and in our Legal Solutions business seven of our top 10 clients have been with us for over five years. We believe our ability to retain our current client base and attract new clients is directly related to our sales force and customer service personnel, which is why we devote extensive resources to recruiting,

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developing and retaining experienced sales and service professionals and employ creative incentive strategies that align our clients' and our company's success with the personal success of our sales professionals.

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Experienced Management Team and Ownership Culture.  Our senior management team averages 15 years of experience with our company. Our Chairman of the Board and Chief Executive Officer, John W. Castro, has been with us since 1978 and our President and Chief Operating Officer, Rick R. Atterbury, has been with us since 1976. As of January 31, 2006, we had over 200 employee shareholders and option holders, who upon completion of this offering will hold over        % of our outstanding common stock on a fully diluted basis, assuming exercise of all outstanding options and warrants. In addition, over 300 employees participate in a long-term incentive plan which is directly linked to our performance. We believe our broad-based ownership culture aligns the interests of our employees at all levels with our shareholders, driving significant commitment to the long-term success of our business.

Our Growth Strategy

        We strive to grow our business through the implementation of the following strategies:

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Focus on Selected Growth Markets.  We believe our products and services are well-suited to our targeted growth markets, particularly those markets involving significant amounts of physical and electronic documentation and requiring rapid turnaround of tailored marketing, compliance or business communication materials. We believe these growth markets offer us significant opportunities and we will continue to focus our sales, marketing, research and development resources on providing enhanced and specialized product and service offerings for these markets. We plan to continue focusing our business on our growing markets, such as our Legal Solutions and Merrill DataSite businesses.



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Expand into New Markets.  We intend to increase our penetration in our existing markets by expanding geographically and to enter new markets that share similar attributes to our existing markets. We believe our existing technology, infrastructure and service capabilities will help us penetrate these new markets. For example, many of the services we provide to national franchise-based residential real estate brokers are also relevant for other national franchise businesses. Based on our work with national real estate brokerage firms, we believe there is an opportunity to serve direct sellers and other national franchise businesses by assisting them with brand identity strategies (such as standardizing marketing materials), procurement cost reduction (such as giving individual brokers corporate rates) and marketing analysis (such as data collection on relationships between marketing materials and home sales). We also believe we can grow geographically. For example, in our Transaction and Compliance Services business we operate in 15 of the top 50 metropolitan areas in the U.S. and in our Legal Solutions business we operate in 16 of the top 50 metropolitan areas in the U.S. We believe we have the infrastructure and capabilities in place to enter other major metropolitan markets. Internationally, we believe we have the opportunity to leverage our existing relationships with multi-national organizations to further expand globally.



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Expand the Range of Solutions Provided to Existing Clients.  We seek to capitalize on our technological expertise and operational competencies to broaden the array of services we offer our existing client base. We seek to accomplish this in two ways. First, we believe there are opportunities for us to sell additional existing solutions to our current clients. For example, for one of our top ten Legal Solutions clients we provide on-site services at four of its 12 locations and document reproduction for three

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locations. However, we provide this client either no or very limited litigation support, including discovery, deposition, litigation management, production and trial presentation services, as well as Merrill Datasite and brand management. We believe we have an opportunity to provide them with these additional services. In addition, the client relationships we have developed in our Transaction and Compliance Services segment have increasingly led to sales of products and services in our other segments. Second, we anticipate we will continue to develop additional services that can be delivered to our existing client base. For example, over the past ten years, we have introduced more than 20 technology and process solutions to help our clients in a variety of areas.

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Pursue Selective Strategic Relationships and Acquisition Opportunities.  We intend to continue to pursue strategic relationships and acquisitions that enhance our service offerings. As an example, we created a joint venture operation in India with a provider of processing services. Over the last ten years, we have acquired 14 companies, expanding our service offering and broadening our market reach. Given the relative fragmentation of many of our target markets, we believe we will be able to continue to identify and capitalize on complementary acquisition opportunities in the future.



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Use our Technology and Operational Expertise to Drive Efficiencies.  We believe many of our technology-based services are scalable and require limited incremental capital spending to fund additional growth. Since fiscal 2001, we have taken considerable measures to reduce the fixed portion of our cost structure, resulting in increased financial flexibility, higher capital efficiency and enhanced profitability. We have consolidated printing, scanning and coding operations, reduced head count in our domestic operations by creating our joint venture in India and focused on using independent contractors and temporary labor in our project-oriented businesses. We plan to continue to identify technology and process improvements that we believe will allow us to become more efficient.

Legal Solutions

Legal Solutions provides both on-demand and on-site litigation support, information management and electronic and print document management services for law firms, corporate legal departments and professional service firms. We believe our ability to improve the effectiveness of our legal clients' operations by increasing their speed, accuracy and thoroughness with respect to information retrieval, review and delivery provides our clients with a distinct competitive advantage. We believe we are one of a handful of organizations offering support for all phases of the litigation process within the U.S. litigation outsourcing and legal information management market.

On-Demand Services

        We provide technology-enabled information management and document solutions to litigators throughout the entire litigation process, from initial complaint and pre-trial work through the trial and any subsequent appeals. Our service platform includes electronic data discovery, high-volume digital document reproduction, transcription of court depositions, electronic information repository services for litigation management and in-trial presentation solutions. The litigation process can take years to complete, providing us the opportunity to assist our clients and become an integral part of their case management over an extended period of time. Our services allow our clients to review and analyze information either in

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printed, electronic or video form. We operate domestically and internationally. Our on-demand services support all phases of the litigation process, including:

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In the discovery phase, we offer electronic discovery, scanning and large scale reproduction of discovery documents. In electronic discovery we capture e-mail files and their attachments, automatically extracting bibliographic information (including dates, sender and all recipients) and textual content for full-text searches. In addition, we scan, image, code and index paper documents, convert them to electronic form and either distribute them on a CD/DVD to the client, or host the content in our Internet-based repository. We also provide large-scale reproduction of discovery documents, including oversize and color reproduction, either at our off-site service centers or on-site at our clients' locations for short-term projects.



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In the deposition phase, we provide court reporting services, where we schedule and staff depositions, utilizing over 1,200 independent court reporters, videographers and transcribers. We provide real-time court reporting, videography and transcript preparation both in electronic and paper forms. In the United States, we currently provide these services under the brand LegaLink.



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In the litigation management phase, we provide an Internet-based litigation repository product, Merrill Discovery Navigator, which enables our clients to access a unique repository for their specific case and to analyze, sort, share, annotate, edit, print and distribute documents, including video and audio files, anywhere in the world via our secure network. As of January 31, 2006, we hosted over 215 million pages in our repository, an increase of 103% over the number of pages hosted as of the same date one year ago. Our typical project is approximately 1.6 million pages and lasts from one to two years. We believe the length of the projects keeps client relationships in place for extended periods of time, provides recurring revenue from repository services and positions us to provide additional services throughout an engagement.



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In the production phase, we create and distribute printed or electronic blowbacks, which are annotated and organized sets of the potentially relevant documents from the repository. We also provide searchable deposition transcripts, exhibits and videography services, which may be linked and synchronized. Videography preserves testimony, illustrates witness demeanor, may help in impeaching witnesses at trial and reduces trial costs by eliminating the need for in-person testimony.



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In the trial presentation phase, we provide presentation strategy services, including recommendations for software, equipment and management of the courtroom technology.

On-Site Services

        We provide our clients with services in their own offices ranging from document reproduction and scanning to complex, technology-based document services, such as desktop publishing and document storage, retrieval and distribution. Typically we offer these services over a three- to five-year contractual period, and generally contract for these services on an office-by-office basis, although we continue to see examples where law firms are consolidating their services on a firm-wide basis. We operate approximately 170 on-site document service centers located across the United States and the United Kingdom. In addition to our document service centers, we offer law firms and the court systems in the United Kingdom, Ireland, Australia, Singapore and Hong Kong, on-site, in-court reporting services. We schedule and staff depositions, including contracting court reporters and provide real-time court reporting, videography and all transcript preparation both in electronic and paper form. Through our on-site service offering we provide law firms and the courts with

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document creation and management and related services that are designed to increase the efficiency, timeliness and quality of their work products.

Sales and Marketing

        We principally target the 250 largest law firms, which represent a total of 115,000 attorneys nationwide according to The National Law Journal. We tend to focus on complex litigation, where our full-service offering, geographical reach, large-scale operations and technology platforms position us well against small or regional competitors.

        Our sales efforts are generally relationship-driven through our direct sales force and supported by our on-site personnel who can gain an in-depth knowledge of our clients' total document and information management needs and are able to sell other services. We believe we are uniquely positioned to sell our court reporting services to clients who have already chosen us as their litigation document provider. In addition to direct sales efforts, we actively participate in industry trade shows by providing speakers and sponsoring events. We also conduct limited advertising in directory and trade publications and offer lawyers free seminars on various legal topics that provide continuing legal education credits.

        For both on-site and on-demand services, our sales initiatives include expanding into new locations and continuing to capitalize on the outsourcing trend among law firms and other professional service firms. Our sales initiatives also capitalize on the overall trends in the litigation market such as increasing trial complexity, increasing settlement sizes and the migration from paper to digital media.

Case Study

        The following case study provides an example of how a single transaction can require a range of our legal services.

        A large United States based company agreed to acquire another large company in the same industry. The transaction faced review by various U.S. state and federal agencies as well as international regulators. In addition, the acquired company was subject to concurrent extensive litigation. We initially were hired by the selling company to provide document reproduction services on a limited basis. However, through the course of the project our role expanded and ultimately we assisted the company and its litigation team in addressing the following information and document management challenges:

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Meeting the government's requirement for electronic document production;



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Developing an electronic processing solution that could pass the government's validation tests;



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Collecting documents from locations in 22 states;



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Imaging 750,000 archived documents for a U.S. regulatory agency;



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Imaging 500,000 working documents in 18 locations on a rolling 24-hour timeframe;



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Collecting, categorizing and hosting 6.5 million pages of electronic data from 70 custodians;



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Supporting 450 attorney-reviewers from two law firms in 15 different cities;



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Producing documents for 20 different entities in four formats totaling nearly four million pages; and

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Meeting government requests to print 800,000 pages in 24 hours.

        Our work on this project generated significant revenue in 2005, and has led to a strong and continuing relationship with the merged company and its top law firms.

Competition

        For a number of the services in our Legal Solutions segment, our primary competitor is in-house operations at the law firms themselves. We also compete with other service providers. While we believe no one market competitor offers the full range of services we provide, those competitors that offer some of our services include: Esquire Deposition Services, LLC; IKON Office Solutions, Inc.; Kroll Ontrack, Inc.; Lexis (Applied Discovery, Inc.); Oce-USA Holding Inc.; Pitney Bowes Inc.; Williams Lea and Xerox Corporation. We compete primarily on the reliability and flexibility of our technology platforms, our long-standing relationships with our clients, the quality of our on-site and off-site staff, our reputation for maintaining confidentiality, our ability to offer a national and global operational footprint and the competitiveness of our pricing.

Marketing and Communication Services

        We provide brand identity management, customer communication and packaged direct marketing programs to many different types of clients. We have targeted customer markets, such as financial services, real estate, corporate and professional services, that have a significant direct sales element, and require a balance between controlling the brand at the corporate level and providing customized marketing solutions at the individual sales representative level.

        Our service offerings are designed to service our clients at both the corporate and individual sales professional levels:

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At the corporate level, we assist corporations, brokerages, franchises, professional service firms and other distributor organizations in building their brand and revenue. We provide our clients control of and consistency in their brand, inventory management solutions and fulfillment of marketing and regulatory document requirements through our comprehensive services.



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At the individual sales professional level, we provide real estate agents, financial advisors, individual franchisees and direct sellers, whom we view as individual entrepreneurial "small businesses", with outsourced marketing, technology and service solutions tailored for their individual needs. We believe one of our competitive advantages is our ability to maintain order profiles and histories of the individual sales professional needs which facilitate ease of ordering for the individual sales professional.

        Our clients share common needs, including protecting and growing their brand, managing a geographically dispersed sales or service organization, tailoring messages for target customers and meeting regulatory and corporate communications requirements.

        We believe our products and services provide our clients with outsourced solutions to manage their branded marketing programs. Our competencies in the Marketing and Communication Services segment include strategic consulting, design, digital and conventional print management, fulfillment, inventory management, direct marketing and sales analysis. Our technologies, such as our Merrill Connect and e:Stores products, are shared across our client markets and are packaged to solve the unique marketing challenges they face. For example, real estate agents use our e:Store technology to order business cards customized with their pictures and brand-approved designations. The same base technology

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used in e:store is also used by our franchise clients to create, edit and order corporate brand-approved advertisements for their particular markets. These technologies can typically be tailored to our clients' individual needs and enable them to access, create, edit and control products and services we provide via web-based technology programs, including:

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Corporate identity materials such as business cards, stationery, presentation folders, direct marketing pieces and other branded specialty products;



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Filing, composition and printing services for mutual funds, including "intelligent print", where we print on-demand documents for individual investors;



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Fulfillment, which includes digital printing, complex kitting and distributing marketing documents and other materials from strategically located warehouse facilities, most often on a same-day basis, along with follow-on reports detailing order history, inventory and distribution activity; and



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Promotional programs, which incorporate the distribution of incentive merchandise and award and recognition programs.

        For some of our corporate level clients, we have exclusive or preferred contracts to supply branded promotional and communications materials, mailing distribution, fulfillment and web-enabled technology products. Because of the nature of the services we provide, our sales agreements are typically multi-year contracts. When we manage a client's entire inventory and fulfillment needs, we generally charge a fee based on the number and type of items fulfilled, together with storage, destruction and other inventory management fees.

Sales and Marketing

        Our sales professionals are trained in our marketing and communication service offering and in the operations and specific needs of our clients and the markets in which they operate. For example, many of our financial services sales professionals have significant prior experience at fund companies or other financial institutions and have knowledge of the operations and regulatory issues of the investment company industry. In the real estate and corporate markets, a direct sales force markets the overall package of services to the parent company or franchiser, with the goal of becoming its preferred vendor for branded promotional materials. For example, we have preferred supplier contracts with five of the top six real estate brands in the United States. After establishing this relationship, we then market directly to sales professionals of the organization through the Internet, direct mail and, occasionally, through direct sales presentations.

        Consistent with our corporate growth strategies, we focus on leveraging our existing products, services and technology into new markets. We target clients with large, geographically dispersed selling organizations that value one-to-one marketing communications. We also intend to increase our marketing directly to independent sales professionals.

Case Study

        The following case study provides an example of our tiered marketing approach at both the corporate and sales professional level.

        One of our real estate clients consists of an international corporate headquarters, 27 U.S. regional offices, 3,800 U.S. brokerages and 87,000 U.S. sales associates. We offer this client and its individual offices, brokerages and sales associates the opportunity to purchase over 300 consumable product line items. In this relationship, we developed a contractual

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relationship at the corporate level that allows us to develop branded products that incorporate proprietary trademarks used at all levels of the organization. The corporate office purchases their proprietary materials, which may include identity materials, policy and procedure manuals, corporate and capabilities brochures, supplier manuals, advertising specialties and awards programs. Regional offices purchase these products, as well as items such as franchise sales materials, training materials and stationery products. Brokerage offices purchase office branded materials, recruiting and retention materials and a wide assortment of stationery, forms, awards and promotional and incentive merchandise. Sales associates often purchase business cards, stationery items, presentation materials, personal promotion, property promotion, signage and advertising specialties.

Competition

        Competitors in the Marketing and Communications Solutions markets range from advertising agencies and direct mail firms to digital communication providers and traditional printers. Our major competitors include: ALL-STATE International, Inc.; Bowne & Co., Inc.; Farrell Grant Sparks; Harte-Hanks, Inc.; Ligature Ltd.; The Personal Marketing Company; R.R. Donnelley & Sons Co. and Quantum Corporation. We compete against many smaller regional competitors as well. We compete primarily on the breadth of our products and services, technology, industry knowledge and the overall quality of our customer service (particularly the ability to consistently and quickly produce high-quality products that incorporate the client's special design, brand and informational requirements), price and relationships.

Transaction and Compliance Services

        We are a global leader in providing transaction and compliance services to corporations. We use our technology to facilitate document creation, production and distribution (both electronic and printed) in support of our clients' high-profile, critical activities, such as securities offerings, reorganization transactions (bankruptcy and corporate reorganizations), merger and acquisition activity and periodic compliance requirements. We are a leading provider of online data room services. We provide these services to corporations, investment banks, law firms and private equity firms, typically on a project basis. Our pricing is dependent on factors such as the time frame, size and complexity of the project. We believe we enjoy brand recognition in the markets we serve.

Transaction Services

        We manage the confidential workflow of time-critical transaction documents for corporations, underwriters and lawyers. These electronic and printed documents include registration statements, offering circulars, offering memoranda and other materials that are part of securities offerings, corporate reorganizations and mergers and acquisitions. Our services include composition, editing, filing, management and distribution of documents, electronically and in printed form. To support our clients' needs, we provide conference facilities and high-quality customer service 24 hours per day, seven days per week to facilitate the creation, production and distribution of documents. We also provide web-based collaborative work environments, such as MyWorkspace.

        Our newest transaction services offering is Merrill DataSite, which enables clients to access and review documents from anywhere in the world, via a secure website. It is designed to make activities such as the due diligence process in mergers and acquisitions more cost effective and efficient. Specifically, we believe it helps reduce the time to close a transaction by facilitating concurrent due diligence efforts, eliminates costly and inefficient travel time, provides robust file organization and search functions and allows for auditing of

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data room activity. Other features include multiple levels of security and access, self- or full-service document loading capability and in-house around-the-clock client support.

Compliance Services

        Our services include the composition, editing, filing, management and distribution of documents, such as annual and quarterly reports and proxy statements, in electronic and printed form. A key element of our service is our ability to manage and distribute documents in a timely manner. As with our transaction services, we offer client support and web-based collaborative work environments.

Sales and Marketing

        We market our transaction and compliance services primarily through direct one-on-one contact with our clients. Our contacts often include senior management of corporations, investment banks and private equity firms, securities attorneys and other financial professionals involved in corporate transactions. The client relationships we have developed in our Transaction and Compliance Services segment have led to the sale of additional products and services by our other segments.

        Within our transaction and compliance business we employ approximately 130 sales executives and approximately 200 customer service professionals, both domestically and internationally. Because the compensation of many of our sales professionals is tied to profitability, we believe they are highly motivated to achieve profitable operating results. Additionally, many members of our sales force have long-standing tenure with us, with our top 25 sales executives (by revenue) averaging over nine years of service with us. Our customer service personnel serve as the primary interface with our clients and are also important in delivering our services.

Case Study

        The following case study provides an example of how our transaction and compliance relationships have led to the sale of additional products and services.

        A large U.S. company was confronted with a Chapter 11 bankruptcy filing and other significant legal challenges. It was required to review more than 30 million pages of data to assemble filings and respond to requests from the Securities and Exchange Commission, various bankruptcy courts, the Justice Department and other regulatory agencies. This client also had to prepare for litigation and prepare due diligence materials to facilitate the sale of the company. As a result of our existing relationship with this client in which we provided compliance services, we were given the opportunity to introduce our additional service capabilities. Over a twelve month period, our revenue from this client grew over ten times, reaching over $10 million, as we:

•

provided multiple online data rooms exceeding 400,000 pages that provided access for multiple parties representing potential buyers of the company, for the purpose of reviewing and analyzing critical information on the company;



•

created a fully searchable, online litigation repository of over a million pages of data to fulfill challenging discovery requests;



•

converted and migrated over 24 million pages from the repository of a competitor to our own repository;

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•

facilitated the printing and mailing of the disclosure statement and plan of reorganization to over 100,000 of the company's creditors and interested parties; and



•

provided real-time deposition services during the subsequent litigation.

Competition

        We compete primarily against Bowne & Co., Inc. and R.R. Donnelley & Sons Company in most elements of our transaction and compliance services business and Intralinks Inc. with respect to our Merrill DataSite product. We compete primarily on the strength of our brand, the quality and accuracy of our work, our ability to meet strict time requirements, the knowledge and relationships of our sales and service staff and the strength of our technology, security and product features.

Other Communication Services

        In addition to the products and services offered by our other three business segments, we also offer various services that complement or utilize the same underlying competencies found in our other segments. The services in this segment are language translation, captioning, election services and specialty printing.

•

Translation Services—We focus on two areas of the translation services market, which are product documentation, primarily for the life sciences, information technology, automobile and manufacturing industries and on-demand language translation for legal and financial services firms. Product documentation includes items such as brochures, product fact sheets, web content and white papers, as well as user, service, training, installation, parts and operations manuals. Our on-demand language translation services include translations of litigation, corporate and other time-sensitive documents. We have translation operations centers in the United States and Ireland. As part of our operations, we have an automated workflow system that can interface with language databases and the client's content management system. We sell our translation services through a direct sales force, and through our other business segments' sales forces. Competition in this market is highly fragmented and we compete primarily with approximately 20 other companies located in the United States and overseas, including LionBridge Technologies, Inc. and SDL International.



•

Captioning Services—We provide language captioning services, under the brand name VITAC, to a wide variety of producers, broadcasters, webcasters and syndicators in the entertainment, governmental and educational fields both domestically and internationally. Our services include live and automated English and Spanish captioning, multi-language subtitling in over 45 languages, Internet captioning and video description. We have also established a joint venture, which has allowed us to penetrate the international market. In the captioning business, technology is critical to offering quality service, faster turnarounds, lower cost and accuracy and we are equipped with the latest technologies for both live and pre-recorded captioning as well as multi-language subtitling. Competition in this industry is highly fragmented. We believe our primary competitors are National Captioning Institute and Caption Colorado and our biggest differentiators are the accuracy of our finished product, the speed and reliability of our service and the expertise of our staff that are supported by our technology.



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Election Services—We are a leader in producing voter information guides required by law in California. These voter information guides are printed booklets ranging in size from eight to over 100 pages containing general election information, candidate and proposition listing, candidate self-promotion and arguments and rebuttals to proposed

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propositions. Various California counties add differing format and language requirements that make the preparation, production and distribution of voter information booklets require intensive labor, data management and technology resources. Currently we have exclusive contracts to provide services to nine of the largest counties in California and the city of Los Angeles, which together represent over 50% of the county-specific voter guides distributed in California. Our competitors are Sequoia Pacific AVC Advantage, Diebold Inc. and Consolidated Printers, Inc. We believe we are well positioned to capitalize on this opportunity through our strong technology platform, and our expertise in fast turn around, multi-version, multi-language, large-volume printing.

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Specialty Printing Services—We own a single sheet-fed printing facility that competes in the four-to-eight-color printing market. This facility offers pre-press, scanning, color manipulation, sheet-fed printing and bindery services. We specialize in printing time-sensitive, complex, high quality marketing and sales communications. Our primary competitors in this market include Millennium Graphics, Inc. and W.E. Andrews (R.R. Donnelley & Sons Company).

Clients

        We believe our revenue is well diversified and that no single client represents a significant portion of our net revenue. We serve diverse industries including financial services, real estate, legal, hospitality, insurance, communications, food service and retail.

        For the nine months ended October 31, 2005, 7.6% of our revenue was generated from our operations outside of the United States. With our recent acquisitions of QMC and WordWave, we believe our percentage of international revenue will increase.

        Much of our revenue is under multi-year contracts. For example, in our Legal Solutions segment, for the fiscal 2005, seven of our top ten customers were subject to contracts greater in length than one year. In our Marketing and Communication Solutions segment in fiscal 2005, we had preferred partner contractual relationships with five of the top six domestic real estate brands. In our Other Communication Services segment in fiscal 2005, all of our Election Services business was contractual.

Information Technology

Solutions Management, Technology Operations and Application Development

        Technology development is an integral part of our continued growth and success. Our technology team consists of over 280 personnel in our solutions management, application development and technology operations departments. Our solutions management and application development personnel are concentrated in each of our major business segments, allowing them to maintain a specific business focus.

        Our solutions management group works with our other information technology teams, our internal operations, our sales and customer service staff, various market and industry leaders and our clients to determine development and service priorities for all our product offerings. This group also provides competitive and market analysis to assist us in evaluating and promoting new product and market opportunities.

        Our application development group develops the applications used in our products and services. In addition to our domestic operations, we have personnel in Chennai, India, that we believe enables us to provide a cost-effective and continuous development and testing environment. We use a wide range of best-of-breed programming and database technologies,

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including Microsoft.NET, ASP, Java, Perl, Oracle, SQL and DB2 running on Microsoft, UNIX and Linux platforms.

        Our technology operations group supports all of our technology applications across our company. As part of the growth plans for our products and services, our technology operations group continuously evaluates ways to consolidate and integrate our technology platforms.

Core Technologies

        Our technologies support our core competencies in electronic and printed document management, imaging, composition, rapid fulfillment and data management. We believe these technological capabilities provide us with important competitive advantages. We develop, integrate and host systems for:

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dynamic data-driven publishing;



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digital printing;



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e-commerce;



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imaging, indexing and searching;



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document repository and retrieval;



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text processing, conversion and formatting;



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electronic data discovery;



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business process workflow; and



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transcription, analysis and presentation.

Data Center and Network

        Our technologies are developed and supported at two facilities, located in St. Paul and St. Cloud, Minnesota. Most of our offices also have distributed hardware, software and technology support personnel that are coordinated from these two facilities. Our global network allows us to digitally distribute work between offices, production centers and our clients. Our open architecture enables us to establish client extranets and third party systems to meet the communications and ordering requirements of our clients. We also use some third-party data hosting facilities to enhance our capabilities and back-up capacity.

        Our systems and physical infrastructure are designed to provide security, reliability and back-up capability. For example, the physical infrastructure of our facilities includes continuously available power through redundant uninterruptible power supply systems, fire detection systems, surveillance cameras and multiple security checkpoints to limit access to our data centers. Data is regularly backed up and saved on a rotating set of media, which are taken off-site to a secure storage facility on a regularly scheduled basis. Critical wide area network links are redundant to allow for continuous connectivity in the event of any one telecommunications carrier outage.

Security and Data Privacy

        We are committed to protecting the safety of our clients' and their customers' highly sensitive information and maintain an information security team responsible for implementing and maintaining controls to limit unauthorized access to our network. These controls include the implementation of information security policies and procedures, security monitoring

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software, encryption, access and password policies, physical access limitations and detection and monitoring of fraud from internal staff. We use a combination of off-the-shelf and proprietary authentication technology designed to ensure that the integrity of our data is not compromised. External audits are conducted regularly and at our client's request, or by potential clients prior to contract negotiations. We use an outside specialist to conduct external penetration testing on an annual basis for selected critical systems.

Scalable Architecture

        Our software applications are designed and engineered to meet the diverse needs of our clients and to grow as our business grows. For example, when we began to implement our legal repository system five years ago, we saw the need to develop the system based on a storage area network architecture that would provide capacity for hundreds of terabytes of data as our legal repository business grew. We have maintained that architecture and added capacity as the amount of data stored has grown to over 100 terabytes. In addition, we have a proprietary grid computing solution for our document capture operation, allowing us to use capacity on computers in our network as document volume fluctuates.

Operations

        We have operations centers both domestically and internationally that service our business segments. These operations centers include:

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Fulfillment operations, which consist primarily of warehousing, pick and pack, collating, digital printing, mailing and shipping services. These operations handle the fulfillment of customer literature and premium items along with on-demand digital print production. Our fulfillment functions are located in four domestic operations centers.



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Composition operations, which include the typesetting and preparation of Securities and Exchange Commission filings and other documents and occur primarily in two core hubs, as well as 15 offices. Like most of our operations, these facilities operate in a networked environment enabling us to meet time-sensitive deadlines while maximizing the utilization of our operation.



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Document reproduction operations, which produce and copy documents with high volume, multifunction scan/print equipment and supporting servers. We also perform similar functions within our document service centers that are housed within our clients' offices. These facilities are connected via our global network to our national litigation and document operations center. This center contains technology used to convert and store documents, including scanners, workstations, printers, storage area networks and servers. We believe this networked approach enables us to manage workflows in a cost-effective way.



•

Print operations, which print a wide variety of documents, such as transaction and compliance documents and direct marketing materials. We seek to maximize utilization of our own facilities by balancing workloads between our operations centers and a preferred list of outside print providers. We have negotiated discount agreements and established efficient workflows with these outside print providers that enable us to meet the time and quality requirements of our clients. Printed documents are produced using digital or conventional presses located in eight domestic operations centers.

        Our operations centers are located throughout the United States. Internationally, we also have operations centers in Canada, England, Ireland, Australia, New Zealand and Chennai, India. These centers are fully networked with our locations in North America. In addition, our

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translation operations are headquartered in Minneapolis, Minnesota, we have a second operating facility in Galway, Ireland and our captioning business operates from Pittsburgh, Pennsylvania.

        Our joint venture in India provides us with additional access to a well-trained, English-speaking workforce at attractive compensation costs. This joint venture provides us with increased coverage to meet time-sensitive turnaround requirements and flexible capacity to meet peak workload demands.

        We have centralized our purchasing functions to optimize our significant corporate spending on paper, transportation, printing, finishing, office equipment and supplies, reduce costs and improve quality, service and technology.

Intellectual Property

        We rely on a combination of copyright, trade secret and trademark laws and non-disclosure and other contractual arrangements to protect our proprietary rights. We seek to protect our trade secrets and proprietary know-how, in part, with confidentiality agreements with clients, consultants, vendors and employees.

        Our material registered trademarks include: Delivering Marketing Solutions to Real Estate, Merrill Discovery Navigator, Wordshare, Cotton Fibre Plus, Laser Perfect, Shore Bond, Bond Green LP, Shore Bond LP & Design and Sparkle White. Our material registered service marks include: Merrill Corporation, Merrillconnect, Merrill Net:Prospect, Millions of Pages. One Solution., Ottomed, Ottoweb, Ottodoc, Ottocms, Brand on Demand., Fine Arts, Fine Arts Engraving Company, Fragos, Stationeers, Web to Plate, Docuserve, V and design, Depowave, Information Minded, L and design, LegaLink, Miscellaneous Design (Arrow Design), Total Transcript, VITAC, W and design and WordWave. All other trademarks or service marks appearing in this prospectus are trademarks or service marks of others. We have additional service mark applications pending with the U.S. Patent and Trademark office and certain foreign jurisdictions.

        We hold one United States patent- Patent No. 6,065,026. "Multi-use electronic document authoring system with prompted updating of shared language." This patent is incorporated into our WordShare product, which is a stand alone product used to produce common elements in mutual fund prospectuses, allowing similar information to be shared across fund family documents.

        We license the use of certain our products to our clients, including MerrillConnect, Merrill DataSite, Merrill DPA, Merrill Discovery Navigator and Web hosting. These licenses provide for restrictions on the transfer, use and access of our products to protect their proprietary nature. We also license intellectual property from third parties and incorporate such intellectual property into our products. These relationships are generally non-exclusive and have a limited duration. Moreover, we have certain obligations with respect to non-use and non-disclosure of such intellectual property. We cannot assure you that the steps we have taken to adequately monitor these obligations or prevent infringement or misappropriation of our licensed intellectual property.

        Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. In addition, innovation by our competitors may provide them with technology equivalent or superior to that contained in our products. We will continue to assess appropriate occasions for seeking intellectual property protections for those aspects of our technology that we believe constitute innovations providing us with significant competitive advantages.

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Employees

        As of January 31, 2006, we had 5,644 employees, of which 257 were classified as temporary employees. We have never had a work stoppage and none of our employees are represented by labor unions. We believe that relations with our employees are good. Our workforce is supplemented by approximately 1,200 independent court reporters and over 600 independent translators.

        We compete with others in the industry to attract and retain qualified technical and sales personnel. To date, we believe we have provided incentives sufficient to minimize the loss of key personnel and to attract additional staff for both replacement and expansion. Many of our sales personnel are under employment contracts of varying terms with us.

Facilities

        As of January 31, 2006, we provide our services through a network of over 70 domestic and 15 international offices. We believe that our facilities are adequate for our current operations. The following are the locations of our significant facilities as of January 31, 2006:

Location	Segment Served	Owned or Leased
Boston, Massachusetts	Legal Solutions and Transaction and Compliance Services	Leased
Birmingham, Alabama	Legal Solutions	Leased
Burr Ridge, Illinois	Marketing and Communication Solutions	Leased
Chicago, Illinois	Legal Solutions and Transaction and Compliance Services	Leased
Dallas, Texas	Legal Solutions, Marketing and Communication Solutions, Transaction and Compliance Services and Operations	Leased
Denver, Colorado	Transaction and Compliance Services	Leased
Everett, Massachusetts	Operations	Owned
Frankfurt, Germany	Transaction and Compliance Services	Leased
Galway, Ireland	Other Communication Services	Leased
Golden Valley, Minnesota	Other Communication Services	Leased
Grove City, Ohio	Operations	Leased
Houston, Texas	Legal Solutions and Transaction and Compliance Services	Leased
Lee, Massachusetts	Marketing and Communication Solutions	Owned
La Mirada, California	Marketing and Communication Solutions and Operations	Leased
London, England	Legal Solutions and Transaction and Compliance Services	Leased
Los Angeles, California	Legal Solutions and Transaction and Compliance Services	Leased
Monroe, Washington	Marketing and Communication Solutions	Leased
Mt. Prospect, Illinois	Operations	Leased
New York, New York	Legal Solutions and Transaction and Compliance Services	Leased
Paris, France	Transaction and Compliance Services	Leased
Pittsburgh, Pennsylvania	Other Communication Services	Leased
Rockville, Maryland	Legal Solutions	Leased

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San Francisco, California	Legal Solutions and Transaction and Compliance Services	Leased
Sartell, Minnesota	Operations	Owned
St. Cloud, Minnesota	Marketing and Communication Solutions and Operations	Owned
St. Cloud, Minnesota	Operations	Leased
St. Paul, Minnesota	Operations	Owned
St. Paul, Minnesota	Headquarters	Owned
Toronto, Canada	Transaction and Compliance Services	Leased
Union, New Jersey	Operations	Leased
Washington, DC	Legal Solutions and Transaction and Compliance Services	Leased
White Plains, New York	Legal Solutions	Leased
Willowbrook, Illinois	Operations	Leased
Woburn, Massachusetts	Marketing and Communication Solutions	Leased

Environmental Matters

        Our printing operations and properties are subject to many laws and regulations relating to the protection of the environment and human health and safety. While we believe we are in material compliance with these requirements, we could incur significant fines, penalties, costs or liabilities in the event we violate these requirements or the permits required for our operations. In addition, because these laws may become more stringent and our processes may change, the amount and timing of expenditures in the future may vary substantially from those currently anticipated.

        Some environmental laws may impose liability for the investigation and cleanup of environmental contamination on current or former property owners or occupants, regardless of knowledge or the legality of the disposal practices at the time they occurred. Although we are not currently aware of any such material obligations at properties we now or previously owned, leased, or operated or at sites we sent our waste for disposal, we may be required to conduct remedial activities in the future which may be material to our business and we also may be subject to claims for property damage, personal injury, natural resource damages or other issues as a result of these matters.

Legal Proceedings

        From time to time we are involved in legal proceedings arising in the ordinary course of our business. We believe that there is no litigation currently pending that could have a material adverse effect on our financial position, results of operations or cash flows.

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MANAGEMENT

Directors and Executive Officers

        The name, age and position of our directors and executive officers as of January 31, 2006 are as follows:

Name	Age	Position
John W. Castro	57	Chairman of the Board and Chief Executive Officer
Rick R. Atterbury	52	President, Chief Operating Officer and Director
Robert H. Nazarian	55	Executive Vice President and Chief Financial Officer
B. Michael James	49	President, Transaction and Compliance Services and Director
Perry L. Solomon	55	President, Legal Solutions
Steven J. Machov	54	Executive Vice President, General Counsel and Secretary
John R. Stolle	58	Executive Vice President and Chief Technology Officer
Brenda J. Vale	43	Executive Vice President, Human Resources
Craig P. Levinsohn	43	Executive Vice President, Marketing
Dale S. Kopel	42	Treasurer
Thompson Dean	47	Director
David A. Durkin	37	Director
Mark D. Edwards	35	Director
Kamil Marc Salame	37	Director

(1)

Member of audit committee.

(2)

Member of compensation committee.

(3)

Member of nominating and corporate governance committee.

John W. Castro has served as our Chairman of the Board since August 2004, Chief Executive Officer since 1984 and a member of our board of directors since 1981. Mr. Castro also served as our President through September 2002. Mr. Castro serves as a director of Minnesota Life Insurance Company.

Rick R. Atterbury has served as our President and Chief Operating Officer since September 2002 and a member of our board of directors since 1989. From February 1999 to September 2002, Mr. Atterbury served as our Executive Vice President and Chief Technology Officer. From 1996 to January 1999, Mr. Atterbury served as our Executive Vice President and, prior to that time, he served as our Vice President of Operations.

Robert H. Nazarian has served as our Executive Vice President and Chief Financial Officer since April 2000. Prior to joining us, Mr. Nazarian served as Executive Vice President and Chief Financial Officer of Florida East Coast Industries, a diversified transportation and real estate company, from July 1999 to April 2000. From August 1998 to April 1999, he served as Treasurer of Northwest Airlines, Inc., a commercial airline company. From October 1995 to July 1998, he served as Chief Financial Officer of Air New Zealand Limited, a commercial airline company. Prior to joining Air New Zealand Limited, Mr. Nazarian served as Group Financial Controller for Lion Nathan Limited, a beverage company in Australia and New Zealand, from October 1989 to September 1995.

B. Michael James has served as our President, Transaction and Compliance Services since December 2005 and was appointed to our board of directors in May 2005. Mr. James served as our President of Financial Document Services from February 1999 until December 2005. From January 1996 to February 1999, Mr. James served as our Vice President of our East Region and International Operations. Prior to that time, Mr. James served as our Vice President, Human Resources. Mr. James joined us in June 1989.

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Perry L. Solomon has served as our President, Legal Solutions since January 2006. Mr. Solomon came to our company from WordWave, Inc. where he served as President and Chief Executive Officer from January 1999 until the acquisition of WordWave by us in January 2006. He previously served as Chairman of HR Logic, Inc., an outsourced human resources company, which he helped found in 1997. Mr. Solomon has over 25 years of business management experience, with much of that time spent at Fidelity Capital, the private investment arm of Fidelity Investments. While at Fidelity, Mr. Solomon was President of BostonCoach Corporation.

Steven J. Machov has served as our Executive Vice President since January 2006, our Vice President since 1993, our Secretary since 1990 and our General Counsel since 1987.

John R. Stolle has been our Executive Vice President since January 2006 and Chief Technology Officer since March 2004. From May 2001 to February 2004, Mr. Stolle served as our Director of Corporate Information Technology and from June 1993 to April 2001, as Vice President of Information Technology. Prior to joining us, Mr. Stolle was Vice President of Information Technology for Jostens, Inc., a company that provides products, programs and services that help people celebrate important moments, recognize achievements and build affiliations, and Director of Management Information Services for Land O'Lakes, Inc.

Brenda J. Vale has served as our Executive Vice President since January 2006 and our Vice President, Human Resources since December 2003. Prior to December 2003, Ms. Vale served as our Vice President of Strategic Sourcing and Director of Compensation and Benefits. Ms. Vale joined us with over 17 years of human resources experience.

Craig P. Levinsohn has served as our Executive Vice President, Marketing since December 2005. Immediately prior to joining us, Mr. Levinsohn served as Chief Marketing Officer of Paisley Consulting, Inc., a provider of corporate governance software. From 2000 to December 2005, he served as Vice President of Marketing and Strategic Alliances of HighJump Software, a 3M Company, a company in the supply chain software industry.

Dale S. Kopel has been our Treasurer since May 2000 and held other financial positions since he joined us in May 1996. Prior to joining us, Mr. Kopel was a director of audit at St. Jude Medical, Inc. and a manager at Coopers & Lybrand.

Thompson Dean has served as one of our directors since March 2004. Mr. Dean is the Co-Managing Partner and Chief Executive Officer of Avista Capital Partners, a private equity firm focused on investments primarily in growth-oriented energy, healthcare and media companies that has been engaged by Credit Suisse's asset management business to serve as a consultant to assist in the monitoring of certain DLJ Merchant Banking Partners portfolio companies. Prior to joining Avista Capital Partners in 2005, Mr. Dean was the Head of Leveraged Corporate Private Equity, Managing Partner and Investment Committee Chairman of DLJ Merchant Banking Partners. Mr. Dean continues to serve as Investment Committee Co- Chairman of DLJ Merchant Banking Partners. Mr. Dean joined DLJ Merchant Banking Partners in 1988 and became the Managing Partner in 1995. Following the merger of Donaldson, Lufkin & Jenrette and Credit Suisse, he became the Head of Leveraged Corporate Private Equity, responsible for Credit Suisse's asset management and worldwide leveraged buyout business. Prior to joining Donaldson, Lufkin & Jenrette, he was a Vice President in the Special Finance Group (Leveraged Transactions) at Goldman, Sachs & Co. Mr. Dean is the Chairman of the Board of DeCrane Aircraft Holdings, Inc., and is a director of BioPartners, NextPharma Technologies, Nycomed Holdings, Safilo S.p.A. and Visant Corporation.

David A. Durkin has served as one of our directors since September 2002. Mr. Durkin is currently a Partner of Avista Capital Partners, a private equity firm focused on investments

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primarily in growth-oriented energy, healthcare and media companies that has been engaged by Credit Suisse's asset management business to serve as a consultant to assist in the monitoring of certain DLJ Merchant Banking Partners portfolio companies, a position he has held since July 2005. From January 2003 to June 2005, he served as a Partner with DLJ Merchant Banking Partners and a Director in Credit Suisse's asset management business. Mr. Durkin joined Credit Suisse in November 2000 upon the merger with Donaldson, Lufkin & Jenrette, where he was a Principal of DLJ Merchant Banking Partners since 2000. Prior to that, he served as a Vice President in the Leveraged Finance Group at Donaldson, Lufkin & Jenrette and other roles within investment banking since 1996. Earlier in his career, Mr. Durkin worked in public accounting with Arthur Andersen as a CPA. Mr. Durkin serves on the board of directors of Frontier Drilling ASA and Prometheus Laboratories, Inc. He previously served on the board of directors of AKI, Inc./AKI Holdings, Inc. and Seabulk International Inc.

Mark D. Edwards has served as one of our directors since August 2004. Mr. Edwards currently serves as a Principal with DLJ Merchant Banking Partners and a Director in Credit Suisse's asset management business. Mr. Edwards joined Credit Suisse in November 2000 upon the merger with Donaldson, Lufkin & Jenrette. Mr. Edwards joined Donaldson, Lufkin & Jenrette's Investment Banking division in August 1998 and DLJ Merchant Banking Partners in January 2000.

Kamil Marc Salame has served as one of our directors since May 2005. Mr. Salame currently serves as a Partner with DLJ Merchant Banking Partners and a Managing Director in Credit Suisse's asset management business. Mr. Salame joined Donaldson Lufkin & Jenrette's Investment Banking division in 1995 and shortly thereafter joined the Leveraged Finance Group. In 1997, he joined DLJ Real Estate Capital Partners, a real estate private equity firm. He joined DLJ Merchant Banking Partners in 2000. Mr. Salame serves as a director of Aspen Insurance Holdings Ltd., Montpelier Re Holdings Ltd., Professional Career Development Institute and U.S. Express Leasing Inc.

        There are no family relationships among any of our directors or our executive officers. Each executive officer is elected or appointed by, and serves at the discretion of, our board of directors.

Board of Directors

        Our board of directors has responsibility for our overall corporate governance and meets regularly throughout the year. Our bylaws permit our board of directors to establish by resolution the authorized number of directors. Seven directors are currently authorized, all of whom were elected as directors pursuant to the terms of an investors' agreement described in more detail under the heading "Certain Relationships and Related Party Transactions." The investors' agreement requires our board of directors to consist of seven directors, three of whom (including the Chairman) are to be nominated by DLJ Merchant Banking Partners II, L.P., three of whom are to be nominated by Messrs. Castro and Atterbury and one of whom is to be nominated by DLJ Investment Partners II, L.P. so long as its beneficial ownership of our common stock exceeds 10% of its initial ownership of our common stock. Each designated director will remain a member of our board of directors following the completion of this offering until his successor is duly elected and qualified or until his death, resignation, retirement, disqualification, removal or otherwise. DLJ Merchant Banking Partners II, L.P. and DLJ Investment Partners II, L.P.'s current designees to our board of directors are Messrs. Dean, Durkin, Edwards and Salame. Messrs. Castro and Atterbury have designated themselves and Mr. James as directors.

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        Upon the completion of this offering, we expect to have at least eight authorized directors. Our board of directors has determined that all of the expected directors comprising the board upon completion of the offering, other than Messrs. Castro and Atterbury, are "independent directors" as defined under the rules of                                                      . We expect that one or more additional directors will be added to our board of directors in the near future and will be "independent directors" as defined under the rules of                                                      . The composition of our board of directors and its committees will comply, when required, with the applicable rules of                                                      , the Sarbanes Oxley Act of 2002, the SEC and applicable law.

        Upon completion of this offering, our board of directors will be divided into three classes. One class will be elected at each annual meeting of shareholders for a term of three years. The Class I directors, whose term will expire at the 2006 annual meeting of shareholders, are Messrs.                            and                            . The Class II directors, whose term will expire at the 2007 annual meeting of shareholders, are Messrs.                            ,                            and                            . The Class III directors, whose term will expire at the 2008 annual meeting of shareholders, are Messrs.                            and                            . At each annual meeting of shareholders, the successors to directors whose terms will then expire will be elected to serve from the time of election and qualification until the third annual meeting following election or special meeting held in lieu thereof and until their successors are duly elected.

Board Committees

        Upon completion of this offering, our board of directors will have an audit committee, a compensation committee and a nominating and corporate governance committee. In addition, from time to time, special committees may be established under the direction of the board of directors when necessary to address specific issues. We will adopt new charters for the audit committee, compensation committee and nominating and corporate governance committee prior to the completion of this offering.

Audit Committee

        Upon completion of this offering, the audit committee will consist of Messrs.                            ,                            and                            . Mr.                            will serve as the chairman of this committee. Our board of directors has determined that Messrs.                            and                            are "independent directors" as defined under the rules of                                                      and that Mr.                            is financially sophisticated as required by the rules of                                                      and Rule 10A-3 of the Securities Exchange Act of 1934, as amended, and is an "audit committee financial expert" as defined by the rules and regulations of the SEC and any similar requirements of                                                      . The functions of this committee will include:

•

meeting with our management periodically to consider the adequacy of our internal controls and the objectivity of our financial reporting;



•

appointing the independent auditors, determining the compensation of the independent auditors and pre-approving the engagement of the independent auditors for audit or non-audit services;



•

having oversight of our independent auditors, including reviewing the independence and quality control procedures and the experience and qualifications of our independent auditors' senior personnel that are providing us audit services;

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•

meeting with the independent auditors and reviewing the scope and significant findings of the audits performed by them, and meeting with management and internal financial personnel regarding these matters;



•

reviewing our financing plans, the adequacy and sufficiency of our financial and accounting controls, practices and procedures, the activities and recommendations of our auditors and our reporting policies and practices, and reporting recommendations to our full board of directors for approval;



•

establishing procedures for the receipt, retention and treatment of complaints regarding internal accounting controls or auditing matters and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;



•

having oversight of the integrity of our financial statements; and



•

following the completion of this offering, preparing the reports required by the rules of the SEC to be included in our annual proxy statement.

        Each of our independent auditors and our financial personnel will have regular private meetings with this committee and will have unrestricted access to this committee.

Compensation Committee

        Upon completion of this offering, the compensation committee will consist of Messrs.                            .                            and                            . Mr.                            will serve as the chairman of this committee. Our board of directors has determined that Messrs.                            and                            are "independent directors" as defined under the rules of the                                                      . The functions of this committee will include:

•

establishing overall employee compensation policies and recommending to our board major compensation programs;



•

reviewing and approving the compensation of our executive officers and directors, including salary and bonus awards;



•

administering our various employee benefit and equity incentive programs;



•

reviewing executive officer and director indemnification and insurance matters; and



•

following the completion of this offering, preparing an annual report on executive compensation for inclusion in our proxy statement.

Nominating and Corporate Governance Committee

        Upon completion of this offering, the nominating and corporate governance committee will consist of Messrs.                            ,                            and                            . Mr.                            will serve as the chairman of this committee. Our board of directors has determined that Messrs.                            and                            are "independent directors" as defined under the rules of the                                                      . The functions of this committee will include:

•

assisting the board of directors in selecting new directors;



•

evaluating the overall effectiveness of the board of directors; and



•

reviewing developments in corporate governance compliance.

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Compensation Committee Interlocks and Insider Participation

        The members of our compensation committee have no interlocking relationships as defined under SEC regulations and the listing requirements of                           .

Board Compensation

        Since our merger and recapitalization in November 1999, we have not provided compensation to our directors, although we have reimbursed the out-of-pocket expenses they have incurred to attend board meetings. Following the completion of this offering, we expect to pay our outside directors (other than those who serve pursuant to our investors' agreement) an annual retainer of $             and board and committee meeting fees of $             . We also expect that we would grant stock options from time to time to our outside directors.

Corporate Governance

        We believe that we will comply with all corporate governance and listing requirements of                           upon the closing of this offering.

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Executive Compensation

        The following table sets forth the cash and non-cash compensation for services rendered in all capacities during the fiscal year ended January 31, 2006 awarded to, earned by or paid to our chief executive officer, each of the four other most highly compensated executive officers serving as executive officers at the end of fiscal 2006 and one individual who would have been one of the four other most highly compensated executive officers had he been an executive officer at the end of 2006. We refer to these persons as our "named executive officers."

Summary Compensation Table

	Annual Compensation					Long-Term Compensation
Name and Principal Position	Salary		Bonus	Other Annual Compensation (1)		Securities Underlying Options	All Other Compensation
John W. Castro Chairman of the Board and Chief Executive Officer	$	570,833	(2)	$	12,000	—	$	102,938	(3)
Rick R. Atterbury President and Chief Operating Officer		400,000	(2)		7,200	—		63,028	(4)
B. Michael James President, Transaction and Compliance Services		360,000	(2)		13,863	22,000		55,829	(5)
Robert H. Nazarian Executive Vice President and Chief Financial Officer		300,000	(2)		11,814	—		34,709	(6)
Steven J. Machov Executive Vice President, General Counsel and Secretary		228,500	(2)		2,957	—		23,252	(7)
Mark A. Rossi (8) President, Financial Services and Brand Management		360,000	(2)		7,650	—		41,055	(9)

(1)

Represents perquisites and other personal benefits, including a car allowance in the case of Messrs. Castro, Atterbury and Rossi, club dues in the case of Messrs. James, Nazarian and Rossi, financial and tax planning services in the case of Messrs. James and Machov and physicals in the case of Mr. Nazarian.

(2)

Annual bonus for fiscal 2006 has not yet been determined.

(3)

Represents (i) 401(k) contributions of $14,700, (ii) an estimated payment of $45,900 to a supplemental executive retirement plan ("SERP") because of limitations imposed by the Internal Revenue Code of 1986, as amended (the "Code"), (iii) $41,931 of total earnings on the SERP and the Merrill Income Deferral Plan ("IDP") and (iv) premium payments under a life insurance policy on the life of the executive at an incremental cost of $407. The estimated SERP contribution reflected was earned during the fiscal year ended January 31, 2006 but will be paid during the subsequent fiscal year.

(4)

Represents (i) 401(k) contributions of $14,700, (ii) an estimated payment of $30,500 to the SERP, (iii) $17,605 of total earnings on the SERP and (iv) premium payments under a life insurance policy on the life of the executive at an incremental cost of $223.

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(5)

Represents (i) 401(k) contributions of $14,700, (ii) an estimated payment of $25,900 to the SERP and (iii) $15,229 of total earnings on the SERP and the IDP.

(6)

Represents ((i) 401(k) contributions of $14,700, (ii) a payment of $16,300 to the SERP and (iii) $3,709 of total earnings on the SERP.

(7)

Represents (i) 401(k) contributions of $14,700, (ii) an estimated payment of $6,700 to the SERP and (iii) $1,852 of total earnings on the SERP.

(8)

Mr. Rossi was President, Strategic Communication Services, which we no longer consider to be one of our business units.

(9)

Represents (i) 401(k) contributions of $14,700, (ii) an estimated payment of $15,300 to the SERP and (iii) $11,055 of total earnings on the SERP.

Option Grants in Fiscal 2006

        The following table summarizes option grants during the fiscal year ended January 31, 2006 to each of our named executive officers.

							Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
	Individual Grants (1)
	Number of Securities Underlying Options Granted (#)	Percent of Total Options Granted to Employees in Fiscal Year
Name				Exercise Price ($/Share)		Expiration Date
							5% ($)		10% ($)
John W. Castro	—	—		$	—	—	$	—	$	—
Rick R. Atterbury	—	—			—	—		—		—
B. Michael James	22,000	38.9	%		26.37	02/11/15		319,847		787,800
Robert H. Nazarian	—	—			—	—		—		—
Steven J. Machov	—	—			—	—		—		—
Mark A. Rossi	—	—			—	—		—		—

(1)

All of the options granted to the individuals in this table were granted under our 1999 stock option plan. Under the individual option agreements, all options vest upon a change in control, as defined in such plan, and remain exercisable for the remainder of their respective terms.

Option Exercises in Fiscal 2006

        None of our named executive officers exercised any stock options during the fiscal year ended January 31, 2006.

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Option Values

        The following table provides information regarding the number and value of exercisable and unexercisable options to purchase shares of our common stock outstanding as of January 31, 2006 by each of our named executive officers. There was no public market for our common stock as of January 31, 2006. Accordingly, as permitted by the rules of the SEC, we have calculated the value of the unexercised in-the-money options at fiscal year end on the basis of an assumed initial public offering price of $             per share, less the applicable exercise price multiplied by the number of shares that may be acquired upon exercise.

Aggregated Fiscal Year-End Option Values

	Number of Securities Underlying Unexercised Options at January 31, 2006
			Value of Unexercised In-the-Money Options at January 31, 2006
Name
	Exercisable	Unexercisable	Exercisable	Unexercisable
John W. Castro	—	—	$	$
Rick R. Atterbury	—	58,200
B. Michael James	6,000	69,300
Robert H. Nazarian	8,000	43,600
Steven J. Machov	900	19,100
Mark A. Rossi	5,000	43,300

Employment Agreements

        We have entered into employment agreements with Messrs. Castro and Atterbury. Under these agreements, Messrs. Castro and Atterbury are entitled to payments in the event we terminate their employment without cause, which means other than as a result of (1) their willful refusal substantially to perform their duties, (2) their conviction of a felony arising from any act of fraud, embezzlement, or willful dishonesty in relation to our business or affairs, (3) any other felonious conduct on their part that is materially detrimental to our best interests, (4) being repeatedly under the influence of illegal drugs or alcohol while performing their duties or (5) any other willful act which is materially injurious to our financial condition or business reputation. If terminated for reasons other than those listed above, each would be entitled to receive:

•

a lump sum payment equal to 2.99 times his annual base salary;



•

a lump sum payment equal to 2.99 times his average bonus over the three consecutive years immediately before his termination; and



•

continuation of all insurance and other benefits for a period of three years.

        In addition, the executives' entire account balance and all accrued benefits under our Supplemental Executive Retirement Plan, as described in more detail under the heading "—Supplemental Executive Retirement Plan" below, and those under our other plans or arrangements providing similar benefits will vest and become non-forfeitable as of the termination date. Should either Mr. Castro or Mr. Atterbury receive any payments under his employment agreement in connection with a change of control he would be entitled to a gross-up payment intended to offset the effect of any excise tax owed under Section 4999 of the Internal Revenue Code of 1986, as amended. Messrs. Castro and Atterbury have also agreed in their employment agreements to certain confidentiality, non-competition and non-solicitation provisions. We intend to amend these employment agreements, if necessary, prior to the end of 2006 to satisfy either the requirements of an exception to, or the provisions

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of, Section 409A of the Internal Revenue Code relating to the taxation of deferred compensation.

        We have also entered into an employment agreement with Perry L. Solomon, our President, Legal Solutions. Under this agreement, Mr. Solomon is entitled to a base salary of $325,000 per year, subject to possible increase from time to time based on performance, and is eligible to receive an annual bonus, with a target of 75% of his base salary. Mr. Solomon is also entitled to receive certain benefits in the event we terminate his employment without cause, which means other than as a result of (1) dishonesty, fraud or gross or willful misconduct, (2) breach of any material provision of his employment agreement or (3) neglect of duties. If terminated without cause, Mr. Solomon would be entitled to receive upon execution of a release of all claims against us a cash payment equal to the lesser of 12 months' base salary or base salary until he commences employment with another organization, any bonus accrued through the date of termination and a lump sum amount equal to the grossed-up cost of 12 months' medical insurance premiums, not to exceed $20,000 net, to offset post-employment medical costs. Mr. Solomon has agreed to certain confidentiality, non-competition and non-solicitation provisions. Additionally, in connection with our acquisition of WordWave, we entered into a five-year non-competition agreement with Mr. Solomon.

        We have also entered into a letter agreement with Craig P. Levinsohn, our Executive Vice President, Marketing pursuant to which we agreed to pay Mr. Levinsohn a base salary of $230,000 and provide him the opportunity to receive an annual bonus, with a target of 50% of his base salary. In the event we terminate Mr. Levinsohn's employment for any reason other than for cause, which is defined as (1) dishonesty, fraud or gross or willful misconduct, (2) breach of any material provision of the employment agreement or (3) neglect of duties, we agreed to pay Mr. Levinsohn four months of base salary, conditioned upon his execution of a release of all claims against us. Mr. Levinsohn has agreed to certain confidentiality, non- competition and non-solicitation provisions.

Management Incentive Plan

        Our executive officers and certain other employees are eligible to participate in our annual management incentive plan that is designed to provide competitive total cash compensation that is closely tied to overall company and business unit performance. Under the plan, participants can earn an incentive payout based on company financial performance and accomplishment of individual objectives. Financial performance measures include earnings before interest, taxes, depreciation, amortization and a non-cash, stock-based employee compensation expense for the management incentive plan, on both a consolidated and a business unit basis. A participant's incentive payout is calculated based on the participant's base salary at the end of the fiscal year multiplied by a target bonus percentage and achievement of a goal percentage. Bonuses earned under the plan are generally paid out within 90 days of the end of the fiscal year.

Change in Control Agreements

        We have entered into change in control agreements with the following named executive officers and other executive officers: B. Michael James, Robert H. Nazarian, Steven J. Machov, Mark A. Rossi and Brenda J. Vale. These executives are entitled to receive the benefits described below if they are terminated in connection with a change in control, which means any of the following:

•

the sale, lease, exchange or other transfer by us of substantially all of our assets;

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•

any person or entity, other than a bona fide underwriter, becomes the beneficial owner of 20% or more of the voting power of our outstanding securities;



•

a merger or consolidation to which we are a party, if our shareholders do not own at least 80% of the voting power of the stock of the surviving corporation;



•

our "continuing directors" cease for any reason to constitute at least a majority of our board ("continuing directors" include members of our current board as well as any future director who is nominated or elected to the board with the approval of a majority of directors who themselves are "continuing directors"); or



•

a change in control of a type that is determined by our outside legal counsel, in a written opinion, to be required to be reported on a Form 8-K, 10-K or 10-Q, whether or not we are subject to those reporting requirements.

        In order to receive the benefits, the executive must be terminated either within 24 months of the occurrence of one of the events listed above or prior to the occurrence of one of the events listed above if the termination was either a condition to the change in control or was at the request or insistence of a person related to the change in control.

        The executives will not receive the benefits if they die or are terminated for cause, which means as a result of the executive's (1) gross misconduct, (2) willful and continued failure to substantially perform his or her duties after demand is given by the Chairman of the Board or (3) conviction of a felony or gross misdemeanor that is materially and demonstrably injurious to us or that impairs the executive's ability to substantially perform his or her duties. The executive will, however, receive the benefits if the executive voluntarily leaves our employ as a result of:

•

an adverse and material change in title, status, position, authority, duties or responsibilities as an executive;



•

a reduction in base salary or an adverse change in the form or timing of an executive's compensation;



•

a failure to cover the executive under similar benefit plans at a substantially similar total cost to the executive (including equity based plans);



•

a relocation to more than 30 miles from the executive's existing office;



•

a failure to obtain a successor's consent to the change in control agreement;



•

any termination of employment not properly noticed; or



•

our refusal to allow the executive to continue to attend to matters or engage in activities not directly related to our business.

        The executive is entitled to receive the following payments and benefits upon the triggering of these agreements:

•

a cash payment equal to two times the sum of the executive's (1) base salary and (2) target cash bonus for the year during which the change in control occurs or the average of the cash bonus for the three fiscal years ending immediately prior to the change in control, whichever is greater;



•

medical, dental and vision benefits to the executive, his or her family members and dependents for two years after the date the executive's employment is terminated, at a substantially similar total cost to the executive;

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•

the account balance under our Supplemental Executive Retirement Plan, as described in more detail under the heading "—Supplemental Executive Retirement Plan" below, will become fully vested and non-forfeitable and we will cause all distributions under this plan to be made regardless of the provisions of the plan that permit these distributions to be deferred; and



•

an additional cash payment, if any, sufficient to cover all tax obligations arising from excise taxes.

        These change in control agreements automatically renew for additional 12-month periods unless we give the executive 90 days' advance notice of our intent to terminate the agreements. In addition, if a change in control occurs during the term of the agreements, the agreements will continue for an additional 24 months. We intend to amend these change in control agreements, if necessary, prior to the end of 2006 to satisfy either the requirements of an exception to, or the provisions of, Section 409A of the Internal Revenue Code relating to the taxation of deferred compensation.

2006 Stock Incentive Plan

General

        Our 2006 Stock Incentive Plan, which we refer to as the 2006 plan, will become effective upon the consummation of this offering. The 2006 plan allows us to award eligible recipients incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, stock units, performance units and stock bonuses. The 2006 plan will replace our 1999 Stock Option Plan, which will be terminated with respect to future awards. All of our employees, consultants, advisors and independent contractors will be eligible to receive incentive awards under the 2006 plan.

        The maximum number of shares reserved for issuance under the 2006 plan is                           . The number of shares available for issuance under the 2006 plan is subject to increase to the extent that we issue shares or incentive awards under the 2006 plan in connection with certain merger and acquisition transactions, or assume any plan in a merger or acquisition transaction. However, any available shares in an assumed plan may only be utilized to the extent permitted under the rules and regulations of the                  . Under the terms of the 2006 plan:

•

no participant may be granted options or stock appreciation rights relating to more than                           shares of common stock in the aggregate during any calendar year;



•

no participant may be granted restricted stock awards, stock unit awards, performance awards and stock bonuses relating to more than                           shares of common stock in the aggregate during any calendar year; and



•

no more than                           shares of common stock may be issued pursuant to the exercise of incentive stock options.

        These individual award limits, however, will be                           shares and                           shares, respectively, as to a participant who, during the calendar year, is first appointed or elected as an officer, hired as an employee, elected as a director or retained as a consultant by us or who receives a promotion that results in an increase in responsibilities or duties. All of the share limitations in the 2006 plan may be adjusted to reflect changes in our corporate structure or shares, as described below. In addition, the limits on individual equity awards and on the number of shares that may be issued as incentive stock options will not apply to

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certain incentive awards granted upon our assumption or substitution of like awards in any merger or acquisition.

        Shares of common stock that are issued under the 2006 plan or that are potentially issuable pursuant to outstanding incentive awards reduce the number of shares remaining available. The total number of shares that may be issued under the 2006 plan will be reduced by                           additional share for each share issued pursuant to a restricted stock award, stock unit award or performance award, or potentially issuable pursuant to an outstanding restricted stock award, stock unit award or performance award. All shares so subtracted from the amount available under the 2006 plan with respect to an incentive award that lapses, expires, is forfeited or for any reason terminates unexercised or unvested and any shares of common stock that are subject to an incentive award that is settled or paid in cash or any other form other than shares of common stock will automatically again become available for issuance under the 2006 plan. However, any shares not issued due to the exercise of an option by a "net exercise" or the tender or attestation as to ownership of previously acquired shares (as described below), as well as shares covered by a stock appreciation right, to the extent exercised, will not again become available for issuance under the 2006 plan.

        In the event of 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 change in our corporate structure or shares, we may adjust the number and kind of securities available for issuance under the 2006 plan, the limits on the numbers of shares that may be granted to a participant within any calendar year or that may be granted as incentive stock options under the 2006 plan, and in order to prevent dilution or enlargement of the rights of participants, the number, kind and, where applicable, the exercise price of securities subject to outstanding incentive awards.

Administration

        The 2006 plan will be administered by our board of directors or by a committee of the board. Any such committee will consist of at least two members of the board, all of whom are "non-employee directors" within the meaning of Rule 16b-3 under the Securities Exchange Act, who are "independent" as required by the listing standards of the                                                      and are "outside directors" under Section 162(m) of the Internal Revenue Code. We expect the compensation committee of our board of directors to administer the 2006 plan. The committee may delegate its duties, power and authority under the 2006 plan to any of our officers to the extent consistent with applicable Minnesota corporate law, except with respect to participants subject to Section 16 of the Securities Exchange Act of 1934.

        The committee will have the authority to determine all provisions of incentive awards consistent with terms of the 2006 plan, including the eligible recipients who will be granted one or more incentive awards under the 2006 plan, the nature and extent of the incentive awards to be made to each participant, the time or times when incentive awards will be granted, the duration of each incentive award and the restrictions and other conditions to which the payment or vesting of incentive awards may be subject. In addition, the committee will have the authority to pay the economic value of any incentive award in the form of cash, common stock or any combination of both, and may amend or modify the terms of outstanding incentive awards (except for any prohibited "re-pricing" of options, discussed below) so long as the amended or modified terms are permitted under the 2006 plan and any adversely affected participant has consented to the amendment or modification.

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        Except in connection with certain specified changes in our corporate structure or shares, the committee may not, without prior approval of our shareholders, seek to effect any re-pricing of any previously granted "underwater" option or stock appreciation right. For purposes of the 2006 plan, an option or stock appreciation right is deemed to be "underwater" at any time when the fair market value of the common stock is less than the exercise price.

Change in Control

        In the event of a "change in control" (as defined in the plan), if approved by the committee in its sole discretion either at the time of the grant of the incentive award or at any time after such grant, all options and stock appreciation rights will become immediately exercisable in full and will remain exercisable for the remainder of their terms, all outstanding restricted stock awards will become immediately fully vested and non-forfeitable and any conditions to the payment of stock unit awards and performance awards will lapse. The committee may condition acceleration on subsequent events, including the failure of any successor to assume the incentive awards, or the participant's involuntary termination, other than for "cause" (as defined in the 2006 plan), or voluntary termination for "good reason" (also as defined in the 2006 plan), within a specified period of time following a change in control.

        In addition, the committee in its sole discretion may determine that some or all participants holding outstanding options will receive cash in an amount equal to the excess of the fair market value of such shares immediately prior to the effective date of such change in control over the exercise price per share of the options (or, in the event that there is no excess, that such options will be terminated), and that some or all participants holding performance awards will receive, with respect to some or all of the shares subject to the performance awards, cash in an amount equal to the fair market value of such shares immediately prior to the effective date of such change in control.

Effect of Termination of Employment or Other Services

        If a participant ceases to be employed by or perform other services for us and all subsidiaries, all incentive awards held by the participant will be treated as set forth below unless provided otherwise in the agreement evidencing the incentive award or modified by the committee in its discretion.

        Upon termination due to death, disability or retirement, all outstanding, exercisable options and stock appreciation rights then held by the participant will remain exercisable for a period of 12 months thereafter (but in no event after the expiration date of any such option or stock appreciation rights), all unvested restricted stock awards then held by the participant will be terminated, and all outstanding stock unit awards and performance awards then held by the participant will be terminated and forfeited.

        Upon termination for any reason other than death, disability or retirement, all rights of the participant under the 2006 plan and any award agreements will immediately terminate without notice of any kind, and no options and stock appreciation rights then held by the participant will thereafter be exercisable, all unvested restricted stock awards will be terminated and forfeited, and all outstanding stock unit awards and performance awards then held by the participant will be terminated and forfeited; provided, however, that if a termination is for any reason other than "cause" (as defined in the 2006 plan), all outstanding, exercisable options and stock appreciation rights then held by the participant will remain

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exercisable for a period of 12 months thereafter (but in no event after the expiration date of any such option or stock appreciation rights).

Amendment or Termination

        Unless terminated earlier, the 2006 plan will terminate at midnight on the tenth (10th) anniversary of its approval by our shareholders. Incentive awards outstanding at the time the 2006 plan is terminated may continue to be exercised, earned or become free of restriction, according to their terms. Our board of directors may suspend or terminate the 2006 plan or any portion of the plan at any time. In addition to the committee's authority to amend the 2006 plan with respect to participants resident outside of the United States or employed by a non-U.S. subsidiary, the board may amend the 2006 plan from time to time in order that incentive awards under the 2006 plan will conform to any change in applicable laws or regulations or in any other respect that the board may deem to be in our best interests; provided, however, that no amendments to the 2006 plan will be effective without shareholder approval, if it is required under Section 422 of the Internal Revenue Code or the rules of the                  or if the amendment seeks to increase the number of shares reserved for issuance under the 2006 plan (other than as a result of a permitted adjustment upon certain corporate events, such as stock splits) or to modify the prohibitions on underwater option re-pricing discussed above.

        Termination, suspension or amendment of the 2006 plan will not adversely affect any outstanding incentive award without the consent of the affected participant, except for adjustments in the event of changes in our capitalization or a "change in control" of our company.

1999 Stock Option Plan

        Under our 1999 stock option plan, which we refer to as our 1999 plan, we may grant incentive and non-statutory stock options to purchase shares of our common stock to our employees, non-employee directors, consultants and independent contractors. Our compensation committee administers the 1999 plan. Upon completion of this offering, no future option grants will be made under the 1999 plan. We intend to amend the 1999 plan prior to the end of 2006 as necessary to satisfy either the requirements of an exception to, or the provisions of, Section 409A of the Internal Revenue Code relating to the taxation of deferred compensation.

Shares Available for Issuance

        We have reserved                           shares of our common stock for issuance under our 1999 plan. As of January 31, 2006, we had outstanding options to purchase                           shares of our common stock at a weighted average exercise price of $             per share, held by an aggregate of 227 current and former employees and independent contractors of our company. Some of the outstanding options granted under the 1999 plan are subject to time-vesting schedules, which generally are for a period of five to six years, and others are subject to time- and performance-vesting schedules, which are linked to certain corporate milestones.

Effect of Termination of Employment or Other Service

        Options granted under our 1999 plan generally terminate either immediately or within a certain period after an optionee's employment or other service with our company terminates.

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Unless otherwise provided in the optionee's stock option agreement, if an optionee is terminated for cause, which means as a result of:

•

dishonesty, fraud, misrepresentation, embezzlement or other act of dishonesty with respect to us or any of our subsidiaries;



•

any serious unlawful or criminal activity;



•

any intentional and deliberate breach of a duty that is material in relation to the optionee's overall duties;



•

any material breach of any employment, service, confidentiality or non-compete agreement the optionee has entered into with us; or



•

any action the compensation committee determines to be adverse to us or any of our subsidiaries, such as the disclosure of any of our confidential information to any person not authorized by us to receive it, the engagement in any commercial activity that in the judgment of the compensation committee competes with our business, or the interference with our relationships with employees or clients;

his or her options will immediately terminate and no longer be exercisable. In addition, we will have the right to repurchase from the optionee all shares of common stock the optionee previously acquired upon the exercise of any options at a price equal to the exercise price paid by the optionee to acquire these shares of common stock.

        Unless otherwise provided in an optionee's stock option agreement, if an optionee's employment or other service with us terminates for any other reason whatsoever, whether due to voluntary resignation, death, disability, retirement or termination by us without cause, the options that were exercisable as of the optionee's termination date will remain exercisable for one year.

Limitations on Our Right to Repurchase

        In connection with any repurchase of an optionee's shares, we will only be required to pay the optionee for these shares as rapidly as permissible without violating any of our loan covenants or other contractual restrictions applicable to and binding upon us. Any amounts not paid to an optionee on the repurchase date will bear interest at a fixed annual rate of 8.0%. In addition, we will only be required to repurchase any shares to the extent that the repurchase does not violate any applicable laws.

Effect of an Adverse Action

        Our compensation committee may immediately terminate all of an optionee's rights under the 1999 plan and his or her options if the optionee engages in any action the compensation committee determines to be adverse to us or any of our subsidiaries, such as:

•

the disclosure of any of our confidential information to any person not authorized to receive it;



•

the engagement in any commercial activity that in the judgment of the compensation committee competes with our business; or



•

the interference with our relationships with employees or clients;

before or within 12 months after the termination of the optionee's employment or other service with us. In addition, if an optionee takes this type of action during the 12 months before or within 12 months after his or her termination, the compensation committee may

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rescind any option exercises that occurred during this period and require the optionee to pay to us within 10 days of receipt of notice of the rescission the amount of any gain the optionee realized as a result of the rescinded exercise.

Effect of a Change in Control

        If any one of the following events occurs, an optionee's options may become immediately exercisable in full and remain exercisable for the remainder of their terms or may be "cashed out" pursuant to the terms of the 1999 plan:

•

a sale or other transfer by DLJ Merchant Banking Partners II, L.P. and its affiliated entities of 90% or more of its shares of common equity in us (including all common equity originally purchased by DLJ Merchant Banking Partners II, L.P. and such affiliates and any additional common equity purchased by DLJ Merchant Banking Partners II, L.P. and such affiliates thereafter) 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 our common equity;



•

the sale, lease, exchange or other transfer of substantially all of our assets; or



•

a merger or consolidation to which we are a party, if our shareholders own at least 50% of the voting power of the surviving corporation.

        An exhibit to the optionee's option agreement states whether or not the vesting of his or her option will accelerate upon the occurrence of one of these events. To the extent the acceleration of the vesting of an option, together with any other payment the optionee has the right to receive from us would constitute a parachute payment subject to an excise tax under the Internal Revenue Code of 1986, as amended, the payments will be reduced so they will not be subject to any excise tax imposed by the Internal Revenue Code. The payments will not be reduced, however, if the optionee is subject to a separate agreement with us that provides otherwise.

Transfer Restrictions

        An optionee may not assign or transfer any of his or her options prior to their exercise to any person, including trusts for estate planning purposes. Furthermore, the optionee may not subject any of his or her options to any lien during the optionee's lifetime. Upon the exercise of an option, an optionee will automatically become a party to and be bound by all the terms and conditions of the investors' agreement, as described in "Certain Relationships and Related Party Transactions."

Employee Stock Purchase Plan

        On                                       , our board of directors approved our Employee Stock Purchase Plan. Our board has reserved                   shares of our common stock for issuance under the plan. We intend to submit the plan to our shareholders for their approval within the next twelve months.

        Under this plan, eligible employees have the right to purchase shares of our common stock through payroll deductions made during consecutive offering periods. The plan has two six-month offering periods each year. The plan is intended to qualify under the provisions of Section 423 of the Code. Subject to certain restrictions imposed by the Code, persons eligible to participate in the plan are those who are employed by us or one of our designated subsidiaries for at least 20 hours per week and for more than five months in a calendar year. Eligible employees participate voluntarily and may withdraw from any offering period at any

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time before they purchase stock. Participation terminates automatically upon termination of employment.

        We will sell shares under the plan to participants at a discount from their fair market value. The purchase price per share of common stock in an offering period will not be less than        % of the lesser of its fair market value at the beginning of an offering period or at the end of an offering period. To accumulate the purchase price for the shares, each participant executes an agreement which authorizes payroll deductions up to a maximum of       % of the participant's eligible compensation. The plan restricts the maximum number of shares we may issue to a participant during a single offering period, and provides that no participant will be permitted to subscribe for shares if, immediately after the sale, that participant would own more than 5% of the combined voting power or value of all classes of our stock.

        The plan provides for adjustments in the number of shares subject to purchase under the plan, and in the purchase price per share, if there is a change in our capitalization that results in an increase or decrease in the number of outstanding shares of our common stock. The plan also gives our board the authority to shorten an offering period, and thereby accelerate a participant's right to purchase shares, in the event of a proposed sale of all or substantially all of our assets or a proposed merger with another company.

Direct Investment Plan

        In December 1999, our board of directors and shareholders adopted the direct investment plan, which was subsequently amended twice and restated, pursuant to which we offered our employees, non-employee directors, consultants and independent contractors the opportunity to purchase reinvestment and coinvestment shares of our common stock. Our compensation committee administers the direct investment plan. Upon completion of this offering, no additional shares will be issued under the direct investment plan. We intend to amend the direct investment plan prior to the end of 2006 as necessary to satisfy either the requirement of an exception to, or the provisions of, Section 409A under the Internal Revenue Code relating to the taxation of deferred compensation.

Number of Shares Reserved for Issuance

        We have reserved                           shares of our common stock for issuance under the direct investment plan, of which                           shares are designated for reinvestment shares and                           shares are designated for coinvestment shares. As of January 31, 2006,                           reinvestment shares and                           coinvestment shares had been issued under the direct investment plan, held by an aggregate of 189 current and former employees and independent contractors of our company. We have not offered any employees the opportunity to purchase reinvestment or coinvestment shares since 2000.

Reinvestment Shares

        The reinvestment shares are the shares of common stock participants are permitted to purchase out of their own funds. Participants are solely responsible for paying the entire amount of the purchase price of reinvestment shares, and unlike the coinvestment shares, we do not lend participants any funds to purchase their reinvestment shares. Not all participants in the direct investment plan are given the opportunity to purchase reinvestment shares. As of January 31, 2006, 66 current and former employees and independent contractors held an aggregate of                           reinvestment shares.

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Coinvestment Shares

        The coinvestment shares are the shares of common stock participants are permitted to purchase with our financial assistance. We loan participants 65% of the total purchase price of the coinvestment shares a participant elects to purchase. The participant is solely responsible for paying the remaining 35% or more balance of the purchase price. The proceeds of the loan must be used solely to assist the participant with the purchase of his or her coinvestment shares. As a condition to us making the loan, all of a participant's coinvestment shares must be pledged as collateral for the loan. As of January 31, 2006, 179 current and former employees and independent contractors held an aggregate of                           coinvestment shares, substantially all of which were vested as of that date. Each participant became immediately vested with respect to 35% of his or her coinvestment shares, because this portion was purchased by the participant without financial assistance. The remaining 65% of the coinvestment shares, have vested over a five-year period. Once coinvestment shares vest, the participant is able to transfer these shares to the extent permitted by the direct investment plan and the investors' agreement. In the event we repurchase vested coinvestment shares, the participant is entitled to receive the fair market value of the shares at a specified valuation date during the fiscal year of transfer plus an adjustment which is based on changes, positive or negative, in the fair market value of the coinvestment shares between that valuation date and the date we exercise our right to repurchase.

Non-Recourse Promissory Notes

        All loans we have made to assist participants in purchasing coinvestment shares are evidenced by non-recourse promissory notes, which accrue interest at a fixed annual rate. In April 2003, we reduced the original 8% interest rate on the loans of our then current employees and independent contractors who executed amended participation agreements to a fixed annual rate of 2.97%. Participants are not required to pay any interest during the term of the notes, but all accrued but unpaid interest and the principal balance must be paid within 120 days following an initial public offering of any of our equity securities.

        Pursuant to an agreement we entered into with our executive officers and certain other employees holding coinvestment shares, we paid each of these employees a bonus in an amount equal to the outstanding principal amount under his or her loan and any accrued but unpaid interest and an additional amount to pay for the estimated federal, state and local income tax the employee would incur as a result of the receipt of such bonus. Pursuant to this agreement, in exchange for this bonus, these employees repaid all outstanding principal and accrued interest under the loans. They also agreed to the terms of an amended and restated investors' agreement described under the heading "Certain Related Parties and Related Party Transactions—Investors' Agreement" and to the imposition of a four-year staggered lock-up with us covering their outstanding shares of our common stock and shares of our common stock issuable upon exercise of options outstanding as of the effectiveness of this offering. The transfer restrictions terminate as to one-quarter of such shares on each of the first, second, third and fourth anniversaries of the completion of this offering. The transfer restrictions may be waived by our board of directors.

Pledge of Shares

        Participants who purchased coinvestment shares were required to grant to us a security interest in all of the participant's coinvestment shares by executing a pledge agreement. If the collateral for a participant's note exceeded the outstanding balance of the loan and all accrued interest, we had the right, upon the participant's request and in our discretion, to release some of the participant's shares. If we repurchase a participant's pledged coinvestment

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shares, the proceeds will be applied against the outstanding balance of the participant's loan and all accrued interest before the participant receives any proceeds. So long as a participant's coinvestment shares are pledged to us, they may not be subject in any manner to alienation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person, except as permitted under the investors' agreement. If the participant is unable to pay his or her note when it becomes due, we will have the right under the pledge agreement to reacquire the participant's shares. The note is a non-recourse note, which means that if the proceeds of the repurchase do not exceed the outstanding balance of the participant's loan and all accrued interest, we will not have the right under the terms of the note to hold the participant personally responsible for the remaining amount he or she owes under the note.

Right of Repurchase

        If a participant's employment or other service with us terminates for any reason whatsoever prior to the occurrence of one of the following events, we will have the right to repurchase all or any portion of the participant's shares:

•

a sale or other transfer by DLJ Merchant Banking Partners II, L.P. and certain of its affiliates of 60% or more of its shares of common equity in us (including all common equity originally purchased by DLJ Merchant Banking Partners II, L.P. and such affiliates and any additional common equity purchased by DLJ Merchant Banking Partners II, L.P. and such affiliates thereafter) 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 our common equity;



•

the sale, lease, exchange or other transfer of substantially all of our assets; or



•

a merger or consolidation to which we are a party, if our shareholders own at least 50% of the voting power of the surviving corporation.

        The price we will pay for these shares depends on the reason for the participant's termination.

        If the participant's employment or other service with us is terminated by us for cause, which means as a result of (1) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, (2) any unlawful or criminal activity of a serious nature, (3) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the participant's overall duties, (4) any material breach of any employment, service, confidentiality or non-compete agreement entered into with us or any of our subsidiaries or (5) an action the compensation committee determines to be adverse to us or any of our subsidiaries, we will pay for each share owned by the participant (whether it is a reinvestment share or a coinvestment share or is vested or unvested) the lesser of:

•

an amount equal to:



•

the fair market value of each share as determined on a predefined valuation date in the fiscal year in which the participant's employment or other service is terminated;



•

plus or minus any adjustment in the fair market value of the participant's shares from the valuation date in the fiscal year in which the participant's employment or other service is terminated until the date of the participant's termination; or



•

the purchase price the participant paid for each share, without any accrued and unpaid interest on the loan relating to the coinvestment shares being paid.

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        If a participant's employment or other service with us terminates for any other reason whatsoever other than for cause, we will pay the participant:

•

for each coinvestment share and all of the participant's reinvestment shares, an amount equal to:



•

the fair market value of each share as determined on the valuation date in the fiscal year in which the participant's employment or other service is terminated;



•

plus or minus any adjustment in the fair market value of the participant's shares from the valuation date in the fiscal year in which the participant's employment or other service is terminated until the date of the participant's termination;



•

for each coinvestment share that has not vested at the time of termination, an amount equal to the lesser of:



•

the fair market value of each coinvestment share as determined on the valuation date in the fiscal year in which the participant's employment or other service is terminated, plus or minus any adjustment in the fair market value of the participant's shares from the valuation date in the fiscal year in which the participant's employment or other service is terminated until the date of the participant's termination; or



•

the purchase price the participant paid for each unvested coinvestment share plus all accrued and unpaid interest on the loan relating to the unvested coinvestment share.

        Regardless of the reason for the termination of the participant's employment, the compensation committee may in its sole discretion determine to pay a higher, but not lower, price for the participant's shares. In the event we repurchase any of the participant's coinvestment shares, our compensation committee, in its sole discretion, will on the repurchase date make an appropriate adjustment to the purchase price paid on this date to repay any interest that has accrued on the participant's loan from the date of the termination of the participant's employment or other services with us until the date we repurchase the participant's coinvestment shares.

Put Right

        So long as a participant's employment or other service with us terminates by reason of voluntary resignation, death, disability, retirement or terminated by us without cause, which means other than as a result of (1) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, (2) any unlawful or criminal activity of a serious nature, (3) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the participant's overall duties, (4) any material breach of any employment, service, confidentiality or non-compete agreement entered into with us or any of our subsidiaries or (5) an action the compensation committee determines to be adverse to us or any of our subsidiaries, the participant will have the right to "put" all or any portion of his or her reinvestment shares and coinvestment shares to us and require us to repurchase these shares in the event neither we nor anyone to whom we may assign our right of repurchase decides to repurchase the participant's shares.

        The per share price at which we must purchase these shares will be equal to:

•

the fair market value for each share as determined on the valuation date in the fiscal year in which the participant's employment or other service is terminated;

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•

plus or minus any adjustment in the fair market value of the participant's shares from the valuation date in the fiscal year in which the participant's employment or other service is terminated until the date of the participant's termination.

Hardship Repurchases

        In the event a participant feels he or she has an immediate and heavy financial need, the participant may request that the compensation committee repurchase his or her shares. A repurchase under these circumstances will be permitted only if the compensation committee determines in its sole discretion that the repurchase is made on account of the participant's immediate and heavy financial need and is necessary to satisfy this financial need.

        A hardship repurchase will be deemed to be necessary only if the compensation committee determines in its sole discretion that the aggregate purchase price we must pay is not more than the sum of the amount of the participant's immediate and heavy financial need plus the amount necessary to pay any estimated federal, state or local taxes or penalties that the participant will incur in connection with the repurchase. The compensation committee will pay the participant the fair market value for each share as determined on the most recent valuation date prior to the hardship repurchase.

Limitations on Our Right to Repurchase

        In connection with any repurchase of a participant's shares, we will only be required to pay the participant for these shares as rapidly as permissible without violating any of our loan covenants or other contractual restrictions applicable to and binding upon us. Any amounts not paid to a participant on the repurchase date will bear interest at a fixed annual rate equal to 8.0%. In addition, we will only be required to repurchase any shares to the extent that the repurchase does not violate any applicable laws.

Effect of Adverse Action

        If a participant engages in any adverse action before or within 12 months after the participant's employment or other service with us terminates by reason of voluntary resignation, death, disability, retirement or is terminated by us without cause, which means other than as a result of (1) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, (2) any unlawful or criminal activity of a serious nature, (3) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the participant's overall duties, (4) any material breach of any employment, service, confidentiality or non-compete agreement entered into with us or any of our subsidiaries or (5) an action the compensation committee determines to be adverse to us or any of our subsidiaries, we will have the right to repurchase all of the participant's shares for the lesser of:

•

the fair market value for each share as of the most recent valuation date prior to the participant's termination of employment or other service plus or minus any adjustments in the fair market value of the participant's shares from the valuation date in the fiscal year in which the employment or other service is terminated until the date of the participant's termination; or



•

the purchase price the participant paid for his or her shares.

        In addition, if the participant received an amount in excess of this purchase price in connection with a prior repurchase by us or the sale or other transfer of these shares during the 12 months before or 12 months after the date the participant's employment or other

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service with us terminates, the participant will be required to pay us in cash any of this excess within 10 days of receipt of notice from us.

Long-Term Incentive Plans

        In December 2002, our board of directors adopted the 2003 long-term incentive plan to provide certain employees opportunities to receive additional compensation and benefit from the growth of the company and its subsidiaries. During the fourth quarter of fiscal 2003, previously granted stock options to purchase                           shares were cancelled and the holders were issued             long-term incentive units under the 2003 long-term incentive plan on a one-for-one basis together with a cash payment of $             per share subject to each option cancelled.

        Under the 2003 long-term incentive plan, our board of directors may grant "potential units" to employees from time to time with terms and conditions established pursuant to the plan. Potential units become "earned units" based upon vesting terms established at the time of the grant. The amount payable to a participant employee shall be determined upon the earlier of a change in control (which is identical to the definition of a change in control in our 1999 plan), April 1, 2009 or at the discretion of our board of directors. The amount payable to the participant employee in either case is the excess of the value of each earned unit over the base amount for each earned unit, as set by the board of directors at the time the potential unit was granted. The maximum number of potential units to be granted under this plan is                           . As of January 31, 2006, approximately 292 current and former employees held potential units under the long term incentive plan, all units had a base amount of $             per unit and all units had been earned.

        A second 2003 long-term incentive plan (the second 2003 plan), with terms similar to the 2003 long-term incentive plan described above, was adopted in December 2003, and                           potential units were immediately granted, all with base amounts of $             per unit. The amount payable to a participant employee under the second 2003 plan shall be determined upon the earlier of a change in control (which is identical to the definition of a change in control in our 1999 plan), December 1, 2009 or at the discretion of our board of directors. The amount payable to the participant employee in either case is the excess of the value of each earned unit over the base amount for each earned unit, as set by the board of directors at the time the potential unit was granted. The maximum number of potential units to be granted under the second plan is             . As of January 31, 2006,                            potential units remained outstanding, held by approximately 59 current employees.

        We intend to amend both 2003 long-term incentive plans prior to the end of calendar 2006 as necessary to satisfy either the requirements of an exception to, or the provisions of, Section 409A of the Internal Revenue Code relating to the taxation of deferred compensation.

Merrill Income Deferral Plan

        We adopted the Merrill Income Deferral Plan, a non-qualified retirement plan effective August 1995. Since calendar 2001, however, the deferral plan has been frozen with respect to new participants and no additional deferrals and/or employer credits have been made on behalf of existing participants, although existing accounts continue to receive earnings credits. Under the deferral plan, until calendar 2001, participants (a select group of management and highly compensated employees) could elect to defer a portion of earned salary, bonus and/or commissions and received additional employer credits under the deferral plan. As of the last day of each semi-monthly payroll period, we credit each participant's account with an earnings credit that is based on the Moody's Corporate Bond Yield Averages—Avg. Corp. As

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of January 31, 2006, 15 employees participated in the deferral plan, including Messrs. Castro and James. Mr. Castro received $13,393 and Mr. James received $3,354 in earnings credits under the plan during fiscal 2006. Mr. James received a $121,840 distribution (including his $3,354 in earnings credits) under the plan during fiscal 2006.

        We established the Merrill Corporation Benefit Protection Trust Agreement, or a "rabbi trust," in 1995 to pay out benefits owed under the deferral plan and the supplemental executive retirement plan discussed below and we have contributed certain assets to that rabbi trust. Under the terms of the deferral plan, upon a change in control we must transfer to the rabbi trust an amount not less than the amount by which 125% of the aggregate balance of all participant's accounts as of the last day of the month immediately preceding the effective date of the change in control exceeds the value of the rabbi trust assets attributable to amounts previously contributed by us as of the most recent date as of which such value was determined. In connection with the change in control we experienced in November 1999, we transferred funds to the trust at that time. If another change of control occurred on January 31, 2006, we would be obligated to transfer an additional $225,155 to the trust.

Retirement Benefits

        We sponsor the Merrill Corporation 401(k) Incentive Savings Plan, a tax-qualified retirement plan under Section 401 of the Internal Revenue Code. Eligible employees may elect to defer compensation under the 401(k) plan, subject to certain plan and statutory limits, on a pre-tax or after-tax basis. We add to employee's retirement savings by contributing: (1) basic matching contributions (100% of the employee's pre-tax contributions up to a maximum of 4% of the employee's eligible earnings), (2) supplemental matching contributions (made only for non-highly compensated employees, employees earning less than $95,000 per year, (25% of the employee's pre-tax contributions up to a maximum of $200) and (3) employer contributions (3% of eligible earnings). Our contributions to the 401(k) plan for the plan year ended January 31, 2005 were $10.7 million. Our contributions to the 401(k) plan for the plan year ending January 31, 2006 have not yet been determined.

        We adopted the Merrill Supplemental Executive Retirement Plan, or "SERP," a non-qualified retirement plan, effective August 1995. The SERP provides additional retirement benefits to participants (a select group of management and highly compensated employees) to make up for employer contributions they could not receive under our 401(k) plan due to limitations on compensation imposed by Section 401(a)(17) of the Internal Revenue Code. Each year eligible participants receive credit under the SERP for an amount, if any, by which the amount of compensation that would have been taken into account to determine such participant's employer contribution under our 401(k) plan for the year (but for the participant's deferral election pursuant to the deferral plan described above and the Code Section 401(a)(17) limitation) exceeds the limitation in effect under Code section 401(a)(17) for such year. As of January 31, 2006, 14 employees participate in the plan, including Messrs. Castro, Atterbury, James, Nazarian, Machov, Rossi, Stolle and Kopel and Ms. Vale. As of the last day of each month, each participant's account is credited with an earnings credit that is based on the Standard & Poor's 500 Index and the Moody's Corporate Bond Yield Averages—Avg. Corp. The following named executive officers received the following earnings credits during fiscal 2006: Mr. Castro ($28,538), Mr. Atterbury ($17,605), Mr. James ($11,875), Mr. Nazarian ($3,709), Mr. Machov ($1,852) and Mr. Rossi ($11,055). Benefits under the SERP may be paid as a single lump sum cash payment or in five annual installments. As discussed above, we formed a rabbi trust in 1995 to pay out benefits owed under the SERP and we have contributed certain assets to that rabbi trust. Under the terms of the SERP, upon a change in control we must transfer to the rabbi trust an amount not less than the amount by which

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125% of the aggregate balance of all participant's accounts as of the last day of the month immediately preceding the effective date of the change in control exceeds the value of the rabbi trust assets attributable to amounts previously contributed by us as of the most recent date as of which such value was determined. In connection with the change in control we experienced in November 1999, we transferred funds to the trust at that time. If another change of control occurred on January 31, 2006, we would be obligated to transfer an additional $1.0 million to the trust.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        Since February 1, 2002, we have entered into or maintained the following transactions or relationships with our directors, officers and holders of more than five percent of our voting securities and affiliates of our directors, officers and five percent shareholders.

Investors' Agreement

        In November 1999, we effected a merger and recapitalization pursuant to which we became a privately-held company. As a result of the merger, John W. Castro, our Chairman of the Board and Chief Executive Officer, and Rick R. Atterbury, our President and Chief Operating Officer, retained an equity interest in our company representing 23.4% of our then outstanding capital stock (excluding warrants).

        In connection with the merger and recapitalization in November 1999, we entered into an investors' agreement with DLJ Merchant Banking Partners II, L.P. and certain of its affiliates, Messrs. Castro and Atterbury and our preferred shareholders. Our preferred warrant holders are also parties to the agreement, but the holders of the warrants we issued in November 1999 to the holders of our senior subordinated notes are not. Subsequent to November 1999, all of the individuals who purchased reinvestment or coinvestment shares under our direct investment plan also became parties to the investors' agreement. In addition, under the terms of our 1999 stock option plan, all holders of stock options granted under that plan will become parties to the investors' agreement upon exercise of their options.

        The investors' agreement contains provisions regarding board composition, transfer restrictions, tag-along and drag-along rights, preemptive rights and registration rights. It is expected that the investors' agreement will be amended and restated to revise the notice requirements for piggyback registration rights applicable to this offering as described below. The amended and restated investors' agreement would also eliminate, effective as of the effectiveness of this offering, the restrictions on transfer, tag-along and drag-along rights and preemptive rights.

        Pursuant to the board composition provisions in the investors' agreement, our board of directors is required to consist of at least seven directors, three of whom (including the Chairman) are to be nominated by DLJ Merchant Banking Partners II, L.P., three of whom are to be nominated by Messrs. Castro and Atterbury and one of whom is to be nominated by DLJ Investment Partners II, L.P. so long as its beneficial ownership of our common stock exceeded 10% of its initial ownership of our capital stock. The parties to the investors' agreement have agreed to vote their common shares so that the composition of our board remains as set forth above.

        Pursuant to the amended and restated investors' agreement, the notice requirement for the piggyback registration rights applicable to this offering would be amended to provide for a post-filing notice requirement. The investors' agreement also contains a lock-up provision, which we expect to amend in the amended and restated investors' agreement to clarify that the lock-up provision will apply to all parties to the agreement in connection with this offering and will only apply with respect to future public offerings. We also intend that the lock-up provisions in the amended and restated investors' agreement will not apply to shelf registrations. The amended and restated investors' agreement would also revise the registration rights provisions under which the shareholders who are parties to the agreement may have the right to request that we register their shares under the Securities Act, either pursuant to a demand registration, a shelf registration or in conjunction with shares we intend to register. These rights are described in more detail under the heading "Description of Capital Stock—Registration Rights" appearing elsewhere in this prospectus.

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Issuance of Preferred Stock and Outstanding Redemption Rights

        In November 1999, at the time of our merger and recapitalization in which we became a privately-held company, we issued and sold an aggregate of 500,000 shares of 14.5% senior preferred stock due 2011 to affiliates of our major shareholder and institutional investors, including funds affiliated with DLJ Merchant Banking Partners II, L.P. for an aggregate purchase price of $40.0 million. We also issued to these investors at that time warrants to purchase an aggregate of 344,263 shares of our common stock at an exercise price of $0.01 per share. These warrants expire on November 15, 2011.

        In August 2002, we completed a debt restructuring in which, among other things, we entered into an agreement with the holders of our preferred stock pursuant to which the preferred stock was amended as follows:

•

all future dividends were eliminated;



•

the per share liquidation preference was changed to $117.72;



•

the liquidation preference ceased to accrete after August 9, 2002, when the aggregate liquidation value was approximately $58.9 million; and



•

the holders of the preferred stock were granted the right to receive additional warrants to purchase approximately 378,202 shares of our common stock at a purchase price of $0.01 per share under certain circumstances.

        The completion of this offering will trigger the issuance of the additional warrants to purchase 378,202 shares of our common stock at a purchase price of $0.01 per share to holders of our preferred stock. These additional warrants will expire on August 8, 2012.

        The following table sets forth the number of shares of preferred stock held by our affiliates, the aggregate redemption price plus accumulated and unpaid dividends as of October 31, 2005, and the number of additional warrants to be issued to these entities upon completion of this offering:

Name of Preferred Shareholder	Number of Shares of Preferred Stock	Aggregate Redemption Price Plus Accumulated and Unpaid Dividends		Number of Warrants	Number of Warrants to be Issued
DLJIP II Holdings, L.P.	38,080	$	4,527,430	26,218	28,803
DLJ Investment Partners, L.P.	53,662		6,380,014	36,947	40,590
DLJ Investment Partners II, L.P.	120,758		14,357,231	83,146	91,341

Financial Advisory Fees and Agreements

        Donaldson, Lufkin & Jenrette Securities Corporation, an affiliate of DLJ Merchant Banking Partners II, L.P., acted as financial advisor to us and as the initial purchaser of the units we sold in connection with our recapitalization in November 1999. We paid customary fees to Donaldson, Lufkin & Jenrette Securities Corporation as compensation for its services as a financial advisor and initial purchaser. DLJ Capital Funding, Inc., an affiliate of DLJ Merchant Banking Partners II, L.P., received customary fees and reimbursement of expenses in connection with the arrangement and syndication of our credit facility. It also received fees as a lender under our November 1999 credit facility, as well as the subsequent replacement credit facilities put in place in July 2004 and December 2005 through its current parent company, Credit Suisse Securities (USA) LLC. The aggregate amount of all fees paid to the DLJ related entities in connection with the July 2004 and December 2005 transactions was approximately $3.6 million, plus out-of-pocket expenses. A portion of these fees were in turn disbursed to lenders during the syndication of these credit facilities.

122

        Credit Suisse, an affiliate of DLJ Merchant Banking Partners II, L.P., is the joint lead arranger and joint bookrunner under our senior secured credit facility. Pursuant to the terms of the senior secured credit facility, Credit Suisse is entitled to certain fees for its services as joint lead arranger and joint bookrunner. Credit Suisse, as one of the banks in the syndicate holding $10 million of the $60 million revolving loan commitment, will receive a fee of 0.50% per annum on amounts not outstanding under its portion of the revolving loan commitment. Credit Suisse will also receive interest payments at the then applicable rate on borrowings outstanding under its portion of the revolving loan commitment.

        Pursuant to the terms of the original investors' agreement described above, we were required to use Donaldson, Lufkin & Jenrette Securities Corporation as our exclusive financial and investment banking advisor from November 23, 1999 through November 23, 2004. Pursuant to this arrangement, we paid or accrued an annual advisory fee of $300,000 to Donaldson, Lufkin & Jenrette Securities Corporation (or its successor).

Sale of Shares to Executive Officers

        In May 2000, pursuant to our direct investment plan, we sold an aggregate of             coinvestment shares to our executive officers at a price of $             or $             per share and an aggregate of             reinvestment shares to our executive officers at a price of $             per share. We financed 65% of the purchase price of the coinvestment shares through an 8% non-recourse promissory note secured by the coinvestment shares. We refer you to the section called "Direct Investment Plan—Non-Recourse Promissory Notes" for the terms and conditions of the notes.

        In July 2000, we also sold an aggregate of             shares of our common stock to Rick Atterbury for $             per share on substantially similar terms to our direct investment plan. We financed 100% of the purchase price for these shares through an 8% non-recourse promissory note secured by all of the coinvestment shares purchased by Mr. Atterbury, plus an additional             shares of our common stock previously acquired by Mr. Atterbury. The terms and conditions of the note held by Mr. Atterbury are identical to the terms and conditions of the coinvestment share notes.

        In April 2003, our board of directors amended the terms of all outstanding notes held by our then current employees, including our executive officers and Mr. Atterbury, to provide that on April 15, 2008, we would pay a bonus to all participants in the amount of the outstanding principal and interest owed by each participant as of the date the bonus is paid, as well as an amount to cover any personal tax liability of the bonus, as long as:

•

The individual has continuously been our employee between April 2003 and April 15, 2008;



•

A change of control sales event has not occurred and either our EBITDA for fiscal 2008 is at least $85.0 million or our cumulative EBITDA for fiscal years 2005 through 2008 is at least $372.0 million;



•

The payoff of the notes and payment of the cash bonuses does not cause any defaults under our existing debt agreements; and



•

The individual uses the bonus to payoff his or her outstanding note.

        If the first two conditions are met, but the third is not, the note and bonus payments would be made to the maximum extent possible so as to not trigger defaults, with the remaining note and bonus payments made in the earliest subsequent period that the third

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condition is met. In addition, the interest rate on all outstanding notes was reduced in the amendment to 2.97%.

        Mr. Atterbury assumed an outstanding promissory note from one of our former executive officers, Joseph Petirossi, in connection with Mr. Atterbury's purchase of Mr. Petirossi's coinvestment shares. This note was also amended to include these bonus provisions and to provide for an interest rate of 3.83%.

        In February 2006, we entered into an agreement with our executive officers and certain other employees holding coinvestment shares pursuant to which we paid each of these employees a bonus in an amount equal to the outstanding principal amount under their loan and any accrued but unpaid interest and an additional amount to pay for the estimated federal, state and local income tax the employee would incur as a result of the receipt of such bonus. This bonus was intended to replace any bonus the employee would otherwise have received as a result of the April 2003 note amendment. In exchange for this bonus, pursuant to this agreement, these employees repaid the entire outstanding principal balance and accrued but unpaid interest under their notes. They also agreed to the amended and restated investors' rights agreement described under the heading "—Investors' Agreement" and to the imposition of a four-year staggered lock-up covering their outstanding shares of our common stock and shares of our common stock issuable upon exercise of options outstanding as of the date of the effectiveness of this offering. The transfer restrictions under the four-year staggered lock-up will terminate as to one-quarter of such shares on each of the first, second, third and fourth anniversaries of the completion of this offering. The transfer restrictions may be waived by our board of directors.

        The following table illustrates the number of coinvestment shares and reinvestment shares that were held by our executive officers as of January 31, 2006, the principal amount outstanding under their non-recourse promissory notes as of such date and the total amount

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of bonus received by such individuals in February 2006 prior to the filing of the registration statement of which this prospectus forms a part:

	Coinvestment Shares						Reinvestment Shares
Name of Current or Former Executive Officer	Number of Coinvestment Shares		Total Purchase Price		Purchase Price Financed (1)		Number of Reinvestment Shares		Total Purchase Price		Bonus Amount
John W. Castro Chairman of the Board and Chief Executive Officer	—		$	—	$	—	4,286	(2)	$	113,022	$	—
Rick R. Atterbury, President and Chief Operating Officer	150,800	(3)		3,270,800		2,926,820	—			—		7,069,966
B. Michael James, President, Transaction and Compliance Services	60,000			1,260,000		819,000	—			—		1,956,242
Robert H. Nazarian, Executive Vice President and Chief Financial Officer	39,000			858,000		557,700	—			—		1,322,329
Dale S. Kopel, Treasurer	—			—		—	—			—		—
Craig P. Levinsohn, Executive Vice President, Marketing	—			—		—	—			—		—
Steven J. Machov, Executive Vice President, General Counsel and Secretary	57,081			1,200,576		780,374	1,100			24,200		1,865,211
John R. Stolle, Executive Vice President and Chief Technology Officer	6,425			141,350		91,878	—			—		223,667
Brenda J. Vale, Executive Vice President, Human Resources	5,175			113,850		74,003	—			—		180,152
Perry L. Solomon President, Legal Solutions	—			—		—	—			—		—
Kathleen A. Larkin Vice President, Operations, Legal Solutions	31,200			655,200		425,880	—			—		1,017,246
Allen J. McNee, President, Legal Solutions Sales	46,800			982,800		638,820	—			—		1,525,869
Mark A. Rossi President, Financial Services and Brand Management	62,400			1,310,400		851,760	5,714			119,994		2,034,492
Raymond J. Goodwin, President, Integrated Operations	27,211			571,431		371,430	—			—		887,188

(1)

All promissory notes issued by the individuals named in the table above were repaid in full in February 2006 prior to the filing of the registration statement of which this prospectus is a part.

(2)

Mr. Castro purchased his reinvestment shares from Joseph Petirossi, a former executive officer of ours, in February 2005.

(3)

We financed 100% of the purchase price for 104,000 shares issued to Mr. Atterbury. Mr. Atterbury holds these shares outside of our direct investment plan. Mr. Atterbury purchased the remaining 46,800 coinvestment shares from Joseph Petirossi, a former executive officer of ours, in February 2005. In connection with this transaction, Mr. Atterbury assumed Mr. Petirossi's outstanding promissory note. Mr. Atterbury has subsequently repaid such note in full.

Director and Executive Compensation

        Please see "Management—Director Compensation" and "—Executive Compensation" for information regarding the compensation of our non-employee directors and executive officers. For information regarding employment agreements and change in control agreements with our executive officers, see "Management—Employment Agreements" and "—Change in Control Agreements."

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DESCRIPTION OF CERTAIN INDEBTEDNESS

Overview

        We are a party to a senior secured credit agreement with Credit Suisse, Banc of America Securities LLC, Deutsche Bank Securities Inc., Calyon New York Branch, National City Bank and LaSalle Bank, N.A., the other lenders party thereto and Merrill Communications LLC, our wholly owned subsidiary, as the borrower. This agreement provides for:

•

a $475.0 million combined term loan; and



•

a $60.0 million revolving loan commitment

        The $475.0 million term loan is scheduled to mature on December 22, 2012, provided that the term loan will mature on May 15, 2011 unless we have (a) extended the mandatory redemption date of our preferred stock to at least June 22, 2013, or (b) refinanced the preferred stock with proceeds of common stock or other preferred stock which is not mandatorily redeemable before June 22, 2013, or (c) redeemed the preferred stock pursuant to a transaction permitted under the senior secured credit facility. Amounts under the term loan repaid or prepaid may not be re-borrowed. As of January 31, 2006, we had $475.0 million of outstanding borrowings under the term loans.

        Amounts drawn under the revolving loan may be borrowed, prepaid and re-borrowed until the final maturity date of the revolving loan, which is December 22, 2010. Up to $15.0 million of the revolving loan commitment is available for the issuance or renewal of standby or commercial letters of credit. Maturities for letters of credit may not exceed twelve months or extend beyond the date that is seven days prior to the final maturity date for the revolving loan. As of January 31, 2006, we had $5.8 million of outstanding borrowings and letters of credit under the revolving credit facility.

Interest Rate and Fees

        Interest accrues on outstanding principal under the term loan, at our option, (a) at the reserve-adjusted LIBOR plus a margin of 2.25%, if the leverage ratio (defined as the ratio of (x) our total debt minus cash and cash equivalents of all restricted subsidiaries (as defined in the senior secured credit agreement) and us as of the end of a fiscal quarter, to (y) EBITDA, as defined in the senior secured credit facility, (for the four fiscal quarters then ended)) is greater than or equal to 2.75:1.00, and a margin of 2.00%, if the leverage ratio is less than 2.75:1.00, or (b) at the alternate base rate plus a margin of 1.00%, if the leverage ratio is greater than or equal to 2.75:1.00, and a margin of 0.75%, if the leverage ratio is less than 2.75:1.00.

        Interest accrues on principal under the revolving loan, at our option, (a) at the reserve-adjusted LIBOR plus a margin, which ranges from 1.75% if the leverage ratio is less than 2.25:1.00, and increasing in increments of 0.25% for each 0.50 increase in the leverage ratio, up to 2.50% when the leverage ratio is equal to or greater than 3.25:1.00, or (b) at the alternate base rate plus a margin ranging from 0.50% if the leverage ratio is less than 2.25:1.00 and increasing in increments of 0.25% for each 0.50 increase in the leverage ratio up to 1.25% when the leverage ratio is equal to or greater than 3.25:1.00.

        The leverage ratio for purposes of determining the interest rate margins is deemed to be 3.25:1.00 until delivery of the first compliance certificate delivered with the first quarter-end financial statements required to be delivered after December 22, 2005.

        We are required to pay a commitment fee at a per annum rate of 0.50% on any un-drawn portions of the revolving line commitment, payable at the end of each of our fiscal quarters.

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        We are required to pay a letter of credit fee on the maximum amount available to be drawn under letters of credit issued under the revolving credit facility at a rate per annum equal to the interest rate margin then applicable for revolving loans based on LIBOR. We are also required to pay an additional fronting fee to the issuer of letters of credit at the rate of 0.25% per annum, on the maximum amount available to be drawn under letters of credit. The letter of credit fees and fronting fees are payable quarterly in arrears on the first business day after the end of each of our fiscal quarters. We are also required to pay on demand customary transaction charges in connection with any letter of credit and a fee to the administrative agent as specified in the agent's confidential fee letter.

Repayments and Prepayments

        Accrued interest on all of the loans is payable on the last day of each of our fiscal quarters, except for LIBOR-based loans, with respect to which interest is payable on the last day of the applicable interest period, or if the interest period exceeds three months, at three-month intervals after the first day of the interest period.

        Subject to certain required payments, described below, all the loans are required to be paid by us in full, including all accrued interest and fees, on the corresponding scheduled maturity date.

        We may also voluntarily prepay any of the loans in whole or in part, subject to minimum payment and notice requirements, without premium or penalty except to reimburse Lenders for losses incurred with respect to LIBOR loans.

        The senior secured credit facility also requires us to repay the principal on the outstanding term loan, as follows:

•

0.25% of the aggregate principal amount of the term loans borrowed under the credit facility on the last day of each fiscal quarter from April 30, 2006 to and including January 31, 2012;



•

100% of the then-outstanding principal amount on the scheduled maturity date of the term loan.

        The senior secured credit facility is also subject to mandatory prepayment by us:

•

with 50% of excess cash flow (as defined in the senior secured credit agreement) or 25% of excess cash flow to the extent the pro forma leverage ratio (as defined in the senior secured credit agreement) after giving effect to such prepayment would be less than 3.00:1.00, minus the aggregate amount of all voluntary prepayments of principal of term loans actually made in such fiscal year, except that such prepayment will be required only to the extent the pro forma leverage ratio after giving effect to such prepayment, would be greater than or equal to 2.00:1.00;



•

with 100% of the net cash proceeds of certain sales or other dispositions of property or assets of Borrower or restricted subsidiaries or net proceeds of any debt (other than debt permitted to be incurred or issued under the senior secured credit facility) incurred or issued by us or our restricted subsidiaries if such proceeds exceed $2.0 million with respect to any single transaction or series of related transactions, except if any such proceeds from a disposition are intended in good faith to be applied to the acquisition of other assets related to our business and are so applied within 365 days of receipt thereof;



•

with 50% of the net cash proceeds received by us or our restricted subsidiaries from the issuance of equity securities by us if such proceeds exceed $2.0 million with respect to

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any single transaction or series of related transactions (or 25% of such proceeds to the extent the pro forma leverage ratio after giving effect to such prepayment would be less than 3.00:1.00), except that such prepayment will be required only to the extent the pro forma leverage ratio after giving effect to such prepayment would be greater than or equal to 2.00:1.00; and

•

100% of any casualty proceeds received by us or our restricted subsidiaries if such proceeds exceed $2.0 million in the aggregate in any fiscal year, except if any such proceeds are intended in good faith to be applied to rebuild or replace assets subject to the corresponding casualty event which were damaged or condemned or to the acquisition of other assets consistent with our business and are so applied within 365 days of receipt.

        Voluntary and mandatory prepayments will be applied to the remaining amortization payments of the term loan facility in the direct order of maturity of the remaining scheduled payments.

Guarantee and Security

        All our obligations under the senior secured credit facility are unconditionally guaranteed by us and each of our existing and future domestic direct and indirect subsidiaries that are restricted subsidiaries, referred to, collectively, as domestic guarantors.

        All our obligations under the senior secured credit facility are secured by substantially all the assets of each of us and each domestic guarantor, including, but not limited to, the following:

•

subject to certain exceptions, a pledge of 100% of the capital stock of Merrill Communications LLC and the capital stock of each domestic guarantor and 65% of the voting capital stock of each foreign subsidiary that is a restricted subsidiary;



•

all promissory notes evidencing intercompany indebtedness payable to us or any domestic guarantor; and



•

subject to certain exceptions, a security interest and lien in substantially all of the other tangible and intangible assets owned by us and each domestic guarantor.

Certain Covenants and Events of Default

        The senior secured credit facility contains a customary restriction on the ability, subject to certain exceptions, of us and our restricted subsidiaries to, among other things:

•

change the business conducted by us and our subsidiaries;



•

incur additional indebtedness;



•

create liens on assets;



•

make investments, loans or advances;



•

pay dividends and distributions or repurchase capital stock;



•

prepay, redeem or repurchase subordinated indebtedness;



•

make capital expenditures;



•

make certain acquisitions or engage in mergers or consolidations;



•

make certain asset dispositions;

128

•

amend our charter documents or certain material agreements;



•

engage in certain transactions with affiliates;



•

make any agreement prohibiting (a) liens to secure the credit facility or (b) the ability to modify the credit facility;



•

enter into agreements that restrict dividends or other payments from restricted subsidiaries; and



•

enter into sale and lease-back transactions.

        In addition, the senior secured credit facility requires us to maintain the following financial covenants:

•

a maximum leverage ratio of 4.50:1.00, which generally decreases over the term of the loan to 3.00:1.00; and



•

a minimum interest coverage ratio (generally defined as the ratio as of the end of each fiscal quarter of (a) EBITDA for the four fiscal quarters then ending to (b) the cash portion of interest expense (net of interest income) for such four fiscal quarter period). This ratio begins at 3.00:1.00, and increases over the course of the loan to 3.50:1.00.

The senior secured credit facility also contains certain customary affirmative covenants and events of default with which we must comply, and representations and warranties we must make in order to borrow or request letters of credit.

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PRINCIPAL AND SELLING SHAREHOLDERS

        The following table sets forth information known to us regarding beneficial ownership of our common stock as of January 31, 2006, and as adjusted to reflect the sale of shares of common stock in this offering, by:

•

each person or entity who beneficially owns more than five percent of our common stock;



•

each of our directors;



•

each of our executive officers;



•

all of our directors and executive officers as a group; and



•

each selling shareholder participating in the offering and/or in the over-allotment option.

        Beneficial ownership is determined in accordance with the rules and regulations of the Securities and Exchange Commission and generally includes shares over which the indicated beneficial owner exercises voting and/or investment power. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock that could be issued upon the exercise of outstanding options and warrants held by that person that are currently exercisable or exercisable within 60 days are considered outstanding. These shares, however, are not considered outstanding when computing the percentage ownership of each other person.

        Except as indicated in the footnotes to this table and pursuant to state community property laws, each shareholder named in the table has sole voting and investment power for the shares shown as beneficially owned by such person. Percentage of ownership is based on 5,234,833 shares of our common stock outstanding and             shares of common stock to be outstanding after completion of this offering. This table assumes no exercise of the underwriters' over-allotment option. Unless otherwise indicated, the address for each of the shareholders in the table below is c/o Merrill Corporation, One Merrill Circle, St. Paul, Minnesota 55108.

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	Shares Beneficially Owned Before Offering				Shares Beneficially Owned After Offering
Name of Beneficial Owner				Shares to be Sold in Offering
	Number	Percent			Number	Percent
Beneficial Owners of 5% or More
Entities affiliated with DLJ Merchant Banking Partners II, L.P. (1)	3,100,856	57.6	%
Executive Officers and Directors
John W. Castro (2)	913,377	17.5
Rick R. Atterbury	220,800	4.2
Mark A. Rossi (3)	76,239	1.5
B. Michael James (4)	69,750	1.3
Robert H. Nazarian (5)	52,000	1.0
Steven J. Machov (6)	59,644	1.1
Thompson Dean (7)	—	—
David A. Durkin (7)	—	—
Mark D. Edwards (7)	—	—
Kamil Marc Salame (7)	—	—
All directors and executive officers as a group (14 persons) (8)	1,336,798	25.4
Selling Shareholders

*

Less than 1% of the outstanding shares.

(1)

Consists of shares held directly by DLJ Merchant Banking Partners II, L.P. and the following affiliated investors: DLJ Merchant Banking Partners II-A, L.P.; DLJ Offshore Partners II, C.V.; DLJ Diversified Partners, L.P.; DLJ Diversified Partners-A, L.P.; DLJ Millennium Partners, L.P.; DLJ Millennium Partners-A, L.P.; DLJMB Funding II, Inc.; DLJ First ESC L.P.; DLJ EAB Partners, L.P.; and DLJ ESC II, L.P. See "Related Party Relationships and Transactions." Includes 146,311 shares of common stock issuable upon the exercise of outstanding warrants which are owned by DLJ Investment Partners II, L.P., DLJ Investment Partners L.P. and DLJIP II Holdings L.P. Does not include 212,500 shares of nonvoting preferred stock which are owned by DLJIP II Holdings, L.P., DLJ Investment Partners, L.P. and DLJ Investment Partners II, L.P. Shares beneficially owned before the offering do not include 160,734 shares of common stock issuable upon the exercise of warrants to be issued upon completion of this offering. The address of each of these investors is 11 Madison Avenue, New York, New York 10010, except that the address of Offshore Partners is John B. Gorsiraweg 14, Willemstad, Curaçao, Netherlands Antilles.

(2)

These shares are held by Mr. Castro's trust.

(3)

Includes 8,125 shares issuable upon exercise of outstanding options.

(4)

Includes 9,750 shares issuable upon exercise of outstanding options.

(5)

Includes 13,000 shares issuable upon exercise of outstanding options.

(6)

Includes 1,463 shares issuable upon exercise of outstanding options.

(7)

Does not include shares beneficially owned by DLJ Merchant Banking Partners II, L.P. and its affiliated entities. Mr. Dean is the Co-Managing Partner and Chief Executive Officer of Avista Capital Partners, a private equity firm that has been engaged by an affiliate of Credit Suisse Securities (USA) LLC to serve as a consultant to assist in the monitoring of certain DLJ Merchant Banking Partners portfolio companies. Mr. Dean disclaims beneficial ownership of these shares. Mr. Durkin currently serves as a partner of Avista Capital Partners. Mr. Durkin disclaims beneficial ownership of these shares. Mr. Edwards currently serves as a director at Credit Suisse Securities (USA) LLC where he is a Principal with DLJ Merchant Banking Partners. Mr. Edwards disclaims beneficial ownership of these shares. Mr. Salame currently serves as a partner with DLJ Merchant Banking Partners and as a Managing Director of Credit Suisse Securities (USA) LLC. Mr. Salame disclaims beneficial ownership of these shares. See footnote (1).

(8)

Includes 33,840 shares issuable upon exercise of outstanding options. Does not include shares beneficially owned by Mark A. Rossi since he is no longer an executive officer. Does not include 146,311 shares of common stock issuable upon the exercise of outstanding warrants and 2,954,545 shares held by affiliates of directors. In addition, does not include 212,500 shares of nonvoting preferred stock which are owned by DLJIP II Holdings, L.P., DLJ Investment Partners, L.P. and DLJ Investment Partners II, L.P. Shares beneficially owned before the offering do not include 160,734 shares of common stock issuable upon the exercise of warrants to be issued upon completion of this offering.

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DESCRIPTION OF CAPITAL STOCK

        The following summarizes important provisions of our capital stock and describes all material provisions of our articles of incorporation and bylaws, each of which will become effective immediately prior to the effectiveness of this offering. This summary is qualified by our articles of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part, and by the provisions of applicable law.

        Our authorized capital stock currently consists of 25 million shares of voting common stock, par value $0.01 per share, 10 million shares of voting class B common stock, par value $0.01 per share, and 500,000 shares of undesignated stock, all of which are currently designated as 14.5% senior preferred stock due 2011. As of January 31, 2006, there were no shares of our voting common stock issued and outstanding, 5,234,833 shares of our class B common stock issued and outstanding, held of record by 203 shareholders, and 500,000 shares of our preferred stock issued and outstanding, held of record by eight shareholders. Our class B common stock is identical in all respects to our voting common stock and has equal rights and privileges, except that the class B common stock, with respect to rights on liquidation, winding up or dissolution of our company, ranks prior to the voting common stock. Subject to the preferential rights of our preferred stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of our company, the holders of the outstanding shares of our class B common stock are entitled to receive out of our assets available for distribution to shareholders, before any distribution of assets will be made to the holders of shares of common stock, an amount equal to $1.00 per outstanding share of class B common stock. After amounts payable with respect to the holders of our class B common stock of the full preferential amount in connection with any liquidation, winding up or dissolution of our company, the holders of our class B common stock and voting common stock will share on a pro rata basis in any distribution of our assets, subject to the preferential rights of the preferred stock.

        Effective immediately prior to the effectiveness of this offering, we will amend our articles of incorporation to change our authorized capital stock to consist of              million shares of common stock, par value $0.01 per share,             million shares of undesignated stock, par value $0.01 per share, the rights and preferences of which may be designated by our board of directors, and 500,000 shares of preferred stock. In connection with these amendments, we will effect a plan of recapitalization pursuant to which all of our issued and outstanding shares of class B common stock will be converted into issued and outstanding shares of common stock on a one-for-one basis. After the recapitalization, we will effect a     for       stock split that will also occur immediately prior to the effectiveness of this offering.

        The following is a summary of the material terms of our common stock, preferred stock and undesignated stock, giving effect to the amendments to our articles of incorporation to be filed immediately prior to the effectiveness of this offering. Please see our amended and restated articles of incorporation, filed as an exhibit to the registration statement of which this prospectus is a part, for more detailed information.

Common Stock

        The holders of our common stock will be entitled to one vote for each share held of record on all matters submitted to a vote of shareholders and will not be entitled to cumulate votes. Subject to preferences that may be applicable to our preferred stock and any future class or series of our shares created from our undesignated stock, holders of our common stock will be entitled to receive ratably such dividends as may be declared by our board of

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directors out of funds legally available therefor. Upon the liquidation, dissolution or winding up of our company, the holders of our common stock will be entitled to share ratably in all assets that are legally available for distribution after payment of all debts and other liabilities and subject to the prior rights of any holders of our preferred stock, and, possibly, any future class or series of our shares created from our undesignated stock. The holders of our common stock will have no preemptive, subscription, redemption, sinking fund or conversion rights. All outstanding shares of common stock are fully paid and nonassessable.

Preferred Stock

        In November 1999, our board of directors designated and authorized the issuance of 500,000 shares of our redeemable preferred stock, all of which are outstanding. We amended and restated the terms of our certificate of designation for the preferred stock in August 2002.

        Under our amended and restated certificate of designation, the rights of our preferred stock rank prior to all classes and series of our capital stock upon any liquidation, dissolution and winding up of our company. Under the original certificate of designation, each share of preferred stock was entitled to cumulative, quarterly dividends at a compound rate of 14.5% and a liquidation preference of $80.00 plus accrued dividends. The amended and restated certificate of designation provides that the preferred stock is entitled to a liquidation preference of $117.72 per share, but is not entitled to any future dividends.

        We may redeem our preferred stock at any time, in whole or in part on a pro rata basis (subject to the legal availability of funds), at a redemption price per share of $118.90. We are required to redeem any then outstanding shares of our preferred stock on November 15, 2011, at a price per share of $117.72. If we are unable to redeem our preferred stock when required, we will be prohibited from directly or indirectly redeeming, purchasing or otherwise acquiring any securities that rank on par with or are subordinate to our preferred stock. We are required to offer to redeem our preferred stock at a redemption price per share equal to $118.90 per share in the event of a "change of control", which is defined to include:

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the sale, lease, exchange or other transfer by us of substantially all of our assets;



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any person or entity, other than a bona fide underwriter, becomes the beneficial owner of 20% or more of the voting power of our outstanding securities;



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a merger or consolidation to which we are a party, if our shareholders own at least 80% of the voting power of the stock of the surviving corporation;



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our "continuing directors" cease for any reason to constitute at least a majority of our board ("continuing directors" include members of our current board as well as any future director who is nominated or elected to the board with the approval of a majority of directors who themselves are "continuing directors"); or



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a change in control of a type that is determined by our outside legal counsel, in a written opinion, to be required to be reported on a Form 8-K, 10-K or 10-Q, whether or not we are subject to those reporting requirements.

        Shares of our preferred stock are non-voting, except as otherwise permitted by the amended and restated certificate of designation, by Minnesota corporate law or the investors' agreement. The amended and restated certificate of designation provides that the holders of a majority of the outstanding shares of preferred stock, together with the holder of any parity securities, voting as a single class, will be entitled to elect two additional directors under certain circumstances, including our failure to redeem the preferred stock when required or our adoption of certain amendments to our articles of incorporation or sale of the company

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without the consent of holders of a majority of the preferred stock. The terms of our preferred stock also limit our ability to enter into certain transactions with affiliates and require us to deliver reports to the holders of our preferred stock until such time as there are no shares of preferred stock outstanding.

Undesignated Stock

        Effective immediately prior to the effectiveness of this offering, we will amend and restate our articles of incorporation to create a class of                             shares of undesignated stock. Our board of directors has the authority, without any further vote or action by our shareholders, to establish and to designate the name of classes or series of shares from the undesignated stock and to set the terms of such shares (including terms with respect to redemption, sinking fund, dividend, liquidation, preemptive conversion and voting rights and preferences). Our board of directors can issue shares of such class or series to the holders of another class or series of undesignated stock or to the holders of our common stock, among others. Accordingly, our board of directors, without shareholder approval, could use the undesignated stock to issue preferred stock or other classes or series of stock with dividend, voting and conversion rights that could adversely affect the rights of the holders of our common stock. The undesignated stock may have the effect of discouraging an attempt, through acquisition of a substantial number of shares of our common stock, to acquire control of our company with a view to effecting a merger, sale or exchange of assets or a similar transaction. We have no present plans to create any class or series of stock from the undesignated stock.

Options

        As of January 31, 2006, we had outstanding options to purchase an aggregate of                           shares of our common stock at a weighted average exercise price of $             per share under our 1999 stock option plan. All outstanding options provide for anti-dilution adjustments in the event of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other similar change in our corporate structure. We have reserved             shares for issuance under our 2006 stock option plan.

Warrants

        As of January 31, 2006, we had outstanding warrants to purchase an aggregate of                            shares of our common stock at a weighted average exercise price of $             per share, as adjusted to reflect an anti-dilution event as a result of the warrants to be issued upon completion of this offering as described below. Warrants were issued to the holders of our senior subordinated notes and preferred shareholders in November 1999. These warrants are to purchase an aggregate of             shares, have an exercise price of $             and expire on May 1, 2009. Warrants to purchase an aggregate of             shares issued to the holders of our preferred stock have an exercise price of $             and expire on November 15, 2011. Upon completion of this offering, additional warrants to purchase             shares of our common stock at an exercise price of $0.01 per share will be issued to the holders of our preferred stock. These warrants will expire on August 9, 2012. All outstanding warrants provide for anti-dilution adjustments in the event of a merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other similar change in our corporate structure.

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Registration Rights

Amended and Restated Investors' Agreement

        Under an amended and restated investors' agreement among us and all of our shareholders as of the date of this prospectus, which we expect to become effective upon completion of this offering, certain of our shareholders and warrant holders have demand registration rights and all of our shareholders have piggyback registration rights. See "Certain Relationships and Related Party Transactions—Investors' Agreement." The following shareholders and warrant holders will have the right to make a "demand" for registration pursuant to the amended and restated investors' agreement:

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in the case of the holders of common stock, (i) DLJ Merchant Banking Partners II, L.P. and certain of its affiliates, and (ii) the holders of 35% or greater of the warrant shares issued in connection with our preferred stock (with such demand being for the registration of the common stock underlying the warrants); and



•

in the case of the holders of preferred stock, holders of 35% or greater of such preferred shares.

        Upon such demand for registration, we will provide notice of such demand to all other shareholders party to this agreement holding the same type of security (and, if a demand is made by holders of common stock, we will also provide notice to all holders of warrants exercisable for common stock) to allow them the opportunity to elect to participate in the registration subject to certain limitations. We will not be obligated to effect more than four demand registrations for DLJ Merchant Banking Partners II, L.P. and certain of its affiliates, two demand registrations for the holders of preferred shares or one demand registration by the warrant holders for the warrants issued in connection with our preferred stock. In the case of shares issuable upon the exercise of the warrants, we will not be obligated to effect a demand registration before the date that is six months after the first public offering, or if such shares are subject to restrictions due to any lock-up agreements. In addition, we will not be obligated to effect a demand registration unless the aggregate proceeds from the sale of common shares equals or exceeds $20.0 million, except there is no minimum threshold in the event of a warrant holder demand. We will pay all registration expenses in connection with any demand or shelf registration. We have the right to defer a demand registration for up to 90 days if, within 30 days of our receipt of such demand, we furnish a certificate stating that (i) we already have a present plan (approved by our board of directors) to commence preparation of a registration statement for a registered public offering and to file such registration statement within 90 days or (ii) in the good faith judgment of our board of directors it that would be detrimental to us and our shareholders for such registration statement to be filed on or before the date filing would otherwise be required under the investors' agreement. We may delay a request for registration in such circumstances not more than twice in any one year period. At any time following the date when we become eligible to use Form S-3 for secondary sales of our securities, upon the request of DLJ Merchant Banking Partners II, L.P. and certain of its affiliates, we will use our reasonable best efforts to file a shelf registration statement and to cause such registration statement to become effective with respect to all or any portion of the securities held by DLJ Merchant Banking Partners II, L.P. and such affiliates.

        Under the amended and restated investors' agreement all of our current shareholders and holders of warrants issued in connection with the sale of our preferred shares have piggyback registration rights. In the event we propose in the future to register any of our equity securities we will be required under the terms of the agreement to provide notice to all shareholders to allow them the opportunity to elect to participate in the registration subject to

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certain limitations. We will not be obligated to extend this right in the event we are registering securities on a Form S-8 or S-4 or like form, for common stock issuable upon the exercise of employee stock options, benefit plans or similar plans, in connection with the issuance of securities in exchange for existing securities in connection with an acquisition by us of another company, or relating to the warrants issued in November 1999 to the holders of our senior subordinated notes or common stock issuable upon the exercise of such warrants.

        In connection with our first public offering, each shareholder who is a party to the investors' agreement has agreed not to effect any public sale or distribution of any common stock or warrants other than as part of such offering during the 14 days prior to the effective date of the registration statement or during the period after the effective date of the registration statement for a period of 180 days, or a shorter period agreed by us and the managing underwriter. Shareholders who sell common shares in a subsequent public offering may not effect any public sale or distribution of any common shares or any warrants, other than as part of such public offering, during the 14 days prior to the effective date of the registration statement (except as part of such registration) or during the 90 days after such effective date, or a shorter period agreed between us and the managing underwriter.

        Upon the closing of this offering, the holders of our preferred stock will be issued warrants for the purchase of             shares of our common stock (due to the fact that the price paid for our common stock exceeds $             per share) and additional warrants for the purchase of                           shares of our common stock (due to the fact that the price paid for our common stock exceeds $             per share). These warrants will be subject to and have piggyback registration rights under the amended and restated investors' agreement.

Warrant Registration Rights Agreement

        In connection with the sale of our senior subordinated notes in November 1999, we issued warrants for the right to purchase an aggregate of                            shares of common stock. In March 2000, we repurchased warrants to purchase                           shares of our common stock for $4.7 million in cash, leaving warrants to purchase                            shares of our common stock outstanding as of January 31, 2006. Under the warrant agreement and warrant registration rights agreement for these warrants, we agreed to file a registration statement within 120 days of November 23, 1999 and to use our reasonable best efforts to cause the registration statement to become and remain effective, subject to some exceptions, until the later of:

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two years following the effective date of the registration statement; and



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the earlier of May 1, 2009 and the first date as of which all warrants had been exercised.

        Although we filed a registration statement as required under the agreement, we failed to maintain the effectiveness of it in compliance with the agreement.

Provisions with Potential Anti-Takeover Effect

Minnesota Law

        We are subject to the provisions of sections 302A.671 and 302A.673 of the Minnesota Business Corporation Act. These anti-takeover provisions may eventually operate to deny our shareholders the receipt of a premium on their capital stock. In general, section 302A.671 provides that the shares of a corporation acquired in a "control share acquisition" have no voting rights unless voting rights are approved by the shareholders in a prescribed manner. A "control share acquisition" is defined as an acquisition of beneficial ownership of shares that

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would, when added to all other shares beneficially owned by the acquiring person, entitle the acquiring person to have voting power of 20% or more in the election of directors. Section 302A.673 prohibits a public corporation from engaging in a "business combination" with an "interested shareholder" for a period of four years after the date of the transaction in which the person became an interested shareholder, unless the business combination is approved in a prescribed manner. A "business combination" includes mergers, asset sales and other transactions. An "interested shareholder" is a person who is the beneficial owner of 10% or more of the corporation's voting stock. Reference is made to the detailed terms of sections 302A.671 and 302A.673 of the Minnesota Business Corporation Act.

Amended and Restated Articles of Incorporation and Bylaws

        Certain provisions of our amended and restated articles of incorporation and bylaws that will be in effect upon the effectiveness of this offering could make the acquisition of us through a tender offer, proxy contest or other means, or the removal of incumbent officers and directors, more difficult. These provisions may discourage certain types of coercive takeover practices and takeover bids and encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of retaining the ability to negotiate with a proponent of an unfriendly or unsolicited proposal outweigh the potential disadvantages of discouraging such a proposal. These provisions may make it more difficult for shareholders to take specific corporate actions and could have the effect of delaying or preventing a change in our control.

        In particular, our amended and restated articles of incorporation or bylaws provide for the following:

        Staggered Board of Directors and Number of Directors.    Our board of directors is divided into three classes of the same or nearly the same number of directors serving staggered three-year terms, which means that only one class of directors may be elected at a particular shareholders meeting. As a result, the replacement of incumbent directors may be more difficult and third parties may be discouraged from seeking to circumvent the anti-takeover provisions of our articles of incorporation and bylaws by replacing our incumbent directors.

        Advance Notice Procedures.    Our bylaws establish an advance notice procedure for shareholder proposals proposed nominations of persons for election to the board of directors to be brought before an annual meeting of our shareholders. At an annual meeting, shareholders may consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Shareholders may also consider a proposal or nomination by a person who was a shareholder of record on the record date for the meeting and on the date that notice of the proposal or nomination was given, who is entitled to vote at the meeting and who has given to our secretary timely written notice, in proper form, of his or her intention to bring that business before the meeting. Our bylaws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of us.

        Undesignated Stock.    Our board of directors has the authority, without further vote or action by our shareholders, to establish and to designate the name of classes or series of shares from our authorized shares of undesignated stock and to set the terms of such shares (including terms with respect to redemption, sinking fund, dividend, liquidation, preemptive conversion and voting rights and preferences). The existence of this ability could discourage an attempt to take control of us through a merger, tender offer, proxy contest or other means.

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        With the exception of the provision relating to the issuance of undesignated stock, which can be amended with the approval of a majority of the outstanding shares of stock entitled to vote, none of these provisions can be amended without the approval of at least two-thirds of our outstanding shares of stock entitled to vote.

Limitation on Liability of Directors and Indemnification

        Our amended and restated articles of incorporation limit the liability of our directors to the fullest extent permitted by the Minnesota Business Corporation Act. Specifically, our directors will not be personally liable for monetary damages for breach of fiduciary duty as directors, except liability for:

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any breach of the duty of loyalty to our company or our shareholders;



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acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;



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dividends or other distributions of corporate assets that are in contravention of certain statutory or contractual restrictions;



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violations of particular Minnesota securities laws; or



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any transaction from which the director derives an improper personal benefit.

        Our amended and restated articles of incorporation do not limit liability under federal securities law.

        The Minnesota Business Corporation Act requires that we indemnify any director, officer or employee made or threatened to be made a party to proceeding, by reason of the former or present official capacity of the person, against judgments, penalties, fines, settlements and reasonable expenses incurred in connection with the proceeding if certain statutory standards are met. "Proceeding" means a threatened, pending or completed civil, criminal, administrative, arbitration or investigative proceeding, including a derivative action in the name of the company. We refer you to the detailed terms of section 302A.521 of the Minnesota Business Corporation act for a complete statement of these indemnification rights.

        We maintain directors' and officers' liability insurance, including a reimbursement policy in favor of us.

Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is                             .

Stock Exchange Listing

        We intend to apply for the listing of our common stock on                           under the symbol "             ."

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SHARES ELIGIBLE FOR FUTURE SALE

        Sales of substantial amounts of our common stock in the public market could adversely affect prevailing market prices of our common stock. Furthermore, since some shares of common stock will not be available for sale shortly after this offering because of the contractual and legal restrictions on resale described below, sales of substantial amounts of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price and our ability to raise equity capital in the future.

        Prior to this offering, there was no public market for our common stock and we cannot assure you that a liquid trading market for our common stock will develop or be sustained after this offering. If our shareholders sell substantial amounts of our common stock, including shares issued upon the exercise of outstanding options or warrants, in the public market following this offering, the market price of our common stock could decline. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

        Upon completion of this offering, we will have outstanding an aggregate of             shares of our common stock, assuming no exercise of outstanding options or warrants. Of these shares, all                           of the shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act, unless those shares are purchased by "affiliates" as that term is defined in Rule 144 under the Securities Act. The remaining shares of common stock to be outstanding after this offering will be "restricted securities" under Rule 144. Of these restricted securities,             shares will be subject to transfer restrictions for 180 days from the date of this prospectus. Upon expiration of the 180 day transfer restriction period,             shares will be freely tradeable under Rule 144(k) and             shares will be eligible for resale under Rule 144, subject to volume limitations. In addition,                           shares will be subject to additional transfer restrictions for periods extending up to four years after this offering, unless such restrictions are waived by our board of directors.

        Restricted securities may be sold in the public market only if they have been registered or if they qualify for an exemption from registration under Rule 144 or 701 under the Securities Act.

Rule 144

        In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, a person who has beneficially owned shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:

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1% of the number of shares of our common stock then outstanding, which will equal approximately             shares immediately after this offering; or



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the average weekly trading volume of our common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.

        Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.

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Rule 144(k)

        In general, under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an "affiliate," is entitled to sell those shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

Rule 701

        In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchase shares of our common stock from us in connection with a qualified compensatory stock or option plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144. As of                           , the aggregate number of shares eligible for resale under Rule 701 is             .

Lock-up Agreements

Underwriters' Lock-Up

        We expect that each of our officers and directors, each of the selling shareholders, and substantially all of our other shareholders and holders of options to purchase our common stock, will agree that, subject to the exceptions described in "Underwriting," without the prior written consent of Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC on behalf of the underwriters, they will not, during the period ending 180 days after the date of this prospectus (subject to extension in specified circumstances), directly or indirectly:

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offer, sell, pledge, contract to sell (including any short sale), grant any option to purchase or otherwise dispose of any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock; or



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enter into any short sale or any purchase, sale or grant of any right (including any put or call option) with respect to any security that includes, relates to or derives any significant part of its value from our common stock.

        Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC do not have any pre-established conditions to waiving the terms of the lock-up agreements. Any determination to release any shares subject to the lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold and the timing, purpose and terms of the proposed sale.

Company Lock-Up

        In addition to these transfer restrictions, we entered into an agreement providing for a four-year staggered lock-up with our executive officers and some of our other employees holding approximately    % of our common stock on a fully diluted basis assuming the exercise of all outstanding options and warrants after the offering. This agreement restricts transfers of all shares held by such persons and shares issuable to such persons upon the exercise of options outstanding as of the date of the effectiveness of this offering for up to four years following the offering. The transfer restrictions terminate as to one-quarter of such

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shares on each of the first, second, third and fourth anniversaries of the completion of this offering. The transfer restrictions contained in this agreement may be waived by our board of directors.

Options

        Upon completion of this offering, stock options to purchase a total of             shares of our common stock will be outstanding. These stock options have a weighted average exercise price of $             and a weighted average of             years until expiration.

        Following this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering approximately             shares of our common stock issuable upon the exercise of stock options or reserved for issuance under our equity compensation plans. Accordingly, shares registered under the registration statement will, subject to Rule 144 provisions applicable to affiliates, be available for sale in the open market, except to the extent that the shares are subject to vesting restrictions or the contractual restrictions described above.

Warrants

        Upon completion of this offering, warrants to purchase a total of              shares of our common stock will be outstanding. These warrants have a weighted average exercise price of $                    and a weighted average of     years until expiration. Warrants to purchase             shares of common stock are subject to lock-up agreements with the underwriters, as described above. Holders of warrants to purchase              shares of common stock will be entitled to registration rights with respect to such shares.

Registration Rights

        Upon completion of this offering, the holders of             shares of our common stock will have rights to require or participate in the registration of those shares under the Securities Act. The holders of warrants to purchase                           shares of our common stock will also be entitled to registration rights with respect to shares of our common stock issuable upon the exercise of such warrants. For a detailed description of certain of these registration rights see "Description of Capital Stock—Registration Rights."

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

        The following is a summary of the material U.S. federal income tax consequences to non-U.S. holders of the ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may be changed, possibly retroactively, so as to result in U.S. federal income tax consequences different from those set forth below. This summary is applicable only to non-U.S. holders who hold our common stock as a capital asset (generally, an asset held for investment purposes). We have not sought any ruling from the Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

CIRCULAR 230 DISCLOSURE

        TO COMPLY WITH INTERNAL REVENUE SERVICE CIRCULAR 230, YOU ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THIS PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY YOU, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON YOU UNDER THE INTERNAL REVENUE CODE; (B) ANY SUCH DISCUSSION IS INCLUDED HEREIN BY THE ISSUER IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE ISSUER AND THE UNDERWRITERS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN BY THE ISSUER; AND (C) YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

        This summary also does not address the tax considerations arising under the laws of any foreign, state or local jurisdiction. In addition, this discussion does not address tax considerations applicable to an investor's particular circumstances or to investors that may be subject to special tax rules, including, without limitation:

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banks, insurance companies, or other financial institutions;



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persons subject to the alternative minimum tax;



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tax-exempt organizations;



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dealers in securities or currencies;



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traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;



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partnerships or other pass-through entities or investors in such entities;



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"controlled foreign corporations," "passive foreign corporations" and corporations that accumulate earnings to avoid U.S. federal income tax;



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U.S. expatriates or former long-term residents of the United States;



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persons who hold our common stock as a position in a hedging transaction, "straddle," "conversion transaction" or other risk reduction transaction; or



•

persons deemed to sell our common stock under the constructive sale provisions of the Code.

        In addition, if a partnership holds our common stock, the tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership.

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Accordingly, partnerships which hold our common stock and partners in such partnerships should consult their tax advisors.

        This discussion is for general information only and is not tax advice. You are urged to consult your tax advisor with respect to the application of the U.S. federal income tax laws to your particular situation, as well as any tax consequences of the purchase, ownership and disposition of our common stock arising under the U.S. federal estate or gift tax rules or under the laws of any state, local, foreign or other taxing jurisdiction or under any applicable tax treaty.

Non-U.S. Holder Defined

        For purposes of this discussion, you are a non-U.S. holder if you are a holder that, for U.S. federal income tax purposes, is not a U.S. person. For purposes of this discussion, you are a U.S. person if you are:

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an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or who meets the "substantial presence" test under Section 7701(b) of the Code;



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a corporation or other entity taxable as a corporation for U.S. tax purposes created or organized in the United States or under the laws of the United States or of any state therein or the District of Columbia;



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an estate whose income is subject to U.S. federal income tax regardless of its source; or



•

a trust (1) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (2) which has made an election to be treated as a U.S. person.

Distributions

        If distributions are made on shares of our common stock, those payments will constitute dividends for U.S. tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of stock.

        Any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the dividend or such lower rate as may be specified by an applicable tax treaty. In order to receive a reduced treaty rate, you must provide us with an IRS Form W-8BEN or other appropriate version of IRS Form W-8 certifying qualification for the reduced rate.

        Dividends received by you that are effectively connected with your conduct of a U.S. trade or business (and, where a tax treaty applies, are attributable to a U.S. permanent establishment maintained by you) are exempt from such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of any allowable deductions and credits. In addition, if you are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or business may also be subject to a

143

branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.

        If you are eligible for a reduced rate of withholding tax pursuant to a tax treaty, you may obtain a refund of any excess amounts currently withheld if you file an appropriate claim for refund with the IRS in a timely manner.

Gain on Disposition of Common Stock

        You generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:

•

the gain is effectively connected with your conduct of a U.S. trade or business (and, where a tax treaty applies, is attributable to a U.S. permanent establishment maintained by you);



•

you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or



•

our common stock constitutes a U.S. real property interest by reason of our status as a "United States real property holding corporation" for U.S. federal income tax purposes (a "USRPHC") at any time within the shorter of the five-year period preceding the disposition or your holding period for our common stock.

        We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if you actually or constructively hold more than 5% of our common stock.

        If you are a non-U.S. holder described in the first bullet under the heading "Non-U.S. Holders Defined," you will be required to pay tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates, and corporate non-U.S. holders described in the first bullet above may be subject to the branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. If you are an individual non-U.S. holder described in the second bullet above you will be required to pay a flat 30% tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses. You should consult any applicable income tax treaties that may provide for different rules.

Backup Withholding and Information Reporting

        Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address, and the amount of tax withheld, if any. A similar report is sent to you. These information reporting requirements apply even if withholding was not required. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in your country of residence.

        Payments of dividends made to you will not be subject to backup withholding if you establish an exemption, for example by properly certifying your non-U.S. status on a Form W-8BEN or another appropriate version of Form W-8. Notwithstanding the foregoing, backup withholding at a current rate of 28%, may apply if either we or our paying agent has actual knowledge, or reason to know, that you are a U.S. person.

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        Payments of the proceeds from a disposition of our common stock effected outside the United States by a non-U.S. holder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) will apply to such a payment if the broker is a U.S. person, a controlled foreign corporation for U.S. federal income tax purposes, a foreign person 50% or more of whose gross income is effectively connected with a U.S. trade or business for a specified three-year period, or a foreign partnership with certain connections with the United States, unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. holder and specified conditions are met or an exemption is otherwise established.

        Payments of the proceeds from a disposition of our common stock by a non-U.S. holder made by or through the U.S. office of a broker are generally subject to information reporting and backup withholding unless the non-U.S. holder certifies as to its non-U.S. holder status under penalties of perjury or otherwise establishes an exemption from information reporting and backup withholding.

        Backup withholding is not an additional tax. Rather, the U.S. income tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may be obtained, provided that the required information is furnished to the IRS in a timely manner.

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UNDERWRITING

        Subject to the terms and conditions of the underwriting agreement, the underwriters named below, through their representatives Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC, have severally agreed to purchase from us and the selling shareholders the following respective number of shares of common stock at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:

Underwriters		Number of Shares
Deutsche Bank Securities Inc.
Credit Suisse Securities (USA) LLC
Piper Jaffray & Co.
	Total

        The underwriting agreement provides that the obligations of the several underwriters to purchase the shares of common stock offered hereby are subject to certain conditions precedent and that the underwriters will purchase all of the shares of common stock offered by this prospectus, other than those covered by the over-allotment option described below, if any of these shares are purchased.

        We have been advised by the representatives of the underwriters that the underwriters propose to offer the shares of common stock to the public at the public offering price set forth on the cover of this prospectus and to dealers at a price that represents a concession not in excess of $             per share under the public offering price. The underwriters may allow, and these dealers may re-allow, a concession of not more than $             per share to other dealers. After the initial public offering, representatives of the underwriters may change the offering price and other selling terms.

        The selling shareholders have granted to the underwriters an option, exercisable not later than 30 days after the date of this prospectus, to purchase up to              additional shares of common stock at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus. The underwriters may exercise this option only to cover over-allotments made in connection with the sale of the common stock offered by this prospectus. To the extent that the underwriters exercise this option, each of the underwriters will become obligated, subject to conditions, to purchase approximately the same percentage of these additional shares of common stock as the number of shares of common stock to be purchased by it in the above table bears to the total number of shares of common stock offered by this prospectus. The selling shareholders will be obligated, pursuant to the option, to sell these additional shares of common stock to the underwriters to the extent the option is exercised. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the             shares are being offered.

        The underwriting discounts and commissions per share are equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting discounts and commissions are       % of the initial public offering price. We have agreed to pay the underwriters the following discounts and

146

commissions, assuming either no exercise or full exercise by the underwriters of the underwriters' over-allotment option:

		Total Fees
	Fee per share	Without Exercise of Over-Allotment Option	With Full Exercise of Over-Allotment Option
Discounts and commissions paid by us	$	$	$
Discounts and commissions paid by the selling shareholders	$	$	$

        In addition, we estimate that our share of the total expenses of this offering, excluding underwriting discounts and commissions, will be approximately $                    .

        We and the selling shareholders have agreed to indemnify the underwriters against some specified types of liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of any of these liabilities.

        We expect that each of our officers and directors, and substantially all of our shareholders and holders of options to purchase our stock, will agree not to offer, sell, contract to sell or otherwise dispose of, or enter into any transaction that is designed to, or could be expected to, result in the disposition of any shares of our common stock or other securities convertible into or exchangeable or exercisable for shares of our common stock or derivatives of our common stock owned by these persons prior to this offering or common stock issuable upon exercise of options or warrants held by these persons for a period of 180 days after the effective date of the registration statement of which this prospectus is a part without the prior written consent of Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC. This consent may be given at any time without public notice. The foregoing does not prohibit open market purchases and sales of our common stock by such holders after the completion of this offering and transfers or dispositions by our officers, directors and shareholders can be made sooner:

•

as a gift or by will or intestacy;



•

to immediate family members;



•

to any trust for the direct or indirect benefit of the holder or his or her immediate family; and



•

as a distribution to partners, members or shareholders of the holder;

in each case, so long as the transferee of such shares agrees to be bound by the lock-up agreement.

        The representatives of the underwriters have advised us that the underwriters do not intend to confirm sales to any account over which they exercise discretionary authority.

        In connection with the offering, the underwriters may purchase and sell shares of our common stock in the open market. These transactions may include short sales, purchases to cover positions created by short sales and stabilizing transactions.

        Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. Covered short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares of common stock from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters

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will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

        Naked short sales are any sales in excess of the over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if underwriters are concerned that there may be downward pressure on the price of the shares in the open market prior to the completion of the offering.

        Stabilizing transactions consist of various bids for or purchases of our common stock made by the underwriters in the open market prior to the completion of the offering.

        The underwriters may impose a penalty bid. This occurs when a particular underwriter repays to the other underwriters a portion of the underwriting discount received by it because the representatives of the underwriters have repurchased shares sold by or for the account of that underwriter in stabilizing or short covering transactions.

        Purchases to cover a short position and stabilizing transactions may have the effect of preventing or slowing a decline in the market price of our common stock. Additionally, these purchases, along with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the                                             , in the over-the-counter market or otherwise.

        A prospectus in electronic format is being made available on Internet web sites maintained by one or more of the lead underwriters of this offering and may be made available on web sites maintained by other underwriters. Other than the prospectus in electronic format, the information on any underwriter's web site and any information contained in any other web site maintained by an underwriter is not part of the prospectus or the registration statement of which the prospectus forms a part.

Pricing of this Offering

        Prior to this offering, there has been no public market for our common stock. Consequently, the initial public offering price of our common stock will be determined by negotiation among us, the selling shareholders and the representatives of the underwriters. Among the primary factors that will be considered in determining the public offering price are:

•

prevailing market conditions;



•

our results of operations in recent periods;



•

the present stage of our development;



•

the market capitalizations and stages of development of other companies that we and the representatives of the underwriters believe to be comparable to our business; and



•

estimates of our business potential.

        Each underwriter has represented and agreed that (i) it has not offered or sold and, prior to the expiration of the period of six months from the closing date of this offering, will not offer or sell any shares of our common stock to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the

148

United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied with and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom, any document received by it in connection with the issue of the shares of our common stock to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on.

        Some of the underwriters or their affiliates have provided investment banking and financial advisory services to us for which they have received customary fees and expenses, and the underwriters may from time to time engage in transactions with and perform services for us in the ordinary course of their business. Deutsche Bank Securities Inc. and Credit Suisse Securities (USA) LLC, or their affiliates, are lenders under our new senior credit facility and they have received customary fees for these services.

        An affiliate of Credit Suisse Securities (USA) LLC, an underwriter, is a shareholder and selling shareholder and may receive more than 10% of the net proceeds of this offering as a result of which Rule 2710(h) and 2720 of the National Association of Securities Dealers, Inc. (NASD) will be implicated. Under Rule 2720 of the NASD, when an NASD member participates in the distribution of an affiliated company's equity securities for which a bona fide independent market does not exist, the price at which equity securities are distributed to the public can be no higher than that recommended by a "qualified independent underwriter" within the meaning of Rule 2720. Deutsche Bank Securities Inc. has agreed to act as a "qualified independent underwriter" within the meaning of Rule 2720 with respect to this offering. Accordingly, the price per share of our common stock set forth on the cover page of this prospectus is not higher than that recommended by Deutsche Bank Securities Inc. in its capacity as a "qualified independent underwriter."

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NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

        The distribution of the shares of common stock in Canada is being made only on a private placement basis exempt from the requirement that we and the selling shareholders prepare and file a prospectus with the securities regulatory authorities in each province where trades of common stock are made. Any resale of the common stock in Canada must be made under applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made under available statutory exemptions or under a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the common stock.

Representations of Purchasers

        By purchasing shares of common stock in Canada and accepting a purchase confirmation, a purchaser is representing to us, the selling shareholders and the dealer from whom the purchase confirmation is received that:

•

the purchaser is entitled under applicable provincial securities laws to purchase the common stock without the benefit of a prospectus qualified under those securities laws;



•

where required by law, that the purchaser is purchasing as principal and not as agent;



•

the purchaser has reviewed the text above under the heading "Resale Restrictions"; and



•

the purchaser acknowledges and consents to the provision of specified information concerning its purchase of the common stock to the regulatory authority that by law is entitled to collect the information.

        Further details concerning the legal authority for this information is available on request.

Rights of Action–Ontario Purchasers Only

        Under Ontario securities legislation, certain purchasers who purchase a security offered by this prospectus during the period of distribution will have a statutory right of action for damages, or while still the owner of the common stock, for rescission against us and the selling shareholders in the event that this prospectus contains a misrepresentation without regard to whether the purchaser relied on the misrepresentation. The right of action for damages is exercisable not later than the earlier of 180 days from the date the purchaser first had knowledge of the facts giving rise to the cause of action and three years from the date on which payment is made for the common stock. The right of action for rescission is exercisable not later than 180 days from the date on which payment is made for the common stock. If a purchaser elects to exercise the right of action for rescission, the purchaser will have no right of action for damages against us or the selling shareholders. In no case will the amount recoverable in any action exceed the price at which the common stock were offered to the purchaser and if the purchaser is shown to have purchased the securities with knowledge of the misrepresentation, we and the selling shareholder will have no liability. In the case of an action for damages, we and the selling shareholders will not be liable for all or any portion of the damages that are proven to not represent the depreciation in value of the common stock as a result of the misrepresentation relied upon. These rights are in addition to, and without derogation from, any other rights or remedies available at law to an Ontario purchaser. The foregoing is a summary of the rights available to an Ontario purchaser. Ontario purchasers should refer to the complete text of the relevant statutory provisions.

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Enforcement of Legal Rights

        All of our directors and officers as well as the experts named herein and the selling shareholders may be located outside of Canada and, as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon us or those persons. All or a substantial portion of our assets and the assets of those persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against us or those persons in Canada or to enforce a judgment obtained in Canadian courts against us or those person outside of Canada.

Taxation and Eligibility for Investment

        Canadian purchasers of common stock should consult their own legal and tax advisors with respect to the tax consequences of an investment in the common stock in their particular circumstances and about the eligibility of the common stock for investment by the purchaser under relevant Canadian legislation.

LEGAL MATTERS

        The validity of the shares of common stock offered hereby and certain other legal matters will be passed upon for us by our counsel, Oppenheimer Wolff & Donnelly LLP, Minneapolis, Minnesota. The underwriters have been represented in connection with this offering by Cravath, Swaine & Moore LLP, New York, New York.

EXPERTS

        The consolidated financial statements of Merrill Corporation as of January 31, 2005 and 2004 and for each of the three years in the period ended January 31, 2005 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

        The financial statements of WordWave, Inc. as of December 31, 2004 and 2003 and for each of the two years in the period ended December 31, 2004 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement, portions of which are omitted as permitted by the rules and regulations of the SEC. For further information pertaining to us and the common stock to be sold in this offering, you should refer to the registration statement and its exhibits. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document filed as an exhibit to the registration statement or such other document, each such statement being qualified in all respects by such reference. On the closing of this offering, we will be subject to the informational requirements of the Securities Exchange Act and will be required to file annual, quarterly and current reports, proxy statements and other information with the SEC. We anticipate making these documents publicly available, free of charge, on our website at

151

www.merrillcorp.com as soon as reasonably practicable after filing such documents with the SEC.

        You can read the registration statement and our future filings with the SEC over the Internet at the SEC's website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Merrill Corporation—Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of January 31, 2004 and 2005	F-3
Consolidated Statements of Operations for the fiscal years ended January 31, 2003, 2004 and 2005	F-4
Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2003, 2004 and 2005	F-5
Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income for the fiscal years ended January 31, 2003, 2004 and 2005	F-6
Notes to Consolidated Financial Statements	F-7
Merrill Corporation—Interim Consolidated Financial Statements
Consolidated Balance Sheets as of January 31, 2005 and October 31, 2005 (unaudited)	F-37
Consolidated Statements of Operations for the three and nine months ended October 31, 2004 and 2005 (unaudited)	F-38
Consolidated Statements of Cash Flows for the three and nine months ended October 31, 2004 and 2005 (unaudited)	F-39
Notes to Consolidated Financial Statements (unaudited)	F-40
WordWave, Inc.—Consolidated Financial Statements December 31, 2003 and 2004 and the Nine-Month Periods Ended September 30, 2004 and 2005
Report of Independent Auditors	F-52
Consolidated Balance Sheets	F-53
Consolidated Statements of Operations	F-54
Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income	F-55
Consolidated Statements of Cash Flows	F-56
Notes to Consolidated Financial Statements	F-57

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of Merrill Corporation:

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, shareholders' equity (deficit) and comprehensive income and cash flows present fairly, in all material respects, the financial position of Merrill Corporation and its subsidiaries at January 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PRICEWATERHOUSECOOPERS LLP

March 25, 2005
Minneapolis, Minnesota

F-2

Merrill Corporation

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

			As of January 31,
			2004			2005
Assets
Current assets
	Cash and cash equivalents		$	36,428		$	12,269
	Trade receivables, less allowance for doubtful accounts of $8,194 and $3,853, respectively			99,915			104,681
	Work in process inventories			14,305			15,764
	Other inventories			8,245			9,530
	Other current assets			13,942			15,812
		Total current assets		172,835			158,056
Property, plant and equipment, net				49,938			55,505
Goodwill				67,224			77,906
Other assets				21,712			35,822
		Total assets	$	311,709		$	327,289
Liabilities, minority interest, redeemable preferred stock, puttable class B common stock and shareholders' deficit
Current liabilities
	Debt obligations		$	21,435		$	1,570
	Capital lease obligations			1,097			945
	Accounts payable			27,937			35,601
	Accrued expenses			43,671			53,467
		Total current liabilities		94,140			91,583
Debt obligations, less current obligations				271,271			300,002
Debt obligations, related parties				35,836			—
Capital lease obligations, less current obligations				1,584			1,150
Other liabilities				8,426			11,024
		Total liabilities		411,257			403,759
Commitments and contingencies
Minority interest				354			343
Redeemable preferred stock, $0.01 par value, 500,000 shares authorized, issued and outstanding, liquidation value of $58,860				54,174			54,465
Puttable class B common stock				507			5,564
Shareholders' deficit
	Common stock, $0.01 par value, 25,000,000 shares authorized, no shares issued or outstanding			—			—
	Class B common stock, $0.01 par value, 10,000,000 shares authorized, 5,272,763 and 5,240,443 shares issued and outstanding, respectively			53			52
	Additional paid-in capital			108,084			104,208
	Notes and interest receivable			(22,337	)		(22,283	)
	Accumulated other comprehensive income			116			310
	Accumulated deficit			(240,499	)		(219,129	)
		Total shareholders' deficit		(154,583	)		(136,842	)
		Total liabilities, minority interest, redeemable preferred stock, puttable class B common stock and shareholders' deficit	$	311,709		$	327,289

The accompanying notes are an integral part of the consolidated financial statements.

F-3

Merrill Corporation

Consolidated Statements of Operations

(dollars in thousands except share and per share data)

		For the Years Ended January 31,
		2003			2004			2005
Net revenue		$	581,571		$	596,215		$	697,893
Cost of revenue			398,095			411,783			462,410
	Gross profit		183,476			184,432			235,483
Selling, general and administrative expenses			133,318			132,507			166,067
Debt restructuring costs			5,300			—			—
Restructuring costs			932			—			—
	Operating income		43,926			51,925			69,416
Interest expense			39,242			34,981			30,543
Other income, net			(95	)		(1,879	)		(2,191	)
	Income before income taxes		4,779			18,823			41,064
Provision for income taxes			3,400			10,402			19,705
	Income before minority interest		1,379			8,421			21,359
Minority interest			13			18			(11	)
	Net income	$	1,366		$	8,403		$	21,370
Accretion of preferred stock			(4,441	)		(243	)		(291	)
	Net (loss) income available to common shareholders	$	(3,075	)	$	8,160		$	21,079
Net (loss) income available to Class B common shareholders per share:
	Basic	$	(0.58	)	$	1.55		$	4.00
	Diluted	$	(0.58	)	$	1.39		$	3.49
Weighted average number of shares outstanding:
	Basic		5,273,086			5,272,713			5,270,785
	Diluted		5,273,086			5,890,166			6,038,188
Unaudited pro forma net (loss) income available to Class B common shareholders per share (see Note 1):
	Diluted							$	3.29
Unaudited pro forma weighted average number of shares outstanding (see Note 1):
	Diluted								6,416,188

The accompanying notes are an integral part of the consolidated financial statements.

F-4

Merrill Corporation

Consolidated Statements of Cash Flows

(dollars in thousands)

						For the Years Ended January 31,
						2003			2004			2005
Operating activities:
	Net income					$	1,366		$	8,403		$	21,370
		Adjustment to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization				14,751			15,025			14,786
			Amortization of intangible and other assets				287			64			363
			Provision for losses on trade receivables				4,780			2,388			1,280
			Deferred income taxes				6,400			9,895			5,375
			Non-cash interest expense and amortization of deferred financing costs				5,721			7,099			4,594
			Minority interest in earnings (loss) of subsidiary				13			18			(11	)
			Stock-based compensation				—			365			1,781
			Other, net				(284	)		(1,535	)		794
			Changes in operating assets and liabilities, net of effects from business acquisitions:
				Trade receivables			7,748			(7,160	)		(2,118	)
				Work in process inventories			(1,260	)		(2,118	)		(1,416	)
				Other inventories			931			(1,900	)		(1,238	)
				Other current assets			(638	)		(2,063	)		(1,959	)
				Accounts payable			(2,622	)		779			6,231
				Accrued expenses and other liabilities			(18,983	)		661			8,159
					Net cash provided by operating activities		18,210			29,921			57,991
Investing activities:
	Purchase of property, plant and equipment						(13,343	)		(13,890	)		(16,026	)
	Proceeds from disposal of property, plant and equipment						404			7			87
	Business acquisitions						—			—			(28,543	)
	Other investing activities						(168	)		(1,386	)		(1,301	)
					Net cash used in investing activities		(13,107	)		(15,269	)		(45,783	)
Financing activities:
	Proceeds from issuance of debt to related parties						18,500			—			—
	Proceeds from issuance of debt						—			—			160,000
	Principal payments on debt and capital lease obligations						(30,379	)		(13,603	)		(191,110	)
	Debt issuance costs						(2,180	)		—			(3,708	)
	Repurchase of class B common stock						—			—			(256	)
					Net cash used in financing activities		(14,059	)		(13,603	)		(35,074	)
Effect of exchange rate changes on cash and cash equivalents							(449	)		(1,101	)		(1,293	)
Decrease in cash and cash equivalents							(9,405	)		(52	)		(24,159	)
Cash and cash equivalents, beginning of year							45,885			36,480			36,428
Cash and cash equivalents, end of year						$	36,480		$	36,428		$	12,269
Supplemental cash flow disclosures:
	Income taxes paid					$	338		$	1,908		$	17,369
	Interest paid					$	40,610		$	28,129		$	27,680

The accompanying notes are an integral part of the consolidated financial statements.

F-5

Merrill Corporation

Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income

(dollars in thousands, except share amounts)

For the Years Ended January 31, 2003, 2004 and 2005

		Class B Common Stock			Additional Paid-In Capital			Notes and Interest Receivable			Accumulated Other Comprehensive Income (Loss)			Retained Earnings (Accumulated Deficit)			Total
Balance, January 31, 2002		$	53		$	110,667		$	(20,094	)	$	(2,032	)	$	(250,268	)	$	(161,674	)
Accretion of redeemable preferred stock			—			(4,441	)		—			—			—			(4,441	)
Accrued interest income			—			1,433			(1,433	)		—			—			—
Comprehensive income:
	Change in cumulative foreign currency translation		—			—			—			1,387			—			1,387
	Net income		—			—			—			—			1,366			1,366
Comprehensive income																		2,753
Balance, January 31, 2003			53			107,659			(21,527	)		(645	)		(248,902	)		(163,362	)
Accretion of redeemable preferred stock			—			(243	)		—			—			—			(243	)
Accrued interest income			—			810			(810	)		—			—			—
Stock-based compensation			—			365			—			—			—			365
Increase in puttable class B common stock obligations			—			(507	)		—			—			—			(507	)
Comprehensive income:
	Change in cumulative foreign currency translation		—			—			—			761			—			761
	Net income		—			—			—			—			8,403			8,403
Comprehensive income																		9,164
Balance, January 31, 2004			53			108,084			(22,337	)		116			(240,499	)		(154,583	)
Accretion of redeemable preferred stock			—			(291	)		—			—			—			(291	)
Accrued interest income			—			543			(543	)		—			—			—
Stock-based compensation			—			1,781			—			—			—			1,781
Increase in puttable class B common stock obligations			—			(5,057	)		—			—			—			(5,057	)
Repurchase of class B common stock (32,320 shares)			(1	)		(852	)		597			—			—			(256	)
Comprehensive income:
	Change in cumulative foreign currency translation		—			—			—			129			—			129
	Unrealized gains on available-for-sale securities (net of income tax expense of $50)		—			—			—			65			—			65
	Net income		—			—			—			—			21,370			21,370
Comprehensive income																		21,564
Balance, January 31, 2005		$	52		$	104,208		$	(22,283	)	$	310		$	(219,129	)	$	(136,842	)

The accompanying notes are an integral part of the consolidated financial statements.

F-6

Merrill Corporation

Notes to Consolidated Financial Statements

1. Nature of Business and Significant Accounting Policies

Nature of Business

        We are a diversified communications and document services company applying advanced information systems and intranet/Internet technology to provide a broad range of services to our financial, legal, corporate and real estate clients. Our services integrate traditional composition, imaging and printing services with document management, distribution, marketing and software solutions.

Principles of Consolidation and Equity Method Investment

        The consolidated financial statements include all majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. Earnings in our equity method investment were $0.7 million, $0.5 million and $1.7 million for the fiscal years 2003, 2004 and 2005, respectively, and these amounts are included in other income, net in the Consolidated Statements of Operations.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Those assumptions and estimates are subject to revision, and actual results could differ from those estimates.

Cash Equivalents

        We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

        We recognize revenue in accordance with Securities and Exchange Commission (SEC) Staff Accounting Bulleting (SAB) No. 104, "Revenue Recognition," which requires that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, we recognize revenues related to financial and other printing arrangements when the services are complete or the products are shipped to our customers. Where we have revenue arrangements with multiple deliverables, we apply Emerging Issues Task Force (EITF) Issue No. 00-21 "Accounting For Revenue Arrangements with Multiple Deliverables", and recognize each element separately as long as we have objective and reliable evidence of the fair value of each element. For our mutual fund clients, for example, we recognize revenue from base print runs we create for our clients and record separately the fulfillment revenues we realize as we store and/or distribute the products. Where we have invoiced customers or collected cash from customers for products or services to be completed in the future, these revenues are deferred and recognized as revenue over the period earned or when completed. Such deferred revenue is included in accrued expenses on the accompanying Consolidated Balance Sheets. In circumstances where we provide hosting services to customers, revenue is recognized ratably over the term of the arrangement.

F-7

Trade Accounts Receivables

        Trade accounts receivable are initially recorded at fair value upon the sale of goods or services to customers. They are stated net of reserves and allowances, which primarily represent estimated losses due to expected customer returns, allowances and deductions, or the inability of certain customers to make the required payments. When determining these reserves and allowances, we take several factors into consideration, including prior history of accounts receivable, credit activity and write-offs, the overall composition of accounts receivable aging, the types of customer and our day-to-day knowledge of specific customers. Changes in these reserves and allowances are recorded as reductions of net revenue or bad debt expense (included in selling, general and administrative expenses) in the Consolidated Statements of Operations.

Inventories

        Work-in-process, which includes purchased services, materials, direct labor and overhead, is valued at the lower of cost or net realizable value, with cost determined on a specific job-cost basis. Other inventories consist primarily of paper and printed materials and are valued at the lower of cost or market, with cost determined on a first-in, first-out basis.

Property, Plant and Equipment

        Property, plant and equipment are stated at cost. Significant additions or improvements extending asset lives are capitalized; normal maintenance and repair costs are expensed as incurred. Depreciation is determined using the straight-line method over the estimated useful lives of the assets, which range from three to 30 years. Amortization of leasehold improvements is recorded on a straight-line basis over the estimated useful lives of the assets or the contractual lease term, whichever is shorter. When assets are sold or retired, related gains or losses are included in selling, general and administrative expenses.

Goodwill and Other Intangible Assets

        We account for goodwill and other intangible assets in accordance with Statement of Financial Accounting Standards (SFAS) No. 142 "Goodwill and Other Intangible Assets." Goodwill is not amortized, but instead is tested for impairment at least annually. Intangible assets with definite useful lives are amortized over their respective estimated useful lives using accelerated and straight-line methods (see Note 3 for further information on amortization lives and methods used for our newly acquired intangible assets). The carrying value of our goodwill was determined not to be impaired based on our initial impairment testing as of February 1, 2002 and subsequent annual impairment testing for each of three years in the period ended January 31, 2005.

Long-Lived Assets

        The recoverability of long-lived assets is assessed periodically whenever adverse events or changes in circumstances or business climate indicate that the expected cash flows previously anticipated warrant a reassessment. When such reassessment indicates the potential of impairment, all business factors are considered and, if the carrying value of such

F-8

long-lived assets is not likely to be recovered from future undiscounted operating cash flows, they will be written down for financial reporting purposes to their estimated fair value.

Income Taxes

        Deferred income taxes are recognized for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the year and the change during the year in deferred tax assets and liabilities.

Stock-Based Compensation

        We account for employee stock-based compensation using the intrinsic value method pursuant to Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations. Under the intrinsic value method, when the exercise price of an employee stock option equals or exceeds the fair value of the underlying stock on the date of grant and the terms of the options are fixed, no compensation expense is recognized. Any compensation costs resulting from option grants to employees are amortized over the underlying option vesting terms using the method prescribed by Financial Accounting Standards Board (FASB) Interpretation No. 28.

        Some of our stock options are required to be accounted for as fixed awards and others require variable accounting treatment. Fixed awards are those for which the total amount of stock-based compensation expense that will be recorded over the vesting period is calculated and determinable at the date of grant. Variable awards are those for which the ultimate stock-based compensation expense to be recorded is contingent upon future events and the fair value of the underlying stock at the time those events occur, and may vary significantly over the vesting period. We also use variable-award accounting for the majority of shares of our class B common stock sold under the Direct Investment Plan—see Note 11 for additional information regarding this plan. As such, the amount of stock-based compensation expense to be recorded in fiscal year 2006 and thereafter may vary significantly.

        We account for stock-based compensation to non-employees using the fair value method. Compensation costs for stock options granted to non-employees are based on fair value of the option during the period in which the holder of the option provides the related service.

F-9

        The table below illustrates the effect on net income if the fair value of options granted to employees and other equity instruments had been recognized as compensation expense over the vesting periods in accordance with the provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." See Note 11 for additional information regarding our employee stock plans.

			For the Years Ended January 31,
			2003			2004			2005
			(dollars in thousands except per share data)
Net (loss) income, as reported			$	1,366		$	8,403		$	21,370
Accretion of preferred stock				(4,441	)		(243	)		(291	)
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects				—			209			1,026
Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects				(2,423	)		(2,178	)		(1,634	)
Pro forma net (loss) income available to common shareholders			$	(5,498	)	$	6,191		$	20,471
Net (loss) income available to common Class B shareholders:
	Per share:
		As reported—Basic	$	(0.58	)	$	1.55		$	4.00
		As reported—Diluted	$	(0.58	)	$	1.39		$	3.49
		Pro-Forma—Basic	$	(1.04	)	$	1.17		$	3.88
		Pro-Forma—Diluted	$	(1.04	)	$	1.07		$	3.46

Fair Value of Financial Instruments

        Our financial instruments, other than long-term debt, consist principally of cash and cash equivalents, trade receivables and accounts payables, for which their current carrying amounts approximated fair market value. We believe our term loan debt carrying amounts approximate their fair values as they were only recently refinanced in July 2004. We estimate the fair value of our senior subordinated notes to be approximately $10.4 million higher than the $142.4 million current carrying value based on limited recent trading activity of the notes.

Comprehensive Income

        Comprehensive income includes net income, the effects of currency translation and unrealized gains on available-for-sale securities. Comprehensive income for all periods presented is included in the Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income.

F-10

Earnings Per Share

        Basic earnings per share is based on the weighted-average number of Class B common shares outstanding during the year. Diluted earnings per share is based on the weighted-average number of Class B common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and warrants.

        The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding.

	For the Years Ended January 31,
	2003	2004	2005
Basic	5,273,086	5,272,713	5,270,785
Dilutive stock options and warrants	—	617,453	767,403
Diluted	5,273,086	5,890,166	6,038,188

        Potential dilutive shares of common stock excluded from the diluted net (loss) income per share computations were 846,688, 1,042,672 and 705,150 for the years ended January 31, 2003, 2004, and 2005, respectively. Certain potential dilutive shares of common stock were excluded from the diluted earnings per share computation because their exercise prices were greater than the average market price of the common shares during the period and were therefore not dilutive. Potential dilutive shares of common stock were excluded from periods with net loss because they were anti-dilutive.

Unaudited Pro Forma Income Loss Per Share

        In connection with an August 2002 modification of our preferred stock terms we granted our preferred shareholders the right to receive warrants to purchase up to 378,000 shares of our Class B common stock if certain "triggering events" occurred (See Note 11). In connection with our initial public offering we will experience a "triggering event," as defined, pursuant to which we will be required to issue to our preferred shareholders warrants to purchase 378,000 shares of our Class B common stock. The unaudited pro forma net income per share has been presented to give effect to the issuance of all of these warrants as if such issuance occurred on February 1, 2004. For purposes of calculating the unaudited pro forma net income per share, we have included an additional 378,000 Class B common shares in the weighted average shares outstanding.

New Accounting Pronouncements

        In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment," which revises SFAS No. 123 and supersedes APB Opinion No. 25. Among other items, SFAS No. 123R eliminates the use of the intrinsic value method of accounting, and requires companies to recognize compensation cost for share-based payment awards with employees, based on the grant date fair value of those awards, in the financial statements. The effective date is the first reporting period beginning after December 15, 2005, which would be our fiscal year beginning February 1, 2006. We have not yet determined which of the adoption methods

F-11

prescribed by SFAS No. 123R we will elect, nor have we determined the impact of adopting this statement. In March 2005, the SEC issued SAB No. 107, "TOPIC 14: Share-Based Payment," which addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides views regarding the valuation of share-based payment arrangements for public companies. This bulletin is effective immediately.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs—an amendment of ARB No. 43, Chapter 4." This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory be based on normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, which would be our fiscal year beginning February 1, 2006. We have not yet determined the impact of adopting this statement.

        In December 2003, the FASB issued Interpretation No. 46R, "Consolidation of Variable Interest Entities," which addresses accounting for special-purpose and variable interest entities and which superseded Interpretation No. 46. The provisions of Interpretation No. 46R are required to be adopted by us effective February 1, 2005. We have not yet determined the impact of adopting this interpretation.

        In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This statement changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or as "mezzanine" instruments, by now requiring those instruments to be classified as liabilities (or assets in certain circumstances) in the balance sheet. This statement also requires disclosures regarding the terms of those instruments and settlement alternatives. For private companies, financial instruments that are mandatorily redeemable on a fixed date for a fixed amount are subject to the provisions of SFAS No. 150 for fiscal periods beginning after December 15, 2004. SFAS No. 150 requires reporting the cumulative effect of adopting SFAS No. 150 by initially measuring the financial instruments at fair value or other measurement prescribed by SFAS No. 150. We plan to adopt this statement effective February 1, 2005. Upon adoption, we anticipate that all of our redeemable preferred stock will be reported as a liability rather than a "mezzanine" instrument and we expect to record a gain from the cumulative effect of this change in accounting principle of approximately $32 million (before income tax effects, if any). In periods subsequent to our adoption of SFAS No. 150, we expect to accrete the value of preferred stock to its liquidation value of $58.9 million at November 15, 2011 through periodic charges to interest expense.

        In September 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections—a replacement of APB No. 20 and SFAS No. 3. SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective applicable is impracticable. The correction of an error in

F-12

previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by SFAS 154. SFAS 154 is required to be adopted in fiscal years beginning after December 15, 2005. Accordingly, we will adopt SFAS 154 in our fiscal year beginning February 1, 2006. Adoption of SFAS 154 is not expected to have a material effect on our financial position, results of operations or cash flows.

2. Selected Balance Sheet Data

			(dollars in thousands)
Rollforward of allowance for doubtful accounts
	Balance, January 31, 2002		$	14,047
		Provision for losses on trade receivables		4,780
		Write-offs, net of recoveries		(9,715	)
	Balance, January 31, 2003			9,112
		Provision for losses on trade receivables		2,388
		Write-offs, net of recoveries		(3,306	)
	Balance, January 31, 2004			8,194
		Provision for losses on trade receivables		1,280
		Write-offs, net of recoveries		(5,621	)
	Balance, January 31, 2005		$	3,853

		As of January 31,
		2004		2005
		(dollars in thousands)
Other current assets
	Deferred tax assets	$	5,615	$	5,430
	Income taxes receivable		—		1,028
	Other		8,327		9,354
		$	13,942	$	15,812

F-13

Property, plant and equipment, net
	Land	$	2,481		$	2,576
	Buildings		20,923			21,904
	Equipment		78,278			86,122
	Furniture and fixtures		11,405			11,011
	Leasehold improvements		26,301			31,374
	Construction in progress		1,276			357
			140,664			153,344
	Less accumulated depreciation and amortization		(90,726	)		(97,839	)
		$	49,938		$	55,505
Other assets
	Intangible assets, net (see Note 4)	$	521		$	15,279
	Investments related to compensation and benefit obligations		5,961			5,935
	Equity method investment		3,351			5,085
	Debt issuance costs		4,505			5,068
	Deferred tax assets		4,190			—
	Other		3,184			4,455
		$	21,712		$	35,822
Accrued expenses
	Commissions, compensation and benefits	$	24,206		$	35,934
	Benefit plan contributions		5,340			6,037
	Income and sales taxes payable		6,354			4,976
	Interest		3,186			1,455
	Other		4,585			5,065
		$	43,671		$	53,467
Other liabilities
	Compensation and benefits	$	8,361		$	9,974
	Deferred tax liabilities		—			1,050
	Other		65			—
		$	8,426		$	11,024
Accumulated other comprehensive income
	Cumulative foreign currency translation	$	116		$	245
	Unrealized gains on available-for-sale securities		—			65
		$	116		$	310

F-14

3. Acquisitions

      On January 31, 2005, we acquired substantially all of the assets, with the exception of inventories, of Fine Arts Engraving Company. The cash portion of the purchase price was $18.7 million, of which $17.5 million was paid at closing. The purchase price also included $1.3 million of assumed liabilities and $0.2 million for our acquisition related costs. Fine Arts Engraving Company is a provider of high quality engraved printed products, such as stationery and business cards. Fine Arts Engraving's product offerings expand our current brand management programs and are marketed to complementary financial, legal and corporate clients. We have allocated the purchase price to the acquired assets and liabilities based upon their relative fair values. The residual purchase price in excess of these fair values has been allocated to goodwill. In conjunction with this acquisition, we did not initially acquire any inventories. We entered into a consignment inventory agreement with the former owners of Fine Arts Engraving Company. Under the consignment agreement, we may elect to purchase inventories from the former owners. A component of any future sales we derive from purchasing and reselling any of these inventories, representing the markup from cost to fair value, will be accounted for as a reduction in the goodwill recorded in this acquisition. The operating results of the acquired assets will be reflected in our consolidated operating results beginning February 1, 2005.

        On September 23, 2004, in exchange for $10.8 million of cash and the assumption of $1.1 million of liabilities, we acquired substantially all of the assets of Jim Laffey, Inc., Ken Freeberg, Inc., Webcopies.com LLC, and The Berkshires Homebuyers Guide, Inc. (collectively "CfRE"). The purchase price also included $0.1 million for our acquisition related costs. The acquired companies focused on marketing materials for the residential real estate industry, particularly in the independent realtor sector. We have allocated the purchase price to the acquired assets and liabilities based upon their relative fair values. The residual purchase price in excess of these fair values has been allocated to goodwill. The operating results of the acquired assets have been reflected in our consolidated operating results since September 23, 2004.

F-15

        The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition (September 23, 2004 for CfRE and January 31, 2005 for Fine Arts Engraving Company).

		CfRE		Fine Arts Engraving Company		Total
		(dollars in thousands)
Trade and other receivables		$	—	$	2,623	$	2,623
Property, plant and equipment			1,853		3,033		4,886
Other assets			—		221		221
Intangible assets
	Customer relationships		2,761		5,261		8,022
	Trademarks and tradenames		1,788		4,183		5,971
	Non-compete agreements		176		100		276
Goodwill			5,411		4,820		10,231
	Total assets acquired		11,989		20,241		32,230
Accounts payable			227		1,023		1,250
Accrued expenses			210		61		271
Capital lease obligations			642		—		642
Other liabilities			—		217		217
	Total liabilities assumed		1,079		1,301		2,380
	Net assets acquired	$	10,910	$	18,940	$	29,850

        The customer relationship and trademark and tradename intangible assets are being amortized on an accelerated basis over ten years, while the non-compete agreement intangible assets are being amortized over five years. All goodwill acquired is expected to be deductible for income tax purposes.

        The following table presents our consolidated results of operations on an unaudited pro forma basis as if these acquisitions had taken place at the beginning of each year presented.

		For the Years Ended January 31,
		2004		2005
		(dollars in thousands except per share data)
Net revenue		$	622,263	$	723,767
Net income		$	8,783	$	22,385
Net income available to common shareholders		$	8,540	$	22,094
Net income per Class B common share:
	As reported—basic	$	1.55	$	4.00
	As reported—dilutive	$	1.39	$	3.49
	Pro Forma—basic	$	1.62	$	4.19
	Pro Forma—dilutive	$	1.45	$	3.66

F-16

        The unaudited pro forma results of operations are for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisitions occurred at the beginning of the periods presented or the results which may occur in the future.

4. Goodwill and Other Intangible Assets

        The following table reflects the changes in the carrying amount of goodwill during the years ended January 31, 2003, 2004 and 2005:

		(dollars in thousands)
Balance, January 31, 2002		$	66,193
	Goodwill acquired		167
Balance, January 31, 2003			66,360
	Goodwill acquired		864
Balance, January 31, 2004			67,224
	Goodwill acquired		10,682
Balance, January 31, 2005		$	77,906

        All goodwill acquired during these periods is included in our Specialty Communication Services reportable segment (see Note 12).

        Intangible assets consisted of the following:

	As of January 31, 2004						As of January 31, 2005
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization			Net Carrying Value
	(dollars in thousands)
Customer relationships	$	521	$	—	$	521	$	9,395	$	(292	)	$	9,103
Trademarks and tradenames		—		—		—		5,971		(64	)		5,907
Non-compete agreements		—		—		—		276		(7	)		269
	$	521	$	—	$	521	$	15,642	$	(363	)	$	15,279

        The estimated future annual amortization expense for these intangible assets over the next five fiscal years is as follows:

	(dollars in thousands)
2006	$	2,695
2007		2,585
2008		2,284
2009		1,977
2010		1,417
	$	10,958

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5. Financing Arrangements

Debt obligations consisted of the following:

			As of January 31,
			2004			2005
			(dollars in thousands)
2004 senior credit facility
	Senior credit term B loan		$	—		$	114,440
	Senior discount term loan			—			44,775
Senior subordinated notes, net of discount				141,826			142,357
1999 senior credit facility
	Term loan A			33,157			—
	Term loan B			117,723			—
		Subtotal		292,706			301,572
Less current obligations				(21,435	)		(1,570	)
Long-term obligations				271,271			300,002
Senior discount notes—related parties				35,836			—
Total long-term obligations			$	307,107		$	300,002

2004 Senior Credit Facility

        On July 30, 2004, we entered into a $210.0 million Senior Credit Facility with a syndicate of banks and financial institutions (2004 Senior Credit Facility). The 2004 Senior Credit Facility consists of a $115.0 million term B loan, a $45.0 million senior discount term loan and a $50.0 million revolving line of credit. At January 31, 2005, an affiliate of our major shareholder was one of the banks in the syndicate and held 20% of the revolving line of credit commitment. Proceeds from the 2004 Senior Credit Facility, along with excess cash generated from operations, were used to repay (i) $142.9 million of term loan borrowings outstanding under our previous senior credit facility; (ii) $38.2 million of borrowings outstanding under our previous senior discount notes with related parties, and (iii) approximately $3.7 million of closing and legal fees.

        The 2004 Senior Credit Facility is collateralized by substantially all of our consolidated assets and is subject to mandatory principal prepayments if certain events occur. Also, the 2004 Senior Credit Facility allows for a potential, although uncommitted, increase of $50.0 million in term loans subject to certain terms. The 2004 Senior Credit Facility contains various financial covenants, including a maximum leverage ratio and a minimum interest coverage ratio, and various negative covenants, such as limitations on certain transactions, incurrence of additional indebtedness, payment of dividends and other distributions.

        The $115.0 million term B loan and $45.0 million senior discount term loan (Term Loans) mature on July 30, 2009, provided that the senior subordinated notes are refinanced with a maturity no earlier than December 30, 2009; otherwise, the maturity is six months prior to the maturity of the senior subordinated notes, or November 1, 2008. Borrowings under the Term Loans bear interest at our option, at the reserve adjusted London Interbank Offering Rate (LIBOR) plus 2.50% or at the alternate base rate plus 1.25%. The Term Loans require

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scheduled quarterly principal payments of $0.4 million through our fiscal quarter ending July 31, 2008, at which time the quarterly principal payment increases to $38.4 million through maturity. The balances of the term B loan and the senior discount term loan at January 31, 2005 were $114.4 million and $44.8 million, respectively.

        The $50.0 million revolving line of credit matures on July 30, 2008. Borrowings under the revolving line of credit bear interest at our option, at the reserve adjusted LIBOR plus 2.75% or at the alternate base rate plus 1.50%. After January 31, 2005, the interest rate may decrease based on our leverage ratio. We are also required to pay annual commitment fees equal to 0.50% on any undrawn portions of the revolving line of credit. At January 31, 2005, there were no borrowings outstanding under the revolving line of credit.

        The revolving line of credit provides for a $15.0 million letter of credit sub limit. At January 31, 2005, there were $3.8 million of outstanding letters of credit.

        The reserve adjusted LIBOR at January 31, 2005 was 2.58%, and the alternate base rate was 5.25%.

        In conjunction with the refinancing of the 2004 Senior Credit Facility, we wrote off unamortized debt issuance costs of $1.4 million associated with our previous senior credit facility. This charge was included in other expense, net in the Consolidated Statement of Operations. We capitalized approximately $3.7 million of direct and incremental fees and other costs associated with completing the 2004 Senior Credit Facility, of which approximately $1.2 million of these fees were paid to an affiliate of our major shareholder. We are amortizing these costs to interest expense over the term of the 2004 Senior Credit Facility.

Senior Subordinated Notes

        We have $145.5 million, face value, senior subordinated notes outstanding at January 31, 2005 and 2004. The senior subordinated notes consist of $25.0 million of class A senior subordinated notes and $120.5 million of class B senior subordinated notes. The class A and class B senior subordinated notes have substantially the same rights and terms. Prior to the repayment of our senior discount notes, the class A senior subordinated notes ranked equal in right of payment to our guarantee of our senior discount notes. The senior subordinated notes mature in May 2009 and may be redeemed on or after November 1, 2004 at certain percentages of principal. Interest is payable semi-annually in arrears on June 30^th and December 31^st of each year. Interest is payable in cash at a rate of 12.0%. Prior to the repayment of our senior discount notes, dependent on our EBITDA (earnings before interest, income taxes, depreciation and amortization) for the subscribed periods, as defined in the agreement, the interest rate could have increased to 13.0% with portions required to be satisfied through the issuance of additional new senior subordinated notes. The interest rate has remained at 12.0%, and we did not issue any new senior subordinated notes under this arrangement. The outstanding balances of the senior subordinated notes at January 31, 2004 and 2005 are stated net of $3.7 million and $3.2 million, respectively, of discounts recorded as part of the original senior subordinated note offering, including the unamortized balance of the original $1.7 million of value allocated to the warrants issued to purchase 166,033 shares of our class B common stock and the unamortized balance of the $3.8 million of original issue

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discount. The senior subordinated notes include various covenants, including limitation on the amounts of certain transactions, including payment of dividends.

        The scheduled aggregate cash maturities of debt obligations at January 31, 2005, including the face value of the senior subordinated notes, are as follows:

	(dollars in thousands)
2006	$	1,570
2007		1,570
2008		1,570
2009		154,505
2010		145,539
	$	304,754

1999 Senior Credit Facility

        At January 31, 2004, we had outstanding term loan borrowings of $150.9 million under our 1999 senior credit facility that were due no later than June 1, 2005. The 1999 senior credit facility originally consisted of a $50.0 million revolving credit facility and a $220.0 million term loan facility, including a $65.0 million term loan A and a $155.0 million term loan B. The old senior credit facility agreement was amended as part of the August 2002 debt restructuring. Significant amendments to the facility included the reduction of the revolving credit facility from $50.0 million to $15.0 million, the elimination of an option to increase the credit facility by $30.0 million, increased interest rates, additional restrictions for certain transactions, an annual mandatory clean-down of the revolving credit facility and acceleration of the maturity date for all components of the senior credit facility to June 1, 2005. As part of the 2004 senior credit facility refinancing, all outstanding amounts under our 1999 senior credit facility were repaid in full and the agreement was terminated.

Senior Discount Notes—Related Parties

        In January 2001, Merrill Communications LLC issued senior discount notes with an aggregate principal balance of $23.5 million to our major shareholder and to our chief executive officer in exchange for $9.1 million in cash. The senior discount notes bore interest at 14.0%, compounded semi-annually, with principal and interest scheduled to be due and payable in January 2008. In connection with our August 2002 debt restructuring, the senior discount notes were exchanged for new senior discount notes, and Merrill Communications issued additional new senior discount notes to our major shareholder for $18.5 million in cash. The new senior discount notes bore interest at 13.0%, compounded semi-annually, with accrued interest added to the principal balance. These senior discount notes were scheduled to mature in January 2008 with an aggregate principal balance of $59.0 million. At our option, the notes could be redeemed prior to January 2007 at a premium. As part of the Senior Credit Facility refinancing in July 2004, the then outstanding $38.2 million balance of the senior discount notes was repaid in full. All early redemption premiums were waved by the holders.

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Debt Restructuring

        We failed to meet our financial covenants under our old senior credit facility beginning with our third quarter ended October 31, 2000 and continuing through July 31, 2002. In addition, in 2001 and 2002, we did not make certain required semi-annual interest payments on our senior subordinated notes and were in default under these notes as well. As a result of the successful completion of our debt restructuring in August 2002, past defaults under our old senior credit facility and senior subordinated notes were waived. Significant financial terms of the restructuring plan were as follows:

•

Our major shareholder loaned us $18.5 million, in the form of 13.0% senior discount notes. Also, the existing 14.0% senior discount notes were exchanged for 13.0% senior discount notes.



•

We paid $20.0 million of principal to the old senior credit facility lenders, who agreed to reset covenant levels. We also accelerated the maturity of the senior credit facility to June 1, 2005, and paid amendment fees of approximately $2.2 million in consideration for the fourth amendment to the senior credit facility.



•

We paid $8.1 million in cash, representing one past due semi-annual interest payment, to the senior subordinated noteholders, and issued additional notes representing one past due semi-annual interest payment of $8.1 million and default interest on past due coupon payments of $2.4 million. Also, the old senior subordinated notes were exchanged for new class A and class B senior subordinated notes.



•

Terms of the redeemable preferred stock were amended to eliminate all future dividends.

        During fiscal year 2003, we recorded $5.3 million as charges to operations for legal and financial fees that related to the debt restructuring efforts.

6. Leases

        We lease an office and production facility and the associated land and equipment under capital leases that terminate at various dates through May 28, 2008. A summary of property, plant and equipment under capital leases is as follows:

	As of January 31,
	2004			2005
	(dollars in thousands)
Land	$	333		$	333
Buildings		2,439			2,439
Equipment		4,217			4,770
Less accumulated amortization		(3,422	)		(4,515	)
	$	3,567		$	3,027

        We also lease office space and equipment under non-cancelable operating leases, which expire at various dates through October 31, 2014. Rental expense charged to operations was

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$25.2 million, $25.1 million and $26.7 million for the years ended January 31, 2003, 2004 and 2005, respectively.

        Future minimum rental commitments under non-cancelable leases at January 31, 2005 are as follows:

	Capital leases			Operating leases
	(dollars in thousands)
For the year ended January 31,
2006	$	1,308		$	21,944
2007		900			16,907
2008		716			12,345
2009		81			8,383
2010		—			6,176
Thereafter		—			8,763
Total		3,005		$	74,518
Less imputed interest		(910	)
Present value of minimum lease payments		2,095
Less current maturities of capital lease obligations		(945	)
Capital lease obligations, net of current maturities	$	1,150

7. Income Taxes

      Our income (loss) before income taxes is as follows:

	For the Years Ended January 31,
	2003			2004			2005
	(dollars in thousands)
Domestic	$	8,829		$	20,924		$	43,509
Foreign		(4,050	)		(2,101	)		(2,445	)
Total income before income taxes	$	4,779		$	18,823		$	41,064

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        Components of the provision for income taxes are as follows:

		For the Years Ended January 31,
		2003			2004			2005
		(dollars in thousands)
Current
	Federal	$	(2,900	)	$	(393	)	$	9,700
	State		500			900			4,630
	Foreign		(600	)		—			—
	Total		(3,000	)		507			14,330
Deferred
	Federal		4,625			8,475			4,905
	State		660			1,210			(260	)
	Foreign		1,115			210			730
	Total		6,400			9,895			5,375
Provision for income taxes		$	3,400		$	10,402		$	19,705

        Temporary differences comprising the net deferred tax asset recognized in the accompanying Consolidated Balance Sheets consist of the following:

		As of January 31,
		2004			2005
		(dollars in thousands)
Deferred tax assets
	Deferred compensation and benefits	$	4,422		$	6,166
	Foreign net operating loss carryforwards		5,043			5,820
	Accruals and other reserves		2,613			3,624
	Allowance for doubtful accounts		2,928			1,536
	Deferred financing costs		1,674			1,322
	Property, plant and equipment		2,844			618
	Other		1,475			1,064
			20,999			20,150
Deferred tax liabilities
	Goodwill		(4,543	)		(7,069	)
	Other		(1,329	)		(2,158	)
			(5,872	)		(9,227	)
Net deferred tax assets before valuation allowance			15,127			10,923
Less valuation allowance			(5,322	)		(6,543	)
Net deferred tax assets		$	9,805		$	4,380

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        Significant differences between income taxes for financial reporting purposes and income taxes calculated using the U.S. federal statutory tax rate consist of the following:

	For the Years Ended January 31,
	2003			2004		2005
	(dollars in thousands)
Provision for federal income taxes at the statutory rate	$	1,673		$	6,588	$	14,372
State income taxes, net of federal benefit		845			907		2,750
Non-deductible business meeting and entertainment expenses		1,456			1,324		1,432
Change in valuation allowance		1,920			1,045		1,221
Interest on shareholder notes receivable		502			284		190
Reversal of accrual for income tax contingency		(2,000	)		—		(675	)
Other		(996	)		254		415
	$	3,400		$	10,402	$	19,705

        At January 31, 2005, we had approximately $16.9 million of foreign net operating loss carryforwards, of which a significant portion do not expire. We established a valuation allowance of approximately $6.5 million at January 31, 2005 primarily for our foreign net operating loss carryforwards and our domestic capital loss carryforwards. We believe the realizability of all other net deferred tax assets is more likely than not and accordingly have not established any valuation allowance for these items. The change in the valuation allowance in fiscal years 2003, 2004 and 2005 relates primarily to additional foreign net operating loss carryforwards generated each year.

        Our consolidated federal income tax returns have been examined by the Internal Revenue Service (IRS) through fiscal year 2002. In March 2005, the IRS completed its audits of our fiscal years 2001 and 2002 federal income tax returns. In August 2002, the IRS completed its audits of our fiscal years 1999 and 2000 returns. As a result of the formal resolution of these examinations, we reduced amounts accrued for income taxes payable and the provision for income taxes by $2.0 million and $0.7 million during fiscal years 2003 and 2005, respectively. We believe any additional taxes, which may ultimately result from any federal, state or local agencies' audits, will not be material to our financial position, results of operations or cash flows.

8. Restructuring Costs

        During the first two quarters of fiscal year 2003, we committed to a restructuring program to decrease employee headcount, due in part to operation closures, technology improvements and decreased sales volume. This reduction in work force resulted in the termination of 97 employees crossing all business units, but was concentrated in the Specialty Communications Services reportable segment. Substantially all of these employees were terminated prior to January 31, 2003. As a result, we recorded approximately $0.9 million of employee related restructuring expense during fiscal year 2003. All severance amounts were paid prior to January 31, 2004.

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9. Litigation

        We are the subject of various pending or threatened legal actions in the ordinary course of business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. However, management believes that the final disposition of these matters will not be material to our financial position, results of operations or cash flows.

10. Defined Contribution Plan and Long-Term Incentive Units

        We sponsor a 401(k) savings plan. Under the plan, our contributions are based on 3.0% of eligible employee compensation and a 100.0% matching contribution up to a maximum of the first 4.0% of a participant's 401(k) contribution to the plan. Substantially all of our employees are covered by the plan. Our contribution expense for our 401(k) savings plan was $9.6 million, $9.7 million and $10.7 million for the years ended January 31, 2003, 2004 and 2005, respectively.

        On December 31, 2002, the 2003 long-term incentive plan was adopted to provide certain employees opportunities to receive additional compensation and benefit from the growth of the company and its subsidiaries. During the fourth quarter of fiscal year 2003, 72,880 of previously granted stock options were cancelled and the holders were issued one long-term incentive unit on a one-for-one basis together with a cash payment of $0.25 per option cancelled. This cash payment was recorded to compensation expense in fiscal year 2003.

        Under the plan, our board of directors may grant "potential units" (as defined in the plan) to employees from time to time with terms and conditions established pursuant to the plan. Potential units become "earned units" (as defined in the plan) based upon vesting terms established at the time of the grant. The amount payable to a participant employee shall be determined upon the earlier of a liquidation event (as defined in the plan), April 1, 2009 or at the discretion of our board of directors. The amount payable to the participant employee in either case is the excess of the value of each earned unit (as defined in the plan) over the base amount for each earned unit, as set by the board of directors at the time the potential unit was granted. The maximum number of potential units to be granted under the plan is 110,000. As of January 31, 2005, there were 68,872 potential units outstanding, all with base amounts of $19.00 per unit.

        A Second 2003 long-term incentive plan (the second plan), with terms similar to the plan described above, was adopted on December 1, 2003, and 75,000 potential units were immediately granted, all with base amounts of $6.30 per unit. The amount payable to a participant employee shall be determined upon the earlier of a liquidation event (as defined in the second plan), December 1, 2009 or at the discretion of our board of directors. The maximum number of potential units to be granted under the second plan is 75,000. As of January 31, 2005, 70,000 potential units remained outstanding.

        Both of these plans are accounted for using a variable accounting model. Compensation expense is recorded over the vesting period whenever the formula value (as defined in the plans) exceeds the base amount of the units awarded. As such, the amount of compensation expense to be recorded in fiscal year 2006 and thereafter may vary significantly. The amount of compensation expense was nominal in fiscal year 2003 and zero in fiscal year 2004. Total compensation expense of $0.9 million for the two plans was recorded in fiscal year 2005.

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11. Equity Instruments

Common Stock

        The holders of common stock are entitled to one vote for each share on all matters voted upon by the shareholders and may not cumulate votes for the election of directors. Subject to the preferential rights of the class B common stock and preferred stock, any shares of common stock outstanding will be entitled to participate equally in any distribution of net assets made to the shareholders in liquidation of our company and will be entitled to participate equally in dividends when declared by the board of directors. There are no redemption, sinking fund, conversion or preemptive rights with respect to the shares of common stock.

Class B Common Stock

        The class B common stock is identical in all respects to the common stock and has equal rights and privileges, except for the put feature of certain class B common stock (see below) and that the class B common stock, with respect to rights on liquidation, winding up or dissolution of our company, ranks prior to the common stock. Subject to the preferential rights of the preferred stock, in the event of any voluntary or involuntary liquidation, dissolution or winding up of our company, the holders of outstanding shares of class B common stock are entitled to receive out of our assets available for distribution to shareholders, before any distribution of assets to holders of common stock, an amount equal to $1.00 per share of class B common stock. After such payment, the holders of common stock and class B common stock will share on a pro rata basis in any distribution of our assets, subject to the preferential rights of the preferred stock.

        In December 1999, our board of directors and shareholders adopted the direct investment plan, which reserved 1,459,091 shares of our class B common stock for issuance to certain of our employees, non-employee directors, consultants and independent contractors. Of the 1,459,091 shares, 227,272 shares were designated as reinvestment shares and 1,231,819 shares were designated as coinvestment shares. Reinvestment shares represent the shares of our class B common stock that can be purchased by participants with their own funds. Coinvestment shares represent the shares of our class B common stock that can be purchased by participants, for which we lend the participants up to 65% of the total purchase price. As a condition to us making a loan, all of a participant's coinvestment shares must be pledged as collateral for the loan. Under the original plan, all loans were non-recourse promissory notes bearing interest at 8.0%. While interest on a particular loan accrues, the participant is not required to pay any interest during the term of the note. The principal and accrued interest balances are scheduled to be due on the earlier of certain events or eight years from the acquisition date. Coinvestment shares were immediately vested for 35% of the shares, with the remaining shares vesting in three equal installments three, four and five years from the acquisition date. We have the right to repurchase all or any portion of the participant's shares upon their termination, death, disability or resignation. The repurchase price per share varies depending on whether the share is vested and whether the participant was terminated for cause; however, in no event will the repurchase price be greater than fair value. The fair value will be determined by the compensation committee of the board of directors and will be based on a specific formula or such other value the compensation committee determines appropriate. Upon termination without cause, death, disability or resignation, the participant

F-26

has the right to put all or any portion of their reinvestment shares and vested coinvestment shares to us at fair value.

        During fiscal year 2001, 155,694 reinvestment shares and 1,097,053 coinvestment shares were sold to employees under the direct investment plan for $21.00 to $22.00 per share, which was the estimated fair value of the class B common stock at the time. In addition to the shares sold under the direct investment plan, we sold 104,000 shares of class B common stock to an executive in fiscal year 2001 at $22.00 per share, and we funded the entire purchase price with a non-recourse note (the executive shares). The terms of the executive shares were similar to the terms of the coinvestment shares, as described above, with two exceptions related to vesting and the put option on the shares. None of the executive shares was immediately vested. Instead, all of the shares vest in three equal installments three, four and five years from the acquisition date. Upon termination without cause, death, disability or resignation, all vested and unvested shares can be put to us at a price that will, in no event, be greater than fair value. At January 31, 2005, 150,969 reinvestment shares, 1,051,838 coinvestment shares and the 104,000 executive shares remained outstanding.

        For accounting purposes, the reinvestment shares purchased under the direct investment plan are considered fixed. Because we funded 65% of the purchase price of the coinvestment shares and 100% of the purchase price of the executive shares with non-recourse notes, these shares are being accounted for as stock options, with the cash portion of each coinvestment share's purchase price considered a prepayment of the option's "exercise price." In accordance with EITF Issue No. 95-16, "Accounting for Stock Compensation with Employer Loan Features Under APB Opinion No. 25," the interest due on the non-recourse notes is considered part of the share purchase price, and because the notes are prepayable, the ultimate purchase price is not known until the notes are settled. Therefore, the coinvestment shares and the executive shares are considered variable, and compensation expense will be recorded to the extent the shares have intrinsic value (the excess of the fair value over the "exercise price").

        All shares purchased under the direct investment plan and the executive shares are considered "mandatorily redeemable securities" because of the holders' rights to put their shares to us upon termination without cause, death, disability or resignation. As a result of this put arrangement, our net obligation to holders of class B common stock purchased under the direct investment plan and the holder of the executive shares was $0.5 million and $5.6 million as of January 31, 2004 and 2005, respectively. These amounts are reported as puttable class B common stock on our Consolidated Balance Sheets.

        In April 2003, our board of directors passed a resolution to change the terms of the direct investment plan and the executive shares, as follows. On an individual basis, a bonus will be paid in an amount equal to the outstanding principal and interest balances on the non-recourse notes grossed-up for the impact of estimated personal income taxes resulting from the bonus on April 15, 2008. If all of the following conditions are met:

•

The individual remains an employee on April 15, 2008.



•

Our EBITDA for fiscal year 2008 is at least $85 million or our cumulative EBITDA for fiscal years 2005 through 2008 is at least $372 million.

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•

Forgiveness of the notes and payment of the cash bonuses does not cause any defaults under existing debt agreements.

        If the first two conditions are met, but the third is not, the note forgiveness and bonus payments will be made to the maximum extent possible so as to not trigger defaults, with the remaining note forgiveness and bonus payments made in the earliest subsequent period that the third condition is met. In addition, the interest rate on significantly all outstanding notes was reduced from 8.0% to 2.97%.

        For accounting purposes, any forgiveness of the notes and interest receivable will be considered reductions of the "exercise price" of the options. Because the forgiveness of the notes is contingent on certain conditions, as described above, at January 31, 2005, the "exercise price" of the options continues to be the full purchase price ($21.00 to $22.00 per share) plus accrued interest until the actual forgiveness occurs or otherwise becomes probable. The deemed fair value of our class B common stock at January 31, 2005 does not exceed the "exercise price," and as such, no compensation expense has been recognized related to the direct investment plan and the executive shares. Compensation expense will be recorded in the future to the extent the fair value of the class B common stock exceeds the "exercise price." Forgiveness of the notes and payment of cash bonuses to cover individuals' personal tax liabilities, if any, will be recorded as compensation in the period the forgiveness occurs.

Redeemable Preferred Stock

        Prior to August 14, 2002, each share of preferred stock was entitled to cumulative, quarterly dividends at a compound rate of 14.5% and a liquidation preference of $80.00 plus accrued dividends. In connection with the August 2002 debt restructuring discussed in Note 5, the terms of the redeemable preferred stock were amended to eliminate all future dividends. Effective August 14, 2002, each share of preferred stock is entitled to a liquidation preference of $117.72 per share. The preferred stock is subject to redemption at our option at $118.90 per share at any time, and is subject to mandatory redemption (subject to the legal availability of funds) (i) in whole on November 15, 2011, at $117.72 per share; and (ii) upon a change in control (as defined in the certificate of designation) at a price of $118.90 per share. We accreted $4.2 million of redeemable preferred stock dividends during fiscal year 2003.

        Shares of preferred stock are non-voting, except that the holders of a majority of the outstanding shares of preferred stock, together with the holders of any parity securities, voting as a single class, will be entitled to elect two additional directors under certain circumstances. The certificate of designation of the preferred stock includes a limitation on transactions that the Company may engage in with its affiliates, which is identical to the covenant provided to the holders of the senior subordinated notes, and a limitation on restricted payments that, in addition to the protections offered to the holders of the senior subordinated notes, prohibits the Company from making certain additional payments, such as dividends, to its common stockholders, for so long as the preferred stock is outstanding.

        In connection with the August 2002 modification of the preferred stock terms, we granted the holders of the preferred stock the right to receive approximately 189,000 warrants upon certain triggering events if the minimum equity value, as defined in the agreement, exceeds

F-28

$15.00 per share of our class B common stock and an additional 189,000 warrants upon certain triggering events if the minimum equity value exceeds $22.00 per share of our class B common stock.

        As discussed in Note 1, effective February 1, 2005 we will begin reporting the fair value of redeemable preferred stock as a liability.

Warrants

        Together with the original issuance of preferred stock, we issued warrants to purchase 344,263 shares of our class B common stock. Each warrant entitles the holder to purchase one share of our class B common stock at an exercise price of $0.01 per share, subject to anti-dilution provisions. The warrants expire if not exercised prior to November 15, 2011. For accounting purposes, $5.5 million of the proceeds of the preferred stock offering was allocated to the estimated value of the warrants and was classified as additional paid-in capital on our Consolidated Balance Sheet. This value was determined using the Black-Scholes option pricing model. As part of the August 2002 restructuring of our debt, holders of our preferred stock are entitled to receive 189,101 series C warrants and 189,101 series D warrants if there is a "triggering event" and if the "current value" (both terms as defined in the preferred stockholders agreement) of our class B common stock, on a fully diluted basis, exceeds (a) $15.00 per share, in the case of the series C warrants, and (b) $22.00 per share, in the case of the series D warrants. Unless exercised, the series C warrants and series D warrants automatically expire on August 8, 2012. Each series C warrant and series D warrant entitles the holder to purchase one share of our class B common stock at an exercise price of $0.01 per share, subject to anti-dilution provisions. As of January 31, 2005, there has been no triggering event to initiate the issuance of these series C and series D warrants.

        Together with the issuance of the original senior subordinated notes, we issued warrants to purchase 172,182 shares of our class B common stock (of which warrants to purchase 6,149 shares of class B common stock are held by us). Each warrant entitles the holder to purchase 1.22987 shares of our class B common stock at an exercise price of $22.00 per share subject to adjustment in certain circumstances. The warrants became exercisable on or after November 1, 2001 and expire May 1, 2009. For accounting purposes, $1.7 million of the proceeds of the issuance of the original senior subordinated notes was allocated to the estimated fair value of the warrants and was classified as additional paid-in capital on our Consolidated Balance Sheet. This value was determined using the Black-Scholes option pricing model.

        In conjunction with the issuance of class A and class B senior subordinated notes, we issued series A warrants to purchase 245,500 shares of our class B common stock. Each warrant entitles the holder to purchase one share of our class B common stock at an exercise price of $0.01 per share, subject to anti-dilution provisions. The warrants are exercisable prior to May 1, 2009. These warrants were determined to have nominal value for accounting purposes, using a Black-Scholes option pricing model. We and our existing holders of class B common stock have the right, exercisable until August 9, 2005, to purchase the series A warrants and any shares of class B common stock issuable upon their exercise, at a price

F-29

(subject to adjustment) of $15.27 per series A warrant and $15.28 per share of class B common stock.

Stock Options

        The 1999 stock option plan was adopted by the board of directors and shareholders in December 1999, and it presently reserves 1,225,000 shares of class B common stock for granting incentive and non-statutory stock options to employees, non-employee directors, consultants, and independent contractors. The option plan will terminate on December 19, 2009, unless our board of directors and shareholders decide to terminate it earlier.

        Substantially all options granted thus far under the plan have been to employees and have had a term of ten years. We granted 575,000 options in December 2003 that had intrinsic value as of the date of grant. All other options outstanding did not have intrinsic value as of the date of grant. For each option grant under the plan, 50% of the recipients' options have fixed vesting schedules over five to six year periods and are considered fixed awards. For the fixed-award portion of the December 2003 option grant, approximately $1.7 million in stock-based compensation expense will be recorded over the vesting period from fiscal year 2005 through 2009, with approximately $1.1 million remaining to be recorded as of January 31, 2005. Approximately 485,000 options vest eight years from the grant date, with accelerated vesting if we meet certain targets outlined in the option agreements, generally related to EBITDA performance or attaining an entity valuation based on a formula driven calculation. Because the predefined eight year vesting period is substantially longer than the vesting period of our other options, it is not considered substantive for accounting purposes. As a result, these options are considered variable awards. As such, the amount of stock-based compensation expense to be recorded in fiscal year 2006 and thereafter may vary significantly. The remaining 174,600 of the options vest only if there is a liquidating event at a certain per share price, as defined in the agreement. Stock-based compensation expense resulting from options during the years ended January 31, 2004 and 2005 was approximately $0.4 million and $1.8 million, respectively. No stock-based compensation expense was recorded during the year ended January 31, 2003.

F-30

        A summary of selected information regarding all stock options for the three years ended January 31, 2005 follows:

		Number of shares		Exercise price per share		Weighted average exercise price per share
Balance, January 31, 2002		593,945		$	22.00	$	22.00
	Cancelled	(91,520	)		22.00		22.00
Balance, January 31, 2003		502,425			22.00		22.00
	Granted	575,000			6.30		6.30
	Cancelled	(9,119	)		22.00		22.00
Balance, January 31, 2004		1,068,306			6.30 - 22.00		13.55
	Granted	101,500			17.04 - 22.00		20.05
	Cancelled	(26,239	)		6.30 - 22.00		12.99
Balance, January 31, 2005		1,143,567		$	6.30 - 22.00	$	14.14
Options exercisable, January 31, 2003		32,359		$	22.00	$	22.00
Options exercisable, January 31, 2004		68,272			22.00		22.00
Options exercisable, January 31, 2005		170,364			6.30 - 22.00		16.72

        A summary of options outstanding at January 31, 2005 follows:

Exercise price per share	Number outstanding	Weighted average remaining contractual life in years	Number Exercisable
$  6.30	559,950	8.8	57,300
$17.04	40,000	9.2	—
$22.00	543,617	5.6	113,064
	1,143,567	7.3	170,364

        No options were granted during fiscal year 2003. The weighted average grant date fair value of options granted during fiscal years 2004 and 2005 was $7.97 and $6.90, respectively. All options granted in fiscal year 2004 have exercise prices that were less than the fair value of our class B common stock on the grant date. All options granted in fiscal year 2005 have exercise prices that exceeded the fair value of our class B common stock on the grant date. The weighted average grant date fair values of options were calculated by using the fair value

F-31

of each option grant, utilizing the Black-Scholes option pricing model and the following key assumptions:

	For the Years Ended January 31,
	2004		2005
Risk free interest rate	3.2% - 3.7	%	3.6% - 4.1	%
Expected life	6-8 years		6-8 years
Expected volatility	35.0	%	35.0	%
Expected dividend yield	0.0	%	0.0	%

12. Segment and Related Information

      Our business units have been aggregated into two reportable segments, Specialty Communication Services and Document Services.

        Specialty Communication Services    This segment consists of four business units, Financial Document Services, Strategic Communication Services, Realty Services and Integrated Operations Group. This segment provides our financial, investment company, corporate and real estate clients with information technology based solutions for the production and distribution of transactional financial documents, marketing materials, compliance documents and branded promotional materials. The principal markets for this segment include major metropolitan centers in North America, Europe, Latin America and the Far East.

        Document Services    Document Management Services is the sole business unit reported in this segment. It provides law firms, corporate legal departments, investment banks and other professional services firms with information management products and services designed to enhance productivity and reduce costs. This business segment provides a total outsourcing solution to our clients' information management needs, including providing all of the staff, technology and equipment necessary to manage the varying levels of demand associated with this function. These Merrill-managed facilities provide clients with a broad range of value added document services, including litigation copying and support, document imaging, electronic document storage and retrieval, binding and post-production shipping. The principal markets for this segment are major metropolitan areas in North America.

        The accounting policies of the reportable segments are the same as those described in Note 1. We evaluate the performance of our operating segments based on net revenue and operating income (loss), among other operating measures of the respective business units. Intersegment sales and transfers are not significant.

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        Summarized financial information concerning our reportable segments is shown in the following table. The "Other" column includes corporate related items and, as it relates to operating income (loss), income and expenses not allocated to reportable segments.

	Specialty Communication Services		Document Services		Other			Total
	(dollars in thousands)
2003
Net revenue	$	457,507	$	124,064	$	—		$	581,571
Operating income (loss)		36,179		7,768		(21	)		43,926
Purchase of property, plant and equipment		4,177		6,828		2,338			13,343
Depreciation and amortization		8,905		2,119		4,014			15,038
Total assets		194,545		49,483		64,131			308,159
2004
Net revenue	$	465,164	$	131,051	$	—		$	596,215
Operating income (loss)		47,778		5,043		(896	)		51,925
Purchase of property, plant and equipment		8,178		4,738		974			13,890
Depreciation and amortization		10,940		3,908		241			15,089
Total assets		210,288		50,624		50,797			311,709
2005
Net revenue	$	562,608	$	135,285	$	—		$	697,893
Operating income (loss)		68,334		1,314		(232	)		69,416
Purchase of property, plant and equipment		9,188		3,413		3,425			16,026
Depreciation and amortization		10,565		4,305		279			15,149
Total assets		253,813		47,594		25,882			327,289

        The reconciliation of total segment income to consolidated income before income taxes and minority interest:

	Year Ended January 31,
	2003			2004		2005
	(dollars in thousands)
Total segment operating income	$	43,926		$	51,925	$	69,416
Interest expense		39,242			34,981		30,543
Other income, net		(95	)		1,879		2,191
Income before income taxes and minority interest	$	4,779		$	18,823	$	41,064

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        Summarized financial information by geographic area is shown in the following table:

	United States		Foreign		Total
	(dollars in thousands)
2003
Net revenue	$	556,661	$	24,910	$	581,571
Long-lived assets		55,796		2,178		57,974
2004
Net revenue	$	566,047	$	30,168	$	596,215
Long-lived assets		57,458		1,428		58,886
2005
Net revenue	$	652,330	$	45,563	$	697,893
Long-lived assets		63,753		1,028		64,781

13. Supplemental Cash Flow Disclosure

      We accreted the value of redeemable preferred stock by $4.4 million, $0.2 million and $0.3 million for fiscal years 2003, 2004 and 2005, respectively. The dividends on our redeemable preferred stock were eliminated in connection with the August 2002 restructuring of our debt. We acquired $1.3 million and $0.8 million of property, plant and equipment through capital leases in fiscal years 2003 and 2004, respectively. As part of our August 2002 debt restructuring, we capitalized approximately $10.5 million of past due interest on the senior subordinated notes. For fiscal years 2003, 2004, and 2005, the amount of capitalized interest on senior discount notes was $2.7 million, $4.2 million and $2.4 million, respectively.

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14. Quarterly Data (unaudited)

        The following is a summary of unaudited quarterly data for the years ended January 31, 2004 and 2005:

		First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
		(dollars in thousands, except per share data)
2004
	Revenue	$	153,861	$	153,337	$	144,229	$	144,788	$	596,215
	Gross profit		49,632		46,640		41,744		46,416		184,432
	Net income		3,568		2,665		1,453		717		8,403
	Net income available to common shareholders	$	3,511	$	2,606	$	1,391	$	652	$	8,160
	Income available to Class B common shareholders per Class B common share:
	Basic	$	0.67	$	0.50	$	0.26	$	0.12	$	1.55
	Diluted	$	0.60	$	0.44	$	0.24	$	0.11	$	1.39
2005
	Revenue	$	189,419	$	179,523	$	162,229	$	166,722	$	697,893
	Gross profit		69,944		60,424		54,380		50,735		235,483
	Net income		11,231		4,133		4,144		1,862		21,370
	Net income available to Class B common shareholders	$	11,163	$	4,062	$	4,070	$	1,784	$	21,079
	Income available to Class B common shareholders per Class B common share:
	Basic	$	2.12	$	0.77	$	0.77	$	0.34	$	4.00
	Diluted	$	1.85	$	0.67	$	0.68	$	0.29	$	3.49

15. Subsequent Event

      On February 28, 2005, we acquired all of the outstanding stock of P.H. Brink International Corporation for $14.2 million in cash. The stock purchase agreement also requires us to pay up to $5.0 million of additional cash to the former shareholders if revenues exceed certain amounts, as defined in the stock purchase agreement. P.H. Brink International Corporation provides translation services, and is complementary to our current translation business, which is part of our Specialty Communication Services reportable segment. The purchase price will be allocated to the acquired assets and liabilities based upon their relative fair values, with the residual purchase price in excess of these fair values, if any, allocated to goodwill. We have not yet completed the final purchase price allocation. The operating results from the acquired assets will be reflected in our consolidated operating results beginning March 1, 2005.

F-35

Merrill Corporation

Unaudited Consolidated Financial Statements

F-36

Merrill Corporation

Consolidated Balance Sheets

(dollars in thousands, except per share amounts)

(Unaudited)

			January 31, 2005			October 31, 2005
Assets
Current assets
	Cash and cash equivalents		$	12,269		$	6,009
	Trade receivables, less allowance for doubtful accounts of $3,853 and $4,670, respectively			104,681			131,402
	Work in process inventories			15,764			18,112
	Other inventories			9,530			12,879
	Other current assets			15,812			22,716
		Total current assets		158,056			191,118
Property, plant and equipment, net				55,505			58,830
Goodwill				77,906			86,050
Other assets				35,822			38,515
		Total assets	$	327,289		$	374,513
Liabilities, minority interest, redeemable preferred stock, puttable class B common stock and shareholders' deficit
Current liabilities
	Debt obligations		$	1,570		$	1,570
	Capital lease obligations			945			945
	Accounts payable			35,601			39,812
	Accrued expenses			53,467			57,547
		Total current liabilities		91,583			99,874
Debt obligations, less current obligations				300,002			308,270
Capital lease obligations, less current obligations				1,150			1,175
Redeemable preferred stock (Note 2)				—			24,701
Other liabilities				11,024			26,842
		Total liabilities		403,759			460,862
Commitments and contingencies
Minority interest				343			—
Redeemable preferred stock (Note 2)				54,465			—
Puttable class B common stock				5,564			60,993
Shareholders' deficit
	Common stock, $.01 par value, 25,000,000 shares authorized; no shares issued or outstanding			—			—
	Class B common stock, $.01 par value, 10,000,000 shares authorized; 5,240,443 and 5,234,833 shares issued and outstanding			52			52
	Additional paid-in capital			104,208			98,438
	Notes and interest receivable			(22,283	)		(22,622	)
	Accumulated other comprehensive income (loss)			310			(591	)
	Accumulated deficit			(219,129	)		(222,619	)
		Total shareholders' deficit		(136,842	)		(147,342	)
		Total liabilities, minority interest, redeemable preferred stock, puttable class B common stock and shareholders' deficit	$	327,289		$	374,513

F-37

Merrill Corporation

Consolidated Statement of Operations

(dollars in thousands except share and per share data)

(Unaudited)

			For the Nine Months Ended October 31,
			2004			2005
Net revenue			$	531,171		$	603,159
Cost of revenue				346,423			390,484
	Gross profit			184,748			212,675
Selling, general and administrative expenses				124,906			202,106
	Operating income (loss)			59,842			10,569
Interest expense				23,516			25,623
Other income, net				(931	)		(1,963	)
	Income (loss) before income taxes			37,257			(13,091	)
Provision (benefit) for income taxes				17,762			9,017
	Income (loss) before minority interest and cumulative effect of change in accounting principle			19,495			(22,108	)
	Minority interest			(13	)		1
	Income (loss) before cumulative effect of change in accounting principle, net of income taxes			19,508			(22,109	)
Cumulative effect of change in accounting principle, net of income tax				—			18,619
	Net income (loss)			19,508			(3,490	)
Accretion of preferred stock				(214	)		—
	Net income (loss) available to common shareholders		$	19,294		$	(3,490	)
Basic per Class B common share:
	Income (loss) before cumulative effect of change in accounting principle, net of income tax					$	(4.22	)
	Cumulative effect of change in accounting principle, net of income tax						3.55
	Net income (loss) available to common shareholders		$	3.66		$	(0.67	)
Diluted per Class B common share:
	Income (loss) available to common shareholders before cumulative effect of change in accounting principle, net of income tax					$	(4.22	)
	Cumulative effect of change in accounting principle, net of income tax						3.55
	Net income (loss) available to common shareholders		$	3.20		$	(0.67	)
Unaudited pro forma net (loss) income available to Class B common shareholders per share (Note 7):
	Diluted					$	(0.67	)
Pro forma amounts assuming the change in accounting principle is applied retroactively:
	Net income (loss) available to common shareholders		$	17,834		$	(22,109	)
Pro forma amounts assuming the change in accounting principle is applied retroactively:
	Income (loss) available to common shareholders per Class B common share:
		Basic	$	3.38		$	(4.22	)
		Diluted	$	2.96		$	(4.22	)
Weighted average number of shares outstanding:
	Basic			5,272,713			5,237,825
	Diluted			6,022,570			5,237,825

F-38

Merrill Corporation

Consolidated Statements of Cash Flows

(dollars in thousands)

(Unaudited)

					For the Nine Months Ended October 31,
					2004			2005
Operating activities:
	Net income (loss)				$	19,508		$	(3,490	)
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				10,737			12,061
		Amortization of intangible and other assets				78			3,036
		Cumulative effect of change in accounting principle, net of income tax				—			(18,619	)
		Provision for losses on trade receivables				1,631			976
		Non-cash interest expense and amortization of deferred financing costs				4,140			3,958
		Minority interest in (loss) earnings of subsidiary				(13	)		1
		Stock-based compensation				563			53,118
		Other, net				1,057			36
		Changes in operating assets and liabilities, net of effect from business acquisitions:
			Trade receivables			(19,317	)		(27,850	)
			Work in process inventories			(1,249	)		(2,399	)
			Other inventories			(685	)		(3,350	)
			Other current assets			(881	)		91
			Accounts payable			3,541			3,613
			Accrued expenses and other liabilities			17,077			(2,983	)
				Net cash provided by operating activities		36,187			18,199
Investing activities:
	Purchase of property, plant and equipment					(10,527	)		(15,094	)
	Proceeds from disposal of property, plant and equipment					85			7
	Business acquisitions, net of cash acquired					(10,810	)		(14,060	)
	Other investing activities					(1,275	)		(345	)
				Net cash used in investing activities		(22,527	)		(29,492	)
Financing activities:
	Borrowings on revolving credit facility					5,000			205,200
	Payments on revolving credit facility					(5,000	)		(196,200	)
	Proceeds from issuance of debt					160,000			—
	Principal payments on debt and capital lease obligations					(190,062	)		(1,294	)
	Debt issuance costs					(3,207	)		—
	Repurchase of Series A warrants					—			(3,796	)
				Net cash (used in) provided by financing activities		(33,269	)		3,910
Effect of exchange rate changes on cash						(689	)		1,123
Decrease in cash and cash equivalents						(20,298	)		(6,260	)
Cash and cash equivalents, beginning of period						36,428			12,269
Cash and cash equivalents, end of period					$	16,130		$	6,009

F-39

Merrill Corporation

Notes to Unaudited Interim Consolidated Financial Statements

1. Basis of Presentation

        The accompanying unaudited interim consolidated financial statements of Merrill Corporation ("the Company") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with Regulation S-X of the Securities Exchange Act of 1934, as if the Company were subject to Regulation S-X. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, they do not include all of the information necessary for a fair statement of results of operations, financial position and cash flows in conformity with GAAP. In the opinion of management, the consolidated financial statements reflect all adjustments, consisting of normal recurring items, considered necessary for a fair statement of our results for the periods presented. Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. For further information, refer to the audited consolidated financial statements and notes thereto included in our Fiscal Year End January 31, 2005 Financial Report.

2. Change in Accounting Principle—Redeemable Preferred Stock

        Effective February 1, 2005, we changed the accounting for our redeemable preferred stock as prescribed by Statement of Financial Accounting Standard ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." Prior to adopting SFAS No. 150, we classified our redeemable preferred stock as a "mezzanine" instrument. Upon the adoption of SFAS No. 150, our redeemable preferred stock, as of October 31, 2005, is recorded as a liability on the accompanying consolidated balance sheets. We recorded the cumulative effect of this change in accounting principle prospectively by initially measuring, on the date of adoption, our redeemable preferred stock at fair value using a discounted cash flow approach. The cumulative effect of change in accounting principle, net of income tax, of $18.6 million, as reflected on the accompanying consolidated statements of operations for the nine month period ended October 31, 2005, represents the total gain upon initial adoption of $32.3 million less income taxes of $13.7 million. The $13.7 million of income tax was recorded as a deferred income tax liability and is included in other liabilities on the accompanying consolidated balance sheets as of October 31, 2005. On February 1, 2005, we began accreting the value of our redeemable preferred stock to its liquidation value through periodic charges to interest expense. This accretion will be recorded until the carrying value of the redeemable preferred stock reaches its liquidation value in November 2011 or upon a change in control, as defined, at which time we will be required to redeem all outstanding preferred shares. For the nine months ended October 31, 2005, we recorded interest expense associated with the accretion of approximately $2.5 million. The pro forma amount shown on the consolidated statements of operations reflect the historical results of operations assuming retroactive application of SFAS No. 150, including the related income taxes effect.

        As of January 31, 2005 and October 31, 2005, there were 500,000 shares of our redeemable preferred stock, $0.01 par value, authorized, issued and outstanding with an aggregate liquidation value of $58.9 million.

F-40

3. Acquisitions

        On February 28, 2005, we acquired all of the outstanding stock of P.H. Brink International Corporation ("Brink") in exchange for $14.1 million in cash. The stock purchase agreement also requires us to pay up to $5.0 million of additional cash to the former stockholders if certain revenues invoiced during the fiscal year ending January 31, 2006 and collected no later than April 30, 2006 exceed certain milestones, as set forth in the stock purchase agreement. Brink provides a variety of language translation services, and is complementary to our current translation service offerings, which is part of our specialty communications services reportable segment. Effective March 1, 2005, operating results from this business are reflected in our consolidated operating results. We recorded approximately $2.3 million of deferred income tax liabilities which are included in other liabilities on the accompanying consolidated balance sheets, as a result of differences between book and tax bases associated with identifiable intangible assets.

        The following table presents our consolidated results of operations on an unaudited pro forma basis as if the Brink acquisition had taken place on February 1, 2005 (for purposes of the nine months ended October 31, 2005 pro forma disclosure), and as if the Brink acquisition, our September 2004 acquisition of substantially all of the assets of Jim Laffey, Inc., Ken Freeberg, Inc., Webcopies.com LLC, and The Berkshires Homebuyers Guide, Inc. (collectively

F-41

"CfRE") and our January 2005 acquisition of Fine Arts, had taken place on February 1, 2004 (for purposes of the nine months ended October 31, 2004 pro forma disclosure).

		Nine Months Ended October 31,
		2004		2005
		(dollars in thousands except per share data)
Net revenue		$	558,737	$	603,673
Income (loss) before cumulative effect of change in accounting principle, net of income tax		$	20,027	$	(22,347	)
Net income (loss)		$	20,027	$	(3,728	)
Net income (loss) available to common shareholders		$	19,813	$	(3,728	)
Basic per Class B common share:
	Income (loss) available to common shareholders before cumulative effect of change in accounting principle, net of income tax			$	(4.27	)
	Cumulative effect of change in accounting principle, net of income tax			$	3.55
Net income (loss) available to common shareholders		$	3.76	$	(0.72	)
Diluted per Class B common share:
	Income (loss) available to common shareholders before cumulative effect of change in accounting principle, net of income tax			$	(4.27	)
	Cumulative effect of change in accounting principle, net of income tax				3.55
Net income (loss) available to common shareholders		$	3.29	$	(0.72	)

        The unaudited pro forma consolidated results of operations do not necessarily reflect the results that would have occurred had the acquisitions occurred when assumed for purposes of this disclosure, nor are the pro forma consolidated results of operations indicative of the results which may occur in the future.

F-42

4. Financing Arrangements

        Debt obligations as of January 31, 2005 and October 31, 2005 consisted of the following:

			January 31, 2005			October 31, 2005
			(dollars in thousands)
2004 Senior credit facility:
	Revolving credit facility.		$	—		$	9,000
	Senior credit term B loan			114,440			113,600
	Senior discount term loan			44,775			44,438
Senior subordinated notes, net of discount				142,357			142,802
		Subtotal		301,572			309,840
Less current obligations				(1,570	)		(1,570	)
Total long-term obligations			$	300,002		$	308,270

        Letters of credit outstanding under the revolving credit facility at January 31, 2005 and October 31, 2005 approximated $3.8 million and $5.7 million, respectively. The reserve adjusted LIBOR at October 31, 2004 and 2005 was 1.63% and 4.08%, respectively. The alternative base rate at October 31, 2004 and 2005 was 4.00% and 6.75%, respectively.

5. Stock-Based Compensation

        We account for employee stock-based compensation using the intrinsic value method and make the pro forma disclosures regarding the expensing of the fair value of all option grants pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation." We account for stock-based compensation to non-employees using the fair value method.

        We have stock ownership and option plans that are accounted for as variable plans under APB Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB No. 25") and related pronouncements. Variable awards are those for which the ultimate stock-based compensation expense to be recorded is contingent upon future events and the fair value of the underlying stock at the time those events occur, and may vary significantly over the vesting period. We also use variable-award accounting for the majority of shares of our class B common stock sold under the Direct Investment Plan. For the nine months ended October 31, 2004 and 2005, we recorded $0.6 million and $53.1 million of non-cash stock compensation expense under the intrinsic value method, respectively. Non-cash stock compensation expense is recorded as a component of selling, general and administrative expenses on the accompanying consolidated statement of operations.

        Stock compensation expense recorded in the third quarter of 2005 resulted from a significant increase in the estimated fair value of our class B common stock. This increase in estimate fair value resulted from favorable developments in the operations and the continued diversification of the company's operations.

        The table below illustrates the effect on net income had we recognized the fair value of options granted to employees as compensation expense over the vesting periods in

F-43

accordance with the provisions of SFAS No. 123. The variable award plans discussed above are not variable plans under SFAS No. 123.

		Nine Months Ended October 31,
		2004			2005
		(dollars in thousands)
Net income (loss), as reported		$	19,508		$	(3,490	)
Accretion of preferred stock			(214	)		—
Net income (loss) available to common shareholders, as reported			19,294			(3,490	)
Add: Stock-based employee compensation expense included in reported net income, net of income tax			278			48,887
Deduct: Total stock-based employee compensation expense determined under fair value based method, net of income taxes			(1,161	)		(884	)
Pro forma net income available to common shareholders		$	18,411		$	44,513
Net income (loss) available to common shareholders
	As reported—Basic	$	3.66		$	(0.67	)
	As reported—Diluted	$	3.20		$	(0.67	)
	Pro-Forma—Basic	$	3.49		$	8.50
	Pro-Forma—Diluted	$	3.13		$	7.36

6. Income Taxes

      Our effective income tax rate for the nine months ended October 31, 2004 was higher than the federal statutory tax rate of 35.0%. Items contributing to our effective income tax rate exceeding the federal statutory tax rate for the nine months ended October 31, 2004 include the impact of non-deductible business meeting and entertainment expenses, foreign operating losses for which no income tax benefit was recorded and state income taxes.

        Our effective income tax rate for the nine months ended October 31, 2005 was higher than the federal statutory tax rate of 35.0%. The primary cause was the recording of $43.2 million of non-cash stock compensation expense during the nine months ended October 31, 2005 associated with stock ownership plans accounted for as variable plans under APB No. 25 and related pronouncements, that will not be deductible for income tax purposes. Other items contributing to our effective income tax rate exceeding the federal statutory tax rate for the nine months ended October 31, 2005 include the impact of non-deductible business meeting and entertainment expenses, foreign operating losses for which no income tax benefit was recorded and state income taxes.

7. Equity Instruments

        During the nine months ended October 31, 2004 and 2005, additional paid-in-capital increased by approximately $0.6 million and $53.1 million, respectively, as a result of

F-44

recording non-cash stock compensation for variable award plans accounted for under APB No. 25 and related pronouncements.

        For the nine months ended October 31, 2004, additional paid-in-capital increased and puttable class B common stock decreased $0.1 million as a result of a decrease in the estimated fair value of class B common stock. During the nine months ended October 31, 2005, additional paid-in-capital decreased and puttable class B common stock increased $55.4 million as a result of increase in the estimated fair value of class B common stock.

        Pursuant to terms of a call option, in August 2005, we repurchased all 245,500 of our outstanding series A warrants for cash of approximately $3.8 million.

Earnings Per Share

        Basic earnings per share is based on the weighted-average number of Class B common shares outstanding during the year. Diluted earnings per share is based on the weighted-average number of Class B common shares outstanding during the year, adjusted to give effect to potential common shares such as stock options and warrants.

        The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding.

	For the Nine Months Ended October 31,
	2004	2005
Basic	5,272,713	5,237,825
Dilutive stock options and warrants	749,857	—
Diluted	6,022,570	5,237,825

        Potential dilutive shares of common stock excluded from the diluted net income (loss) per share computations were 690,699 and 1,670,508 for the nine months ended October 31, 2004 and 2005, respectively. Certain potential dilutive shares of common stock were excluded from the diluted earnings per share computation because their exercise prices were greater than the average market price of the common shares during the period and were therefore not dilutive. Potential dilutive shares of common stock were excluded from periods with net loss because they were anti-dilutive.

Unaudited Pro Forma Net Loss Per Share

        In connection with an August 2002 modification of our preferred stock terms, we granted our preferred stockholders the right to receive warrants to purchase up to 378,000 shares of our Class B common stock if certain "triggering events" occurred. In connection with our initial public offering we will experience a "triggering event," as defined, pursuant to which we will be required to issue to our preferred shareholders warrants to purchase 378,000 shares of our Class B common stock. The unaudited pro forma net loss per share excludes these potentially dilutive shares because their effect would be anti-dilutive. We have not

F-45

separately presented the unaudited pro forma net loss per share for the nine months ended October 31, 2005 because it is the same as our net loss per share.

8. Comprehensive (Loss) Income

        We report accumulated other comprehensive (loss) income as a component of shareholders' deficit. The accumulated other comprehensive loss at January 31, 2005 and October 31, 2005 consisted of foreign currency translation adjustments and unrealized gains on available-for-sale securities. Comprehensive (loss) income for the nine months ended October 31, 2004 and 2005 was as follows:

	Nine Months Ended October 31,
	2004			2005
	(dollars in thousands)
Net income (loss), as reported	$	19,508		$	(3,490	)
Change in cumulative foreign currency translation adjustment.		(133	)		(1,021	)
Unrealized (losses) gains on available-for-sale securities, net of income taxes		—			120
Comprehensive income (loss)	$	19,375		$	(4,391	)

9. Variable Interest Entity

      In January 2003, we entered into a joint venture arrangement with an independent third party. We currently own a 5.0% membership interest of the joint venture with the independent third party owning the remaining 95.0% membership interest. The joint venture owns a wholly-owned subsidiary located in India, that provides certain composition and electronic document coding services to us. The joint venture bills us for these services. Pursuant to the terms of the joint venture agreement, our membership interest in the joint venture can increase based on the volume of business we direct through the joint venture over a period of time. Our maximum exposure to loss is our initial membership contribution which is insignificant. In accordance with FASB Interpretation No. 46R, we are not the primary beneficiary of this variable interest and accordingly, have not consolidated the operating results of the joint venture with ours. However, if our membership interest in the joint venture increases, we may become the primary beneficiary and we may be required to consolidate the joint venture's operating results with ours.

10. Litigation

        We are the subject of various pending or threatened legal actions in the ordinary course of business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. However, management believes that the final disposition of these matters will not be material to our financial position, results of operations or cash flows.

F-46

11. Segment Information

        Our business units have been aggregated into two reportable segments, Specialty Communication Services and Document Services.

        Specialty Communication Services    This segment consists of four business units, Financial Document Services, Strategic Communication Services, Realty Services and Integrated Operations Group. This segment provides our financial, investment company, corporate and real estate clients with information technology based solutions for the production and distribution of transactional financial documents, marketing materials, compliance documents and branded promotional materials. The principal markets for this segment include major metropolitan centers in North America, Europe, Latin America and the Far East.

        Document Services    Document Management Services is the sole business unit reported in this segment. It provides law firms, corporate legal departments, investment banks and other professional services firms with information management products and services designed to enhance productivity and reduce costs. This business segment provides a total outsourcing solution to our clients' information management needs, which includes providing all of the staff, technology and equipment necessary to manage the varying levels of demand associated with this function. These Merrill-managed facilities provide clients with a broad range of value added document services, including litigation copying and support, document imaging, electronic document storage and retrieval, binding and post-production shipping. The principal markets for this segment are major metropolitan areas in North America.

        We evaluate the performance of our operating segments based on net revenue and operating income among other operating measures of the respective business units.

        Summarized financial information concerning our reportable segments is shown in the following table. The "Other" column includes corporate related items and income and expenses not allocated to reportable segments. Intersegment sales and transfers are not significant. The proportion of total assets by segment has not changed materially since January 31, 2005.

Nine Months Ended October 31,	Specialty Communication Services		Document Services			Other			Total
	(dollars in thousands)
2004
Net revenue	$	430,043	$	101,128		$	—		$	531,171
Operating income (loss)	$	59,938	$	(96	)	$	—		$	59,842
2005
Net revenue	$	486,947	$	116,212		$	—		$	603,159
Operating income (loss)	$	31,649	$	2,043		$	(23,123	)	$	10,569

F-47

        The reconciliation of total segment operating income (loss) to consolidated income (loss) before income taxes, minority interest and cumulative effect of change in accounting principle is as follows:

	Nine Months Ended October 31,
	2004			2005
Total segment operating income (loss)	$	59,842		$	10,569
Interest expense		23,516			25,623
Other income, net		(931	)		(1,963	)
Income (loss) before income taxes, minority interest and cumulative effect of change in accounting principle	$	37,257		$	(13,091	)

12. Subsequent Events

      On January 3, 2006, we acquired all of the outstanding stock of WordWave for $157.3 million. The agreement contains a $5.0 million contingent earn-out payment to be made no later than April 30, 2007 if WordWave achieves certain financial objectives for the year ended December 31, 2005 and for our fiscal year 2007, as defined in the Agreement. Also, the agreement allows for a working capital adjustment to purchase price based on December 31, 2005 balances as defined in the Agreement. WordWave is a global provider of court reporting, litigation support, digital recording, transcription and services to law firms, courts, governmental agencies and corporations and complements our existing Document Management Services product offering and service.

        As a result of our acquisition of WordWave, during December 2005 and January 2006, we reorganized our operations and re-aligned our management and financial reporting structure. We expect this reorganization and realignment will change our reporting segments in the fourth quarter of fiscal year 2006.

        In conjunction with our acquisition of Wordwave, on December 22, 2005, we closed on our new $535.0 million senior credit facility and redeemed our 2004 senior subordinated notes. The new senior credit facility consisted of a $60.0 million revolving credit facility, a $320.0 million initial term loan and a $155.0 million delayed draw term loan (collectively, the "term loans"). Amounts borrowed under the revolving credit facility mature on December 22, 2010 and bear interest, at our option, at LIBOR plus a maximum of 2.50% or a base rate plus a maximum of 1.25%, subject to reductions based on a leverage ratio as defined in the agreement. The term loan matures on December 22, 2012, unless we fail to extend the mandatory redemption date of our preferred stock, refinance or otherwise redeem our preferred stock as provided in the credit agreement. The term loan bears interest, at our option, at LIBOR plus a maximum of 2.25% or a base rate plus a maximum of 1.00%, subject to reductions based on a leverage ratio as defined in the agreement. An affiliate of our largest shareholder earned approximately $2.6 million of fees and related expenses for partially underwriting the senior credit facility and holds a $10.0 million revolving credit facility commitment.

F-48

        On December 31, 2005, we completed an acquisition that increased our equity ownership of Quebecor Merrill Canada (QMC) from 49.0% to 100.0%. We acquired this additional 51.0% equity interest in QMC for approximately $16.4 million. QMC is a provider of financial transactional and compliance composition and printing services to Canadian issuers.

        In February 2006, we entered into an agreement with our executive officers and certain other employees holding coinvestment shares pursuant to which we paid each of these employees a bonus in an amount equal to the outstanding principal amount under their loan and any accrued but unpaid interest and an additional amount to pay for the estimated federal, state and local income taxes the executive officers and other employees would incur as a result of the receipt of such bonus. The total amount of such bonuses will approximate $18.1 million and will be recorded as a charge to operations in our first fiscal quarter ending April 30, 2006.

        On February 7, 2006, we entered into a five-year fixed interest rate swap arrangement that effectively converted $200.0 million of our new senior credit facility from floating rate debt to fixed-rate debt at 5.03% plus the applicable margin, as defined in the new senior credit facility.

13. New Accounting Pronouncements

        In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment," which revises SFAS No. 123, and supersedes Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." Among other items, SFAS No. 123R eliminates the use of the intrinsic value method of accounting, and requires companies to recognize compensation expense for share-based payment awards to employees, based on the grant date fair value of those awards, in the financial statements. The effective date for this standard is the first reporting period beginning after December 15, 2005, which would be our fiscal year beginning February 1, 2006. We have not yet determined which of the adoption methods prescribed by SFAS No. 123R we will elect, nor have we determined the impact of adopting this statement. However, we do expect that adoption of this standard will reduce the volatility of our stock-based compensation expense, because certain instruments accounted for as "variable" under APB No. 25 will not be considered variable under the new standard. In March 2005, the SEC issued SAB No. 107, "Topic 14: Share-Based Payment," which addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides views regarding the valuations of shared-based payments arrangements for public companies.

        In November 2004, the FASB issued SFAS No. 151, "Inventory Costs—an amendment of ARB No. 43, Chapter 4." This statement clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognized as current-period charges and requires the allocation of fixed production overheads to inventory be based on normal capacity of the production facilities. This statement is effective for inventory costs incurred during fiscal years beginning after June 15, 2005, which would be our fiscal year beginning February 1, 2006. We have not yet determined the impact of adopting this statement, but we do not anticipate a material impact.

        In September 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections—a replacement of APB No. 20 and SFAS No. 3. SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes,

F-49

unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective applicable is impracticable. The correction of an error in previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by SFAS 154. SFAS 154 is required to be adopted in fiscal years beginning after December 15, 2005. Accordingly, we will adopt SFAS 154 in our fiscal year beginning February 1, 2006. Adoption of SFAS 154 is not expected to have a material effect on our financial position, results of operations or cash flows.

F-50

WordWave, Inc.

Consolidated Financial Statements

December 31, 2003 and 2004
and September 30, 2004 and 2005 (unaudited)

F-51

Report of Independent Auditors

To the Board of Directors and Shareholders of WordWave, Inc.

        In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of redeemable convertible preferred stock, stockholders' deficit and comprehensive income and of cash flows present fairly, in all material respects, the financial position of WordWave, Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
April 29, 2005
Boston, Massachusetts

F-52

WordWave, Inc.

Consolidated Balance Sheets

			December 31,
									September 30, 2005
			2003			2004
									(unaudited)
			(in thousands, except share data)
Assets
Current assets
	Cash		$	1,824		$	1,606		$	1,269
	Accounts receivable, net of allowance for doubtful accounts of $1,669 and $1,893 at December 31, 2003 and 2004, respectively, and $2,094 at September 30, 2005 (unaudited)			19,984			21,934			29,121
	Deferred income taxes			2,755			1,904			1,904
	Other current assets			336			1,211			1,342
		Total current assets		24,899			26,655			33,636
Property and equipment, net				2,577			2,962			4,063
Goodwill				62,625			63,059			74,245
Other assets				1,840			1,189			12,626
Total assets			$	91,941		$	93,865		$	124,570
Liabilities, Minority Interest, Redeemable Convertible Preferred Stock and Stockholders' Deficit
Current liabilities
	Accounts payable		$	5,585		$	5,554		$	6,404
	Accrued expenses			7,719			9,175			9,640
	Notes payable			217			217			217
	Current portion of term notes			4,053			—			5,750
	Obligations under capital leases			91			24			123
		Total current liabilities		17,665			14,970			22,134
Revolving line of credit, term notes and notes payable, less current maturities				17,516			16,563			59,289
Senior subordinated notes payable				21,747			22,076			—
Deferred income taxes				3,852			4,671			5,528
		Total liabilities		60,780			58,280			86,951
Commitments and contingencies
Minority interest				—			42			—
Preferred stock, 10,000,000 shares authorized
	Series A Redeemable Convertible Preferred Stock, $.01 par value; 2,916,666 shares authorized, 2,897,107 shares issued and outstanding (aggregate liquidation and redemption value of $16,799 at December 31, 2004)			15,959			16,799			17,429
	Series B Redeemable Convertible Preferred Stock, $.01 par value; 1,818,182 shares authorized, issued and outstanding (aggregate liquidation and redemption value of $15,224 at December 31, 2004)			14,424			15,224			15,824
	Series C Redeemable Convertible Preferred Stock, $.01 par value; 903,517 shares authorized and 829,230 shares issued and outstanding (aggregate liquidation and redemption value of $7,620 at December 31, 2004)			7,189			7,620			7,943
Stockholders' deficit
	Common stock, $.01 par value; 20,000,000 shares authorized; 4,223,798 and 5,968,798 shares issued and outstanding at at December 31, 2003 and 2004, respectively and 5,612,759 shares issued and outstanding at September 30, 2005 (unaudited)			42			59			57
	Notes receivable from stockholders			(83	)		(83	)		(83	)
	Accumulated other comprehensive income			1,165			1,587			1,188
	Accumulated deficit			(7,535	)		(5,663	)		(4,739	)
		Total stockholders' deficit		(6,411	)		(4,100	)		(3,577	)
		Total liabilities and stockholders' deficit	$	91,941		$	93,865		$	124,570

The accompanying notes are an integral part of these consolidated financial statements.

F-53

WordWave, Inc.

Consolidated Statements of Operations

		Years Ended December 31,					Nine-Month Periods Ended September 30,
		2003			2004		2004		2005
							(unaudited)
		(in thousands)
Net revenues		$	102,712		$	115,757	$	84,595	$	94,466
Cost of services (excluding depreciation and amortization)			59,372			66,327		48,851		52,787
Selling, general and administrative expenses (excluding depreciation and amortization)			32,977			36,178		26,457		29,825
Depreciation and amortization of property, equipment and intangibles			1,502			1,355		1,049		1,221
			93,851			103,860		76,357		83,833
	Operating income		8,861			11,897		8,238		10,633
Interest expense			5,111			4,888		3,642		2,811
Other expense, net			364			264		36		1,337
	Income before income taxes		3,386			6,745		4,560		6,485
(Benefit from) provision for income taxes			(936	)		2,785		1,886		2,721
	Net income	$	4,322		$	3,960	$	2,674	$	3,764

The accompanying notes are an integral part of these consolidated financial statements.

F-54

WordWave, Inc.

Consolidated Statements of Redeemable Convertible Preferred Stock, Stockholders' Deficit and Comprehensive Income

Years Ended December 31, 2003 and 2004 and the Nine-Month Period Ended September 30, 2005 (unaudited)

		Series A Redeemable Convertible Preferred Stock			Series B Redeemable Convertible Preferred Stock			Series C Redeemable Convertible Preferred Stock
											Common Stock								Notes Receivable from Stockholders			Accumulated Other Comprehensive Income
																Capital in Excess of Par Value									Accumulated Deficit			Total Stockholders' Deficit
		Shares	Value		Shares	Value		Shares	Value		Shares		Par Value
		(in thousands, except share data)
Balance at December 31, 2002		2,897,107	$	15,119	1,818,182	$	13,624	829,230	$	6,758	4,198,798		$	42		$	—		$	(83	)	$	154		$	(9,811	)	$	(9,698	)
Net income																										4,322			4,322
Foreign currency translation adjustment																							1,011						1,011
	Comprehensive income																												5,333
Accrual of dividends on redeemable convertible preferred stock				840			800			431							(25	)								(2,046	)		(2,071	)
Issuance of common stock											25,000						25												25
Balance at December 31, 2003		2,897,107		15,959	1,818,182		14,424	829,230		7,189	4,223,798			42			—			(83	)		1,165			(7,535	)		(6,411	)
Net income																										3,960			3,960
Foreign currency translation adjustment																							422						422
	Comprehensive income																												4,382
Accrual of dividends on redeemable convertible preferred stock				840			800			431																(2,071	)		(2,071	)
Issuance of restricted stock											1,745,000			17												(17	)
Balance at December 31, 2004		2,897,107		16,799	1,818,182		15,224	829,230		7,620	5,968,798			59			—			(83	)		1,587			(5,663	)		(4,100	)
Net income (unaudited)																										3,764			3,764
Foreign currency translation adjustment																							(399	)					(399	)
	Comprehensive income																												3,365
Accrual of dividends on redeemable convertible preferred stock (unaudited)				630			600			323																(1,553	)		(1,553	)
Write-off of canceled warrants (unaudited)																	(376	)											(376	)
Shares returned as settlement (unaudited)											(70,000	)					(210	)											(210	)
Issuance of common stock (unaudited)											155,000			2			618									—			620
Repurchase of common stock (unaudited)											(441,039	)		(4	)		(32	)								(1,287	)		(1,323	)
Balance at September 30, 2005 (unaudited)		2,897,107	$	17,429	1,818,182	$	15,824	829,230	$	7,943	5,612,759		$	57		$	—		$	(83	)	$	1,188		$	(4,739	)	$	(3,577	)

The accompanying notes are an integral part of these consolidated financial statements.

F-55

WordWave, Inc.

Consolidated Statements of Cash Flows

				Years Ended December 31,						Nine-Month Periods Ended September 30,
				2003			2004			2004			2005
				(in thousands)
										(unaudited)
Cash flows from operating activities
Net income				$	4,322		$	3,960		$	2,674		$	3,764
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization of property, equipment and deferred financing costs				1,357			1,202			824			963
	Amortization of intangible assets and other assets				474			466			353			484
	Accretion of interest for warrants				263			263			197			47
	Provision for allowance for doubtful accounts				541			381			273			417
	Noncash write-off of deferred financing costs				—			—			—			892
	Noncash interest expense				287			292			210			—
	Noncash gain on settlement				—			—			—			(210	)
	Loss on extinguishment of debt				—			—			—			961
	Deferred income taxes				(1,866	)		1,664			773			857
	Changes in operating assets and liabilities, net of effects from business acquisitions
		Accounts receivable			(514	)		(2,331	)		(644	)		(3,916	)
		Other current assets			(25	)		(871	)		(429	)		(2,081	)
		Accounts payable			104			(31	)		1,501			179
		Accrued expenses			(443	)		1,557			(1,120	)		85
			Net cash provided by operating activities		4,500			6,552			4,612			2,442
Cash flows from investing activities
Purchase of property and equipment					(1,248	)		(1,438	)		(964	)		(1,301	)
Acquisition of businesses, net of cash acquired					(503	)		(465	)		(388	)		(24,880	)
			Net (cash) provided by used in investing		(1,751	)		(1,903	)		(1,352	)		(26,181	)
Cash flows from financing activities
Payments on capital lease obligations					(156	)		(66	)		(45	)		(10	)
Net borrowings (payments) under notes payable to bank					(3,237	)		(5,006	)		(3,299	)		46,259
Payment on subordinated notes					—			(217	)		—			(21,176	)
Repurchase of common stock					—			—			—			(1,322	)
			Net cash (used in) provided by financing activities		(3,393	)		(5,289	)		(3,344	)		23,751
Effect of exchange rate changes on cash					1,011			422			28			(349	)
Net increase (decrease) in cash					367			(218	)		(56	)		(337	)
Cash at beginning of period					1,457			1,824			1,824			1,606
Cash at end of period				$	1,824		$	1,606		$	1,768		$	1,269
Supplemental cash flow information
Income taxes paid				$	1,305		$	1,313		$	954		$	1,585
Interest paid					4,224			4,053			3,263			3,162

The accompanying notes are an integral part of these consolidated financial statements.

F-56

WordWave, Inc.

Notes to Consolidated Financial Statements

December 31, 2003 and 2004 and September 30, 2004 and 2005 (unaudited)

1. Nature of Business

        WordWave, Inc. (the "Company") is a Delaware corporation, which provides digitized information transcription and related services, primarily to the legal, media and government markets through its subsidiaries and divisions throughout the United States, Europe, Asia and Australia.

2. Summary of Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts have been eliminated.

Interim Financial Statements (unaudited)

        The balance sheet at September 30, 2005, the statements of operations for the nine months ended September 30, 2004 and 2005, the statements of cash flows for the nine months ended September 30, 2004 and 2005 and the statement of changes in redeemable convertible preferred stock, stockholders' deficit and comprehensive income for the nine months ended September 30, 2005 have been prepared by the Company without audit. The amounts at and for the nine months ended September 30, 2004 and 2005 included within the notes to financial statements have also been prepared by the Company without audit. In the opinion of the Company's management all adjustments (which include only normal recurring adjustments) necessary for a fair statement of the financial position, results of operations, cash flow and changes in redeemable convertible preferred stock, stockholders' deficit and comprehensive income have been made. Interim results are not necessarily indicative of the results that will be achieved for the year.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, accounts receivable, long-lived and intangible assets, income taxes and accounting for acquisitions. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Risks and Uncertainties

        The Company's future results of operations involve a number of risks and uncertainties that could affect the Company's future operating results and cause actual results to vary materially from expectations.

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Cash

        Cash consists of deposits at various banks. At times, the Company may maintain balances in excess of the federally insured limits of $100,000 per account.

Revenue Recognition

        The Company recognizes revenue in accordance with Securities and Exchange Commission (SEC) Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition," which requires that persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, the Company recognizes revenue related to providing information transcription services when such services are completed. Where the Company has revenue arrangements with multiple deliverables, we apply Emerging Issues Task Force (EITF) Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliveries, and recognize each element separately as long as the Company has objective and reliable evidence of the fair value of each element. Where the Company has invoiced customers or collected cash from customers for products or services to be completed in the future, these revenues are deferred and recognized as revenue over the period earned or when completed. Such deferred revenue is included in accrued expenses on the accompanying Consolidated Balance Sheets.

        During 2003 the Company reduced revenues by $927,000 to reflect a one-time discount on services to be rendered to a customer in the United Kingdom, related to the resolution of a contract pricing issue.

Property and Equipment

        Property and equipment are recorded at cost. The Company provides for depreciation of furniture and fixtures and equipment using the straight-line method over three to five years. Amortization of leasehold improvements is provided using the straight-line method over the shorter of the lease term or the estimated useful life of the leasehold improvements. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Significant additions or improvements extending asset lives are capitalized; normal repairs and maintenance costs are expensed as incurred.

Accounts Receivable and Concentration of Credit Risk

        The Company's accounts receivable consist primarily of amounts owed by law firms and related clients and companies in the entertainment business located throughout the United States of America and in other countries where the Company has operations. The Company performs credit evaluations of its clients to minimize its collection risk and generally does not require collateral. The Company maintains an allowance for doubtful accounts for amounts considered uncollectible. Receivables are written off against these reserves in the period they are determined to be uncollectible.

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Accounting for Derivatives and Hedging Activities

        The Company accounts for derivative instruments in accordance with Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133). SFAS No. 133 requires that all derivative instruments be recorded on the balance sheet at fair value. Changes in the fair value of derivatives are recorded each period in current earnings. At December 31, 2004 the Company had entered into only one such transaction, an interest rate swap, to minimize the fluctuation of its financing costs pursuant to its bank credit facility agreement, discussed in Note 5.

Income Taxes

        Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Income tax expense is the tax payable for the year and the change during the year in deferred tax assets and liabilities.

Stock-Based Compensation

        As more fully described in Note 6 to the consolidated financial statements, the Company has a stock option plan authorizing various types of stock-based awards that may be granted to employees. The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB No. 25), and related interpretations, in accounting for its stock-based compensation plans for employees, rather than the alternative fair value accounting method provided for under SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123). The exercise price of the stock options, set at the time of the grant, is not less than the fair market value per share at the date of grant. Options have a term of ten years and generally vest over three to five years.

        The following table illustrates the effect on net income as if the minimum value method described in SFAS No. 123 had been applied to the Company's stock option plan.

		Years Ended December 31,				Nine-Month Periods Ended September 30,
		2003		2004		2004		2005
		(in thousands)
						(unaudited)
Net income, as reported		$	4,322	$	3,960	$	2,674	$	3,764
Less: Total stock-based employee compensation expense, net of related tax effects			112		89		67		49
	Pro forma net income	$	4,210	$	3,871	$	2,607	$	3,715

        Pro forma information regarding net income was computed in accordance with SFAS No. 123, and has been determined as if the Company accounted for its employee stock

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options granted under the fair value methods of that statement. The fair value of these options was estimated at the date of grant using the minimum value option pricing model. The weighted average fair value at date of grant for stock options granted during each of the years ended December 31, 2003 and 2004 was nominal. The following table summarizes the weighted average assumptions used in the minimum value method option pricing model:

	Years Ended December 31,		Nine-Month Periods Ended September 30,
	2003	2004	2004	2005
			(unaudited)
Risk-free interest rate	5.0%	5.0%	5.0%	4.25%
Expected life	7 years	7 years	7 years	5 years
Expected volatility	0%	0%	0%	0%
Expected dividend yield	0%	0%	0%	0%

Foreign Currency Translation

        The Company translates balance sheet amounts of its foreign subsidiaries using year-end exchange rates and statement of operations amounts using average exchange rates for the year. Foreign currency translation gains in the amount of $1,011,000 in 2003 and $422,000 in 2004 and ($399,000) for the nine months ended September 30, 2005 (unaudited) are included in the statement of stockholders' equity.

Goodwill

        The Company accounts for goodwill and other intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets, which requires, among other things, the discontinuance of goodwill amortization and the requirement to test goodwill and other indefinite-lived intangible assets for impairment at least annually. A two-step impairment test is used to first identify potential impairments and then measure the amount of impairment losses. The Company completed the annual impairment tests during the years ended December 31, 2003 and 2004 and determined that no impairment charge is necessary.

Other Intangible Assets

        The Company has noncompetition agreements with sellers of acquired businesses, which are amortized over the term of the agreements, generally five years.

Deferred Financing Costs

        Deferred financing costs are amortized to interest expense over the term of the related borrowings and are included in other assets in the accompanying financial statements. Accumulated amortization amounted to $1,531,000 and $1,844,000 at December 31, 2003 and 2004, respectively, and $227,000 at September 30, 2005 (unaudited).

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Impairment of Long-Lived Assets

        The Company reviews the carrying value of its long-lived assets (primarily property and equipment and goodwill) to assess the recoverability of these assets whenever events indicate that impairment may have occurred; any impairment would be recognized in operating results if a permanent diminution in value were to occur. As part of this assessment, the Company evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset or operating unit. If an impairment is indicated from this review, the carrying amount of the assets would be reduced to their estimated fair value.

Fair Value of Financial Instruments

        Financial instruments, other than long-term debt, consist principally of cash and cash equivalents, trade receivables and accounts payables, for which their current carrying amounts approximated fair market value. The Company believes our term loan debt carrying amounts approximate their fair values.

Comprehensive Income

        Comprehensive income includes net income and the effects of currency translation. Comprehensive income for all periods presented is included in the consolidated statements of shareholders' equity (deficit) and comprehensive income.

New Accounting Pronouncements

        In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which revises SFAS No. 123 and APB No. 25, Accounting for Stock Issued to Employees. Among other items, SFAS No. 123R eliminates the use of the intrinsic value method of accounting, and requires companies to recognize compensation expense for share-based payment awards with employees, based on the grant date fair value of those awards in the financial statements. The effective date for private companies is the first reporting period beginning after December 15, 2005, which would be January 1, 2006 for the Company. The Company has not yet determined which of the adoption methods prescribed by SFAS No. 123R it will elect, nor has it determined the impact of adopting this statement. In March 2005, the SEC issued SAB No. 107, Topic 14: Share-Based Payment, which addresses the interaction between SFAS No. 123R and certain SEC rules and regulations and provides views regarding the valuations of shared-based payment arrangements for public companies.

Reclassifications

        Certain prior year amounts have been reclassified to conform to the current year's presentation.

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3. Consolidated Balance Sheet and Statement of Operations Detail

Property and Equipment, Net

		December 31,
								September 30, 2005
		2003			2004
								(unaudited)
Furniture and fixtures		$	1,708		$	2,018		$	2,399
Computer and video equipment			6,473			7,716			9,022
Leasehold improvements			808			606			1,014
			8,989			10,340			12,435
Less: Accumulated depreciation and amortization			(6,412	)		(7,378	)		(8,372	)
	Property and equipment, net	$	2,577		$	2,962		$	4,063

        Amortization of property and equipment under capital leases totaled $40,000 and $116,000 for the years ended December 31, 2004 and 2003, respectively and $30,000 and $10,000 for the nine-month periods ended September 30, 2004 and 2005, respectively (unaudited).

        Depreciation and amortization expense for property and equipment was $1,279,000 and $1,327,000 for the years ended December 31, 2004 and 2003, respectively and $1,056,000 and $963,000 for the nine-month periods ended September 30, 2004 and 2005, respectively (unaudited).

Accrued Expenses

		As of December 31,
						As of September 30, 2005
		2003		2004
						(unaudited)
Accrued payroll related		$	2,259	$	4,140	$	3,851
Accrued taxes			1,616		1,826		2,602
Accrued interest			833		694		126
Deferred income			311		375		365
Other accrued expenses			2,700		2,140		2,696
	Total accrued expenses	$	7,719	$	9,175	$	9,640

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Other Expense, Net

		Years Ended December 31,						Nine-Month Periods Ended September 30,
		2003			2004			2004			2005
								(unaudited)
Loss on extinguishment of senior subordinated notes payable		$	—		$	—		$	—		$	(892	)
Write-off of unamortized deferred financing costs			—			—			—			(961	)
(Loss) gain on foreign currency exchange			(555	)		(473	)		(167	)		132
Interest income			230			314			218			156
Other (expense) income			(39	)		(105	)		(87	)		228
	Other expense, net	$	(364	)	$	(264	)	$	(36	)	$	(1,337	)

4. Goodwill and Other Intangible Assets

		(in thousands)
Balance, December 31, 2002		$	61,625
	Goodwill acquired		1,000
Balance, December 31, 2003			62,625
	Goodwill acquired		434
Balance, December 31, 2004			63,059
	Goodwill acquired (Note 8)		11,186
Balance, September 30, 2005 (unaudited)		$	74,245

        In connection with its adoption of SFAS 142, the Company reassessed the useful lives and the classification of its identifiable intangible assets and determined that they continue to be appropriate. The components of the Company's amortized intangible assets, which are included in other assets in the accompanying balance sheets, are as follows:

	December 31, 2003							December 31, 2004							September 30, 2005
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
															(unaudited)
	(in thousands)
Total other intangible assets	$	2,032	$	(1,920	)	$	112	$	2,032	$	(1,996	)	$	36	$	12,713	$	(2,237	)	$	10,476

        At December 31, 2004 estimated intangible asset amortization expense is expected to be $10,000, $10,000, $10,000 and $6,000 in fiscal year 2005, 2006, 2007 and 2008, respectively.

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        At September 30, 2005 estimated intangible asset amortization expense is expected to be $307,000, $1,333,000, $1,333,000, $1,312,000, $1,281,000 and $4,910,000 in year(s) 2005, 2006, 2007, 2008, 2009 and thereafter, respectively (unaudited).

5. Financing Arrangements

Senior Subordinated Notes

        The Company had an agreement to issue up to $25.0 million of 12.75% Senior Subordinated Notes due 2009 and ten-year warrants to purchase shares of common stock at $.01 per share. As of December 31, 2004, $21.7 million of the 12.75% Senior Subordinated Notes were issued and warrants to purchase 1,393,000 shares of common stock had been granted. In connection with this agreement, the Series A and Series B preferred stockholders agreed to waive their redemption rights so long as the Senior Subordinated Notes were outstanding. The Company allocated approximately $2.6 million of the borrowings to the value of the warrants. The reduction in the recorded principal amount of the senior debt was amortized as interest expense over the term of the loans. The unamortized balance approximated $1.3 million at December 31, 2004. For each of the years ended December 31, 2003 and 2004, $263,000 of the value of the warrants was amortized to interest expense.

        In January 2005, the Company repaid the outstanding balance on the Senior Subordinated Notes which approximated $23.3 million. As a result, the Company recognized a loss on the extinguishment of debt of $892,000 and wrote off the related unamortized deferred financing costs of $961,000. These charges are included in other (expense), net on the accompanying consolidated statements of operations.

        The Company was subject to meeting certain operating and financial covenants under the senior subordinated notes, the most restrictive of which required the Company to maintain certain financial ratios and placed restrictions on the level of capital expenditures made and indebtedness incurred. Furthermore, the Company was prohibited from declaring or paying cash dividends. The Company was in compliance with these covenants at time of repayment of the outstanding balance.

Bank Credit Facility

        In September 2002, the Company renegotiated its Bank Credit Facility and converted $22.0 million of Revolving Credit Notes into Term Notes. These Term Notes were collateralized by substantially all of the Company's assets and accrued interest either at the LIBOR rate plus an applicable margin of between 3% to 4% or at the bank's base rate plus an applicable margin of between 0.75% to 1.75% depending upon the Company's leverage ratio. Quarterly redemption payments in varying amounts were scheduled through June 2005. The remaining Term Notes matured in September 2005. At December 31, 2003 and 2004, the outstanding balance on the Term Notes was $19,350,000 and $15,297,000, respectively.

        The Bank Credit Facility allowed for borrowings of up to $13.0 million through a revolving credit agreement which also terminated in September 2005. Borrowings outstanding under this agreement were $2.2 million and $1.3 million at December 31, 2003 and 2004,

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respectively. The revolving credit agreement was collateralized by substantially all of the Company's assets and accrued interest either at the LIBOR rate plus an applicable margin of between 3% to 4% or at the bank's base rate plus an applicable margin of between 0.75% to 1.75% dependant upon the Company's leverage ratio. At December 31, 2003 and 2004 borrowings under the Revolving Credit Agreement accrued interest at 5.25% and 6.0%, respectively.

        The Company's Bank Credit Facility provides for Term Notes borrowings of up to $28.8 million. At September 30, 2005, the outstanding balance on the Term Notes approximated $28.8 million (unaudited). The Term Notes are collateralized by substantially all the assets of the Company and accrue interest at the LIBOR rate plus an applicable margin of between 2.25% and 3.50% or at the bank's base rate plus an applicable margin of between 0.25% to 1.50% depending upon the Company's leverage ratio. Quarterly redemption payments in varying amounts are scheduled through December 2009. The remaining Term Notes mature and are payable January 2010.

        As part of the renegotiated Bank Credit Facility, the new Revolving Credit Facility allows for borrowings of up to $50.0 million (unaudited). Borrowings outstanding under the Revolving Credit Facility approximately $34.1 million at September 30, 2005 (unaudited). The Revolving Credit Facility is collateralized by substantially all the assets of the Company and accrues interest at the LIBOR rate plus an applicable margin of between 2.25% and 3.50% or at the bank's base rate plus an applicable margin of between 0.25% and 1.50% depending upon the Company's leverage ratio. The revolving credit agreement matures in January 2010.

        The Company is subject to meeting certain operating and financial covenants under the Bank Credit Facility, the most restrictive of which requires the Company to maintain certain financial ratios and places restrictions on the level of capital expenditures made and indebtedness incurred. Furthermore, the Company is prohibited from declaring or paying cash dividends. At September 30, 2005 the Company was in compliance with the covenants (unaudited).

Notes Payable

        In August 2003, the Company acquired Statewide Reporters, Inc. (Statewide). As partial consideration of the purchase price of this acquisition, the Company issued a $650,000 promissory Note to the seller. This Note bears interest at a rate of 7.0% per annum and is due in three, equal, annual installments. The initial annual payment was made in 2004.

2005 (unaudited)

        In April 2005, the Company acquired L.A.D. Reporting Company, Inc. (LAD) (Note 8). As partial consideration of the purchase price of this acquisition, the Company issued a $2,000,000 promissory Note to the seller. This note bears interest at a rate of 6.0% per annum and is due in July 2008.

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Maturities

        At December 31, 2004, the aggregate amounts of required minimum principal payments under the Company's Bank Credit Facility and Senior Subordinated Notes Payable in each of the next five years are as follows:

	(in thousands)
2005	$	16,563
Thereafter (all in 2009)		22,076
		38,639

        Although the balance of the Company's bank credit facility is scheduled to mature in 2005, it has been classified as long-term on the Company's consolidated balance sheet as the Company had the ability and intention to refinance this obligation over a period greater than one year, at December 31, 2004.

2005 (unaudited)

        At September 30, 2005, the aggregate amounts of required minimum principal payments under the Company's Bank Credit Facility and Notes Payable in each of the next five years are as follows:

	(in thousands)
2005 (remainder of year)	$	1,467
2006		6,217
2007		6,000
2008		8,000
2009		7,000
2010		36,572
	$	65,256

Interest Rate Swap

        In 1999, the Company entered into a three-year fixed interest rate swap agreement which converted a portion of its floating rate debt to a fixed-rate basis. In October 2002, the Company renewed the interest rate swap agreement for another three years.

        The notional amounts and fair market value under the swap agreements are as follows:

	Notional Amount		Estimated Fair Value Asset (Liability)
December 31, 2003	$	12,900,000	$	(266,000	)
December 31, 2004		14,667,000		(25,000	)
September 30, 2005 (unaudited)		28,750,000		(131,534	)

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        The differentials to be paid or received are accrued as interest rate change and are recognized as an adjustment to interest expense. As of December 31, 2003 and 2004 and September 30, 2005, the fixed rate was 2.1%, 3.2% and 3.2% (unaudited), respectively. Under this arrangement, the Company recognized as a component of interest expense losses of $274,000 and $182,000 for the years ended December 31, 2003 and 2004, respectively, and $182,000 and $62,000 for the nine months ended September 30, 2004 and 2005, respectively (unaudited).

6. Stockholders' Equity

Series A Redeemable Convertible Preferred Stock

        Each share of Series A redeemable convertible preferred stock has the same number of votes as a holder of common stock as its conversion rights provide, as defined in the amended Articles of Incorporation. Holders of Series A redeemable convertible preferred stock have preference over common shareholders with respect to payment of dividends and distribution of assets in the event of liquidation. Holders of Series A redeemable convertible preferred stock are entitled to a liquidation value of $3.60 per share, respectively, plus all unpaid dividends (aggregating approximately $6.4 million as of December 31, 2004 based on a rate equal to $0.29 per share per year) as of the liquidation date.

        Unless waived by holders of two thirds of the outstanding Series A shares, the Company is required to redeem at the redemption value, defined as the liquidation value on the redemption date (approximately $16.8 million as of December 31, 2004 and $17.4 million (unaudited) as of September 30, 2005), the outstanding shares of Series A redeemable convertible preferred stock as follows: 33% of the outstanding shares on January 31, 2001, 67% of the outstanding shares on January 31, 2002 and 100% of the outstanding shares on January 31, 2003, provided that no shares shall be redeemed until the earlier of 180 days after the stated 2009 maturity date of the 12.75% Senior Subordinated Notes or on the date such notes are paid in full and until the Company's Bank Credit Facility is repaid.

        Each share of Series A redeemable convertible preferred stock is convertible at any time and also upon a qualified initial public offering with proceeds equal to or in excess of $15 million and a per share price of $15.00. Each share converts into an equal number of shares of common stock which results from dividing the conversion value per share in effect at the time of conversion into $3.60 per share for each share of Series A convertible preferred stock being converted, subject to certain adjustments as defined in the Company's Articles of Incorporation.

Series B Redeemable Convertible Preferred Stock

        Each share of Series B preferred stock has the same number of votes as a holder of common stock as its conversion rights provide, as defined in the amended Articles of Incorporation. Holders of Series B redeemable convertible preferred stock have preference over common stockholders with respect to payment of dividends and distribution of assets in the event of liquidation. Holders of Series B convertible preferred stock are entitled to a

F-67

liquidation value of $5.50 per share, plus all unpaid dividends (aggregating approximately $5.2 million as of December 31, 2004 based on a rate equal to $0.44 per share per year) as of the liquidation date.

        Unless waived by holders of two thirds of the outstanding Series B shares, the Company is required to redeem at the redemption value, defined as the liquidation value on the redemption date, approximately $15.2 million as of December 31, 2004 and $15.8 million (unaudited) as of September 30, 2005) the outstanding shares of Series B redeemable convertible preferred stock as follows: 33% of the outstanding shares on January 31, 2002, 67% of the outstanding shares on January 31, 2003 and 100% of the outstanding shares on January 31, 2004, provided that no shares shall be redeemed until the earlier of 180 days after the stated 2009 maturity date of the 12.75% Senior Subordinated Notes or on the date such Notes are paid in full and until the Company's Bank Credit Facility is repaid.

        Each share of Series B redeemable convertible preferred stock is convertible at any time and also upon a qualified initial public offering with proceeds equal to or in excess of $15.0 million and a per share price of $15.00. Each share converts into an equal number of shares of common stock which results from dividing the conversion value per share in effect at the time of conversion into $5.50 per share for each share of Series B convertible preferred stock being converted, subject to certain adjustments as defined in the Company's Articles of Incorporation.

Series C Redeemable Convertible Preferred Stock

        Each share of Series C preferred stock has the same number of votes as a holder of common stock as its conversion rights, provide, as defined in the amended Articles of Incorporation. Holders of the Series C preferred stock have preference over common stockholders with respect to payment of dividends and distribution of assets in the event of liquidation. Holders of Series C preferred stock are entitled to a liquidation value of $6.50 per share, plus any unpaid dividends (aggregating approximately $2.2 million as of December 31, 2004 and $2.6 million (unaudited) as of September 30, 2005 based on a rate equal to $0.52 per share per year) as of the liquidation date. The Company may be required to redeem, unless waived by two-thirds of the Series C holders, at redemption value (approximately $7.6 million as of December 31, 2004. Approximately $7.9 million as of September 30, 2005—unaudited) the Series C preferred stock 180 days after the stated 2009 maturity of the 12.75% Senior Subordinated Notes or on the date such Notes are paid in full and until the Company's Bank Credit Facility is repaid.

        Each share of Series C redeemable convertible preferred stock is convertible at any time and also upon a qualified initial public offering with proceeds equal to or in excess of $15.0 million and a per share price of $15.00. Each share converts into an equal number of shares of common stock which results from dividing the conversion value per share in effect at the time of conversion into $6.50 per share for each share of Series C convertible preferred stock being converted, subject to certain adjustments as defined in the Company's Articles of Incorporation.

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Common Stock

        During 2003 and 2005, the Company issued 25,000, and 155,000 (unaudited) shares of common stock in connection with acquisitions as discussed in Note 8.

Notes Receivable from Stockholders

        Notes receivable from stockholders in the amount of $83,000 at December 31, 2003 and 2004 and September 30, 2005 (unaudited) accrue interest at the bank's base rate plus 1.50% and are due no later than December 2005. Interest income is received periodically and is included as a component of interest expense, net on the accompanying consolidated statements of operations.

1996 Stock Option Plan

        The Company adopted the 1996 Stock Option Plan (the "Stock Option Plan") which allows for the granting of nonincentive and incentive stock options, as defined by Section 422 of the Internal Revenue Code, and stock appreciation rights to officers, directors and employees of the Company to purchase up to 2,000,000 shares of common stock. The Stock Option Plan terminates in 2006.

        Awards under the Stock Option Plan may be granted as determined by the Board of Directors, which administers the Stock Option Plan. The Board of Directors selects the participants and establishes the terms and conditions of each option or other equity right granted under the Plan, including the exercise price, the number of shares subject to options or other equity rights and the time at which such options become exercisable. All options were granted with an exercise price that was equal to or greater than their fair market value on the date of grant. Information relating to the Stock Option Plan is as follows:

		Number of Options		Weighted Average Exercise Price
		(in thousands, except per share data)
Outstanding at December 31, 2002		1,603		$	2.80
	Granted	267			4.00
	Canceled	(72	)		3.33
Outstanding at December 31, 2003		1,798			2.94
	Granted	63			4.00
	Canceled	(1,219	)		2.80
Outstanding at December 31, 2004		642		$	3.30
Exercisable at December 31, 2004		511		$	3.12
Available for grant at December 31, 2004		1,358

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        The following table summarizes information about stock options outstanding under the 1996 Plan at December 31, 2004:

		Options Outstanding
						Options Exercisable
					Weighted Average Remaining Contractual Life (in Years)
Exercise Price		Number Outstanding	Weighted Average Exercise Price			Number Exercisable	Weighted Average Exercise Price
$	1.50	154	$	1.50	4.5	154	$	1.50
	3.00	64		3.00	5.6	64		3.00
	4.00	424		4.00	7.1	293		4.00
		642				511

        At December 31, 2004, a total of 9,024,000 shares of common stock were reserved for the exercise of options, warrants and the conversion of preferred stock.

Warrants

        The Company has warrants outstanding to purchase 1,393,000 and 1,193,000 shares of common stock outstanding as of December 31, 2004 and September 30, 2005 (unaudited), respectively at $.01 per share, which expire in 2009. These warrants were issued with the Senior Subordinated Notes Payable as discussed in Note 5. In January 2005, warrants to purchase 200,000 shares of common stock were canceled as part of the debt refinancing as discussed in Note 5 (unaudited).

Restricted Stock

        On July 20, 2004, 1,745,000 shares of common stock were issued at $0.01 per share to certain members of management. These shares will vest at various times between the date of issuance and 2008. Each employee who received the restricted stock also agreed to the cancellation of certain previously held stock options. At December 31, 2004 and September 30, 2005, 1,025,000 and 1,197,397 (unaudited) of these shares were vested, respectively. Any unvested shares granted under the 2004 Incentive Plan are subject to repurchase by the Company at the issue price of $0.01 upon termination of the employee.

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7. Income Taxes

        The Company's (benefit from) provision for income taxes for the year ended December 31, 2003 and 2004 consists of the following:

			2003			2004
			(in thousands)
Current
	Federal		$	16		$	61
	Foreign			630			754
	State			284			300
			$	930		$	1,115
Deferred
	Federal		$	(1,164	)	$	1,380
	Foreign			(161	)		6
	State			(541	)		284
			$	(1,866	)	$	1,670
Total
	Federal		$	(1,148	)	$	1,441
	Foreign			469			760
	State			(257	)		584
		(Benefit from) provision for income taxes	$	(936	)	$	2,785

        The components of the net deferred tax asset (liability) are as follows:

			2003			2004
			(in thousands)
Deferred tax assets
	Net operating loss carryforwards		$	1,334		$	296
	Allowance for doubtful accounts			693			742
	Depreciation			304			381
	Other			424			485
		Deferred tax assets		2,755			1,904
Deferred tax liabilities
	Cash to accrual adjustment			(54	)		(32	)
	Goodwill and intangible assets			(3,794	)		(4,639	)
	Other			(4	)		—
		Deferred tax liabilities		(3,852	)		(4,671	)
		Net deferred tax liabilities	$	(1,097	)	$	(2,767	)

        During 2003, management determined that the available positive evidence carried more weight than the historical negative evidence and concluded it was more likely than not that the net deferred tax assets would be realized in future periods. Therefore, the $3,134,000

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valuation allowance was released in the year ended December 31, 2003. As of December 31, 2003 and 2004, there was no valuation allowance.

        At December 31, 2004, the Company had available net operating loss carryforwards for state tax purposes of approximately $4,728,000. These loss carryforwards may be utilized to offset future taxable income, which expire at various dates through 2008.

        The reconciliation of the expected tax (benefit) expense to actual tax expense was as follows:

	2003		2004
Expected federal income tax	34.0	%	34.0	%
Permanent items	4.5		2.4
Foreign deemed dividends	22.5		4.9
State taxes	8.4		7.2
Foreign taxes	(5.1	)	(4.2	)
Other	0.4		(3.0	)
Change in valuation allowance	(92.3	)	—
	(27.6	)%	41.3	%

8. Acquisitions

2003

        In August 2003, the Company acquired a privately held court reporting firm for a total cost of approximately $1,278,000, including transaction costs of $103,000. In connection with the acquisition, the Company paid $500,000 in cash, issued a Note for $650,000 (Note 5) and issued 25,000 shares in the Company's common stock, valued at $25,000.

        The acquisition has been accounted for as a purchase business combination. Accordingly, the results of operations of the business have been included with those of the Company for the period subsequent to the date of the acquisition. Of the purchase price of $1,278,000, approximately $1,000,000 was allocated to goodwill and $48,000 was allocated to other intangible assets.

        Pro forma data summarizing the combined results have been omitted as the results of this business are immaterial to those of the Company for all prior periods.

2004

        In July 2004, the Company acquired 66.7% of a privately held Australian-based court reporting firm for total cost of approximately $376,000, including transaction costs of $51,000. The Company paid cash for this acquisition. Of the purchase price of $376,000 approximately $318,000 was allocated to goodwill. The Company reflects the other shareholders' interest in the court reporting firm as minority interest in the consolidated financial statements.

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        As discussed in Note 10, in March 2005, the Company acquired the remaining 33.3% interest. The Company paid $214,000 in cash for this interest. Pro forma data summarizing the combined results have been omitted as the results of this business are immaterial to those of the Company for all prior periods.

2005 (unaudited)

        On April 19, 2005, the Company acquired substantially all of the assets of Pacific Coast Court Reports (PCCR). The total purchase price of $2,650,000 included $2,400,000 in cash and $250,000 for acquisition related costs. PCCR complements the Company's existing litigation support services. The operating result of the acquired assets are reflected in operating results since April 19, 2005. The Company has preliminarily allocated the purchase price to the acquired assets and liabilities based upon their relative fair value as follows:

Total purchase price	$	2,650
Tangible assets acquired		200
Identifiable intangible assets acquired		1,585
Goodwill		865

        On July 27, 2005, the Company acquired substantially all of the assets of LAD Reporting Company, Inc. (LAD). The total purchase price of $10,590,000 included $8,000,000 in cash, a $2,000,000 promissory note, 5,000 shares of the Company's common stock with an estimated fair valued at $20,000, assumed liabilities of $225,000 and $345,000 for acquisition related costs. LAD complements the Company's existing litigation support services and gives the Company a presence in the Mid-Atlantic region. The operating result of the acquired assets are reflected in operating results since July 27, 2005. The Company has preliminarily allocated the purchase price to the acquired assets and liabilities based upon their relative fair values as follows:

Total purchase price	$	10,590
Liabilities assumed		(225	)
Tangible assets acquired		1,145
Identifiable intangible assets acquired		5,069
Goodwill		4,376

        On August 30, 2005, the Company acquired substantially all of the assets of The Docuserve Group (Docuserve). The total purchase price of $12,394,000 included $11,450,000 cash, 120,000 shares of the Company's common stock with an estimated fair valued at $480,000, assumed liabilities of $109,000 and $355,000 for acquisition related costs. Docuserve will expand the Company's product offerings and complements its existing litigation support services. The operating results of the acquired asset are reflected in operating results since

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August 30, 2005. The Company has preliminarily allocated the purchase price to the acquired assets and liabilities based upon their relative fair value as follows:

Total purchase price	$	12,394
Liabilities assumed		(109	)
Tangible assets acquired		2,631
Identifiable intangible assets acquired		4,028
Goodwill		5,735

        The following table presents results of operations on an unaudited pro forma basis as if these acquisitions had taken place at January 1, 2004.

	Nine-Month Ended September 30,
	2004		2005
Revenue	$	101,290	$	109,090
Net income		3,581		4,243

        The pro forma results are not necessarily indicative of the results that would have resulted had the acquisition occurred at the beginning of the periods presented, nor is it necessarily indicative of future results.

9. Commitments and Contingencies

        The Company has various operating and capital leases that expire at various dates through 2009. In addition to the base rent relating to the Company's lease of its facilities, the Company is obligated to pay a proportionate share, as defined, of real estate tax and operating cost increases. The Company recorded rental and lease expense of $3,140,000 and $3,222,000 in 2003 and 2004, respectively, and $2,416,000 and $2,594,000 for the nine-month periods ended September 30, 2004 and 2005, respectively (unaudited).

F-74

        Future noncancelable minimum lease commitments at December 31, 2004 are as follows:

		Capital Leases		Operating Leases
		(in thousands)
Year Ended December 31,
2005		$	24	$	2,588
2006					1,998
2007					1,259
2008					829
2009					305
	Present value of minimum lease payments		24	$	6,979
Less current portion of capital lease obligations			24
	Capital lease obligations, net of current portion	$	—

Litigation

        We are the subject of various pending or threatened legal actions in the ordinary course of business. All such matters are subject to many uncertainties and outcomes that are not predictable with assurance. However, management believes that the final disposition of these matters will not be material to our financial position, results of operations or cash flows.

10. Joint Ventures

United Kingdom

        In December 2003 the Company entered into a joint venture to provide broadcast captioning services outside of North America, principally in the United Kingdom. The Company owns 50% of the net equity of the joint venture. The joint venture agreement requires each partner to contribute the lesser of $250,000 or 150,000 GBP, in the form of 24-month, interest-free loans. No contributions had been paid at December 31, 2004.

        From January 2005 through May 2005, the Company contributed a net total of 300,000 GBP (approximately $567,000) (unaudited).

Australia

        In July 2004, the Company acquired 66.7% of a privately held Australian-based court reporting firm for total cost of approximately $376,000 including transaction costs of $51,000. The Company paid cash for this acquisition. Of the purchase price of $376,000 approximately $318,000 was allocated to goodwill. The Company reflects the other shareholders' interest in the court reporting firm as minority interest in the consolidated statements.

        In March 2005, the Company acquired the remaining 33.3% interest (Note 8) of the privately held Australian-based court reporting firm that it did not own. The Company paid $214,000 in cash for this interest (unaudited).

F-75

11. Defined Contributions Plans

        The Company sponsors a 401(k) savings and retirement plan for certain employees. The Company's contribution expense related to the Plans was approximately $115,000 and $33,000 for 2003 and 2004, respectively, and $24,000 and $26,000 and for the nine months ended September 30, 2004 and 2005, respectively (unaudited).

12. Supplemental Cash Flows Disclosure

        The Company accreted the value of redeemable convertible preferred stock by $2,071,000 for 2003 and 2004 and $1,553,000 for each of the nine months ended September 30, 2004 and 2005 (unaudited).

        The Company issued 155,000 shares of common stock valued at $620,000 in aggregate as partial consideration associated with acquisitions made in 2005 (unaudited) (Note 8).

13. Subsequent Events (unaudited)

        On January 1, 2006, all outstanding shares of common stock of the Company were purchased for total consideration of approximately $158.0 million by Merrill Corporation. The redeemable convertible preferred stock holders converted their shares into common stock as prescribed in the Company's articles of incorporation as discussed in Note 6. In conjunction with the acquisition, the Bank Credit Facility and Notes Payable were paid in full.

F-76

You should rely only on the information contained in this prospectus. We and the underwriters have not authorized anyone to provide you with different or additional information. We are offering to sell, and are seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	10
Forward-Looking Statements	29
Use of Proceeds	30
Dividend Policy	31
Capitalization	32
Dilution	34
Unaudited Pro Forma Condensed Consolidated Financial Data	35
Selected Consolidated Financial Data	43
Management's Discussion and Analysis of Financial Condition and Results of Operations	47
Business	77
Management	96
Certain Relationships and Related Party Transactions	121
Description of Certain Indebtedness	126
Principal and Selling Shareholders	130
Description of Capital Stock	132
Shares Eligible for Future Sale	139
United States Federal Income Tax Consequences to Non-United States Holders	142
Underwriters	146
Legal Matters	151
Experts	151
Where You Can Find More Information	151
Index to Consolidated Financial Statements	F-1

Until                           , 2006 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

             Shares

Common Stock

Deutsche Bank Securities

Credit Suisse

Piper Jaffray

Prospectus

                           , 2006

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

        The following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by us in connection with the sale of common stock being registered. All amounts shown are estimates, except the SEC registration fee, the National Association of Securities Dealers, Inc. filing fee and the                           listing fee.

		Amount
SEC registration fee		$	27,071
NASD fee			25,800
listing fee			*
Blue sky fees and expenses			*
Legal fees and expenses			*
Accounting fees and expenses			*
Printing expenses			*
Transfer agent and registrar fees and expenses			*
Miscellaneous			*
	Total	$	*

*To be filed by amendment

Item 14. Indemnification of Directors and Officers.

        The Minnesota Business Corporation Act requires us to indemnify any director, officer or employee made or threatened to be made a party to a proceeding, by reason of the former or present official capacity of the person, against judgments, penalties, fines, settlements and reasonable expenses incurred in connection with the proceeding if certain statutory standards are met. "Proceeding" means a threatened, pending or completed civil, criminal, administrative, arbitration or investigative proceeding, including a derivative action in the name of the company. Reference is made to the detailed terms of Section 302A.521 of the Minnesota Business Corporation Act for a complete statement of these indemnification rights.

        Our articles of incorporation, as amended, provide that each director, officer, employee and agent, past or present of our company, and persons serving as such of another corporation or entity at our request, shall be indemnified to the fullest extent permitted by applicable state law.

        We also maintain a directors' and officers' insurance policy pursuant to which our directors and officers are insured against liability for actions in their capacity as directors and officers.

Item 15. Recent Sales of Unregistered Securities.

        On                           , we effected a recapitalization pursuant to which all of our issued and outstanding shares of class B common stock were converted into shares of issued and outstanding common stock. In effecting the exchange, we relied upon Section 3(a)(9) of the Securities Act of 1933, as amended.

        Since January 1, 2003, we have granted under our 1999 stock option plan options to purchase an aggregate of             shares of common stock at exercise prices ranging from $             to $             per share to our employees, officers, directors and independent

II-1

contractors. Since January 1, 2003, no stock options to purchase shares of our common stock have been exercised.

        No underwriting commissions or discounts were paid with respect to the sales of the unregistered securities and grant of stock options described above. At the time of the option grants described above, we believed that each of the grants was exempt from the registration requirements of the Securities Act of 1933 by virtue of a "no-sale" theory under Section 5 of the Securities Act of 1933, since none of the option recipients provided any consideration for the grants (the sale of the underlying option shares will occur only when the option is exercised and the purchase price paid to us). We also believed that each of such grants was exempt from the registration requirements of the Securities Act of 1933 by virtue of the exemption available under Rule 701 of the Securities Act of 1933 for securities offered under compensatory plans. With regard to our reliance upon the Rule 701 exemption, all such option grants were to our employees or independent consultants pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701.

Item 16. Exhibits and Financial Statement Schedules.

(a)   Exhibits

Exhibit No.		Description
1.1	*	Form of Underwriting Agreement.
3.1	*	Form of Amended and Restated Articles of Incorporation of Merrill Corporation to be effective immediately prior to effectiveness of the offering.
3.2	*	Form of Amended and Restated Bylaws of Merrill Corporation to be effective immediately prior to the effectiveness of the offering.
4.1	*	Specimen Certificate representing shares of common stock of Merrill Corporation.
4.2	*	Amended and Restated Investors' Agreement dated as of                           , 2006 among Merrill Corporation and the investor parties thereto.
4.3		Form of Warrant issued November 23, 1999 to the holders of preferred stock.
4.4		Global Warrant issued November 23, 1999 to the holders of senior subordinated notes.
4.5		Form of Series C Warrant to be issued to the holders of preferred stock.
4.6		Form of Series D Warrant to be issued to the holders of preferred stock.
4.7		Warrant Registration Rights Agreement dated as of November 23, 1999 between Merrill Corporation and Donaldson, Lufkin Jenrette Securities Corporation.
5.1	*	Opinion of Oppenheimer Wolff & Donnelly LLP.
10.1		Merrill Corporation 1999 Stock Option Plan, as amended.
10.2		Form of Participation Agreement (All Awards) under the Merrill Corporation 1999 Stock Option Plan and the Merrill Corporation Direct Investment Plan for awards granted prior to 2003.
10.3		Form of Executive Participation Agreement under the Merrill Corporation 1999 Stock Option Plan for awards granted prior to 2003.

II-2

10.4		Merrill Corporation Direct Investment Plan, as amended.
10.5		Form of Participation Agreement (Options Only) under the Merrill Corporation 1999 Stock Option Plan for options granted after 2003.
10.6		Form of First Amendment to Executive Participation Agreement under the Merrill Corporation 1999 Stock Option Plan and Merrill Corporation Direct Investment Plan granted prior to 2003.
10.7		Form of First Amendment to Participation Agreement (All Awards) under the Merrill Corporation 1999 Stock Option Plan and Merrill Corporation Direct Investment Plan granted prior to 2003.
10.8		Merrill Corporation 2003 Long Term Incentive Plan.
10.9		Form of Eligibility Notice under Merrill Corporation 2003 Long Term Incentive Plan.
10.10		Merrill Corporation Second 2003 Long Term Incentive Plan.
10.11		Form of Eligibility Notice under Merrill Corporation Second 2003 Long Term Incentive Plan.
10.12		Merrill Corporation Supplemental Executive Retirement Plan, as amended.
10.13		Merrill Corporation Income Deferral Plan, as amended.
10.14		Merrill Corporation 2006 Management Incentive Plan.
10.15	*	Merrill Corporation 2006 Stock Incentive Plan.
10.16	*	Form of Stock Option Agreement under the Merrill Corporation 2006 Stock Incentive Plan.
10.17	*	Form of Restricted Stock Agreement under the Merrill Corporation 2006 Stock Incentive Plan.
10.18	*	Merrill Corporation 2006 Employee Stock Purchase Plan.
10.19		Employment Agreement dated as of November 23, 1999 between Viking Merger Sub, Inc. and John W. Castro.
10.20		Employment Agreement dated as of November 23, 1999 between Viking Merger Sub, Inc. and Rick R. Atterbury.
10.21		Employment Agreement dated November 18, 2005 between Merrill Communications LLC and Perry L. Solomon.
10.22		Non-Competition Agreement dated November 18, 2005 between Merrill Communications LLC and Perry L. Solomon.
10.23		Letter Agreement dated November 23, 2005 between Merrill Communications LLC and Craig P. Levinsohn.
10.24		Form of Change in Control Agreement between Merrill Corporation and certain of its executive officers.
10.25	*	Summary of Named Executive Officer Compensation.
10.26	*	Summary of Outside Director Compensation.

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10.27		Preferred Stockholders Agreement dated as of August 9, 2002 among Merrill Corporation and holders of its preferred stock.
10.28		Amended, Restated and Combined Credit Agreement, dated December 22, 2005, among Merrill Communications LLC, Merrill Corporation, Bank of America, N.A., as the Administrative Agent, and the various financial institutions as the lenders thereunder.
10.29		First Amendment to Credit Agreement dated December 30, 2005 among Merrill Communications LLC, Merrill Corporation, the Lenders party thereto and Bank of America, N.A., as Administrative Agent.
10.30		Agreement and Plan of Merger dated November 18, 2005 by and among Capture Merger Corp., Merrill Communications LLC, WordWave, Inc. and Perry L. Solomon, as stockholder representative.
10.31		Closing Agreement and Amendment No. 1 to the Agreement and Plan of Merger dated November 18, 2005 by and among Capture Merger Corp., Merrill Communications LLC, WordWave, Inc. and Perry L. Solomon, as stockholder representative.
10.32		Stock Transfer Restriction Agreement dated February 10, 2006 by and among Merrill Corporation and certain officers of Merrill Corporation.
21.1		List of Subsidiaries.
23.1		Consent of PricewaterhouseCoopers LLP.
23.2		Consent of PricewaterhouseCoopers LLP.
23.3	*	Consent of Oppenheimer Wolff & Donnelly LLP (included in Exhibit 5.1).
24.1		Power of Attorney (Included on page II-6).

*To be filed by amendment.

(b)   Financial Statement Schedules.

        All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.

Item 17. Undertakings.

        (a)   The undersigned registrant undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in denominations and registered in names as required by the underwriters to permit prompt delivery to each purchaser.

        (b)   Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the

II-4

opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether this indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of this issue.

        (c)   The undersigned registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

        (2)   For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, Merrill Corporation has duly caused this registration statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Paul, State of Minnesota on this 13th day of February, 2006.

MERRILL CORPORATION
By:	/s/  JOHN W. CASTRO John W. Castro Chairman of the Board and Chief Executive Officer

POWER OF ATTORNEY

        KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints jointly and severally, John W. Castro, Rick R. Atterbury and Steven J. Machov, and each one of them acting singly, as the person's true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the person and in the person's name, place and stead, in any and all capacities (including his capacity as a director and/or officer), to sign any and all amendments (including post-effective amendments) to this registration statement and any subsequent registration statements filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form S-1 and Power of Attorney has been signed by the following persons in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/  JOHN W. CASTRO John W. Castro	Chairman of the Board, Chief Executive Officer and Director (principal executive officer)	February 13, 2006
/s/  ROBERT H. NAZARIAN Robert H. Nazarian	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	February 13, 2006
/s/  RICK R. ATTERBURY Rick R. Atterbury	Director	February 13, 2006

II-6

/s/  THOMPSON DEAN Thompson Dean	Director	February 13, 2006
/s/  DAVID A. DURKIN David A. Durkin	Director	February 13, 2006
/s/  MARK D. EDWARDS Mark D. Edwards	Director	February 13, 2006
/s/  B. MICHAEL JAMES B. Michael James	Director	February 13, 2006
/s/  KAMIL MARC SALAME Kamil Marc Salame	Director	February 13, 2006

II-7

MERRILL CORPORATION

REGISTRATION STATEMENT ON FORM S-1

EXHIBIT INDEX

Exhibit No.		Description
1.1	*	Form of Underwriting Agreement.
3.1	*	Form of Amended and Restated Articles of Incorporation of Merrill Corporation to be effective immediately prior to effectiveness of the offering.
3.2	*	Form of Amended and Restated Bylaws of Merrill Corporation to be effective immediately prior to the effectiveness of the offering.
4.1	*	Specimen Certificate representing shares of common stock of Merrill Corporation.
4.2	*	Amended and Restated Investors' Agreement dated as of                           , 2006 among Merrill Corporation and the investor parties thereto.
4.3		Form of Warrant issued November 23, 1999 to the holders of preferred stock.
4.4		Global Warrant issued November 23, 1999 to the holders of senior subordinated notes.
4.5		Form of Series C Warrant to be issued to the holders of preferred stock.
4.6		Form of Series D Warrant to be issued to the holders of preferred stock.
4.7		Warrant Registration Rights Agreement dated as of November 23, 1999 between Merrill Corporation and Donaldson, Lufkin Jenrette Securities Corporation.
5.1	*	Opinion of Oppenheimer Wolff & Donnelly LLP.
10.1		Merrill Corporation 1999 Stock Option Plan, as amended.
10.2		Form of Participation Agreement (All Awards) under the Merrill Corporation 1999 Stock Option Plan and the Merrill Corporation Direct Investment Plan for awards granted prior to 2003.
10.3		Form of Executive Participation Agreement under the Merrill Corporation 1999 Stock Option Plan for awards granted prior to 2003.
10.4		Merrill Corporation Direct Investment Plan, as amended.
10.5		Form of Participation Agreement (Options Only) under the Merrill Corporation 1999 Stock Option Plan for options granted after 2003.
10.6		Form of First Amendment to Executive Participation Agreement under the Merrill Corporation 1999 Stock Option Plan and Merrill Corporation Direct Investment Plan granted prior to 2003.
10.7		Form of First Amendment to Participation Agreement (All Awards) under the Merrill Corporation 1999 Stock Option Plan and Merrill Corporation Direct Investment Plan granted prior to 2003.
10.8		Merrill Corporation 2003 Long Term Incentive Plan.
10.9		Form of Eligibility Notice under Merrill Corporation 2003 Long Term Incentive Plan.

Index-1

10.10		Merrill Corporation Second 2003 Long Term Incentive Plan.
10.11		Form of Eligibility Notice under Merrill Corporation Second 2003 Long Term Incentive Plan.
10.12		Merrill Corporation Supplemental Executive Retirement Plan, as amended.
10.13		Merrill Corporation Income Deferral Plan, as amended.
10.14		Merrill Corporation 2006 Management Incentive Plan.
10.15	*	Merrill Corporation 2006 Stock Incentive Plan.
10.16	*	Form of Stock Option Agreement under the Merrill Corporation 2006 Stock Incentive Plan.
10.17	*	Form of Restricted Stock Agreement under the Merrill Corporation 2006 Stock Incentive Plan.
10.18	*	Merrill Corporation 2006 Employee Stock Purchase Plan.
10.19		Employment Agreement dated as of November 23, 1999 between Viking Merger Sub, Inc. and John W. Castro.
10.20		Employment Agreement dated as of November 23, 1999 between Viking Merger Sub, Inc. and Rick R. Atterbury.
10.21		Employment Agreement dated November 18, 2005 between Merrill Communications LLC and Perry L. Solomon.
10.22		Non-Competition Agreement dated November 18, 2005 between Merrill Communications LLC and Perry L. Solomon.
10.23		Letter Agreement dated November 23, 2005 between Merrill Communications LLC and Craig P. Levinsohn.
10.24		Form of Change in Control Agreement between Merrill Corporation and certain of its executive officers.
10.25	*	Summary of Named Executive Officer Compensation.
10.26	*	Summary of Outside Director Compensation.
10.27		Preferred Stockholders Agreement dated as of August 9, 2002 among Merrill Corporation and holders of its preferred stock.
10.28		Amended, Restated and Combined Credit Agreement, dated December 22, 2005, among Merrill Communications LLC, Merrill Corporation, Bank of America, N.A., as the Administrative Agent, and the various financial institutions as the lenders thereunder.
10.29		First Amendment to Credit Agreement dated December 30, 2005 among Merrill Communications LLC, Merrill Corporation, the Lenders party thereto and Bank of America, N.A., as Administrative Agent.
10.30		Agreement and Plan of Merger dated November 18, 2005 by and among Capture Merger Corp., Merrill Communications LLC, WordWave, Inc. and Perry L. Solomon, as stockholder representative.

Index-2

10.31		Closing Agreement and Amendment No. 1 to the Agreement and Plan of Merger dated November 18, 2005 by and among Capture Merger Corp., Merrill Communications LLC, WordWave, Inc. and Perry L. Solomon, as stockholder representative.
10.32		Stock Transfer Restriction Agreement dated February 10, 2006 by and among Merrill Corporation and certain officers of Merrill Corporation.
21.1		List of Subsidiaries.
23.1		Consent of PricewaterhouseCoopers LLP.
23.2		Consent of PricewaterhouseCoopers LLP.
23.3	*	Consent of Oppenheimer Wolff & Donnelly LLP (included in Exhibit 5.1).
24.1		Power of Attorney (Included on page II-I).

*

To be filed by amendment.

Index-3

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EXPLANATORY NOTE
TABLE OF CONTENTS
PROSPECTUS SUMMARY
Our Business
The Offering
Summary Consolidated Financial Data
RISK FACTORS
Risks Relating to Our Business
Risks Relating to this Offering and Ownership of Our Common Stock
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
Unaudited Pro Forma Condensed Consolidated Balance Sheet As of October 31, 2005
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Year Ended January 31, 2005
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Nine Months Ended October 31, 2005
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet and Statements of Operations
SELECTED CONSOLIDATED FINANCIAL DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
Summary Compensation Table
Aggregated Fiscal Year-End Option Values
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF CERTAIN INDEBTEDNESS
PRINCIPAL AND SELLING SHAREHOLDERS
DESCRIPTION OF CAPITAL STOCK
SHARES ELIGIBLE FOR FUTURE SALE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
UNDERWRITING
NOTICE TO CANADIAN RESIDENTS
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Merrill Corporation Consolidated Balance Sheets (dollars in thousands, except per share amounts)
Merrill Corporation Consolidated Statements of Operations (dollars in thousands except share and per share data)
Merrill Corporation Consolidated Statements of Cash Flows (dollars in thousands)
Merrill Corporation Consolidated Statements of Shareholders' Equity (Deficit) and Comprehensive Income (dollars in thousands, except share amounts) For the Years Ended January 31, 2003, 2004 and 2005
Merrill Corporation Notes to Consolidated Financial Statements
Merrill Corporation Consolidated Balance Sheets (dollars in thousands, except per share amounts) (Unaudited)
Merrill Corporation Consolidated Statement of Operations (dollars in thousands except share and per share data) (Unaudited)
Merrill Corporation Consolidated Statements of Cash Flows (dollars in thousands) (Unaudited)
Merrill Corporation Notes to Unaudited Interim Consolidated Financial Statements
WordWave, Inc. Consolidated Financial Statements December 31, 2003 and 2004 and September 30, 2004 and 2005 (unaudited)
Report of Independent Auditors
WordWave, Inc. Consolidated Balance Sheets
WordWave, Inc. Consolidated Statements of Operations
WordWave, Inc. Consolidated Statements of Cash Flows
WordWave, Inc. Notes to Consolidated Financial Statements December 31, 2003 and 2004 and September 30, 2004 and 2005 (unaudited)
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
POWER OF ATTORNEY
MERRILL CORPORATION REGISTRATION STATEMENT ON FORM S-1 EXHIBIT INDEX

EX-4.3

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Exhibit 4.3

FORM OF WARRANT FOR PREFERRED SHAREHOLDERS

MERRILL CORPORATION

Warrant for the Purchase of
Class B Common Shares of Merrill Corporation

No. Warrant to Purchase
[    ] Shares

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE INVESTORS' AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY OR ANY SUCCESSOR THERETO.

FOR VALUE RECEIVED, MERRILL CORPORATION, a Minnesota corporation (the "Company"), hereby certifies that [HOLDER NAME], its successor or permitted assigns (the "Holder"), is entitled, subject to the provisions of this Warrant, to purchase from the Company, at the times specified herein, [NO] fully paid and non-assessable shares of Class B Common Stock of the Company, par value $0.01 per share (the "Warrant Shares"), at a purchase price per share equal to the Exercise Price (as hereinafter defined). The number of Warrant Shares to be received upon the exercise of this Warrant and the price to be paid for a Warrant Share are subject to adjustment from time to time as hereinafter set forth.

        (a)    DEFINITIONS.

        (1)   The following terms, as used herein, have the following meanings:

        "Affiliate" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

        "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized by law to close.

        "Class B Common Share" means a Class B Common Share, par value $0.01, of the Company or other capital stock of the Company that is not preferred as to liquidation or dividends.

        "Duly Endorsed" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

        "Exercise Price" means $0.01 per Warrant Share, as such Exercise Price is adjusted from time to time as provided herein.

        "Expiration Date" means November 15, 2011 at 5:00 p.m. New York City time.

        "Fair Market Value" means, with respect to one Class B Common Share on any date, the Current Market Price Per Class B Common Share for purposes of paragraph (h)(6) hereof.

        "Investors Agreement" means the Investors Agreement dated as of the date hereof among Viking Merger Sub, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and the other stockholders listed on the signature pages thereto.

        "Person" means an individual, partnership, corporation, limited liability company, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        "Principal Holders" means, on any date, the holders of at least 25% of the Warrants.

        "Senior Note Warrants" means the warrants attached to the Senior Notes due 2009 of Merrill Corporation issued on or about November 23, 1999.

        "Transfer" shall have the meaning assigned to such term in the Investors' Agreement.

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        "Warrants" means the Warrants issued to the subscriber under the Subscription Agreement dated as of the date hereof among the Company and the subscribers listed on the signature pages thereof.

        (2)   Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Investors' Agreement.

        (b)    EXERCISE OF WARRANT.

        (1)   The Holder is entitled to exercise this Warrant in whole or in part at any time, or from time to time, until the Expiration Date or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Warrant, the Holder shall execute and deliver to the Company a Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder and payment of the applicable Exercise Price for each Warrant Share subject to such exercise. Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. Notwithstanding anything herein to the contrary, in lieu of payment in cash of the applicable Exercise Price, the Holder may elect (i) to receive upon exercise of this Warrant, the number of Warrant Shares reduced by a number of Class B Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate Exercise Price, Class B Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash or (iii) to deliver as payment, in whole or in part of the aggregate Exercise Price, such number of Warrants which, if exercised, would result in a number of Class B Common Shares having an aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash. Notwithstanding anything to the contrary in this paragraph (b)(1), if the aggregate Fair Market Value of the Class B Common Shares applied or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise Price, in no event shall the Holder be entitled to receive any amounts from the Company.

        (2)   The Exercise Price may be paid in cash or by certified or official bank check or bank cashier's check payable to the order of the Company or by any combination of such cash or check. The Company shall pay any and all documentary, stamp or similar

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issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

        (3)   If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company. The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph (f) hereof as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

        (4)   Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of Class B Common Shares or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, including an amount in cash in lieu of any fraction of a share as provided in paragraph (e) below.

        (c)    RESTRICTIVE LEGEND.    Certificates representing Class B Common Shares issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to the Investors' Agreement or applicable securities laws.

        (d)    RESERVATION OF SHARES.    The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued Class B Common Shares or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except to the extent set forth in the Investors' Agreement.

        (e)    FRACTIONAL SHARES.    No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the

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Current Market Price Per Class B Common Share (as defined in paragraph (h)(6)) at the date of such exercise.

        The Company further agrees that it will not change the par value of the Class B Common Shares to any higher par value which exceeds the Exercise Price then in effect, and will reduce the par value of the Class B Common Shares upon any event described in paragraph (h) that (i) provides for an increase in the number of Class B Common Shares subject to purchase upon exercise of this Warrant, in inverse proportion to and effective at the same time as such number of shares is increased, but only to the extent that such increase in the number of shares, together with all other such increases after the date hereof, causes the aggregate Exercise Price of all Warrants (without giving effect to any exercise thereof) to be greater than $3,442.63 or (ii) would, but for this provision, reduce the Exercise Price below the par value of the Class B Common Stock.

        (f)    EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.

        (1)   This Warrant and the Warrant Shares are subject to the provisions of the Investors' Agreement, including the applicable restrictions on transfer. Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Warrant, will be subject to the provisions of, and will have the benefits of, the Investors' Agreement to the extent set forth therein, including the applicable transfer restrictions and the registration rights included therein.

        (2)   Subject to compliance with the transfer restrictions set forth in the Investors' Agreement and with applicable securities laws, upon surrender of this Warrant to the Company, together with the attached Warrant Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and, if the Holder's entire interest is not being assigned, in the name of the Holder and this Warrant shall promptly be canceled.

        (g)    LOSS OR DESTRUCTION OF WARRANT.    Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date.

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        (h)    ANTI-DILUTION PROVISIONS.    The Exercise Price of this Warrant and the number of Class B Common Shares for which this Warrant may be exercised shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this paragraph (h).

        (1)   In case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Class B Common Shares payable in Class B Common Shares, (ii) subdivide or split the outstanding Class B Common Shares, (iii) combine or reclassify the outstanding Class B Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Class B Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination or reclassification shall be proportionately adjusted so that, giving effect to paragraph (h)(9), the exercise of this Warrant after such time shall entitle the holder to receive the aggregate number of Class B Common Shares or other securities of the Company (or shares of any security into which such shares of Class B Common Stock have been reclassified pursuant to clause (iii) or (iv) above) which, if this Warrant had been exercised immediately prior to such time, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

        (2)   In case the Company shall issue or sell any Class B Common Shares (other than Class B Common Shares issued (I) upon exercise of the Warrants or the Senior Note Warrants, (II) pursuant to any stock option, co-investment or other stock related employee compensation plan of the Company approved by the Company's Board of Directors, (III) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraphs (h)(3) or (h)(4) hereof or (IV) in any bona fide registered public offering), the Exercise Price to be in effect after such issuance or sale shall be determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the sum of (x) the number of Class B Common Shares outstanding immediately prior to the time of such issuance or sale multiplied by the Current Market Price Per Class B Common Share immediately prior to such issuance or sale and (y) the aggregate consideration, if any, to be received by the Company upon such issuance or sale, and the denominator of which shall be the product of the aggregate number

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of Class B Common Shares outstanding immediately after such issuance or sale and the Current Market Price Per Class B Common Share immediately prior to such issuance or sale but in no event will such fraction exceed 1. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; provided that if the Principal Holders shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Principal Holders to determine such fair market value. The Holder shall be notified promptly of any consideration other than cash to be received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

        (3)   In case the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Class B Common Shares or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date Class B Common Shares (or securities convertible into Class B Common Shares) at a price per Class B Common Share (or having a conversion price per share of Class B Common Share, if a security convertible into Class B Common Shares) less than the Current Market Price Per Class B Common Share on such record date, the maximum number of Class B Common Shares issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof, as though such maximum number of Class B Common Shares had been so issued for the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Class B Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of Class B Common Shares to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed, in the

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former event, or the Exercise Price which would then be in effect if such holder had initially been entitled to such changed number of Class B Common Shares, in the latter event.

        (4)   In case the Company shall sell or issue rights, options (other than options issued pursuant to a plan described in clause II of paragraph (h)(2)) or warrants (other than Senior Notes Warrants) entitling the holders thereof to subscribe for or purchase Class B Common Shares (or securities convertible into Class B Common Shares) or shall issue convertible securities and the price per Class B Common Share of such rights, options, warrants or convertible securities (including, in the case of rights, options, warrants or convertible securities, the price at which they may be exercised or converted) is less than the Current Market Price Per Class B Common Share, the maximum number of Class B Common Shares issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof as though such maximum number of Class B Common Shares had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Class B Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Class B Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Exercise Price which would then be in effect if such holders had initially been entitled to such changed number of Class B Common Shares, in the latter event. No adjustment of the Exercise Price shall be made pursuant to this paragraph (h)(4) to the extent that the Exercise Price shall have been adjusted pursuant to paragraph (h)(3) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of Class B

8

Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

        (5)   In case the Company shall fix a record date for the making of a distribution to holders of Class B Common Shares (including any such distribution made in connection with a consolidation or merger, other than the merger referred to in paragraph (o), in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets or other property (other than dividends payable in Class B Common Shares or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraphs (h)(3) or (h)(4) hereof), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price Per Class B Common Share on such record date, less the fair market value (determined as set forth in paragraph (h)(2) hereof) of the portion of the assets, cash, other property or evidence of indebtedness so to be distributed which is applicable to one Class B Common Share, and the denominator of which shall be such Current Market Price Per Class B Common Share. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

        (6)   For the purpose of any computation under paragraph (e) or paragraph (h)(2), (3), (4) or (5) hereof, on any determination date, the Current Market Price Per Class B Common Share shall be deemed to be the average (weighted by daily trading volume) of the Daily Prices (as defined below) per Class B Common Share for the 20 consecutive trading days ending three days prior to such date. "Daily Price" means (1) if the Class B Common Shares then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the Class B Common Shares then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the Class B Common Shares then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the Class B Common Shares then are not listed and traded on any such securities exchange and not traded on the NASDAQ National

9

Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ; or (5) if such shares are not listed and traded on any such securities exchange, not traded on the NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then the average of the closing bid and asked prices, as reported by The Wall Street Journal for the over-the-counter market. If on any determination date the Class B Common Shares are not quoted by any such organization, the Current Market Price Per Class B Common Share shall be the fair market value of such shares on such determination date as determined by the Board of Directors, without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Investors' Agreement. If the Principal Holders shall object to any determination by the Board of Directors of the Current Market Price Per Class B Common Share, the Current Market Price Per Class B Common Share shall be the fair market value per Class B Common Share as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the Principal Holders. For purposes of any computation under this paragraph (h), the number of Class B Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company.

        (7)   No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; provided that any adjustments which by reason of this paragraph (h)(7) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (h) shall be made to the nearest one hundredth of a cent or to the nearest hundredth of a share, as the case may be.

        (8)   In the event that, at any time as a result of the provisions of this paragraph (h), the holder of this Warrant upon subsequent exercise shall become entitled to receive any shares of capital stock or other securities of the Company other than Class B Common Shares, the number of such other shares so receivable upon exercise of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

        (9)   Upon each adjustment of the Exercise Price as a result of the calculations made in paragraphs (h)(1), (2), (3), (4) or (5) hereof, the number of shares for which this Warrant is exercisable immediately prior to the making of such adjustment shall thereafter

10

evidence the right to purchase, at the adjusted Exercise Price, that number of Class B Common Shares obtained by (i) multiplying the number of shares covered by this Warrant immediately prior to this adjustment of the number of shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

        (10) The Company shall notify all Holders of the fixing of a record date for the purpose of payment of a cash dividend to holders of Class B Common Shares as soon as reasonably practicable, but in no event less than 20 days prior to any such record date.

        (11) Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this paragraph (h), the Company shall forthwith file in the custody of this Secretary or an Assistant Secretary at its principal executive office and with its stock transfer agent or its warrant agent, if any, an officers' certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the chairman, president or chief financial officer of the Company and by the secretary or any assistant secretary of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to paragraph (f) and the Company shall, forthwith after each such adjustment, mail a copy, by first-class mail, of such certificate to the Holder.

        (12) The Holder shall, at its option, be entitled to receive, in lieu of the adjustment pursuant to paragraph (h)(5) otherwise required thereof, on the date of exercise of the Warrants, the evidences of indebtedness, other securities, cash, property or other assets which such Holder would have been entitled to receive if it had exercised its Warrants for Class B Common Shares immediately prior to the record date with respect to such distribution. The Holder may exercise its option under this paragraph (h)(12) by delivering to the Company a written notice of such exercise within seven days of its receipt of the certificate of adjustment required pursuant to paragraph (h)(11) to be delivered by the Company in connection with such distribution.

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        (i)    CONSOLIDATION, MERGER, OR SALE OF ASSETS.    In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Class B Common Shares) or any sale or transfer of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Class B Common Shares for which this Warrant may have been exercised immediately prior to such consolidation, merger, sale or transfer, assuming (i) such holder of Class B Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("constituent Person"), or an Affiliate of a constituent Person and (ii) in the case of a consolidation, merger, sale or transfer which includes an election as to the consideration to be received by the holders, such holder of Class B Common Shares failed to exercise its rights of election, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Class B Common Share held immediately prior to such consolidation, merger, sale or transfer by a Person other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this paragraph (i) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Adjustments for events subsequent to the effective date of such a consolidation, merger and sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease or transfer, or otherwise so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this paragraph (i) shall similarly apply to successive consolidations, mergers, sales, leases or transfers. Notwithstanding the foregoing provisions of this paragraph (i), the treatment of this Warrant in connection with the merger of the Company with and into Merrill Corporation shall be governed by paragraph (o).

        (j)    NOTICES.    Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company as the case may be, at its address (or telecopier number) set forth below,

12

or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery:

If to the Company:	Merrill Corporation One Merrill Circle St. Paul, MN 55108 Telecopy: 651-632-4141 Attention: Corporate Secretary
If to the Holder:	[HOLDER NAME AND ADDRESS]

        Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.

        (k)    RIGHTS OF THE HOLDER.    Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

        (l)    REGISTRATION RIGHTS.    The Holder of this Warrant is entitled to the registration rights relating to the Warrants and the Warrant Shares set forth in the Investors' Agreement.

        (m)    GOVERNING LAW.THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.

        (n)    AMENDMENTS; WAIVERS.    Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

        (o)    CONVERSION UPON MERGER.    In lieu of the provisions of paragraph (i), upon the consummation of the merger of the Company with and

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into Merrill Corporation on the date hereof pursuant to the Agreement and Plan of Merger dated as of July 14, 1999 between the Company and Merrill Corporation, as amended, this Warrant shall automatically and without further action on the part of the Holder constitute a Warrant to acquire shares of voting Class B Common Stock $.01 per share of Merrill Corporation on the terms and conditions as are set forth herein.

        IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed by its duly authorized officer and to be dated effective as of March 8, 2000.

MERRILL CORPORATION
By:	Steven J. Machov Vice President-General Counsel and Secretary

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WARRANT SUBSCRIPTION FORM

To: Merrill Corporation

        The undersigned irrevocably exercises the Warrant for the purchase of                        Class B Common Shares (the "Shares"), par value $0.01 per share, of Merrill Corporation (the "Company") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) and herewith makes payment of $                        (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Class B Common Shares (the "Shares"), par value $0.01 per share, of Merrill Corporation (the "Company") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) (provided that in lieu of payment of $                        , the undersigned will receive a number of Shares reduced by a number of Class B Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate Exercise Price for the Shares), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase                        Class B Common Shares (the "Shares"), par value $0.01 per share, of Merrill Corporation (the "Company") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Class B Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

15

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Class B Common Shares, par value $0.01 per share, of Merrill Corporation (the "Company") at $            per share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Warrants which, if exercised, would result in a number of Class B Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

        Date:                            ,             .

(Signature of Owner)

(Street Address)

(City) (State) (Zip Code)

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Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the

within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

17

WARRANT ASSIGNMENT FORM

Dated

FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto,
	(the "Assignee"),
(please type or print in block letters)
(insert address)

its right to purchase up to              Class B Common Shares represented by this Warrant and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises.

Signature

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Exhibit 4.3

FORM OF WARRANT FOR PREFERRED SHAREHOLDERS MERRILL CORPORATION
WARRANT SUBSCRIPTION FORM

EX-4.4

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Exhibit 4.4

        THIS SECURITY (OR ITS PREDECESSOR) AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

        (1)   REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT HAS ACQUIRED THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"),

        (2)   AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE WARRANT AGENT A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE WARRANT AGENT) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PURCHASE AMOUNT OF LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION,

        (3)   AGREES NOT TO ENGAGE IN ANY HEDGING TRANSACTION UNLESS IN COMPLIANCE WITH THE SECURITIES ACT AND

        (4)   AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

        AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE WARRANT AGREEMENT CONTAINS A PROVISION REQUIRING THE

WARRANT AGENT TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.

        THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (i) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 3.5 OF THE WARRANT AGREEMENT, (ii) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 3.5(A) OF THE WARRANT AGREEMENT, (iii) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 3.8 OF THE WARRANT AGREEMENT AND (iv) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF MERRILL CORPORATION (THE "COMPANY").

        THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE INITIALLY ISSUED AS PART OF AN ISSUANCE OF UNITS (THE "UNITS"), EACH OF WHICH CONSIST OF $1,000 PRINCIPAL AMOUNT AT MATURITY OF THE 12% SENIOR SUBORDINATED NOTES DUE 2009 (THE "NOTES") OF MERRILL CORPORATION AND ONE WARRANT (THE "WARRANTS") INITIALLY ENTITLING THE HOLDER THEREOF TO PURCHASE 1.22987 SHARES, PAR VALUE $0.01 PER SHARE, OF MERRILL CORPORATION COMMON STOCK.

        PRIOR TO THE EARLIEST TO OCCUR OF (i) 180 DAYS AFTER THE CLOSING OF THE OFFERING OF THE UNITS, (ii) THE DATE ON WHICH A REGISTRATION STATEMENT WITH RESPECT TO A REGISTERED EXCHANGE OFFER FOR THE NOTES IS DECLARED EFFECTIVE UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), (iii) THE DATE A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE NOTES or the warrants IS DECLARED EFFECTIVE UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), (iv) SUCH DATE AS DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION IN ITS SOLE DISCRETION SHALL DETERMINE AND (v) THE DATE ON WHICH THE ISSUER OF THE NOTES GIVES THE NOTICE REQUIRED BY THE INDENTURE GOVERNING THE NOTES UPON THE OCCURRENCE OF A CHANGE OF CONTROL (AS DEFINED IN THE INDENTURE GOVERNING THE NOTES), THE WARRANTS EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OR EXCHANGED SEPARATELY FROM, BUT MAY BE TRANSFERRED OR EXCHANGED ONLY TOGETHER WITH, THE NOTES

No.1	140,000 Warrants
CUSIP No. 590175113

Warrant Certificate

MERRILL CORPORATION

        This Warrant Certificate certifies that Cede & Co., or its registered assigns, is the registered holder of Warrants expiring May 1, 2009 (the "Warrants") to purchase Common Stock, par value $.01 (the "Common Stock"), of Merrill Corporation, a Minnesota corporation. Each Warrant entitles the registered holder upon exercise at any time from the opening of business on November 1, 2001 (the "Exercise Date") until 5:00 p.m. New York City Time on May 1, 2009, to receive from the Company 1.22987 fully paid and nonassessable shares of Common Stock (the "Warrant Shares") at the initial exercise price (the "Exercise Price") of $22.00 per share payable upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent, but only subject to the conditions set forth herein and in the Warrant Agreement referred to on the reverse hereof. The Exercise Price and number of Warrant Shares issuable upon exercise of the Warrants are subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

        No Warrant may be exercised after 5:00 p.m., New York City Time on May 1, 2009, and to the extent not exercised by such time, such Warrants shall become void.

        Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

        This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

        This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York.

        IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be signed below.

Dated: November 23, 1999

		MERRILL CORPORATION
		By:	/s/  JOHN CASTRO Name: Title:
Countersigned:
	NORWEST BANK MINNESOTA, N.A. as Warrant Agent
By:	/s/  ILLEGIBLE Authorized Signature

[Reverse of Warrant Certificate]

        The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants expiring at 5:00 p.m. New York City time on May 1, 2009 entitling the holder on exercise to receive shares of Common Stock, and are issued or to be issued pursuant to a Warrant Agreement dated as of November 23, 1999 {the "Warrant Agreement"), duly executed and delivered by the Company to Norwest Bank Minnesota, N.A., as warrant agent (the "Warrant Agent"), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words "holders" or "holder" meaning the registered holders or registered holder) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company.

        Warrants may be exercised at any time on or after November 1, 2001 and on or before 5:00 p.m. New York City time on May 1, 2009; provided that holders shall be able to exercise their Warrants only if a registration statement relating to the Warrants Shares is then in effect, or the exercise of such Warrants is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), and such securities are qualified for sale or exempt from qualification under the applicable securities laws of the states in which the various holders of the Warrants or other persons to whom it is proposed that the Warrant Shares be issued on exercise of the Warrants reside. In order to exercise all or any of the Warrants represented by this Warrant Certificate, the holder must deliver to the Warrant Agent at its New York corporate trust office set forth in Section 19 of the Warrant Agreement this Warrant Certificate and the form of election to purchase on the reverse hereof duly filled in and signed which signature shall be medallion guaranteed by an institution which is a member of a Securities Transfer Association recognized signature guarantee program, and upon payment to the Warrant Agent for the account of the Company of the Exercise Price, as adjusted as provided in the Warrant Agreement, for the number of Warrant Shares in respect of which such Warrants are then exercised. No adjustment shall be made for any dividends on any Common Stock issuable upon exercise of this Warrant.

        The Warrant Agreement provides that upon the occurrence of certain events the Exercise Price set forth on the face hereof may, subject to certain conditions, be adjusted. If the Exercise Price is adjusted, the Warrant Agreement provides that the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted. No fractions of a share of Common Stock will be issued upon the exercise of any Warrant, but the Company will pay the cash value thereof determined as provided in the Warrant Agreement.

        The Company has agreed pursuant to a Warrant Registration Rights Agreement dated as of November 23, 1999 (the "Warrant Registration Rights Agreement") to file within 120 days after the issuance of the Warrants and use its reasonable best efforts to make effective on or before 180 days after such date a shelf registration statement on the appropriate form under the Securities Act, and to use its reasonable best efforts to keep such registration statement continuously effective under the Securities Act in order to permit the resale of the Warrants and Warrant Shares by the holders thereof for the period of time referred to in the immediately preceding sentence.

        Warrant Certificates, when surrendered at the office of the Warrant Agent by the registered holder thereof in person or by legal representative or attorney duly authorized in writing, may be

exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

        Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.

        The Company and the Warrant Agent may deem and treat the registered holder(s) thereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder to the Company.

(To Be Executed Upon Exercise Of Warrant)

The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive                      shares of Common Stock and herewith tenders payment for such shares to the order of Merrill Corporation, in the amount of $                     in accordance with the terms hereof. The undersigned requests that a certificate for such shares be registered in the name of                     , whose address is                      and that such shares to be delivered to                     , whose address is                     . If said number of shares is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such shares be registered in the name of                     , whose address is                     , and that such Warrant Certificate be delivered to whose address is                     .

	Signature
Date:
	Signature Guaranteed

Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Warrant Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Warrant Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS

The following exchanges of a part of this Global Warrant have been made:

Date of Exchange Amount of decrease in Number of warrants in this Global Warrant Amount of increase in Number of Warrants in this Global Warrant Number of Warrants in this Global Warrant following such decrease or increase Signature of authorized officer of Warrant Agent

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Exhibit 4.4

EX-4.5

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Exhibit 4.5

MERRILL CORPORATION

FORM OF WARRANT FOR THE PURCHASE OF
CLASS B COMMON STOCK OF MERRILL CORPORATION

NO. SERIES C WARRANTS

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE INVESTORS' AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY OR ANY SUCCESSOR THERETO.

        FOR VALUE RECEIVED, MERRILL CORPORATION, a Minnesota corporation (the "COMPANY"), hereby certifies that                        , its successor or permitted assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant, to purchase from the Company, at the times specified herein, one fully paid and non-assessable share of Class B common stock of the Company, par value $0.01 per share (the "WARRANT SHARES"), for each Warrant evidenced by this Warrant Certificate at a purchase price per share equal to the Exercise Price (as hereinafter defined). The number of Warrant Shares to be received upon the exercise of this Warrant and the price to be paid for a Warrant Share are subject to adjustment from time to time as hereinafter set forth.

        (a)DEFINITIONS.    

        (1)   The following terms, as used herein, have the following meanings:

        "AFFILIATE" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

        "BOARD OF DIRECTORS" means the Company's Board of Directors.

        "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized by law to close.

        "COMMON SHARE" means a share of the Company's Class B Common Stock, par value $0.01 per share.

        "DULY ENDORSED" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

        "EXERCISE PRICE" means $0.01 per Warrant Share, as such Exercise Price is adjusted from time to time as provided herein.

        "EXPIRATION DATE" means August 8, 2012 at 5:00 p.m. New York City time.

        "FAIR MARKET VALUE" means, with respect to one Common Share on any date, the Current Market Price Per Common Share for purposes of paragraph (h)(6) hereof.

        "INVESTORS AGREEMENT" means the Investors Agreement dated as of November 23, 1999 among Viking Merger Sub, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and the other stockholders listed on the signature pages thereto.

        "OLD PREFERRED STOCK WARRANTS" means the warrants issued to holders of the Company's 14.5% Senior Preferred Stock due 2011 on November 23, 1999.

        "OLD SENIOR SUBORDINATED NOTE WARRANTS" means the warrants issued to holders of the Company's 12% Senior Subordinated Notes due 2009 on November 23, 1999.

        "PERSON" means an individual, partnership, corporation, limited liability company, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        "PREFERRED STOCK" means the Company's Preferred Stock due 2011.

        "PRINCIPAL HOLDERS" means, on any date, the holders of at least 25% of the Warrants.

        "SERIES A WARRANTS" means the Series A Warrants issued by the Company to holders of the Company's 12% Senior Subordinated Notes due 2009 on August 9, 2002.

        "SERIES B WARRANTS" means the Series B Warrants to be issued in certain circumstances by the Company to holders of the Company's Class A Senior Subordinated Notes due 2009 and Class B Senior Subordinated Notes due 2009.

        "SERIES D WARRANTS" means the Series D Warrants to be issued in certain circumstances by the Company to the holders of the Preferred Stock.

        "TRANSFER" shall have the meaning assigned to such term in the Investors' Agreement.

        "WARRANTS" means the Series C Warrants issued to the holders of the Preferred Stock pursuant to the terms of the Preferred Stockholders Agreement dated August 9, 2002.

        (2)   Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Investors' Agreement.

        (b)EXERCISE OF WARRANT.    

        (1)   The Holder is entitled to exercise this Warrant in whole or in part at any time, or from time to time, until the Expiration Date or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Warrant, the Holder shall execute and deliver to the Company a Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder and payment of the applicable Exercise Price for each Warrant Share subject to such exercise. Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. Notwithstanding anything herein to the contrary, in lieu of payment in cash of the applicable Exercise Price, the Holder may elect (i) to receive upon exercise of this Warrant, the number of Warrant Shares reduced by a number of Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate Exercise Price, Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash or (iii) to deliver as payment, in whole or in part of the aggregate Exercise Price, such number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash. Notwithstanding anything to the contrary in this paragraph (b)(1), if the aggregate Fair Market Value of the Common Shares applied or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise Price, in no event shall the Holder be entitled to receive any amounts from the Company.

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        (2)   The Exercise Price may be paid in cash or by certified or official bank check or bank cashier's check payable to the order of the Company or by any combination of such cash or check. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

        (3)   If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company. The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph (f) hereof as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

        (4)   Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of Common Shares or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, including, if applicable, an amount in cash in lieu of any fraction of a share as provided in paragraph (e) below.

        (c)RESTRICTIVE LEGEND.    Certificates representing Common Shares issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to the Investors' Agreement or applicable securities laws.

        (d)RESERVATION OF SHARES.    The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued Common Shares or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except to the extent set forth in the Investors' Agreement.

        (e)FRACTIONAL SHARES.    No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Current Market Price Per Common Share (as defined in paragraph (h)(6)) at the date of such exercise; PROVIDED that if any of the Company's debt agreements at the time of exercise would prohibit such a payment, no such payment shall be made.

        The Company further agrees that it will not change the par value of the Common Shares to any higher par value which exceeds the Exercise Price then in effect, and will reduce the par value of the Common Shares upon any event described in paragraph (h) that (i) provides for an increase in the number of Common Shares subject to purchase upon exercise of this Warrant, in inverse proportion to and effective at the same time as such number of shares is increased, but only to the extent that such increase in the number of shares, together with all other such increases after the date hereof, causes the aggregate Exercise Price of all Warrants (without giving effect to any exercise thereof) to be greater than the product of all Warrants issued multiplied by $0.01 or (ii) would, but for this provision, reduce the Exercise Price below the par value of the Common Shares.

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        (f)EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.    

        (1)   This Warrant and the Warrant Shares are subject to the provisions of the Investors' Agreement, including the applicable restrictions on transfer. Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Warrant, will be subject to the provisions of, and will have the benefits of, the Investors' Agreement to the extent set forth therein, including the applicable transfer restrictions and the registration rights included therein.

        (2)   Subject to compliance with the transfer restrictions set forth in the Investors' Agreement and with applicable securities laws, upon surrender of this Warrant to the Company, together with the attached Warrant Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and, if the Holder's entire interest is not being assigned, in the name of the Holder and this Warrant shall promptly be canceled.

        (g)LOSS OR DESTRUCTION OF WARRANT.    Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date.

        (h)ANTI-DILUTION PROVISIONS.    The Exercise Price of this Warrant and the number of Common Shares for which this Warrant may be exercised shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this paragraph (h).

        (1)   In case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, (iii) combine or reclassify the outstanding Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination or reclassification shall be proportionately adjusted so that, giving effect to paragraph (h)(9), the exercise of this Warrant after such time shall entitle the holder to receive the aggregate number of Common Shares or other securities of the Company (or shares of any security into which such shares of Common Stock have been reclassified pursuant to clause (iii) or (iv) above) which, if this Warrant had been exercised immediately prior to such time, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

        (2)   In case the Company shall issue or sell any Common Shares (other than common shares issued (I) upon exercise of the Warrants, the Old Preferred Stock Warrants, the Old Senior Subordinated Note Warrants, the Series A Warrants, the Series B Warrants or the Series D Warrants, (II) pursuant to any stock option, co-investment or other stock-related employee compensation plan of the Company approved by the Board of Directors, (III) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraphs (h)(3) or (h)(4) hereof or (IV) in any Public Offering (as defined in the Indenture dated as of August 9, 2002 between HSBC Bank USA, as Trustee, the Company and the Guarantors party thereto relating to those certain Class A Senior Subordinated Notes due 2009, as in effect on the date hereof) generating gross proceeds of at least $25.0 million, the Exercise Price to be in effect after

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such issuance or sale shall be determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the sum of (x) the number of Common Shares outstanding immediately prior to the time of such issuance or sale multiplied by the Current Market Price Per Common Share immediately prior to such issuance or sale and (y) the aggregate consideration, if any, to be received by the Company upon such issuance or sale, and the denominator of which shall be the product of the aggregate number of Common Shares outstanding immediately after such issuance or sale and the Current Market Price Per Common Share immediately prior to such issuance or sale but in no event will such fraction exceed 1. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; PROVIDED that if the Principal Holders shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Principal Holders to determine such fair market value. The Holders shall be notified promptly of any consideration other than cash to be received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

        (3)   In case the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Common Shares or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date Common Shares (or securities convertible into Common Shares) at a price per Common Share (or having a conversion price per share of Common Share, if a security convertible into Common Shares) less than the Current Market Price Per Common Share on such record date, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof, as though such maximum number of Common Shares had been so issued for the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of Common Shares to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed, in the former event, or the Exercise Price which would then be in effect if such holder had initially been entitled to such changed number of Common Shares, in the latter event.

        (4)   In case the Company shall sell or issue rights, options (other than options issued pursuant to a plan described in clause II of paragraph (h)(2)) or warrants (other than Series B Warrants or Series D Warrants) entitling the holders thereof to subscribe for or purchase Common Shares (or securities convertible into Common Shares) or shall issue convertible securities and the price per Common Share of such rights, options, warrants or convertible securities (including, in the case of rights, options, warrants or convertible securities, the price at which they may be exercised or converted) is less than the Current Market Price Per Common Share, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof as though such maximum number of Common Shares had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or

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convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjuted to be the Exercise Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Exercise Price which would then be in effect if such holders had initially been entitled to such changed number of Common Shares, in the latter event. No adjustment of the Exercise Price shall be made pursuant to this paragraph (h)(4) to the extent that the Exercise Price shall have been adjusted pursuant to paragraph (h)(3) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

        (5)   In case the Company shall fix a record date for the making of a distribution to holders of Common Shares (including any such distribution made in connection with a consolidation or merger, other than the merger referred to in paragraph (o), in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets or other property (other than dividends payable in Common Shares or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraphs (h)(3) or (h)(4) hereof), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price Per Common Share on such record date, less the fair market value (determined as set forth in paragraph (h)(2) hereof) of the portion of the assets, cash, other property or evidence of indebtedness so to be distributed which is applicable to one Common Share, and the denominator of which shall be such Current Market Price Per Common Share. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

        (6)   For the purpose of any computation under paragraph (e) or paragraph (h)(2), (3), (4) or (5) hereof, on any determination date, the Current Market Price Per Common Share (the "CURRENT MARKET PRICE PER COMMON SHARE") shall be deemed to be the average (weighted by daily trading volume) of the Daily Prices (as defined below) per Common Share for the 20 consecutive trading days ending three days prior to such date. "DAILY PRICE" means (1) if the Common Shares then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the Common Shares then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the Common Shares then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the Common Shares then are not listed and traded on any such securities exchange and not traded on the NASDAQ National Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ; or (5) if such shares are not listed and traded on any such securities exchange, not traded on the NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then the average of the closing bid and asked prices, as reported by The Wall Street

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Journal for the over-the-counter market. If on any determination date the Common Shares are not quoted by any such organization, the Current Market Price Per Common Share shall be the fair market value of such shares on such determination date as determined by the Board of Directors, without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Investors' Agreement. If the Principal Holders shall object to any determination by the Board of Directors of the Current Market Price Per Common Share, the Current Market Price Per Common Share shall be the fair market value per Common Share as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the Principal Holders. For purposes of any computation under this paragraph (h), the number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company.

        (7)   No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; PROVIDED that any adjustments which by reason of this paragraph (h)(7) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (h) shall be made to the nearest one hundredth of a cent or to the nearest hundredth of a share, as the case may be.

        (8)   In the event that, at any time as a result of the provisions of this paragraph (h), the holder of this Warrant upon subsequent exercise shall become entitled to receive any shares of capital stock or other securities of the Company other than Common Shares, the number of such other shares so receivable upon exercise of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

        (9)   Upon each adjustment of the Exercise Price as a result of the calculations made in paragraphs (h)(1), (2), (3), (4) or (5) hereof, the number of shares for which this Warrant is exercisable immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares obtained by (i) multiplying the number of shares covered by this Warrant immediately prior to this adjustment of the number of shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

        (10) The Company shall notify all Holders of the fixing of a record date for the purpose of payment of a cash dividend to holders of Common Shares as soon as reasonably practicable, but in no event less than 20 days prior to any such record date.

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        (11) Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this paragraph (h), the Company shall forthwith file in the custody of this Secretary or an Assistant Secretary at its principal executive office and with its stock transfer agent or its warrant agent, if any, an officers' certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the chairman, president or chief financial officer of the Company and by the secretary or any assistant secretary of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to paragraph (f) and the Company shall, forthwith after each such adjustment, mail a copy, by first-class mail, of such certificate to the Holder.

        (12) The Holder shall, at its option, be entitled to receive, in lieu of the adjustment pursuant to paragraph (h)(5) otherwise required thereof, on the date of exercise of the Warrants, the evidences of indebtedness, other securities, cash, property or other assets which such Holder would have been entitled to receive if it had exercised its Warrants for Common Shares immediately prior to the record date with respect to such distribution. The Holder may exercise its option under this paragraph (h)(12) by delivering to the Company a written notice of such exercise within seven days of its receipt of the certificate of adjustment required pursuant to paragraph (h)(11) to be delivered by the Company in connection with such distribution.

        (i)CONSOLIDATION, MERGER, OR SALE OF ASSETS.    In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Shares) or any sale or transfer of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares for which this Warrant may have been exercised immediately prior to such consolidation, merger, sale or transfer, assuming (i) such holder of Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of a constituent Person and (ii) in the case of a consolidation, merger, sale or transfer which includes an election as to the consideration to be received by the holders, such holder of Common Shares failed to exercise its rights of election, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Common Share held immediately prior to such consolidation, merger, sale or transfer by a Person other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this paragraph (i) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Adjustments for events subsequent to the effective date of such a consolidation, merger and sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease or transfer, or otherwise so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this

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paragraph (i) shall similarly apply to successive consolidations, mergers, sales, leases or transfers. Notwithstanding the foregoing provisions of this paragraph (i), the treatment of this Warrant in connection with the merger of the Company with and into Merrill Corporation shall be governed by paragraph (o).

        (j)NOTICES.    Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company as the case may be, at its address (or telecopier number) set forth below, or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery:

If to the Company:	Merrill Corporation One Merrill Circle St. Paul, Minnesota 55108 Telecopy: (651) 632-4141 Attention: General Counsel
If to the Holder:	To the address of such holder set forth on the signature page hereof.

        Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.

        (k)RIGHTS OF THE HOLDER.    Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

        (l)REGISTRATION RIGHTS.    The Holder of this Warrant is entitled to the registration rights relating to the Warrants and the Warrant Shares set forth in the Investors' Agreement.

        (m)GOVERNING LAW.    THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.

        (n)AMENDMENTS; WAIVERS.    Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

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        IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed by its duly authorized officer and to be dated as of                        .

MERRILL CORPORATION
By:
	Name:
	Title:

Acknowledged and Agreed:
[HOLDER]
By:
	Name:
	Title:
	[Address]

WARRANT SUBSCRIPTION FORM

To: Merrill Corporation

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) and herewith makes payment of $            (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) (provided that in lieu of payment of $            , the undersigned will receive a number of Shares reduced by a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate Exercise Price for the Shares), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and

interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

        Date:                        ,             .

(Signature of Owner)

(Street Address)

(City) (State) (Zip Code)

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Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

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WARRANT ASSIGNMENT FORM

Dated

FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto,
	(the "ASSIGNEE"),
(please type or print in block letters)
(insert address)

its right to purchase up to              Common Shares represented by this Warrant and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises.

Signature

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Exhibit 4.5

MERRILL CORPORATION FORM OF WARRANT FOR THE PURCHASE OF CLASS B COMMON STOCK OF MERRILL CORPORATION
WARRANT SUBSCRIPTION FORM
WARRANT ASSIGNMENT FORM

EX-4.6

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Exhibit 4.6

MERRILL CORPORATION

FORM OF WARRANT FOR THE PURCHASE OF
CLASS B COMMON STOCK OF MERRILL CORPORATION

NO. SERIES D WARRANTS

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE INVESTORS' AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY OR ANY SUCCESSOR THERETO.

        FOR VALUE RECEIVED, MERRILL CORPORATION, a Minnesota corporation (the "COMPANY"), hereby certifies that                         , its successor or permitted assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant, to purchase from the Company, at the times specified herein, one fully paid and non-assessable share of Class B common stock of the Company, par value $0.01 per share (the "WARRANT SHARES"), for each Warrant evidenced by this Warrant Certificate at a purchase price per share equal to the Exercise Price (as hereinafter defined). The number of Warrant Shares to be received upon the exercise of this Warrant and the price to be paid for a Warrant Share are subject to adjustment from time to time as hereinafter set forth.

        (a)   DEFINITIONS.

        (1)   The following terms, as used herein, have the following meanings:

        "AFFILIATE" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

        "BOARD OF DIRECTORS" means the Company's Board of Directors.

        "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized by law to close.

        "COMMON SHARE" means a share of the Company's Class B Common Stock, par value $0.01 per share.

        "DULY ENDORSED" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

        "EXERCISE PRICE" means $0.01 per Warrant Share, as such Exercise Price is adjusted from time to time as provided herein.

        "EXPIRATION DATE" means August 8, 2012 at 5:00 p.m. New York City time.

        "FAIR MARKET VALUE" means, with respect to one Common Share on any date, the Current Market Price Per Common Share for purposes of paragraph (h)(6) hereof.

        "INVESTORS AGREEMENT" means the Investors Agreement dated as of November 23, 1999 among Viking Merger Sub, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and the other stockholders listed on the signature pages thereto.

        "OLD PREFERRED STOCK WARRANTS" means the warrants issued to holders of the Company's 14.5% Senior Preferred Stock due 2011 on November 23, 1999.

        "OLD SENIOR SUBORDINATED NOTE WARRANTS" means the warrants issued to holders of the Company's 12% Senior Subordinated Notes due 2009 on November 23, 1999.

        "PERSON" means an individual, partnership, corporation, limited liability company, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        "PREFERRED STOCK" means the Company's Preferred Stock due 2011.

        "PRINCIPAL HOLDERS" means, on any date, the holders of at least 25% of the Warrants.

        "SERIES A WARRANTS" means the Series A Warrants issued by the Company to holders of the Company's 12% Senior Subordinated Notes due 2009 on August 9, 2002.

        "SERIES B WARRANTS" means the Series B Warrants to be issued in certain circumstances by the Company to holders of the Company's Class A Senior Subordinated Notes due 2009 and Class B Senior Subordinated Notes due 2009.

        "SERIES C WARRANTS" means the Series C Warrants to be issued in certain circumstances by the Company to the holders of the Preferred Stock.

        "TRANSFER" shall have the meaning assigned to such term in the Investors' Agreement.

        "WARRANTS" means the Series D Warrants issued to the holders of the Preferred Stock pursuant to the terms of the Preferred Stockholders Agreement dated August 9, 2002.

        (2)   Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Investors' Agreement.

        (b)   EXERCISE OF WARRANT.

        (1)   The Holder is entitled to exercise this Warrant in whole or in part at any time, or from time to time, until the Expiration Date or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Warrant, the Holder shall execute and deliver to the Company a Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder and payment of the applicable Exercise Price for each Warrant Share subject to such exercise. Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. Notwithstanding anything herein to the contrary, in lieu of payment in cash of the applicable Exercise Price, the Holder may elect (i) to receive upon exercise of this Warrant, the number of Warrant Shares reduced by a number of Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate Exercise Price, Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash or (iii) to deliver as payment, in whole or in part of the aggregate Exercise Price, such number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash. Notwithstanding anything to the contrary in this paragraph (b)(1), if the aggregate Fair Market Value of the Common Shares applied or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise Price, in no event shall the Holder be entitled to receive any amounts from the Company.

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        (2)   The Exercise Price may be paid in cash or by certified or official bank check or bank cashier's check payable to the order of the Company or by any combination of such cash or check. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

        (3)   If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company. The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph (f) hereof as may be directed in writing by the Holder and deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

        (4)   Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of Common Shares or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, including, if applicable, an amount in cash in lieu of any fraction of a share as provided in paragraph (e) below.

        (c)   RESTRICTIVE LEGEND. Certificates representing Common Shares issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to the Investors' Agreement or applicable securities laws.

        (d)   RESERVATION OF SHARES. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued Common Shares or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except to the extent set forth in the Investors' Agreement.

        (e)   FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Current Market Price Per Common Share (as defined in paragraph (h)(6)) at the date of such exercise; PROVIDED that if any of the Company's debt agreements at the time of exercise would prohibit such a payment, no such payment shall be made.

        The Company further agrees that it will not change the par value of the Common Shares to any higher par value which exceeds the Exercise Price then in effect, and will reduce the par value of the Common Shares upon any event described in paragraph (h) that (i) provides for an increase in the number of Common Shares subject to purchase upon exercise of this Warrant, in inverse proportion to and effective at the same time as such number of shares is increased, but only to the extent that such increase in the number of shares, together with all other such increases after the date hereof, causes the aggregate Exercise Price of all Warrants (without giving effect to any exercise thereof) to be greater than the product of all Warrants issued multiplied by $0.01 or (ii) would, but for this provision, reduce the Exercise Price below the par value of the Common Shares.

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        (f)    EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.

        (1)   This Warrant and the Warrant Shares are subject to the provisions of the Investors' Agreement, including the applicable restrictions on transfer. Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Warrant, will be subject to the provisions of, and will have the benefits of, the Investors' Agreement to the extent set forth therein, including the applicable transfer restrictions and the registration rights included therein.

        (2)   Subject to compliance with the transfer restrictions set forth in the Investors' Agreement and with applicable securities laws, upon surrender of this Warrant to the Company, together with the attached Warrant Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and, if the Holder's entire interest is not being assigned, in the name of the Holder and this Warrant shall promptly be canceled.

        (g)   LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date.

        (h)   ANTI-DILUTION PROVISIONS. The Exercise Price of this Warrant and the number of Common Shares for which this Warrant may be exercised shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this paragraph (h).

        (1)   In case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, (iii) combine or reclassify the outstanding Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination or reclassification shall be proportionately adjusted so that, giving effect to paragraph (h)(9), the exercise of this Warrant after such time shall entitle the holder to receive the aggregate number of Common Shares or other securities of the Company (or shares of any security into which such shares of Common Stock have been reclassified pursuant to clause (iii) or (iv) above) which, if this Warrant had been exercised immediately prior to such time, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

        (2)   In case the Company shall issue or sell any Common Shares (other than common shares issued (I) upon exercise of the Warrants, the Old Preferred Stock Warrants, the Old Senior Subordinated Note Warrants, the Series A Warrants, the Series B Warrants or the Series C Warrants, (II) pursuant to any stock option, co-investment or other stock-related employee compensation plan of the Company approved by the Board of Directors, (III) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraphs (h)(3) or (h)(4) hereof or (IV) in any Public Offering (as defined in the Indenture dated as of August 9, 2002 between HSBC Bank USA, as Trustee, the Company and the Guarantors party thereto relating to those certain Class A Senior Subordinated Notes due 2009, as in effect on the date hereof) generating gross proceeds of at least $25.0 million, the Exercise Price to be in effect after

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such issuance or sale shall be determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the sum of (x) the number of Common Shares outstanding immediately prior to the time of such issuance or sale multiplied by the Current Market Price Per Common Share immediately prior to such issuance or sale and (y) the aggregate consideration, if any, to be received by the Company upon such issuance or sale, and the denominator of which shall be the product of the aggregate number of Common Shares outstanding immediately after such issuance or sale and the Current Market Price Per Common Share immediately prior to such issuance or sale but in no event will such fraction exceed 1. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; PROVIDED that if the Principal Holders shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Principal Holders to determine such fair market value. The Holders shall be notified promptly of any consideration other than cash to be received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

        (3)   In case the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Common Shares or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date Common Shares (or securities convertible into Common Shares) at a price per Common Share (or having a conversion price per share of Common Share, if a security convertible into Common Shares) less than the Current Market Price Per Common Share on such record date, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof, as though such maximum number of Common Shares had been so issued for the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of Common Shares to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed, in the former event, or the Exercise Price which would then be in effect if such holder had initially been entitled to such changed number of Common Shares, in the latter event.

        (4)   In case the Company shall sell or issue rights, options (other than options issued pursuant to a plan described in clause II of paragraph (h)(2)) or warrants (other than Series B Warrants) entitling the holders thereof to subscribe for or purchase Common Shares (or securities convertible into Common Shares) or shall issue convertible securities and the price per Common Share of such rights, options, warrants or convertible securities (including, in the case of rights, options, warrants or convertible securities, the price at which they may be exercised or converted) is less than the Current Market Price Per Common Share, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof as though such maximum number of Common Shares had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities

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and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjuted to be the Exercise Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Exercise Price which would then be in effect if such holders had initially been entitled to such changed number of Common Shares, in the latter event. No adjustment of the Exercise Price shall be made pursuant to this paragraph (h)(4) to the extent that the Exercise Price shall have been adjusted pursuant to paragraph (h)(3) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

        (5)   In case the Company shall fix a record date for the making of a distribution to holders of Common Shares (including any such distribution made in connection with a consolidation or merger, other than the merger referred to in paragraph (o), in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets or other property (other than dividends payable in Common Shares or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraphs (h)(3) or (h)(4) hereof), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price Per Common Share on such record date, less the fair market value (determined as set forth in paragraph (h)(2) hereof) of the portion of the assets, cash, other property or evidence of indebtedness so to be distributed which is applicable to one Common Share, and the denominator of which shall be such Current Market Price Per Common Share. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

        (6)   For the purpose of any computation under paragraph (e) or paragraph (h)(2), (3), (4) or (5) hereof, on any determination date, the Current Market Price Per Common Share (the "CURRENT MARKET PRICE PER COMMON SHARE") shall be deemed to be the average (weighted by daily trading volume) of the Daily Prices (as defined below) per Common Share for the 20 consecutive trading days ending three days prior to such date. "DAILY PRICE" means (1) if the Common Shares then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the Common Shares then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the Common Shares then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the Common Shares then are not listed and traded on any such securities exchange and not traded on the NASDAQ National Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ; or (5) if such shares are not listed and traded on any such securities exchange, not traded on the NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then the average of the closing bid and asked prices, as reported by The Wall Street

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Journal for the over-the-counter market. If on any determination date the Common Shares are not quoted by any such organization, the Current Market Price Per Common Share shall be the fair market value of such shares on such determination date as determined by the Board of Directors, without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Investors' Agreement. If the Principal Holders shall object to any determination by the Board of Directors of the Current Market Price Per Common Share, the Current Market Price Per Common Share shall be the fair market value per Common Share as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the Principal Holders. For purposes of any computation under this paragraph (h), the number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company.

        (7)   No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; PROVIDED that any adjustments which by reason of this paragraph (h)(7) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (h) shall be made to the nearest one hundredth of a cent or to the nearest hundredth of a share, as the case may be.

        (8)   In the event that, at any time as a result of the provisions of this paragraph (h), the holder of this Warrant upon subsequent exercise shall become entitled to receive any shares of capital stock or other securities of the Company other than Common Shares, the number of such other shares so receivable upon exercise of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

        (9)   Upon each adjustment of the Exercise Price as a result of the calculations made in paragraphs (h)(1), (2), (3), (4) or (5) hereof, the number of shares for which this Warrant is exercisable immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares obtained by (i) multiplying the number of shares covered by this Warrant immediately prior to this adjustment of the number of shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

        (10) The Company shall notify all Holders of the fixing of a record date for the purpose of payment of a cash dividend to holders of Common Shares as soon as reasonably practicable, but in no event less than 20 days prior to any such record date.

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        (11) Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this paragraph (h), the Company shall forthwith file in the custody of this Secretary or an Assistant Secretary at its principal executive office and with its stock transfer agent or its warrant agent, if any, an officers' certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the chairman, president or chief financial officer of the Company and by the secretary or any assistant secretary of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to paragraph (f) and the Company shall, forthwith after each such adjustment, mail a copy, by first-class mail, of such certificate to the Holder.

        (12) The Holder shall, at its option, be entitled to receive, in lieu of the adjustment pursuant to paragraph (h)(5) otherwise required thereof, on the date of exercise of the Warrants, the evidences of indebtedness, other securities, cash, property or other assets which such Holder would have been entitled to receive if it had exercised its Warrants for Common Shares immediately prior to the record date with respect to such distribution. The Holder may exercise its option under this paragraph (h)(12) by delivering to the Company a written notice of such exercise within seven days of its receipt of the certificate of adjustment required pursuant to paragraph (h)(11) to be delivered by the Company in connection with such distribution.

        (i)    CONSOLIDATION, MERGER, OR SALE OF ASSETS. In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Shares) or any sale or transfer of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares for which this Warrant may have been exercised immediately prior to such consolidation, merger, sale or transfer, assuming (i) such holder of Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of a constituent Person and (ii) in the case of a consolidation, merger, sale or transfer which includes an election as to the consideration to be received by the holders, such holder of Common Shares failed to exercise its rights of election, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Common Share held immediately prior to such consolidation, merger, sale or transfer by a Person other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this paragraph (i) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Adjustments for events subsequent to the effective date of such a consolidation, merger and sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease or transfer, or otherwise so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this

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paragraph (i) shall similarly apply to successive consolidations, mergers, sales, leases or transfers. Notwithstanding the foregoing provisions of this paragraph (i), the treatment of this Warrant in connection with the merger of the Company with and into Merrill Corporation shall be governed by paragraph (o).

        (j)    NOTICES. Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company as the case may be, at its address (or telecopier number) set forth below, or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery:

If to the Company:	Merrill Corporation One Merrill Circle St. Paul, Minnesota 55108 Telecopy: (651) 632-4141 Attention: General Counsel
If to the Holder:	To the address of such holder set forth on the signature page hereof.

        Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.

        (k)   RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

        (l)    REGISTRATION RIGHTS. The Holder of this Warrant is entitled to the registration rights relating to the Warrants and the Warrant Shares set forth in the Investors' Agreement.

        (m)  GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.

        (n)   AMENDMENTS; WAIVERS. Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

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        IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed by its duly authorized officer and to be dated as of                        .

MERRILL CORPORATION
By:
	Name: Title:

Acknowledged and Agreed:
[HOLDER]
By:
	Name: Title:
	[Address]

WARRANT SUBSCRIPTION FORM

To:

Merrill Corporation

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) and herewith makes payment of $            (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant) (provided that in lieu of payment of $            , the undersigned will receive a number of Shares reduced by a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate Exercise Price for the Shares), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per Share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                        Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $            per share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $            of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $            of the aggregate Exercise Price that number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and

interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

        Date:                        ,             .

(Signature of Owner)

(Street Address)

(City) (State) (Zip Code)

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Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

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WARRANT ASSIGNMENT FORM

Dated

FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto,
	(the "ASSIGNEE"),
(please type or print in block letters)
(insert address)

its right to purchase up to              Common Shares represented by this Warrant and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises.

Signature

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Exhibit 4.6

MERRILL CORPORATION FORM OF WARRANT FOR THE PURCHASE OF CLASS B COMMON STOCK OF MERRILL CORPORATION
WARRANT SUBSCRIPTION FORM
WARRANT ASSIGNMENT FORM

EX-4.7

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Exhibit 4.7

Execution Version

WARRANT
REGISTRATION RIGHTS AGREEMENT

MERRILL CORPORATION

140,000 Warrants to Purchase Shares of Common Stock

Dated as of November 23, 1999

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

        This Warrant Registration Rights Agreement (this "Agreement") is made and entered into as of November 23, 1999, between Merrill Corporation, a Minnesota corporation (the "Issuer" or the "Company"), and Donaldson, Lufkin & Jenrette Securities Corporation (the "Initial Purchaser").

        The Issuer and the Initial Purchaser have entered into a Purchase Agreement, dated November 18, 1999 (the "Purchase Agreement"), the Guarantors (as defined in the Purchase Agreement) and Viking Merger Sub, Inc. ("Viking"). The Purchase Agreement provides for the offering by the Company of 140,000 Units, each consisting of $1,000 principal amount at maturity of the Company's 12% Senior Subordinated Notes due 2009 (the "Notes") and one warrant initially representing the right to purchase 1.22987 Common Shares, par value $0.01 per share, of Viking ("Viking Common Shares").

        Pursuant to the Purchase Agreement, Viking has entered into a Warrant Agreement (the "Warrant Agreement") with Norwest Bank Minnesota, N.A., as warrant agent (the "Warrant Agent") providing for the issuance of 140,000 warrants (the "Warrants") each initially representing the right to purchase 1.22987 shares of Viking Common Shares.

        The Company and Viking have entered into an Agreement and Plan of Merger dated as of July 14, 1999 pursuant to which Viking will merger (the "Merger") with and into the Company. Upon consummation of the Merger, each Viking Common Share will become one share of Class B Common Stock of the Company, par value $0.01 per share, and each Warrant by its terms will become exercisable to initially purchase 1.22987 shares of such Class B Common Stock of the Company and the Company will succeed to all obligations of Viking under the Warrant Agreement and with respect to the Warrants. In addition, the Company will enter into a Warrant Assumption Agreement in accordance with Section 8(l) of the Warrant Agreement providing for its assumption of the obligations of Viking thereunder.

        In order to induce the Initial Purchaser to purchase the Warrants, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchaser set forth in Section 9 of the Purchase Agreement.

        Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Warrant Agreement.

        The parties hereby agree as follows:

1.     DEFINITIONS

        As used in this Agreement, the following capitalized terms shall have the following meanings:

        Act:    The Securities Act of 1933, as amended.

        Affiliate:    As defined in Rule 144.

        Black Out Notice:    As defined in Section 4(b) hereof.

        Black Out Period:    As defined in Section 3(a) hereof.

        Closing Date:    The date hereof.

        Commission:    The Securities and Exchange Commission.

        Exchange Act:    The Securities Exchange Act of 1934, as amended.

        Expiration Date:    5:00 p.m. New York City time on May 1, 2009.

        Holders:    As defined in Section 2 hereof.

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        Prospectus:    The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

        Registration Statement:    Any registration statement of the Issuer relating to the registration for resale of Transfer Restricted Securities that is filed pursuant to the provisions of this Agreement and including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

        Rule 144:    Rule 144 promulgated under the Act.

        Transfer Restricted Securities:    (a) Each Warrant and Warrant Share held by an Affiliate of the Issuer and (b) each other Warrant and Warrant Share until the earlier to occur of (i) the date on which such Warrant or Warrant Share (other than any Warrant Share issued upon exercise of a Warrant in accordance with a Registration Statement) has been disposed of in accordance with a Registration Statement and (ii) the date on which such Warrant or Warrant Share (or the related Warrant) is distributed to the public pursuant to Rule 144 under the Act.

2.     HOLDERS

        A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person is the holder of record of Transfer Restricted Securities.

3.     SHELF REGISTRATION

        (a)    Shelf Registration.    The Issuer shall prepare and cause to be filed with the Commission on or before 120 days from the Closing Date pursuant to Rule 415 under the Securities Act a Registration Statement on the appropriate form relating to resales of Transfer Restricted Securities by the Holders thereof and the issuance of Warrant Shares upon the exercise of the Warrants sold pursuant to such Registration Statement. The Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective by the Commission on or before 180 days after the Closing Date.

        To the extent necessary to ensure that the Registration Statement is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 3(a), the Issuer shall use its reasonable best efforts to keep any Registration Statement required by this Section 3(a) continuously effective, supplemented, amended and current as required by and subject to the provisions of Section 4(a) hereof and in conformity with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, until the later of (i) the second anniversary of the effective date of the Registration Statement and (ii) the earlier of (A) the Expiration Date and (B) the first date as of which all Warrants have been exercised by the Holders thereof; provided that such obligation shall expire before such date if the Issuer delivers to the Warrant Agent a written opinion of counsel to the Issuer (which opinion of counsel shall be satisfactory to the Initial Purchaser) that all Holders (other than Affiliates of the Issuer) of Warrants and Warrant Shares may resell the Warrants and the Warrant Shares without registration under the Act and without restriction as to the manner, timing or volume of any such sale; and provided, further, that notwithstanding the foregoing, any Affiliate of the Issuer may, with notice to the Issuer, require the Issuer to keep the Registration Statement continuously effective for resales by such Affiliate for so long as such Affiliate holds Warrants or Warrant Shares, including as a result of any market-making activities or other trading activities of such Affiliate. Notwithstanding the foregoing, the Issuer shall not be required to amend or supplement the Registration Statement, any related prospectus or any document incorporated therein by reference, for a period (a "Black Out Period") not to exceed, for so long as this Agreement is in effect, an aggregate of 60 days in any calendar year, in the event that

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(i) an event occurs and is continuing as a result of which the Registration Statement, any related prospectus or any document incorporated therein by reference as then amended or supplemented would, in the Issuer's good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (ii)(A) the Issuer determines in its good faith judgment that the disclosure of such event at such time would have a material adverse effect on the business, operations or prospects of the Issuer or (B) the disclosure otherwise relates to a material business transaction which has not yet been publicly disclosed; provided that such Black Out Period shall be extended for any period, not to exceed an aggregate of 30 days in any calendar year, during which the Commission is reviewing any proposed amendment or supplement to the Registration Statement, any related prospectus or any document incorporated therein by reference which has been filed by the Issuer; and provided, further, that no Black Out Period may be in effect during the three months prior to the Expiration Date.

        (b)    Provision by Holders of Certain Information in Connection with the Registration Statement.    No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Issuer in writing, within 20 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for use in connection with any Registration Statement or Prospectus or preliminary Prospectus included therein. Each selling Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Issuer by such Holder not materially misleading.

4.     REGISTRATION PROCEDURES

        (a)   In connection with the Registration Statement and any related Prospectus required by this Agreement, the Issuer shall:

        (i)    Comply with all the provisions of this Section 4(a) and use its reasonable best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Issuer pursuant to Section 3(b) hereof), and pursuant thereto the Issuer will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof;

        (ii)   use its reasonable best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 of this Agreement. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Issuer shall, subject to Section 3(a), file promptly an appropriate amendment to such Registration Statement or a supplement to the Prospectus, as applicable, curing such defect, and, in the case of an amendment, use its reasonable best efforts to cause such amendment to be declared effective as soon as practicable;

        (iii)  prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3; cause the Prospectus to be supplemented

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by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

        (iv)  promptly advise each Holder whose Transfer Restricted Securities have been included in the Registration Statement (each, a "Relevant Holder") and the Initial Purchaser and, if requested by such Person, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any applicable Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Issuer shall use its reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

        (v)   subject to Section 4(a)(ii), if any fact or event contemplated by Section 4(a)(iv)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

        (vi)  furnish to each Relevant Holder and the Initial Purchaser, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Persons in connection with such sale, if any, for a period of at least five Business Days, and the Issuer will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which such Person shall reasonably object within five Business Days after the receipt thereof. Such Person shall be deemed to have reasonably objected to such filing if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading or fails to comply with the applicable requirements of the Act;

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        (vii) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to each Relevant Holder and the Initial Purchaser, make the Issuer's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such Persons may reasonably request;

        (viii) make available, at reasonable times, for inspection by each Relevant Holder and the Initial Purchaser and any attorney or accountant retained by the such Person, all financial and other records, pertinent corporate documents of the Issuer and cause the Issuer's officers, directors and employees to supply all information reasonably requested by any such Person, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness, other than the inspection of any records, documents or information which would have an adverse effect on the Issuer's competitive position; provided, however, that any records, documents or information which are necessary to avoid or correct a material misstatement or omission in such Registration Statement or which are necessary to enable a Holder or the Initial Purchaser and any attorney or accountant retained by any such Persons to exercise any applicable due diligence responsibilities will be released to such Holder or the Initial Purchaser.

        (ix)  if requested any Relevant Holder or by the Initial Purchaser, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as any such Person reasonably requests to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities and the use of the Registration Statement or Prospectus for market-making activities; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Issuer is notified of the matters to be included in such Prospectus supplement or post-effective amendment;

        (x)   furnish to the Initial Purchaser and each Relevant Holder upon request, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

        (xi)  deliver to the Initial Purchaser and each Relevant Holder, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Issuer hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each Person in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto and all market-making activities of the Initial Purchaser, as the case may be;

        (xii) upon the request of any Relevant Holder or the Initial Purchaser, enter into such agreements (including underwriting agreements) as are customary in comparable offerings and make such representations and warranties and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any applicable Registration Statement contemplated by this Agreement as may be reasonably requested by any Person in connection with any sale or resale pursuant to any applicable

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Registration Statement. In such connection, and also in connection with market-making activities by the Initial Purchaser, the Issuer shall:

        (A)  upon request of any Person, furnish (or in the case of paragraphs (2) and (3), use its reasonable best efforts to cause to be furnished) to each Person, upon the effectiveness of the Registration Statement:

        (1)   a certificate, dated such date, signed on behalf of the Issuer by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Issuer, confirming, as of the date thereof, the matters set forth in Sections 10(a) and 10(b) of the Purchase Agreement and such other similar matters as such Person may reasonably request;

        (2)   an opinion, dated the date of effectiveness of the Registration Statement, of counsel for the Issuer covering matters similar to those set forth in Sections 10(f), (g) and (h) of the Purchase Agreement and such other matters as such Person may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Issuer, representatives of the independent public accountants for the Issuer and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus; and

        (3)   a customary comfort letter, dated the date of effectiveness of the Registration Statement, from the Issuer's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with underwritten offerings, and affirming the matters set forth in the comfort letters delivered pursuant to Section 10(l) of the Purchase Agreement; and

        (B)  deliver such other documents and certificates as may be reasonably requested by such Person to evidence compliance with the matters covered in clause (A) above and with any customary conditions contained in any agreement entered into by the Issuer pursuant to this clause;

        (xiii) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders and their counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that the Issuer shall not be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would

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subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject;

        (xiv) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to register such Transfer Restricted Securities in such denominations and such names as the selling Holders may request at least two business days prior to such sale of Transfer Restricted Securities;

        (xv) use its reasonable best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xiii) above;

        (xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Warrant Agent with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with The Depository Trust Company;

        (xvii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Commission so long as any provision of this Agreement shall be applicable, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period beginning after the effective date of the Registration Statement (as such term is defined in Rule 158(c) under the Act); and

        (xviii) provide promptly to each Holder and the Initial Purchaser, upon request, each document filed after the date of this Agreement with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act.

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        (b)    Restrictions on Holders.    Each Holder agrees by acquisition of a Transfer Restricted Security and the Initial Purchaser agrees that, upon receipt of the notice from the Issuer of the commencement of a Black Out Period (in each case, a "Black Out Notice"), such Person will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement (i) such Person has received copies of the supplemented or amended Prospectus referred to in Section 4(a)(v) hereof, or (ii) until such Person is advised in writing that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. Each Person receiving a Black Out Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Person's possession which have been replaced by the Issuer with more recently dated Prospectuses or (ii) deliver to the Issuer (at the Issuer's expense) all copies, other than permanent file copies, then in such Person's possession of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of the Black Out Notice. The time period regarding the effectiveness of such Registration Statement set forth in Section 3 hereof shall be extended by a number of days equal to the number of days in the period from and including the date of delivery of the Suspension Notice to the Recommencement Date.

5.     REGISTRATION EXPENSES

        All expenses incident to the Issuer's performance of or compliance with this Agreement will be borne by the Issuer, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing Prospectuses (whether for sales, market-making or otherwise)), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Issuer; (v) all application and filing fees in connection with listing the Warrant Shares on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vi) all fees and disbursements of independent certified public accountants of the Issuer (including the expenses of any special audit and comfort letters required by or incident to such performance).

        The Issuer will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Issuer.

6.     INDEMNIFICATION

        (a)   The Issuer agrees to indemnify and hold harmless each Holder, its directors, officers and each Person, if any, who controls such Holder (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act), from and against any and all losses, claims, damages, liabilities, judgments, (including, without limitation, any legal or other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, preliminary prospectus or Prospectus (or any amendment or supplement thereto) provided by the Issuer to any Holder or any prospective purchaser of Transfer Restricted Securities, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by an untrue statement or omission or alleged untrue statement or omission that is based upon information relating to a Holder furnished in writing to the Issuer by such Holder.

        (b)   Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Issuer, its directors and officers, and each person, if any, who controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Issuer, to the same extent

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as the foregoing indemnity from the Issuer set forth in Section 6(a) hereof, but only with reference to information relating to such Holder furnished in writing to the Issuer by such Holder expressly for use in any Registration Statement. In no event shall any Holder, its directors, officers or any Person who controls such Holder be liable or responsible for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages that such Holder, its directors, officers or any Person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

        (c)   In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 6(a) or 6(b) (the "indemnified party"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing, and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that, in the case of any action in respect of which indemnity may be sought pursuant to both Sections 6(a) and 6(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 6(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Holder). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party, unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by a majority of the Holders, in the case of the parties indemnified pursuant to Section 6(a), and by the Issuer, in the case of parties indemnified pursuant to Section 6(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without the indemnifying party's written consent if the settlement is entered into more than twenty Business Days after the indemnified party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. The indemnifying party shall not, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party.

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        (d)   To the extent that the indemnification provided for in this Section 6 is unavailable to an indemnified party in respect of any losses, claims, damages, liabilities or judgments referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Issuer, on the one hand, and the Holders, on the other hand, from their sale of Transfer Restricted Securities or (ii) if the allocation provided by clause 6(d)(i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 6(d)(i) hereof but also the relative fault of the Issuer, on the one hand, and of the Holder, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative fault of the Issuer, on the one hand, and of the Holder, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Issuer, on the one hand, or by the Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

        The Issuer and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 6(a), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action that could have given rise to such losses, claims, damages liabilities or judgments. Notwithstanding the provisions of this Section 6, no Holder, its directors, its officers or any Person, if any, who controls such Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Securities pursuant to a Registration Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Securities and (ii) the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 6(d) are several in proportion to the respective principal amount of Transfer Restricted Securities held by each Holder hereunder and not joint.

        (e)   The Issuer agrees that the indemnity and contribution provisions of this Section 6 shall apply to the Initial Purchaser to the same extent, on the same conditions, as it applies to Holders.

7.     RULE 144

        The Issuer agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Issuer (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144.

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8.     MISCELLANEOUS

        (a)    Remedies.    The Issuer acknowledges and agrees that any failure by the Issuer to comply with its obligations under Section 3 hereof may result in material irreparable injury to the Initial Purchaser or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchaser or any Holder may obtain such relief as may be required to specifically enforce the Issuer's obligations under Section 3 hereof. The Issuer further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

        (b)    No Inconsistent Agreements.    The Issuer will not, on or after the date of this Agreement, enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Issuer has not previously entered into any agreement granting any registration rights with respect to its securities to any Person that is currently effective other than the Registration Rights Agreement, dated as of the date hereof, with respect to the Issuer's 12% Senior Subordinated Notes due 2009, and that certain Investors Agreement, dated as of the date hereof, among the Issuer and certain persons named therein. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Issuer's securities under any agreement in effect on the date hereof.

        (c)    Amendments and Waivers.    The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of this Section 8(c)(i), the Issuer has obtained the written consent of Holders of all outstanding Transfer Restricted Securities, and (ii) in the case of all other provisions hereof, the Issuer has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding Transfer Restricted Securities held by the Issuer or its Affiliates); provided that this Agreement may be amended without the consent of any Holder pursuant to Section 8(l) of the Warrant Agreement.

        (d)    Third Party Beneficiary.    The Holders shall be third party beneficiaries to the agreements made hereunder between the Issuer, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder.

        (e)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

        (i)    if to a Holder, at the address set forth on the records of the Warrant Agent, with a copy to the Warrant Agent; and

        (ii)   if to the Issuer:

Merrill Corporation
One Merrill Circle
St. Paul, MN 55108
Telecopier No.: (615) 632-4141
Attention: General Counsel

With a copy to:

Oppenheimer Wolff & Donnelly LLP
45 South Seventh Street
Suite 3400

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Minneapolis, MN 55402
Telecopier No.: (612) 607-7100
Attention: Bruce A. Machmeier, Esq.

        All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

        Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Warrant Agent at the address specified in Warrant Agreement. Upon the date of filing a Shelf Registration Statement, notice shall be delivered to the Initial Purchaser (in the form attached hereto as Exhibit A) and shall be addressed to: Attention: Louise Guarneri (Compliance Department), 277 Park Avenue, New York, New York 10172.

        (f)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Transfer Restricted Securities in violation of the terms hereof or of the Purchase Agreement or the Warrant Agreement. If any transferee of any Holder shall acquire Transfer Restricted Securities in any manner, whether by operation of law or otherwise, such Transfer Restricted Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Transfer Restricted Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such Person shall be entitled to receive the benefits hereof.

        (g)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

        (h)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

        (i)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.

        (j)    Severability.    In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

        (k)    Entire Agreement.    This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

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

MERRILL CORPORATION
By:	/s/  RICK R. ATTERBURY Name: Rick R. Atterbury Title: Executive Vice President

DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By:	/s/  OMAR KARAME Name: Omar Karame Title: Vice President

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EXHIBIT A

EXHIBIT A

NOTICE OF FILING OF
WARRANT REGISTRATION STATEMENT

To:	Donaldson, Lufkin & Jenrette Securities Corporation 277 Park Avenue New York, New York 10172 Attention: Louise Guarneri (Compliance Department) Fax: (212) 892-7272
From:	Merrill Corporation Warrants to Purchase Shares of Class B Common Stock

Date:

        For your information only (NO ACTION REQUIRED):

        Today,                                                  , we filed a Shelf Registration Statement with the Securities and Exchange Commission. We currently expect this registration statement to be declared effective within    •    business days of the date hereof.

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EXHIBIT A NOTICE OF FILING OF WARRANT REGISTRATION STATEMENT

EX-10.1

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Exhibit 10.1

MERRILL CORPORATION
1999 STOCK OPTION PLAN

1.    Purpose of Plan.

        The purpose of the Merrill Corporation 1999 Stock Option Plan (the "Plan") is to advance the interests of Merrill Corporation (the "Company") and its shareholders by enabling the Company and its Subsidiaries to attract and retain persons of ability to perform services for the Company and its Subsidiaries by providing an incentive to such individuals through equity participation in the Company and rewarding such individuals who contribute to the achievement by the Company of its economic objectives.

2.    Definitions.

        In addition to the capitalized terms otherwise defined herein, the following additional capitalized terms will have the meanings set forth below, unless the context clearly otherwise requires:

        2.1    "Adverse Action" means the actions described in Section 10.5(b) of the Plan.

        2.2    "Board" means the Board of Directors of the Company.

        2.3    "Broker Exercise Notice" means a written notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs a broker or dealer to sell a sufficient number of shares or loan a sufficient amount of money to pay all or a portion of the exercise price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver stock certificates to be issued upon such exercise directly to such broker or dealer.

        2.4    "Cause" means (i) dishonesty, fraud, misrepresentation, embezzlement or other act of dishonesty with respect to the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant's overall duties, (iv) any material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary, or (v) an Adverse Action.

        2.5    "Code" means the Internal Revenue Code of 1986, as amended.

        2.6    "Committee" means the group of individuals administering the Plan, as provided in Section 3 of the Plan.

        2.7    "Common Stock" means the voting class B common stock of the Company, $0.01 par value per share, or the number and kind of shares of stock or other securities into which such common stock may be changed in accordance with Section 4.3 of the Plan.

        2.8    "Disability" means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.

        2.9    "DLJMB" means DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors' Agreement.

        2.10    "DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a sale or other transfer by DLJMB of 90% or more of its shares of common equity in the Company (including all common equity originally purchased by DLJMB and any additional common equity purchased by DLJMB 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.

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

        2.12    "Eligible Recipients" means all employees of the Company or any Subsidiary and any non-employee directors, consultants and independent contractors of the Company or any Subsidiary.

        2.13    "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        2.14    "Fair Market Value" means, with respect to the Common Stock, as of the Valuation Date (or, if no shares were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote) (a) the mean between the reported high and low sale prices of the Common Stock if the Common Stock is listed, admitted to unlisted trading privileges or reported on any foreign or national securities exchange or on the NASDAQ National Market or an equivalent foreign market on which sale prices are reported; (b) if the Common Stock is not so listed, admitted to unlisted trading privileges or reported, the closing bid price as reported by the NASDAQ SmallCap Market, OTC Bulletin Board or the National Quotation Bureau, Inc. or other comparable service; or (c) if the Common Stock is not so listed or reported, such price shall be the Formula Value, or such other price as the Committee shall determine is appropriate in its sole discretion. The Committee's determination as to the Fair Market Value of the Common Stock shall be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, shareholders of the Company, the Participants and their respective successors-in-interest. No member of the Board or the Committee shall be liable for any determination regarding current values of the Common Stock that is made in good faith.

        2.15    "Formula Value" means the price determined on a Valuation Date by subtracting (i) Total Debt and (ii) Total Preferred Stock from the Enterprise Value, adding Total Cash to this difference and dividing such sum by the aggregate of the number of shares of capital stock of the Company outstanding on such Valuation Date (including all vested and unvested Shares) and all shares of common equity of the Company which may be issuable upon the exercise of options and warrants of the Company outstanding on such Valuation Date (whether or not then exercisable); provided, however, that any option which is not subject to a specific vesting schedule and only becomes fully exercisable upon a DLJMB Liquidation Event which realizes an internal rate of return in excess of fifty percent shall not be included in the outstanding option number on such Valuation Date.

        2.16    "Incentive Stock Option" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an "incentive stock option" within the meaning of Section 422 of the Code.

        2.17    "Investors' Agreement" means the Investors' Agreement, dated November 23, 1999, by and among the Company and its shareholders, as amended from time to time.

        2.18    "Non-Statutory Stock Option" means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an Incentive Stock Option.

        2.19    "Option" means an Incentive Stock Option or a Non-Statutory Stock Option.

        2.20    "Partial Termination" means a change in the Participant's employment or other service with the Company and all its Subsidiaries such that the number of hours worked by such Participant is

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substantially reduced for any reason as the Committee in its sole discretion may determine from the number of hours such Participant is required to work for the Company or Subsidiary and such reduction is expected to extend for an indefinite period of time.

        2.21    "Participant" means an Eligible Recipient who receives one or more Options under the Plan, and to the extent such Participant transfers any Option granted under this Plan to a Permitted Transferee (as defined in the Investors' Agreement) in accordance with the terms of the Investors' Agreement such term shall mean the Participant and such Permitted Transferee of such Participant.

        2.22    "Previously Acquired Shares" means shares of Common Stock that are already owned by the Participant or, with respect to any Option, that are to be issued upon the exercise of such Option.

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

        2.24    "Repurchase Date" means the date set forth in Section 7.7 of the Plan.

        2.25    "Repurchase Right" means the Company's irrevocable and exclusive right to repurchase from the Participant all shares of Common Stock previously acquired upon exercise of an Option, at a price equal to the exercise price paid by the Participant to acquire such shares of Common Stock, in the event a Participant's employment or other service with the Company and all its Subsidiaries is terminated by the Company or any Subsidiary for Cause.

        2.26    "Retirement" means termination of employment or service pursuant to and in accordance with the regular (or, if approved by the Committee for purposes of the Plan, early) retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, provided that if the Participant is not covered by any such plan or practice, the Participant will be deemed to be covered by the Company's plan or practice for purposes of this determination.

        2.27    "Securities Act" means the Securities Act of 1933, as amended.

        2.28    "Subsidiary" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee.

        2.29    "Tax Date" means the date any withholding tax obligation arises under the Code or other applicable tax statute for a Participant with respect to an Option.

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

        2.31    "Total Debt" means any indebtedness of the Company 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 the Company's consolidated balance sheet as of its most recent fiscal year end.

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

        2.33    "Valuation Date" means a date on which the Committee shall determine the Fair Market Value of the Common Stock, which date shall be no more than ninety (90) days following the Company's fiscal year end.

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3.    Plan Administration.

        3.1    The Committee.    The Plan will be administered by the Board or by a committee of the Board. So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, any committee administering the Plan will consist solely of two or more members of the Board who are "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act and, if the Board determines in its sole discretion, who are "outside directors" within the meaning of Section 162(m) of the Code. As used in the Plan, "Committee" will refer to the Board or to such a committee, if established. The committee, if established, will act by majority approval of the members (but may also take action with the written consent of a majority of the members of such committee), and a majority of the members of such a committee will constitute a quorum. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Eligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, the shareholders of the Company, the Participants and their respective successors-in-interest. No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Option granted under the Plan.

        3.2    Authority of the Committee.

        (a)   In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Options as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Options to be granted to each Participant (including the number of shares of Common Stock to be subject to each Option, the exercise price and the manner in which Options will become exercisable) and the form of written agreement, if any, evidencing such Option; (iii) the time or times when Options will be granted; (iv) the duration of each Option; and (v) the restrictions and other conditions to which the Options, or vesting of Options, may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Option in the form of cash, Common Stock or any combination of both.

        (b)   The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Option in any manner, including, without limitation, the authority to modify the number of shares or other terms and conditions of an Option, extend the term of an Option, accelerate the exercisability or otherwise terminate any restrictions or vesting relating to an Option, accept the surrender of any outstanding Option or, to the extent not previously exercised or vested, authorize the grant of new Options in substitution for surrendered Options; provided, however that the amended or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. No amendment or modification to an Option, however, whether pursuant to this Section 3.2 or any other provisions of the Plan, will be deemed to be a re-grant of such Option for purposes of this Plan.

        (c)   In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other change in corporate structure or shares, (ii) any purchase, acquisition, sale or disposition of a significant amount of assets or a significant

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business, (iii) any change in accounting principles or practices, or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Option, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected Participant, amend or modify the conditions to the exercisability of any outstanding Option that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect.

4.    Shares Available for Issuance.

        4.1    Maximum Number of Shares Available.    Subject to adjustment as provided in Section 4.3 of the Plan, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 825,000 shares of Common Stock.

        4.2    Accounting for Options.    Shares of Common Stock that are issued under the Plan or that are subject to outstanding Options will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan. Any shares of Common Stock that are subject to an Option that lapses, expires, is forfeited or for any reason is terminated unexercised and any shares of Common Stock that are subject to an Option that is settled or paid in cash or any form other than shares of Common Stock will automatically again become available for issuance under the Plan. In addition, in the event that any shares of Common Stock that are issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal, such shares will automatically again become available for issuance under the Plan, except that any such shares so reacquired will not be available for issuance in connection with the exercise of Incentive Stock Options unless permitted by Section 422 of Code and the rules and regulations thereunder.

        4.3    Adjustments to Shares and Options.

        (a)    General.    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 the Company, affects the Options 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 Plan, the Committee (or, if the Company 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 the Company (or number and kind of other securities or property) available for issuance or payment under the Plan, (ii) the number of shares of Common Stock or other securities of the Company (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.

        (b)    Mergers and Consolidations.    Without limiting the authority of the Committee to take any actions deemed appropriate under Section 4.3(a) of the Plan, in the event that the Company is a party to a merger or consolidation, outstanding Options under the Plan will be subject to the

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agreement of merger or consolidation, and such agreement, without the Participants' consent, may provide for the following:

          (i)  If the Company is the surviving corporation in connection with such merger or consolidation, the continuation of outstanding Options by the Company.

         (ii)  If the Company is not the surviving corporation in connection with such merger or consolidation, the assumption of the Plan and the outstanding Options by the surviving corporation or its parent or the substitution by the surviving corporation or its parent of options with substantially similar terms for such outstanding Options.

5.    Participation.

        Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Options as may be determined by the Committee in its sole discretion. Options will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related agreement with the Participant.

6.    Options.

        6.1    Grant.    An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock Option granted under the Plan ceases for any reason to qualify as an "incentive stock option" for purposes of Section 422 of the Code, such Incentive Stock Option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.

        6.2    Exercise Price.    The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at the time of the Option grant; provided, however, that (a) such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant with respect to an Incentive Stock Option (110% of the Fair Market Value if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company), and (b) such price will not be less than 85% of the Fair Market Value of one share of Common Stock on the date of grant with respect to a Non-Statutory Stock Option (110% of the Fair Market Value if, at the time the Non-Statutory Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

        6.3    Exercisability and Duration.    Subject to Section 7 hereof, an Option will become exercisable at such times and in such installments as may be determined by the Committee in its sole discretion at the time of grant; provided, however, that no Incentive Stock Option may be exercisable after ten (10) years from its date of grant (five (5) years from its date of grant if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

        6.4    Payment of Exercise Price.    The total purchase price of the shares to be purchased upon exercise of an Option must be paid entirely in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions established

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by the Committee, may allow such payments to be made, in whole or in part, by tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory note (on terms acceptable to the Committee in its sole discretion) or by a combination of such methods.

        6.5    Manner of Exercise.    An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by delivery in person, by facsimile or electronic transmission (with written confirmation via the mail to follow such electronic transmission) or through the mail of written notice of exercise to the Company (Attention: Secretary) at its principal executive office in St. Paul, Minnesota and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan.

        6.6    Aggregate Limitation of Stock Subject to Incentive Stock Options.    To the extent that the aggregate Fair Market Value (determined as of the date an Incentive Stock Option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under the Plan and any other incentive stock option plans of the Company or any subsidiary or parent corporation of the Company (within the meaning of the Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code from time to time), such excess Options will be treated as Non-Statutory Stock Options. The determination will be made by taking Incentive Stock Options into account in the order in which they were granted. If such excess only applies to a portion of an Incentive Stock Option, the Committee, in its discretion, will designate which shares will be treated as shares to be acquired upon exercise of an Incentive Stock Option.

        6.7    Investors' Agreement.    Upon exercise of an Option under the Plan each Participant shall become a party to the Investors' Agreement. Each Participant who (i) is an employee of the Company or any Subsidiary reporting directly to the Chief Executive Officer ("CEO") or Chief Operating Officer ("COO") of the Company or (ii) acquires more than a certain percentage of the Common Stock available for issuance under the Plan as determined by the Committee in its sole discretion from time to time, shall be deemed a "Co-invest Management Stockholder" for all purposes of the Investors' Agreement and all other Participants who acquire shares of Common Stock under the Plan shall be deemed "Other Stockholders" for purposes of the Investors' Agreement, including, without limitation, all transfer restrictions and provisions thereof; provided, however, if a Participant after the exercise of the Option is no longer required to report directly to the CEO or COO such Participant shall thereafter be deemed an "Other Stockholder," and any "Other Stockholder" who acquires more than the percentage of the Common Stock available for issuance under the Plan as determined by the Committee or reports directly to the CEO or COO after the exercise of the Option shall thereafter be deemed a "Co-invest Management Stockholder," for all purposes of the Investors' Agreement. Notwithstanding anything to the contrary in the Plan, if the Investors' Agreement has terminated by its terms, the provisions of this Section 6.7 shall no longer apply.

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7.    Effect of Termination of Employment or Other Service.

        7.1    Termination for Cause.    Unless otherwise provided by the Committee in its sole discretion in the agreement evidencing an Option, in the event a Participant's employment or other service with the Company and all its Subsidiaries is terminated by the Company or any Subsidiary for Cause, all rights of the Participant under the Plan and any agreements evidencing an Option will immediately terminate without notice of any kind, and all Options then held by the Participant, whether exercisable or not at the time of termination, will immediately terminate without notice of any kind, and the Company shall also have the right to exercise its Repurchase Right in the manner set forth in Section 7.7.

        7.2    Termination for Reasons Other Than Cause.    Unless otherwise provided by the Committee in its sole discretion in the agreement evidencing an Option, in the event a Participant's employment or other service with the Company and all Subsidiaries is terminated other than for Cause by reason of voluntary resignation, death, Disability or Retirement, all outstanding Options then held by the Participant will remain exercisable, to the extent exercisable as of the date of such termination, for a period of one year following the date the Participant's employment or other service is terminated, and any outstanding Options not exercisable as of the date of such termination will immediately terminate without notice of any kind.

        7.3    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 Participant at the time of the Partial Termination, including, without limitation, the right to immediately terminate without notice of any kind all rights the Participant has in any unvested Options then held by the Participant at the time of the Partial Termination.

        7.4    Modification of Rights Upon Termination.    Notwithstanding the other provisions of this Section 7, upon a Participant's termination of employment or other service with the Company and all Subsidiaries, the Committee may, in its sole discretion (which may be exercised at any time on or after the date of grant, including following such termination), cause Options (or any part thereof) then held by such Participant to become or continue to become exercisable and/or remain exercisable following such termination of employment or service; provided, however, that no Option may remain exercisable beyond its expiration date.

        7.5    Exercise of Incentive Stock Options Following Termination.    Any Incentive Stock Option that remains unexercised more than one year following termination of employment by reason of Disability or more than three months following termination for any reason other than death or Disability will thereafter be deemed to be a Non-Statutory Stock Option.

        7.6    Date of Termination of Employment or Other Service.    Unless the Committee otherwise determines in its sole discretion, a Participant's employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or other service, as determined by the Committee in its sole discretion based upon such records.

        7.7    Exercisability of Repurchase Right.    If the Company elects to exercise its Repurchase Right, the Company shall give the Participant written notice of its intent to exercise its Repurchase Right (the "Notice of Repurchase") within sixty (60) days of such Participants termination of employment or other service. The Notice of Repurchase shall specify (i) the number of shares of Common Stock the Company intends to repurchase, (ii) the applicable purchase price for such shares of Common Stock, and (iii) the date the Company expects to purchase such shares of Common Stock from the Participant 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 Participant's employment or other service is terminated (the "Repurchase Date"). On or before the Repurchase Date, the Participant shall deliver to the Company the stock certificates representing the shares of Common Stock being purchased by the

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Company, properly endorsed for transfer. By such delivery of such certificates, the Participant warrants that (i) the Participant 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 Plan or the Investors' Agreement, and except such restrictions on transfer as may be imposed by federal or state securities laws, and (iii) the Participant shall hold harmless the Company from all costs, expenses and fees incurred in defending title and right to possession. On the Repurchase Date, the Company shall pay to the Participant the total purchase price for the shares of Common Stock to be purchased by the Company. Notwithstanding anything to the contrary in the Plan, however, the Company 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, the Company, and any amounts not paid to the Participant 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. The Company shall only be required to repurchase shares of Common Stock pursuant to this Section 7.7 to the extent that such repurchase does not violate any applicable laws.

8.    Payment of Withholding Taxes.

        8.1    General Rules.    The Company is entitled to (a) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company 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 an Option, including, without limitation, the grant or exercise of an Option or a disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Option.

        8.2    Special Rules.    The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 8.1 of the 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.    DLJMB Liquidation Event.

        9.1    Acceleration of Vesting.    Without limiting the authority of the Committee under the Plan, if a DLJMB Liquidation Event occurs, then, unless otherwise provided by the Committee in its sole discretion, all unvested Options will vest in accordance with the terms and conditions of the written agreement entered into with the Participant to evidence the Option.

        9.2    Limitation on Payments in Connection with a DLJMB Liquidation Event.    Notwithstanding anything in Section 9.1 of the Plan to the contrary, if, with respect to a Participant, the acceleration of the vesting of Options as provided in Section 9.1 (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 Participant has the right to receive from the Company 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 the Company is a member, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code), then the "payments" to such Participant pursuant to Section 9.1 of the Plan 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 a Participant is subject to a separate agreement with the Company 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 Participant will

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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 9.2 will not apply, and any "payments" to a Participant pursuant to Section 9.1 of the Plan will be treated as "payments" arising under such separate agreement.

10.    Rights of Eligible Recipients and Participants; Transferability.

        10.1    Employment or Service.    Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any Subsidiary.

        10.2    Rights as a Shareholder.    As a holder of Options, a Participant will have no rights as a shareholder unless and until such Options are exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to such Options as to which there is a record date preceding the date the Participant becomes the holder of record of such shares, except as the Committee may determine in its discretion.

        10.3    Restrictions on Transfer.    Unless approved by the Committee in its sole discretion, no right or interest of any Participant 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 Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise; provided, however, once a Participant 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.

        10.4    Non-Exclusivity of the Plan.    Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

        10.5    Restrictions Regarding Employment or Service.

          (i)  Notwithstanding anything in the Plan to the contrary, in the event that a Participant takes an Adverse Action with respect to the Company or any Subsidiary (1) prior to such Participant's termination of employment or other service with the Company and all its Subsidiaries or (2) during the period ending twelve (12) months following the date of the Participant's termination of employment or other service with the Company and all Subsidiaries without Cause, the Committee in its sole discretion will have the authority to terminate immediately all rights of the Participant under the Plan and any agreement evidencing Options then held by the Participant without notice of any kind. In addition, to the extent that the Participant takes such Adverse Action during the period beginning twelve (12) months prior to, and ending twelve 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 Participant that were exercised during such period and to require the Participant to pay to the Company, within ten (10) days of receipt from the Company 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. The Company will be entitled to withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary) or make other arrangements for the collection of all amounts necessary to satisfy such payment obligations.

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         (ii)  For purposes of the Plan, an "Adverse Action" will mean any action by a Participant that the Committee, in its sole discretion, determines to be adverse to the interests of the Company or any Subsidiary, including, without limitation, (i) disclosing confidential information of the Company or any Subsidiary to any person not authorized by the Company 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 the Company or any Subsidiary or (iii) interfering with the relationships of the Company or any Subsidiary and their respective employees and customers.

11.    Securities Law and Other Restrictions.

        11.1    Securities Law Restrictions.    Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Options granted under the Plan, unless (i) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, 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. The Company 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 shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

        11.2    Other Restrictions.    The Committee may impose such other restrictions, including, without limitation, market stand-off provisions and rights of first refusal, as it deems appropriate in its sole discretion and will set forth any such restrictions that are not otherwise provided for by the Plan in the agreement evidencing such Option.

12.    Plan Amendment, Modification and Termination.

        The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Options under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no amendments to the Plan will be effective without approval of the shareholders of the Company if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the rules of any stock exchange or NASDAQ or similar regulatory body. No termination, suspension or amendment of the Plan may adversely affect any outstanding Option without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate under Sections 3.2, 4.3, 5, 7.3, 9 and 10.5 of the Plan.

13.    Effective Date and Duration of the Plan.

        The Plan is effective as of December 20, 1999, the date it was adopted by the Board. The Plan will terminate at midnight on December 19, 2009, and may be terminated prior to such time to by Board action, and no Option will be granted after such termination. Options outstanding upon termination of the Plan may continue to be exercised in accordance with their terms.

14.    Miscellaneous.

        14.1    Governing Law.    The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Minnesota, notwithstanding the conflicts of laws principles of any jurisdictions.

        14.2    Successors and Assigns.    The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants.

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FIRST AMENDMENT TO 1999 STOCK OPTION PLAN

        THIS FIRST AMENDMENT TO 1999 STOCK OPTION PLAN, dated January 30, 2003, amends the 1999 Stock Option Plan of Merrill Corporation (the "Plan"), such amendment being effective as of the date hereof. Except to the extent amended hereby, the Plan shall remain in full force and effect in accordance with its terms.

Increase in Maximum Number of Shares Available

        To increase the maximum number of shares of Common Stock (as defined in the Plan) that will be available for issuance under the Plan, Section 4.1 of the Plan is hereby amended by replacing the number "825,000" with "1,225,000".

SECOND AMENDMENT TO 1999 STOCK OPTION PLAN

        THIS SECOND AMENDMENT TO 1999 STOCK OPTION PLAN, effective as of December 1, 2003, amends the 1999 Stock Option Plan of Merrill Corporation (as previously amended, the "Plan"). Except to the extent amended hereby, the Plan shall remain in full force and effect in accordance with its terms. The amendments to the Plan herein shall only apply to grants under the Plan on or after the effective date hereof.

        1.     The Plan is hereby amended by adding the following provisions to the Plan as a new Section 9.3 (such new provisions to immediately follow the existing Section 9.2 of the Plan):

        9.3.    Additional Rights in Connection with a DLJMB Liquidation Event.    Without limiting the authority of the Committee under the Plan, the Committee may elect, in its sole discretion, to proceed pursuant to this Section 9.3 in connection with the occurrence of a DLJMB Liquidation Event.

        (a)   The Committee may determine that no additional vesting of an Option shall occur in connection with or after such DLJMB Liquidation Event (without notice of any kind). In connection therewith, the Committee may determine for each share of Common Stock subject to such Option (each an "Option Share") an amount that is equal to (i) the per-share amount received in connection with such DLJMB Liquidation Event by a holder of shares of common equity of the Company who is not a DLJMB Entity, minus (ii) the per share price to be paid by the Participant holding such Option in the event of an exercise of such Option (the result of the foregoing being the "Per-Option Share Amount").

        (b)   For the portion of such Option that is vested immediately prior to such DLJMB Liquidation Event, the Company may pay to such Participant, in cash, an amount equal to the Per-Option Share Amount for each Option Share subject to such vested portion of such Option, with such payment being due on or before the 10^th business day following the effective date of such DLJMB Liquidation Event.

        (c)   For the portion of such Option that is not yet vested immediately prior to such DLJMB Liquidation Event, the Committee may cause the Company to, subject to Section 9.3(d) below, on or before the 10^th business day following the effective date of such DLJMB Liquidation Event, place an amount equal to the Per-Option Share Amount for each Option Share subject to such unvested portion of such Option (along with any or all corresponding amounts payable to other Option holders under the Plan) in an escrow account, a so-called "Rabbi Trust" or a similar account or fund under terms determined by the Company from time to time, in its discretion; provided, however, that (i) the Company shall pay (or cause to be paid) to such Participant such amount in installments over a period that is the shorter of two years from the date of such DLJMB Liquidation Event or the remainder of the period in which such Option would otherwise have vested in full pursuant its vesting schedule (assuming, for purposes of this clause, that such Option is governed entirely by the applicable Participant's time-based option vesting schedule, or if no such schedule exists, then as stated in the agreement between such Participant and the Company governing such Option), (ii) such installments shall be allocated equally over such period and shall not be paid less frequently than once per calendar quarter, (iii) any (if any) interest or other earnings or proceeds earned thereon shall be for the benefit of such Participant and (iv) the Company may cause such portion of such amount to be prepaid to such Participant in whole or in part at any time and from time to time, including on or before such 10^th business day following the effective date of such DLJMB Liquidation Event.

        (d)   If the Committee elects to proceed pursuant to this Section 9.3, then notwithstanding any other provision herein, the following shall apply:

          (i)  Such Option shall be cancelled and terminated without notice of any kind, and such Participant shall have no right with respect thereto, except the right to receive payment under the terms, and subject to the conditions, of this Section 9.3. If the

Per-Option Share Amount is less than or equal to $0, then such Option shall be cancelled and terminated without notice of any kind, and such Participant shall have no right with respect thereto, including without limitation any right to receive any payment under this Section 9.3 or otherwise under any agreement regarding such Option or the Plan.

         (ii)  If, in connection with or after such DLJMB Liquidation Event, such Participant's employment or other service with the Company or any Subsidiary is terminated for Cause or by resignation by such Participant (other than a bona fide retirement substantiated and documented as determined, and subject to conditions stated, by the Company), then after the effective date of such termination or resignation (as applicable) no amount whatsoever shall be payable to such Participant regarding the portion of such Option that is not yet vested immediately prior to such DLJMB Liquidation Event (including under Section 9.3(c) above) and all amounts in respect of such Option held in an escrow account, a so-called "Rabbi Trust" or a similar account or fund pursuant to Section 9.3(c) above shall immediately revert to and be owned by the Company.

        (iii)  In electing how to proceed under Section 9.3(c) above, the Committee shall not place any amount in an escrow account, a so-called "Rabbi Trust" or a similar account or fund (as contemplated in such Section), unless (A) such placement is not a taxable event in which income is presently recognized for any Option holder under the Plan at the time the Company does so or (B) if such placement is a taxable event described in the preceding clause (A), then the Company causes there to be a payment of tax, or takes such other action, so that such taxable event does not cause any reduction (from withholding or otherwise) in such Participant's usual and regular employment compensation. (As examples only, the Company could withhold from such amount the taxes required to be withheld by it and then place only the balance in such an escrow account, so-called "Rabbi Trust" or similar account or fund, or the Company could make a gross up payment to such Participant (and the corresponding withholdings therefrom) at the: time of such placement in an amount sufficient to pay such Participant's associated tax obligations.) If the Company is not able to so place such amount without such placement being such a taxable event and the Company does not take any such action contemplated by the preceding clause (B), then the Company shall pay to such Participant the amount owed under Section 9.3(c) regarding such unvested portion of the Option on or before the 10^th business day following the effective date of such DLJMB Liquidation Event.

        (iv)  The Company shall only be required to make payments in connection with this Section 9.3 as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, the Company provided, however, that at and after a DLJMB Liquidation Event, the foregoing shall not restrict any such payment to a greater extent than such payment could have been restricted based on any loan, credit or debt arrangement. or any covenant, obligation or other contractual restriction that applied to, or was binding upon, the Company immediately prior to such DLJMB Liquidation Event.

         (v)  For purposes of this Section 9.3, the "Company" means, at any time prior to such DLJMB Liquidation Event, Merrill Corporation, and "Company" means, at any time after such DLJMB Liquidation Event, Merrill Corporation or a successor entity of Merrill Corporation (or a successor to, or transferee of, all or substantially all of its assets) as a result of such DLJMB Liquidation Event (including without limitation any surviving entity of a merger or consolidation with Merrill Corporation).

        2.     Each reference in Section 9.2 of the Plan is hereby amended to also be a reference to Section 9.3 of the Plan.

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THIRD AMENDMENT TO 1999 STOCK OPTION PLAN

        THIS THIRD AMENDMENT TO 1999 STOCK OPTION PLAN, dated February 13, 2006, amends the 1999 Stock Option Plan of Merrill Corporation (the "Plan") such amendment being effective as of the date hereof. Except to the extent amended hereby, the Plan shall remain in full force and effect in accordance with its terms.

Increase the Maximum Number of Shares Available

        To increase the maximum number of shares of Common Stock (as defined in the Plan) that will be available for issuance under the Plan, Section 4.1 of the Plan is hereby amended by replacing the number "1,225,000" with "1,525,000".

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Exhibit 10.1

MERRILL CORPORATION 1999 STOCK OPTION PLAN
FIRST AMENDMENT TO 1999 STOCK OPTION PLAN
SECOND AMENDMENT TO 1999 STOCK OPTION PLAN
THIRD AMENDMENT TO 1999 STOCK OPTION PLAN
Increase the Maximum Number of Shares Available

EX-10.2

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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                        .

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        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.

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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,

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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.

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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").

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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

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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

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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.

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        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.

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        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.

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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:

•

1^st qtr: $45,000



•

2^nd qtr: $5,000



•

3^rd qtr: $15,000



•

4^th 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 Stock

EX-10.3

QuickLinks -- 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.

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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)

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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

EX-10.4

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Exhibit 10.4

MERRILL CORPORATION
DIRECT INVESTMENT PLAN,
AS AMENDED
OCTOBER 26, 2000

1.    Purpose.

        The purpose of the Merrill Corporation Direct Investment Plan (the "Plan") is to advance the interests of Merrill Corporation (the "Company") and its shareholders by facilitating the purchase of shares of the Company's voting class B common stock, $0.01 par value per share ("Common Stock") by Eligible Employees (as defined below) of the Company. These purchases are intended to (i) increase Common Stock ownership among Eligible Employees of the Company and its Subsidiaries; (ii) more closely align such Eligible Employees' financial rewards with the financial rewards realized by all other holders of capital stock of the Company; and (iii) increase such Eligible Employees' motivation to manage the Company as owners.

2.    Definitions.

        In addition to the capitalized terms otherwise defined herein, the following additional capitalized terms will have the meanings set forth below, unless the context clearly otherwise requires:

        2.1    "Adverse Action" means any of the actions described in Section 8.7(b) of the Plan.

        2.2    "Board" means the Board of Directors of the Company.

        2.3    "Cause" means (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant's overall duties, (iv) any material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary, or (v) an Adverse Action.

        2.4    "Closing Date" means the date the Company closes on the sale of Shares to Eligible Employees who are initially offered the right to purchase Shares under the Plan, which the Company expects to be on or before January 31, 2000.

        2.5    "Code" means the Internal Revenue Code of 1986, as amended.

        2.6    "Coinvestment Shares" mean the shares of Common Stock offered to the Participant pursuant to Section 5.2 of the Plan.

        2.7    "Committee" means the group of individuals administering the Plan, as provided in Section 3.1 of the Plan.

        2.8    "Common Stock" shall have the meaning given such term in Section 1, or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 7.3 of the Plan.

        2.9    "Disability" means the disability of the Participant such as would entitle the Participant to receive disability income benefits pursuant to the long-term disability plan of the Company or Subsidiary then covering the Participant or, if no such plan exists or is applicable to the Participant, the permanent and total disability of the Participant within the meaning of Section 22(e)(3) of the Code.

        2.10    "DLJMB" means DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors' Agreement.

        2.11    "DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a sale or other transfer by DLJMB of 60% or more of its shares of common equity in the Company (including all common equity originally purchased by DLJMB and any additional common equity purchased by DLJMB 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.

        2.12    "Effective Date" means the date set forth in Section 12.1 of the Plan.

        2.13    "Eligible Employees" means any employee of the Company or any Subsidiary, and any non-employee director, consultant and independent contractor of the Company or any Subsidiary.

        2.14    "Eligibility Notice" means the notice described in Section 4.1 of the Plan.

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

        2.16    "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        2.17    "Fair Market Value" means, with respect to the Common Stock, as of a Valuation Date (or, if no shares were traded or quoted on such date, as of the next preceding date on which there was such a trade or quote) (i) the mean between the reported high and low sale prices of the Common Stock if the Common Stock is listed, admitted to unlisted trading privileges or reported on any foreign or national securities exchange or on the NASDAQ National Market or an equivalent foreign market on which sale prices are reported; (ii) if the Common Stock is not so listed, admitted to unlisted trading privileges or reported, the closing bid price as reported by the NASDAQ SmallCap Market, OTC Bulletin Board or the National Quotation Bureau, Inc. or other comparable service; or (iii) if the Common Stock is not so listed or reported, such price shall be the Formula Value, or such other price as the Committee shall determine is appropriate in its sole discretion. The Committee's determination as to the Fair Market Value of the Common

2

Stock shall be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, shareholders of the Company, the Participants and their respective successors-in-interest. No member of the Board or the Committee shall be liable for any determination regarding current values of the Common Stock that is made in good faith.

        2.18    "Formula Value" means the price determined on a Valuation Date by subtracting (i) Total Debt and (ii) Total Preferred Stock from the Enterprise Value, adding Total Cash to this difference and dividing such sum by the aggregate of the number of shares of capital stock of the Company outstanding on such Valuation Date (including all vested and unvested Shares) and all shares of common equity of the Company which may be issuable upon the exercise of options and warrants of the Company outstanding on such Valuation Date (whether or not then exercisable); provided, however, that any option which is not subject to a specific vesting schedule and only becomes fully exercisable upon a DLJMB Liquidation Event which realizes an internal rate of return in excess of fifty percent shall not be included in the outstanding option number on such Valuation Date.

        2.19    "Interest Rate" means the rate of interest on the Purchase Loan as set forth in Section 6.2 of the Plan.

        2.20    "Investors' Agreement" means the Investors' Agreement, dated November 23, 1999, by and among the Company and its shareholders, as amended from time to time.

        2.21    "Note" means the Nonrecourse Promissory Note in the form attached hereto as Exhibit A to be entered into by each Participant in connection with the purchase of Coinvestment Shares.

        2.22    "Partial Termination" means a change in the Participant's employment or other service with the Company and all its Subsidiaries such that the number of hours worked by such Participant is substantially reduced for any reason as the Committee in its sole discretion may determine from the number of hours such Participant is required to work for the Company or Subsidiary and such reduction is expected to extend for an indefinite period of time.

        2.23    "Participant" means an Eligible Employee of the Company or any Subsidiary who is selected by the Committee to participate in the Plan, and to the extent such Participant transfers any Shares purchased under this Plan to a Permitted Transferee (as defined in the Investors' Agreement) in accordance with the terms of the Investors' Agreement such term shall mean the Participant and such Permitted Transferee of such Participant.

        2.24    "Pledge Agreement" means the Pledge and Custody Agreement in the form attached hereto as Exhibit B to be entered into by each Participant and the Company in connection with the purchase of Coinvestment Shares.

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

        2.26    "Pro Rata Adjustment" means a price per Share (which price could be negative) determined by subtracting the Fair Market Value of such Share as determined on the

3

Valuation Date in the fiscal year in which the Participant's employment or other service is terminated from the Fair Market Value of such Share as determined on the Valuation Date in the fiscal year immediately following the fiscal year in which the Participant's employment or other service is terminated, and then multiplying such difference by a fraction, the numerator of which shall be the number of calendar days the Participant was employed by the Company or any Subsidiary in the fiscal year in which the Participant's employment or other services is terminated, and the denominator of which shall be the total number of calendar days in the fiscal year in which the Participant's employment or other services is terminated.

        2.27    "Purchase Date" means the date, time and place the Company plans to close the sale of Shares and collect the payment of the purchase price for the Shares from the Participant as set forth in Section 4.1 of the Plan.

        2.28    "Purchase Loan" means a nonrecourse interest bearing loan that may be made by the Company to the Participant to enable the Participant to purchase Coinvestment Shares pursuant to Section 5.2 of the Plan which shall be evidenced by a Note.

        2.29    "Reinvestment Shares" means the shares of Common Stock offered to the Participant pursuant to Section 5.1 of the Plan.

        2.30    "Repurchase Date" means the date the Company will repurchase Shares from the Participant as set forth in Section 8.2 of the Plan.

        2.31    "Repurchase Right" means the irrevocable and exclusive right the Company has to repurchase Shares as set forth in Section 8 of the Plan.

        2.32    "Retirement" means termination of employment or service pursuant to and in accordance with the regular (or, if approved by the Committee for purposes of the Plan, early) retirement/pension plan or practice of the Company or Subsidiary then covering the Participant, provided that if the Participant is not covered by any such plan or practice, the Participant will be deemed to be covered by the Company's plan or practice for purposes of this determination.

        2.33    "Securities Act" means the Securities Act of 1933, as amended.

        2.34    "Shares" means the Reinvestment Shares and the Coinvestment Shares offered to a Participant pursuant to Sections 5.1 and 5.2 of the Plan.

        2.35    "Subsidiary" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee.

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

        2.37    "Total Debt" means any indebtedness of the Company 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

4

a liability on the Company's consolidated balance sheet as of its most recent fiscal year end.

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

        2.39    "Valuation Date" means a date on which the Committee shall determine the Fair Market Value of the Common Stock, which date shall be no more than ninety (90) days following the Company's fiscal year end.

3.    Administration.

        3.1    The Committee.    The Plan will be administered by the Board or by a committee of the Board. So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, any committee administering the Plan will consist solely of two or more members of the Board who are "non-employee directors" within the meaning of Rule 16b-3 under the Exchange Act and, if the Board determines in its sole discretion, who are "outside directors" within the meaning of Section 162(m) of the Code. As used in the Plan, "Committee" will refer to the Board or to such a committee, if established. The Committee will act by majority approval of the members (but may also take action with the written consent of a majority of the members of the Committee), and a majority of the members of the Committee will constitute a quorum. To the extent consistent with corporate law, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Eligible Employees who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Plan will be final, conclusive and binding for all purposes and on all persons, including, without limitation, the Company, the shareholders of the Company, the Participants and their respective successors-in-interest. No member of the Committee will be liable for any action or determination made in good faith with respect to the Plan.

        3.2    Authority of the Committee.

        (a)   Notwithstanding any other provision to the contrary in the Plan, the Committee will have the authority in its sole discretion to (i) determine the Eligible Employees to be selected as Participants in the Plan, (ii) determine the number of Shares such Participant is allowed to purchase, or the Company is allowed to repurchase, under the Plan, (iii) determine the periods or dates when Shares may be purchased by the Participant, or repurchased by the Company, under the Plan, (iv) determine the amount of Purchase Loans to be made to Participants in connection with the purchase of Coinvestment Shares (which amount shall not exceed sixty-five percent (65%) of the total purchase price of the Coinvestment Shares), (v) determine the terms and conditions of the Note and Pledge Agreement as described in Section 6 hereof, (vi) adopt, alter, amend, waive or repeal any administrative rules, guidelines, practices and provisions governing the Plan or the administration of the Plan as the Committee shall, from time to

5

time, deem advisable, (vii) interpret the terms and provisions of the Plan (and any agreement or document related hereto) and to supervise the administration of the Plan, and (viii) determine the terms and conditions to which the Shares may be subject upon a Participant's death, Disability, Retirement or termination of employment or other service with the Company or any Subsidiary, including, without limitation, the right of the Company to accelerate the vesting of unvested Coinvestment Shares and the right of the Company to repurchase the Shares.

        (b)   The Committee will also have the authority under the Plan to amend or modify the terms of any outstanding Shares in any manner, including, without limitation, the terms and conditions of any Shares or otherwise terminate any restrictions relating to any Shares; provided, however, that the amended or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. The Committee shall also have the authority to correct any defect, supply any omission or reconcile any inconsistency in the Plan, any Purchase Loan or any related document or agreement in the manner and to the extent it shall deem desirable to carry it into effect.

4.    Participation.

        4.1    Selection of Participants.    The Committee will have the authority to select from the Eligible Employees the Participants in the Plan in accordance with Section 3 hereof. Eligible Employees will be given written notice of their eligibility to participate in the Plan (the "Eligibility Notice"). The Eligibility Notice shall specify (i) the specific number of Reinvestment Shares and Coinvestment Shares the Participant shall have the right to purchase from the Company, (ii) the per share price the Participant must pay for Reinvestment Shares and Coinvestment Shares, (iii) the maximum amount the Participant may borrow from the Company to assist with the purchase price of the Coinvestment Shares (which in no event shall exceed sixty-five percent (65%) of the total purchase price for the Coinvestment Shares), and (iv) the date, time and place the Company plans to close the sale of Shares and collect the payment of the purchase price for the Shares from the Participant (the "Purchase Date"). Eligible Employees will have fifteen (15) days from the date of the Eligibility Notice to elect to participate in the Plan, and if the Eligible Employee elects to participate in the Plan, he or she must satisfy all of the conditions set forth in Section 4.2 hereof on or prior to the Purchase Date determined by the Committee; provided, however, that the Eligible Employees initially selected to participate in the Plan shall have until the Closing Date to elect to participate in the Plan and to satisfy the conditions set forth in Section 4.2 hereof. No Eligible Employee shall have at any time the right (i) to be selected as a Participant, (ii) to be entitled to purchase any Shares, or (iii) having been selected to purchase Shares, to purchase any additional Shares.

        4.2    Election to Participate in Plan.    Eligible Employees are not required to participate in the Plan. Each Eligible Employee who elects to participate in the Plan, however, shall satisfy the following requirements on or prior to the Purchase Date or the Closing Date, as applicable:

        (a)   Submit a completed, signed and irrevocable agreement to purchase the Shares under the Plan, which agreement shall specify the number of Coinvestment

6

Shares and Reinvestment Shares to be purchased by the Participant and the total purchase price for such Shares;

        (b)   Deliver to the Company in cash (including check, bank draft or money order) the total purchase price for the Reinvestment Shares purchased by the Participant pursuant to Section 5.1 hereof, and that portion of the Coinvestment Shares not covered by the Note pursuant to Section 5.2 hereof;

        (c)   Complete and sign all necessary agreements and other documents relating to the Purchase Loan described in Section 6 hereof in connection with the purchase of the Coinvestment Shares;

        (d)   Execute and deliver to the Company an agreement to become a party to the Investors' Agreement pursuant to Section 12.2 hereof;

        (e)   If required by the Committee, execute and deliver to the Company an agreement acknowledging to be bound by a confidentiality and non-compete agreement;

        (f)    If required by the Committee, execute an agreement to waive or modify certain compensation provisions in any existing employment agreement or arrangement between the Company and the Participant; and

        (g)   Satisfy all other terms and conditions of participation specified in the Plan, or as may be required from time to time by the Committee after the Effective Date.

        The agreements and other documents specified in this Section 4.2 shall be in such forms and shall be submitted at such times to such Participants as specified by the Committee or its designee(s).

5.    Purchase of Shares.

        5.1    Reinvestment Shares.    Each Participant selected by the Committee to participate in the Plan shall be granted the right to purchase, out of such Participant's own funds, that number of Reinvestment Shares, at a price per share, as determined by the Committee. If a Participant elects to participate in the Plan, such Participant shall have the right to purchase any number of the Reinvestment Shares up to the total amount awarded the Participant in the Eligibility Notice. Each Participant electing to purchase such Reinvestment Shares shall deliver to the Company on the Purchase Date or the Closing Date, as applicable, the total purchase price for the number of Reinvestment Shares such Participant is electing to purchase. Each Participant electing to purchase Reinvestment Shares shall be solely responsible for paying the entire amount of the total purchase price of the Reinvestment Shares, and the Company will not lend any funds to the Participant to assist with the purchase of any Reinvestment Shares. On the Purchase Date or the Closing Date, as applicable, the Participant will be recorded on the books of the Company as the owner of the Reinvestment Shares, and the Company will issue one or more duly issued and executed stock certificates to the Participant evidencing such Reinvestment Shares.

        5.2    Coinvestment Shares.    Each Participant selected by the Committee to participate in the Plan may also be granted the right to purchase Coinvestment Shares as determined by the Committee. Such Participant shall have the right to purchase any number of

7

Coinvestment Shares up to the total amount awarded the Participant in the Eligibility Notice. On the Purchase Date or the Closing Date, as applicable, the Company shall make a Purchase Loan to the Participant in an amount determined by the Committee in its sole discretion (which amount shall not exceed sixty-five percent (65%) of the total purchase price of the Coinvestment Shares) to pay for a portion of the total purchase price for the number of Coinvestment Shares the Participant is electing to purchase, and the Participant shall be solely responsible for paying the remaining balance of such purchase price. The proceeds of the Purchase Loan shall be used solely to assist the Participant with the purchase of the Coinvestment Shares. As a condition to the Company making the Purchase Loan, all of the Coinvestment Shares purchased by the Participant pursuant this Section 5.2 (whether purchased with the Participant's own funds or with the Purchase Loan) must be pledged as collateral for the Purchase Loan pursuant to Section 6.4 hereof. The Coinvestment Shares purchased by the Participant shall vest in accordance with the vesting schedule set forth on an exhibit to the written agreement evidencing such purchase. On the Purchase Date or the Closing Date, as applicable, the Participant will be recorded on the books of the Company as the owner of the Coinvestment Shares, and, subject to Section 6.4 hereof, the Company will issue one or more duly issued and executed stock certificates evidencing such Coinvestment Shares.

        5.3    Restrictions on Transferability of Shares.    In no event will a Participant be entitled to sell or transfer any Shares purchased by the Participant pursuant to the Plan during the six (6) months following the Purchase Date or the Closing Date, as applicable. In addition, all Shares purchased by Participants under the Plan shall be subject to the transfer restrictions and other provisions of the Plan and the Investors' Agreement, and until such time as such restrictions on transfer expire, no right or interest of any Participant under the Plan shall be subject in any manner to alienation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person, and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, or any such right shall be void, except as may otherwise be provided for in the Plan or the Investors' Agreement. Subject to Section 6.1 hereof, and in addition to the other restrictions contained in the Plan and the Investors' Agreement, a Participant may not sell, transfer, assign, pledge, attach, charge or encumber in any way or in any manner any unvested Coinvestment Shares. To enforce the transfer restrictions set forth in the Plan and the Investors' Agreement, the Committee, in its sole discretion, may place a legend on the stock certificates evidencing that the Shares are subject to certain transfer restrictions and may require the Company to hold any stock certificates issued to the Participant for the Coinvestment Shares, together with stock powers executed in blank, in the custody of the Company or its transfer agent until the restrictions on the Coinvestment Shares have terminated.

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6.    Purchase Loans.

        6.1    Note.    All Purchase Loans shall be evidenced by the Participant's execution of a Note. In the event that a Participant transfers all or a portion of his or her Coinvestment Shares to a Permitted Transferee (as defined in the Investors' Agreement), such Permitted Transferee, as a condition to the transfer of the Coinvestment Shares, shall agree to be bound by the terms and conditions of the Plan, any agreement evidencing the sale of the Shares to the Participant, and shall also agree to take such Shares subject to the terms and conditions of the Note and Pledge Agreement. The Participant, however, shall remain the primary obligor of all obligations outstanding under the Note and the Pledge Agreement regardless of such a transfer to a Permitted Transferee.

        6.2    Interest.    Purchase Loans will accrue at a fixed rate of interest equal to eight percent (8%) per annum beginning on the date the Note is executed to evidence the Purchase Loan; provided, however, that such interest rate shall not exceed the rate permitted by applicable law (the "Interest Rate"). While interest on the Purchase Loan will accrue at the Interest Rate, interest will not be paid by the Participant during the term of the Note, but will be paid upon maturity of the Purchase Loan pursuant to Section 6.3 hereof and the terms of the Note. Accrued but unpaid interest on the Purchase Loan will be in addition to the principal balance of the Purchase Loan.

        6.3    Repayment.    The principal of the Purchase Loan and all accrued but unpaid interest will be due and payable by the Participant in a single payment, pursuant to the terms and conditions of the Plan and the Note, as of the earlier of (i) the Participant's termination of employment or other service with the Company and all its Subsidiaries in accordance with Section 8 hereof, (ii) a DLJMB Liquidation Event, (iii) 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 under the Investors' Agreement or hardship repurchases under Section 8.5 hereof), (iv) eight years from the Purchase Date or Closing Date, as applicable, for the Coinvestment Shares or (v) within 120 days following an initial public offering of the Company's equity securities in which case the principal of the Purchase Loan and all accrued interest thereon must be paid with cash, or the Committee in its sole discretion may allow the Company to repurchase the Participant's Reinvestment Shares and vested Coinvestment Shares at Fair Market Value, and the Participant's unvested Coinvestment Shares at a purchase price determined by the Committee in its sole discretion, and apply the proceeds the Company owes the Participant against the outstanding balance of the Note and all accrued interest; provided, however, that if the Participant elects to repay the Purchase Loan and all accrued interest with the Participant's Shares, the Participant will not be required to repay the Note and all accrued interest if the total purchase price paid for such Shares does not exceed the outstanding balance of the Note, all accrued interest and any tax liability of the Participant associated with the sale of the Shares. Notwithstanding anything to the contrary in this Section 6.3, however, the Committee may decide, in its sole discretion, to extend the maturity of the Note. In the event that the Participant sells or transfers (other than transfers to Permitted Transferees under the Investors' Agreement or hardship repurchases under Section 8.5 hereof) all or a portion of the Coinvestment Shares in accordance with the Plan and the Investors' Agreement, the Purchase Loan will become immediately due and payable by the Participant to the extent of the lesser of (i) the total outstanding balance of unpaid principal and all accrued interest on the Purchase Loan or (ii) the net after tax proceeds realized upon such sale. The Company shall have the right to apply any amounts it owes the Participant for the purchase of Coinvestment Shares

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pursuant to Section 8 hereof towards the outstanding principal and accrued interest on the Note in accordance with Section 8.7(c) hereof, and, in the event the Participant sells or transfers the Coinvestment Shares in connection with a DLJMB Liquidation Event or pursuant to the provisions of the Investors' Agreement (other than to a Permitted Transferee, the Participant shall be required to use all proceeds received from such sale or transfer to repay the outstanding balance of the Note and all accrued interest.

        6.4    Pledge of Shares.    As collateral for the Note, the Participant shall grant to the Company a security interest in the Coinvestment Shares by executing the Pledge Agreement. Any stock certificates issued for Coinvestment Shares purchased pursuant to Section 5.2 hereof shall be held by the Company as collateral for the Purchase Loan until such time as the Purchase Loan and all accrued interest on the Purchase Loan are paid in full; provided, however, that the Committee may in its sole discretion release, upon request of the Participant, Shares if the collateral for the Note exceeds the outstanding balance of the Purchase Loan and all accrued interest and the Committee determines in its sole discretion that the remaining collateral is sufficient to secure the outstanding balance of the Note and accrued interest. If the Company repurchases the Coinvestment Shares so pledged in accordance with Section 8 hereof, the Company shall have the right to apply all proceeds it owes the Participant against the outstanding balance of the Purchase Loan and all accrued interest. Notwithstanding anything to the contrary in the Plan or in the Investors' Agreement, so long as Coinvestment Shares are pledged to the Company pursuant to this Section 6.4 in no event can such Coinvestment Shares (whether vested or unvested) be subject in any manner to alienation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person, except that such Coinvestment Shares may be transferred to Permitted Transferees (as defined in the Investors' Agreement).

7.    Shares Available for Issuance.

        7.1    Maximum Number of Shares Available.    Subject to adjustment as provided in Section 7.3 of the Plan, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 1,355,091 shares of Common Stock of which 214,392 shares will be designated for Reinvestment Shares and 1,140,699 shares will be designated for Coinvestment Shares.

        7.2    Accounting for Shares.    Shares of Common Stock that are sold under the Plan as Reinvestment Shares will be applied to reduce the number of shares of Common Stock designated for Reinvestment Shares remaining available for issuance under the Plan and shares of Common Stock that are sold under the Plan as Coinvestment Shares will be applied to reduce the number of shares of Common Stock designated for Coinvestment Shares remaining available for issuance under the Plan. In addition, in the event that any Shares purchased under the Plan are reacquired by the Company pursuant to any right of repurchase, right of first refusal or forfeiture provisions, such Shares will automatically again become available for issuance under the Plan and such shares of Common Stock shall be divided by the Committee between Reinvestment Shares and Coinvestment Shares in such amounts as the Committee deems appropriate.

        7.3    Adjustments to Shares.    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

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shares of the Company, affects the Shares 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 of a Participant's investment in the Shares under the Plan, the Committee (or, if the Company 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, make such adjustments, if any, to the number and kind of Shares (or number and kind of other securities or property) with respect to the Shares purchased under the Plan, as it deems appropriate and necessary.

8.    Repurchase Rights upon Participant's Termination of Services.

        8.1    Repurchase Right.    Subject to the other provisions of this Section 8, in the event a Participant's employment or other service with the Company and all its Subsidiaries is terminated for any reason whatsoever, whether due to death, Disability, Retirement or termination with or without Cause, prior to a DLJMB Liquidation Event, the Company shall have the irrevocable and exclusive right to repurchase (the "Repurchase Right") at the price determined in accordance with this Section 8.1 and in the manner set forth in Section 8.2 hereof all or any portion of the Participant's Shares; provided, however, that the Committee in its sole discretion may determine to pay a price other than the price determined in accordance with this Section 8.1 but in no event shall such price be less than the price determined in accordance with this Section 8.1:

        (a)   If the Participant's employment or other service with the Company and all its Subsidiaries is terminated during a fiscal year by reason of voluntary resignation, death, Disability, Retirement or termination by the Company without Cause, the Company shall pay: (i) for each Coinvestment Share that is vested at the time of termination and each Reinvestment Share, an amount equal to the Fair Market Value of each Share as determined on the Valuation Date in the fiscal year in which the Participant's employment or other service is terminated plus any Pro Rata Adjustment; and (ii) for each Coinvestment Share that is not vested at the time of termination, an amount equal to the lesser of (x) the Fair Market Value of each Coinvestment Share as determined on the Valuation Date in the fiscal year in which the Participant's employment or other service is terminated plus any Pro Rata Adjustment, or (y) the purchase price paid by the Participant for each unvested Coinvestment Share, plus all accrued and unpaid interest on the Purchase Loan relating to such unvested Coinvestment Shares.

        (b)   If the Participant's employment or other service with the Company and all its Subsidiaries is terminated during a fiscal year by the Company for Cause, the Company shall pay for each Share owned by the Participant (whether vested or unvested) the lesser of (i) the Fair Market Value for each Share as determined on the Valuation Date in the fiscal year in which the Participant's employment or other service is terminated plus any Pro Rata Adjustment, or (ii) the purchase price paid by the Participant for each Share, without any accrued and unpaid interest on the Purchase Loan relating to the Coinvestment Shares being paid.

        (c)   Unless the Committee otherwise determines in its sole discretion, a Participant's employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or

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other service, as determined by the Committee in its sole discretion based upon such records.

        8.2    Exercisability of Repurchase Right.    Subject to Section 8.7 hereof, if the Company elects to exercise its Repurchase Right or any other right or obligation the Company may have to repurchase Shares pursuant to the Plan, the Company shall give the Participant written notice of its intent to exercise its Repurchase Right (the "Notice of Repurchase") within sixty (60) days of such Participants termination of employment or other service. The Notice of Repurchase shall specify (i) the number of Reinvestment Shares and Coinvestment Shares (including the number of vested and unvested Coinvestment Shares) the Company intends to repurchase and (ii) the date the Company expects to purchase the Reinvestment Shares and Coinvestment Shares from the Participant 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 Participant's employment or other service is terminated (the "Repurchase Date"). On or before the Repurchase Date, the Participant shall deliver to the Company the stock certificates representing the Reinvestment Shares and Coinvestment Shares being purchased by the Company, properly endorsed for transfer, unless the Company is holding such Coinvestment Shares pursuant to Section 6.4 hereof in which case such Coinvestment Shares shall be deemed to have been delivered to the Company. By such delivery, or deemed delivery, of such certificates, the Participant warrants that (i) the Participant has good title to, the right to possession of, and the right to sell, the Reinvestment Shares and the Coinvestment Shares, (ii) such Reinvestment Shares and Coinvestment Shares 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 Plan or the Investors' Agreement, and except such restrictions on transfer as may be imposed by federal or state securities laws, and (iii) the Participant shall hold harmless the Company from all costs, expenses and fees incurred in defending title and right to possession. On the Repurchase Date, the Company shall pay to the Participant the total purchase price for the Reinvestment Shares and Coinvestment Shares purchased by the Company.

        8.3    Assignability of Repurchase Right.    The Company, in its sole discretion, may assign its Repurchase Right to one or more employees, officers, directors, shareholders or other persons or organizations. In the event the Company does assign its Repurchase Right to one or more employees, officers, directors, shareholders or other persons or organizations, such persons or organizations shall exercise such Repurchase Right in accordance with Section 8.2 hereof.

        8.4    Put Right.    Subject to Section 8.7 hereof, in the event that neither the Company nor any assignee of the Company exercises the Repurchase Right and a Participant's employment or other service with the Company and all Subsidiaries is terminated by reason of voluntary resignation, death, Disability, Retirement or termination by the Company without Cause, the Participant shall have the right to require the Company to purchase, in the manner set forth in Section 8.2 hereof, all or any portion of the Reinvestment Shares and vested Coinvestment Shares owned by the Participant at the time of termination at a purchase price per share equal to the Fair Market Value for each such Share as determined on the Valuation Date in the fiscal year in which the Participant's employment or other service is terminated plus any Pro Rata Adjustment.

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        8.5    Hardship Repurchases.

        (a)   Subject to the provisions of Section 8.5(e) and Section 8.7 hereof, a Participant may request that the Committee repurchase his or her Reinvestment Shares and vested Coinvestment Shares if the Participant is deemed to be in immediate and heavy financial need as determined in accordance with Section 8.5(b) and (c) hereof. A hardship repurchase will be permitted only if the Committee determines in its sole discretion that the repurchase is being requested on account of an immediate and heavy financial need of the Participant and is necessary to satisfy such financial need. The fact that the Committee grants a hardship repurchase to a Participant, however, will not impact the discretion of the Committee in the future to determine whether to grant additional hardship repurchases to such Participant or any other Participant, and each application for a hardship repurchase will be considered by the Committee on an individual basis independent of any facts or circumstances surrounding any previous hardship repurchase grants.

        (b)   A repurchase will be deemed to be made on account of an immediate and heavy financial need only if it is determined by the Committee in its sole discretion to be on account of: (i) expenses for medical care (as described in Code section 213(d)), incurred or to be incurred by the Participant, the Participant's spouse or the Participant's dependent (as described in Code section 152), (ii) payments necessary to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage on the Participant's principal residence, or (iii) any other situation in which the Committee in its sole discretion determines such Participant is in immediate and heavy financial need.

        (c)   A hardship repurchase will be deemed to be necessary to satisfy the immediate and heavy financial need of the Participant only if the Committee determines in its sole discretion that the aggregate purchase price the Company must pay is not more than the sum of the amount of the immediate and heavy financial need of the Participant plus the amount necessary to pay any federal, state or local taxes or penalties that the Participant will incur in connection with the repurchase, as estimated by the Committee.

        (d)   The Committee's determination of the existence of a Participant's financial hardship and the amount that may be repurchased to satisfy the need created by such hardship will be made in accordance with all applicable laws, and is final and binding on the Participant. The Committee may require the Participant to make representations and certifications concerning his or her entitlement to a repurchase pursuant to this Section 8.5 and is entitled to rely on such representations and certifications unless the Committee has actual knowledge to the contrary. The Committee is not obligated to supervise or otherwise verify that amounts repurchased are applied in the manner specified in the Participant's repurchase application.

        (e)   In addition to the provisions of Section 8.7 hereof, all repurchases of Shares under this Section 8.5 shall be subject to the following rules:

          (i)  Applications for repurchases may be made at anytime during the Company's fiscal year. The Company, however, will not be required to

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make any payments for such Shares repurchased within any specific time period designated by the Participant in his or her repurchase application. The Company will pay the purchase price for such Shares being repurchased pursuant to this Section 8.5 as soon as administratively practicable after the Committee's determination that the Participant is entitled to have his or her Shares repurchased by the Company.

         (ii)  The price to be paid by the Company to the Participant for each Share shall be the Fair Market Value for such Share as determined on the most recent Valuation Date prior to the hardship repurchase.

        (iii)  No payment for Shares purchased by the Company under this Section 8.5 will be made if the total purchase price for such Shares is less than $1,000.

        (iv)  All payments for Shares purchased will be made by the Company in the form of a lump sum payment by check.

         (v)  The Company shall be permitted to repurchase Shares pursuant to this Section 8.5 only to the extent that the Fair Market Value of the Coinvestment Shares held as collateral for the Note exceeds the outstanding balance of the Purchase Loan and all accrued interest, and at no time shall the Company be permitted to repurchase Shares under this Section 8.5 if such repurchase would cause the collateral securing the Note to be insufficient to repay the Purchase Loan and all accrued interest in full.

        8.6    Partial Terminations.    Subject to Section 8.7 hereof, in the event that there is a Partial Termination of the Participant, the Company shall have the irrevocable and exclusive right to repurchase, in the manner set forth in Section 8.2 hereof, all or any portion of the Participant's Coinvestment Shares (whether vested or unvested) at the time of the Partial Termination as is determined by the Committee in its sole discretion, and the Company shall pay the Participant: (i) for each Coinvestment Share that is vested at the time of the Partial Termination, an amount equal to the Fair Market Value of each share as determined on the Valuation Date in the fiscal year in which the Participant has a Partial Termination plus any Pro Rata Adjustment; and (ii) for each Coinvestment Share that is not vested at the time of the Partial Termination, an amount equal to the lesser of (x) the Fair Market Value of each Coinvestment Share as determined on the Valuation Date in the fiscal year in which the Participant has a Partial Termination plus any Pro Rata Adjustment, or (y) the purchase price paid by the Participant for such unvested Coinvestment Share, plus all accrued and unpaid interest on the Purchase Loan relating to such unvested Coinvestment Shares.

        8.7    Obligations, Limitations and Restrictions on Repurchase Shares.

        (a)    Violation of Law and Contractual Obligations.    Notwithstanding anything to the contrary in the Plan, the Company shall only be required to repurchase any Shares pursuant to this Section 8 as rapidly as permissible without violating any loan covenants or other contractual restrictions applicable to, and binding upon, the Company, and any amounts not paid to the Participant on the Repurchase Date in such case will bear interest at the Interest Rate. The Company shall only

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be required to repurchase any Shares pursuant to this Section 8 to the extent that such repurchase does not violate any applicable laws.

        (b)    Adverse Actions.

          (i)  Notwithstanding anything in the Plan to the contrary, in the event that a Participant takes Adverse Actions with respect to the Company or any Subsidiary (1) prior to such Participant's termination of employment or other service with the Company and all its Subsidiaries or (2) during the period ending twelve (12) months following the date of the Participant's termination of employment or other service with the Company and all Subsidiaries by reason of voluntary resignation, death, Disability, Retirement or termination by the Company without Cause, the Committee in its sole discretion will have the authority to treat such Participant's termination of employment or other service as a termination for Cause and to repurchase all Shares held by such Participant in the manner set forth in Section 8.2 hereof for the lesser of (x) the Fair Market Value for each Share as determined on the Valuation Date in the fiscal year in which the Participant's employment or other service is terminated plus any Pro Rata Adjustment or (y) the purchase price paid by the Participant for each Share. In addition, to the extent a Participant has received an amount in excess of such purchase price in connection with a prior exercise of the Company's Repurchase Right or the sale or other transfer of such Shares either in the twelve (12) months prior to, or the twelve (12) months following, such Participant's termination of employment or service, then the Participant shall be required to pay to the Company any such excess. The Company shall be entitled to require the Participant to pay to the Company, within ten (10) days of receipt of notice from the Company, the amount of any excess. Such payment will be made in cash (including check, bank draft or money order). The Company will be entitled to off-set any amounts that may be due and owing to the Participant from the Company or any Subsidiary pursuant to Section 8.7(c) or make other arrangements for the collection of all amounts necessary to satisfy such payment obligations.

         (ii)  For purposes of the Plan, an "Adverse Action" will mean any action by a Participant that the Committee, in its sole discretion, determines to be adverse to the interests of the Company or any Subsidiary, including, without limitation, (x) disclosing confidential information of the Company or any Subsidiary to any person not authorized by the Company to receive it, (y) engaging, directly or indirectly, in any commercial activity that in the judgement of the Committee competes with the business of the Company or any Subsidiary or (z) interfering with the relationships of the Company or any Subsidiary and their respective employees and customers.

        (c)    Right of Off-Set.    The Company shall have the right to set-off against any amounts owing by the Company to the Participants, including, without limitation, any dividends paid on the Shares, which amounts shall be applied first to accrued interest on the Note and then to the outstanding principal balance of the Note. Neither the exercise of, nor the failure to exercise, such right of set-off will

15

constitute an election of remedies nor limit the Company in any manner in the enforcement of any other remedies that may be available to it.

        (d)    Repayment of Interest.    In the event that the Company repurchases Coinvestment Shares pursuant to Sections 8.1, 8.4, 8.6 or 8.7(b) hereof, the Committee, in its sole discretion, shall on the Repurchase Date make an appropriate adjustment to the purchase price paid on such date to repay any interest that has accrued on the Purchase Loan from the date of the Participant's termination of employment or other services with the Company and all its Subsidiaries until the date the Company repurchases the Coinvestment Shares pursuant to this Section 8.

9.    Shareholder Rights.    Subject to the provisions of Section 5 and Section 12.2 hereof, upon the Participant's purchase of the Shares (whether vested or unvested) such Participant shall have all the rights of a shareholder of the Company with respect to the Shares, including, without limitation, all voting rights, liquidation rights and rights to receive all dividends paid on the Shares at the same times and in the same amounts as all other shares of Common Stock; provided, however, that all dividends paid on the Coinvestment Shares shall be pledged as collateral for the Note until such time as the Note and all accrued interest is paid in full, and the Company shall be entitled to set-off against such dividends in accordance with Section 8.7(c) hereof. Nothing in the Plan, however, will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Employee or Participant at any time, nor confer upon any Eligible Employee or Participant any right to continue in the employ or service of the Company.

10.    Taxes.

        10.1    General Rules for Withholding.    The Company is entitled to (i) withhold and deduct from future wages of the Participant (or from other amounts that may be due and owing to the Participant from the Company 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 acquisition of the Shares, the receipt of dividends or distributions on the Shares or the termination of the security interest or restrictions applicable to the Shares, or (ii) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any Shares. In the event the Company is unable to withhold such amounts, for whatever reasons, the Participant hereby agrees to pay to the Company an amount equal to the amount the Company would otherwise be required to withhold under foreign, federal, state or local law.

        10.2    Special Rules for Withholding.    The Committee may, in its sole discretion and upon terms and conditions established by the Committee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 10.1 hereof by electing to tender shares of the Company previously acquired by the Participant or a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods.

        10.3    Section 83(b) Election.    The Participant has reviewed with the Participant'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 Plan. The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. The Participant understands that the Participant (and not the Company)

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shall be responsible for the Participant's own tax liability that may arise as a result of the purchase of the Shares or the other transactions contemplated by this Agreement. The Company recommends that each Participant consult with such Participant's own tax advisor with respect to the making of an election pursuant to Section 83(b) of the Code. Any such election, if made, must be filed with the Internal Revenue Service within thirty (30) days of the purchase of such Shares. THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE RESPONSIBILITY AND NOT THE COMPANY'S RESPONSIBILITY TO FILE SUCH ELECTION ON A TIMELY BASIS, EVEN IF THE PARTICIPANT REQUESTS THAT THE COMPANY OR ITS REPRESENTATIVES MAKE SUCH FILING ON BEHALF OF THE PARTICIPANT.

11.    DLJMB Liquidation Event.

        11.1    Acceleration of Vesting.    Without limiting the authority of the Committee under the Plan, if a DLJMB Liquidation Event occurs, then, unless otherwise provided by the Committee in its sole discretion in an agreement with the Participant, all unvested Coinvestment Shares will become immediately vested in full.

        11.2    Limitation on Payments in Connection with a DLJMB Liquidation Event.    Notwithstanding anything in Section 11.1 hereof to the contrary, if, with respect to a Participant, the acceleration of the vesting of Coinvestment Shares as provided in Section 11.1 (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 Participant has the right to receive from the Company 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 the Company is a member, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code), then the "payments" to such Participant pursuant to Section 11.1 hereof 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 a Participant is subject to a separate agreement with the Company 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 Participant 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 11.2 will not apply, and any "payments" to a Participant pursuant to Section 11.1 hereof will be treated as "payments" arising under such separate agreement.

12.    Miscellaneous.

        12.1    Effective Date and Duration of the Plan.    The Plan is effective as of December 20, 1999, the date it was adopted by the Board. The Plan will terminate at midnight on December 19, 2009, and may be terminated prior to such time to by Board action, and no Shares will be granted after such termination.

        12.2    Investors' Agreement.    Each Participant who purchases Shares under the Plan shall become a party to the Investors' Agreement. Each Participant who (i) is an employee of the Company or any Subsidiary reporting directly to the Chief Executive Officer ("CEO") or Chief Operating Officer ("COO") of the Company or (ii) acquires more than a certain percentage of Common Stock available for sale under the Plan as determined by

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the Committee in its sole discretion from time to time, shall be deemed a "Co-invest Management Stockholder" for all purposes of the Investors' Agreement, and all other Participants who acquire shares of Common Stock under the Plan shall be deemed "Other Stockholders" for purposes of the Investors' Agreement, including, without limitation, all transfer restrictions and provisions thereof; provided, however, if a Participant after the Purchase Date or Closing Date, as applicable, is no longer required to report directly to the CEO or COO such Participant shall thereafter be deemed an "Other Stockholder," and any "Other Stockholder" who acquires more than the percentage of Common Stock available for sale under the Plan as determined by the Committee or reports directly to the CEO or COO after the Purchase Date or Closing Date, as applicable, shall thereafter be deemed a "Co-invest Management Stockholder," for all purposes of the Investors' Agreement. Notwithstanding anything to the contrary in the Plan, if the Investors' Agreement has terminated by its terms, the provisions of this Section 12.2 shall no longer apply.

        12.3    Non-Exclusivity of the Plan.    Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

        12.4    Securities Law and Other Restrictions.    Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any Shares under the Plan, and a Participant may not sell, assign, transfer or otherwise dispose of Shares issued under the Plan, unless (i) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, 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. The Company 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 Shares, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

        12.5    Plan Amendment, Modification and Termination.    The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Shares issued or to be issued under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no amendments to the Plan will be effective without approval of the shareholders of the Company if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the rules of any stock exchange or NASDAQ or similar regulatory body. No termination, suspension or amendment of the Plan may adversely affect any outstanding Shares without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to take whatever action it deems appropriate in accordance with the terms and conditions of the Plan.

        12.6    Governing Law.    The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by

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and construed exclusively in accordance with the laws of the State of Minnesota, notwithstanding the conflicts of laws principles of any jurisdictions.

        12.7    Successors and Assigns.    The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the Participants.

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EXHIBIT A
FORM OF SECURED DEMAND NOTE

[See Form of Participation Agreement]

EXHIBIT B
FORM OF PLEDGE AND CUSTODY AGREEMENT

[See Form of Participation Agreement]

EXHIBIT C
VESTING SCHEDULE FOR COINVESTMENT SHARES

(ONLY ATTACHED TO SUBSCRIPTION AGREEMENT)

        On the Purchase Date or Closing Date, as applicable, thirty-five percent (35%) of the Coinvestment Shares purchased by the Participant 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 Purchase Date or Closing Date, as applicable	35% of the Coinvestment Shares purchased by the Participant
Two Years from Purchase Date or Closing Date, as applicable	35% of the Coinvestment Shares purchased by the Participant
Three Years from Purchase Date or Closing Date, as applicable	57% of the Coinvestment Shares purchased by the Participant
Four Years from Purchase Date or Closing Date, as applicable	79% of the Coinvestment Shares purchased by the Participant
Five Years from Purchase Date or Closing Date, as applicable	100% of Coinvestment Shares purchased by the Participant

*

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.

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Exhibit 10.4

MERRILL CORPORATION DIRECT INVESTMENT PLAN, AS AMENDED OCTOBER 26, 2000
EXHIBIT A FORM OF SECURED DEMAND NOTE
EXHIBIT B FORM OF PLEDGE AND CUSTODY AGREEMENT
EXHIBIT C VESTING SCHEDULE FOR COINVESTMENT SHARES

EX-10.5

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Exhibit 10.5

PARTICIPATION AGREEMENT

(OPTIONS ONLY)

        This Participation Agreement (this "Agreement") is made and entered into as of [DATE], 2004 by and between Merrill Corporation, a Minnesota corporation ("Merrill") and [NAME], an individual residing at [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 (as amended from time to time, 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, the Employee must execute and deliver this Agreement as a condition to participating in the Option Plan and receiving certain awards under the Option Plan.

        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.

        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 [NUMBER OF 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 the Employee in the event of an exercise of the Option will be $[EXERCISE PRICE] 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.    Investors' Agreement.

        2.1    In connection with the Employee's purchase of Common Stock upon the exercise of the Option pursuant to the Option Plan, the Employee hereby acknowledges and agrees that the Employee has received and reviewed a copy of the Investors' Agreement, dated November 23, 1999, by and among Merrill and its shareholders (as amended from time to time, 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.

        2.2    Upon the exercise of the Option and pursuant to the Option Plan, the Employee shall be deemed an "other" Stockholder within the meaning of the Investors' Agreement as of 12:01 a.m. of the Date of Grant (the "Effective Date"), the Date of Grant of the Option to the Employee for all purposes of the Investors' Agreement.

        2.3    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.

3.    Miscellaneous.

        3.1    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.

        3.2    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.

        3.3    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 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.

        3.4    Entire Agreement.    This Agreement, including all attachments hereto, and the Option Plan set forth the entire agreement and understanding of the parties to this Agreement with respect to the grant and exercise of the Option and the administration of the Option Plan, and supersede all prior agreements, arrangements, plans and understandings relating to the foregoing.

        3.5    Amendment and Waiver.    Other than as provided in this Agreement, including all attachments hereto, or the Option 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.

        3.6    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:	John W. Castro
Its:	Chief Executive Officer
EMPLOYEE:
Signature [EMPLOYEE NAME]
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, the Investors' Agreement and all attachments to this Agreement.

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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 the portion of the Option governed by this Time Vesting Option Schedule will be exercisable:

DATE OF EXERCISABILITY On or After:	PERCENTAGE OF OPTION SHARES GOVERNED BY THIS TIME VESTING OPTION SCHEDULE AVAILABLE FOR EXERCISE
February 1,2005	0	%
February 1,2006	0	%
February 1,2007	25	%
February 1,2008	50	%
February 1,2009	75	%
February 1,2010	100	%

        In no event will the portion of the Option governed by this Time Vesting Option Schedule be exercisable after, and the portion of the Option governed by this Time Vesting Option Schedule will become void and expire as to all unexercised Option Shares at, 5:00 p.m. (St. Paul, Minnesota time) on the 10th anniversary of the Date of Grant (the "Time of Termination").

        If a DLJMB Liquidation Event (as defined below) occurs, then, unless otherwise provided by the Committee in its sole discretion, the unvested portion of the Option governed by this Time Vesting Option Schedule will become immediately vested in full, subject to Section 9.3 of the Option Plan.

        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.

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PERFORMANCE VESTING OPTION SCHEDULE

        The portion of the Option governed by this Performance Vesting Option Schedule will become vested and exercisable on the dates and in the proportions indicated in Table 1 below if Merrill's actual EBITDA (as defined below) equals or exceeds the amount stated for the relevant fiscal year or years, as indicated in Table 1 below, but in any event such portion will vest in full eight (8) years from the Date of Grant. If a DLJMB Liquidation Event (as defined below) occurs, then, unless otherwise provided by the Committee in its sole discretion, the portion of the Option governed by this Performance Vesting Option Schedule will become immediately vested and exercisable in full, subject to Section 9.3 of the Option Plan.

        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 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.

        3.     "EBITDA" means, for any applicable period, as determined by Merrill, (i) the sum of Merrill's consolidated (A) net income; (B) depreciation and amortization and other non-cash charges or expenses; (C) income taxes; (D) interest expenses; and (E) net loss realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring loss; minus (ii) Merrill's consolidated net gain realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring gain.

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TABLE 1

Fiscal Year Ended January 31	EBITDA		Percentage of Option Shares Governed by this Performance Vesting Option Schedule Available for Exercise**
2005	$	68,676,000	20%
2006	$	73,721,000	20%; or 40% if the sum of EBITDA for fiscal years ending January 31, 2005 through January 31, 2006 equals or exceeds $142,397,000
2007		80,535,000	20%; or 60% if the sum of EBITDA for fiscal years ending January 31, 2005 through January 31, 2007 equals or exceeds $222,932,000
2008	$	87,969,000	20%; or 80% if the sum of EBITDA for fiscal years ending January 31, 2005 through January 31, 2008 equals or exceeds $310,901,000
2009	$	96,100,000	20%; or 100% if the sum of EBITDA for fiscal years ending January 31, 2005 through January 31, 2009 equals or exceeds $407,001,000

*

Such percentage of Option Shares available for exercise shall vest on the April 30^th immediately following the last day of the fiscal year indicated above.

**

The 20% stated for each fiscal year shall be vested on the April 30^th following the last day of such fiscal year if Merrill's actual EBITDA for such fiscal year equals or exceeds the amount stated in the table for such fiscal year, regardless of whether any vesting occurred regarding any previous fiscal year. Additionally, vesting shall apply retroactively and cumulatively (on the applicable April 30^th) if at the end of any fiscal year the sum of Merrill's actual EBITDA for the corresponding fiscal years stated in the table equals or exceeds the corresponding total EBITDA stated in the table for such fiscal years.

        The portion of the Option governed by this Performance Vesting Option Schedule 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 1, 2013 or (ii) the day immediately following the completion of a DLJMB Liquidation Event.

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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

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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 DLJMB 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, subject to Section 9.3 of the Option Plan.

        4.2    Limitation on Payments in Connection with a DLJMB Liquidation Event.    Notwithstanding anything in Section 4.1 above or 4.3 below to the contrary, if, with respect to the 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) or a "payment" under Section 4.3 below, together with any other "payments" that the 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 the Employee pursuant to Section 4.1 or 4.3 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 the Employee is subject to a separate agreement with Merrill or a Subsidiary

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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 "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 or 4.3 will be treated as "payments" arising under such separate agreement.

        4.3    Additional Rights in Connection with a DLJMB Liquidation Event.    Without limiting the authority of the Committee under the Option Plan or otherwise under the Participation Agreement, the Committee may elect, in its sole discretion, to proceed pursuant to this Section 4.3 in connection with the occurrence of a DLJMB Liquidation Event.

        (a)   The Committee may determine that no additional vesting of the Option shall occur in connection with or after such DLJMB Liquidation Event (without notice of any kind). In connection therewith, the Committee may determine for each Option Share an amount that is equal to (i) the per-share amount received in connection with such DLJMB Liquidation Event by a holder of shares of common equity of the Company who is not a DLJMB Entity, minus (ii) the per share price to be paid by the Employee in the event of an exercise of the Option (the result of the foregoing being the "Per-Option Share Amount").

        (b)   For the portion of the Option that is vested immediately prior to such DLJMB Liquidation Event, the Company may pay to the Employee, in cash, an amount equal to the Per-Option Share Amount for each Option Share subject to such vested portion of the Option, with such payment being due on or before the 10th business day following the effective date of such DLJMB Liquidation Event.

        (c)   For the portion of the Option that is not yet vested immediately prior to such DLJMB Liquidation Event, the Committee may cause the Company to, subject to Section 4.3(d) below, on or before the 10th business day following the effective date of such DLJMB Liquidation Event, place an amount equal to the Per-Option Share Amount for each Option Share subject to such unvested portion of the Option (along with any or all corresponding amounts payable to other option holders under the Option Plan) in an escrow account, a so-called "Rabbi Trust" or a similar account or fund under terms determined by the Company from time to time, in its discretion; provided, however, that (i) the Company shall pay (or cause to be paid) to the Employee such amount in installments over a period that is the shorter of two years from the date of such DLJMB Liquidation Event or the remainder of the period in which the Option would otherwise have vested in full pursuant its vesting schedule (assuming, for purposes of this clause, that the Option is governed entirely by the Employee's Time Vesting Option Schedule), (ii) such installments shall be allocated equally over such period and shall not be paid less frequently than once per calendar quarter, (iii) any (if any) interest or other earnings or proceeds earned thereon shall be for the benefit of the Employee and (iv) the Company may cause such portion of such amount to be prepaid to the Employee in whole or in part at any time and from time to time, including on or before such 10th business day following the effective date of such DLJMB Liquidation Event.

        (d)   If the Committee elects to proceed pursuant to this Section 4.3, then notwithstanding any other provision herein, the following shall apply:

          (i)  The Option shall be cancelled and terminated without notice of any kind, and the Employee shall have no right with respect thereto, except the right to receive payment under the terms, and subject to the conditions, of this Section 4.3. If the Per-Option Share Amount is less than or equal to $0, then the Option shall be cancelled and terminated without notice of any kind, and the Employee shall have no right with respect thereto, including without

9

limitation any right to receive any payment under this Section 4.3 or otherwise under the Participation Agreement or the Option Plan.

         (ii)  If, in connection with or after such DLJMB Liquidation Event, the Employee's employment or other service with the Company or any Subsidiary is terminated for Cause or by resignation by the Employee (other than a bona fide retirement substantiated and documented as determined, and subject to conditions stated, by the Company), then after the effective date of such termination or resignation (as applicable) no amount whatsoever shall be payable to the Employee regarding the portion of the Option that is not yet vested immediately prior to such DLJMB Liquidation Event (including under Section 4.3(c) above) and all amounts in respect of the Option held in an escrow account, a so-called "Rabbi Trust" or a similar account or fund pursuant to Section 4.3(c) above shall immediately revert to and be owned by the Company.

        (iii)  In electing how to proceed under Section 4.3(c) above, the Committee shall not place any amount in an escrow account, a so-called "Rabbi Trust" or a similar account or fund (as contemplated in such Section), unless (A) such placement is not a taxable event in which income is presently recognized for any option holder under the Option Plan at the time the Company does so or (B) if such placement is a taxable event described in the preceding clause (A), then the Company causes there to be a payment of tax, or takes such other action, so that such taxable event does not cause any reduction (from withholding or otherwise) in the Employee's usual and regular employment compensation. (As examples only, the Company could withhold from such amount the taxes required to be withheld by it and then place only the balance in such an escrow account, so-called "Rabbi Trust" or similar account or fund, or the Company could make a gross up payment to the Employee (and the corresponding withholdings therefrom) at the time of such placement in an amount sufficient to pay the Employee's associated tax obligations.) If the Company is not able to so place such amount without such placement being such a taxable event and the Company does not take any such action contemplated by the preceding clause (B), then the Company shall pay to the Employee the amount owed under Section 4.3(c) regarding such unvested portion of the Option on or before the 10th business day following the effective date of such DLJMB Liquidation Event.

        (iv)  The Company shall only be required to make payments in connection with this Section 4.3 as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, the Company; provided, however, that at and after a DLJMB Liquidation Event, the foregoing shall not restrict any such payment to a greater extent than such payment could have been restricted based on any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction that applied to, or was binding upon, the Company immediately prior to such DLJMB Liquidation Event.

         (v)  For purposes of this Section 4.3, the "Company" means, at any time prior to such DLJMB Liquidation Event, Merrill Corporation, and "Company" means, at any time after such DLJMB Liquidation Event, Merrill Corporation or a successor entity of Merrill Corporation (or a successor to, or transferee of, all or substantially all of its assets) as a result of such DLJMB Liquidation Event (including without limitation any surviving entity of a merger or consolidation with Merrill Corporation).

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

10

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 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

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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 in connection with Section 4.3 above, 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.

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Exhibit 10.5

PARTICIPATION AGREEMENT (OPTIONS ONLY)
TIME VESTING OPTION SCHEDULE
PERFORMANCE VESTING OPTION SCHEDULE
TABLE 1
TERMS AND CONDITIONS OF NON-STATUTORY STOCK OPTION AWARDS

EX-10.6

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Exhibit 10.6

Executive-Option & Coinvest

FIRST AMENDMENT TO PARTICIPATION AGREEMENT

        THIS FIRST AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment") is entered into effective as of February       , 2003, between Merrill Corporation, a Minnesota corporation ("Merrill"), and                          (the "Employee"), to amend the Participation Agreement, dated                         ,             , between Merrill and the Employee (the "Agreement").

        NOW, THEREFORE, in consideration of each party's undertakings herein and other good and valuable consideration, Merrill and the Employee hereby agree as follows:

        1.Amendment of Stock Option Vesting.

        (a)   The "Super Performance Vesting Schedule" attached to the Agreement (the "Vesting Schedule") is hereby amended by deleting the first paragraph of the Vesting Schedule (which reads, "All Option Shares subject to this. .. available for exercise.") in its entirety and replacing such paragraph with the following:

        "All Option Shares subject to this Super Performance Vesting Schedule shall become immediately vested and available for exercise if (i) a DLJMB Liquidation Event (as defined below) occurs and (ii) the per-share consideration received by DLJMB Entities (as defined below) in connection with such DLJMB Liquidation Event, with respect to shares of Common Stock held by DLJMB Entities, is $33 or more (such consideration being the cash amount, if such consideration is paid in cash, or the fair market value of such consideration as determined by the Committee, if paid in a form other than cash)."

        (b)   The paragraph of the Vesting Schedule that is numbered "2" (which contains the definition of "DLJMB IRR") is hereby deleted in its entirety, and the paragraph of the Vesting Schedule that contains the definition of "DLJMB Liquidation Event" is hereby renumbered as paragraph number "2".

        2.Amendment of Interest Rate on Coinvestment Share Loan.    The first sentence of Section 2.1(b) of the Agreement is hereby amended by deleting the parenthetical "(the 'Interest Rate')" and replacing such parenthetical with the following: "through February 28, 2003, and at a fixed rate of 3.32% per annum commencing on March 1, 2003 (as in effect from time to time, the "Interest Rate")".

        3.Amendment of Coinvestment Share Loan and Bonus Eligibility.    The attachment to the Agreement entitled "Terms and Conditions of Nonrecourse Purchase Loan" is hereby amended by inserting at the end of such attachment the following:

        "Bonus Eligibility and Debt Reduction.    Without limiting the Committee's or Merrill's other rights and powers under this Agreement or the DI Plan, the following shall apply:

        (a)    Bonus Eligibility.    Subject to the other provisions hereof, Merrill shall (or shall cause the applicable Subsidiary to) pay to the Employee a bonus (the "Bonus") on April 15, 2008 (the "Payment Date"), if the following conditions are satisfied:

        (i)    the Employee has been continuously employed by Merrill or any Subsidiary from the date of this Agreement through the Payment Date; and

        (ii)   if a DLJMB Liquidation Event (as defined in the DI Plan, for purposes of this Section entitled "Bonus Eligibility and Debt Reduction") does not occur prior to the Payment Date, then either (A) the EBITDA (as defined below) for Merrill's fiscal year ended January 31, 2008 is $85 million or more or (B) the sum obtained by adding the EBITDA for each of Merrill's fiscal years ended January 31, 2004 through January 31, 2008 is $372 million or more.

        "EBITDA" means for any applicable period, the sum of consolidated (i) net income; (ii) depreciation and amortization and other non-cash charges or expenses; (iii) income taxes; (iv) interest expense; (v) net loss realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring loss; minus (vi) net gain realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring gain.

        (b)    Bonus Amount.    The amount of the Bonus (the "Bonus Amount") shall be equal to the sum of the following (each to the extent applicable):

        (i)    the unpaid principal balance of the Purchase Loan as of the Payment Date, plus

        (ii)   the accrued and unpaid interest on the Purchase Loan as of the Payment Date, plus

        (iii)  if a DLJMB Liquidation Event occurs prior to the Payment Date, the amount applied as full or partial payment of the Purchase Loan (principal and interest) in connection with such DLJMB Liquidation Event pursuant to Paragraph (e) below, plus

        (iv)  a Gross Up Amount with respect to the sum of the immediately preceding clauses (i), (ii) and (iii).

        "Gross Up Amount" means, with respect to any payment, an amount equal to the difference obtained by subtracting (1) the product of (y) the dollar amount of such payment, multiplied by (z) the quotient of $1.00 divided by x, where x is equal to $1.00 minus the sum of all federal, state, local and foreign income taxes that would be imposed on $1.00 of additional ordinary income at the highest marginal rates in effect for the applicable individual for the year during which such payment is to be paid, taking into account whatever deduction for state income taxes is then permitted by the Internal Revenue Code and whatever deduction for federal income taxes is then permitted by the laws of the applicable state (e.g., if the sum of all such taxes were $0.43, then x would be $1.00 - $0.43, which is $0.57, and the multiplier from clause (z) would be 1.7544), minus (2) the dollar amount of such payment.

        (c)    Application of Bonus.    Merrill (or the applicable Subsidiary) shall retain the amount of the Bonus and apply such amount first to satisfy any tax withholding requirements related to the Bonus, then as full or partial payment of the Purchase Loan and all accrued and unpaid interest thereon, and then any (if any) remaining portion of the Bonus shall be remitted to the Employee.

        (d)    Further Limitations.    Merrill shall not have any obligation to pay (nor shall it have any obligation to cause any Subsidiary to pay) the Bonus if an Event of Default shall have occurred. Merrill shall only (and shall only be required to cause the applicable Subsidiary to) pay the Bonus as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, Merrill or any Subsidiary.

        (e)    Application of DUMB Liquidation Event Consideration.    Merrill may obtain and retain any consideration or other payment in respect of the Coinvestment Shares held by the Employee in connection with a DUMB Liquidation Event and apply such consideration or payment (or any portion thereof) as full or partial payment of the Purchase Loan (including all accrued and unpaid interest thereon). If the total amount of such consideration or payment exceeds the amount so applied by Merrill to the Purchase Loan, then Merrill shall remit such excess to the Employee. If such consideration or payment is in a form other than cash, then the Committee shall determine the fair market value of such consideration or payment for purposes of such application.

        (f)    Additional Effect of Adverse Action.    In addition to Merrill's rights regarding an Adverse Action described in clause (I) or (2) of Section 8.7(b)(i) of the DI Plan, upon such an Adverse Action (i) the principal of the Purchase Loan and all accrued but unpaid interest thereon shall be immediately due and payable by the Employee in a single payment, pursuant to the terms and

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conditions of the DI Plan and the Agreement, (ii) the date (as determined by the Committee) of such Adverse Action shall be the Maturity Date, unless an earlier Maturity Date has already been established and (iii) an Event of Default shall be deemed to have occurred."

        4.Other Provisions.    Merrill and the Employee shall each take and cause to be taken, from time to time, all reasonable actions and things necessary, proper or advisable to cause the consummation of the matters contemplated hereby. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Except to the extent amended hereby, the Agreement, including each attachment thereto, shall remain in full force and effect in accordance with its terms.

*          *          *          *           *

IN WITNESS WHEREOF, each party has executed this First Amendment to Participation Agreement, effective as of the date first above written.

MERRILL CORPORATION

By:                                                           

Its:                                                           

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Exhibit 10.6
Executive-Option & Coinvest

FIRST AMENDMENT TO PARTICIPATION AGREEMENT

EX-10.7

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Exhibit 10.7

FIRST AMENDMENT TO PARTICIPATION AGREEMENT

        THIS FIRST AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment") is entered into effective as of April 30, 2003, between Merrill Corporation, a Minnesota corporation ("Merrill"), and                          (the "Employee"), to amend the Participation Agreement, dated as of January 28, 2000, between Merrill and the Employee (the "Agreement").

        NOW, THEREFORE, in consideration of each party's undertakings herein and other good and valuable consideration, Merrill and the Employee hereby agree as follows:

        1.Amendment of Stock Option Vesting.

        (a)   The "Performance Vesting Option Schedule" attached to the Agreement (the "Performance Vesting Schedule") is hereby amended by deleting the second sentence of the first paragraph of the Performance Vesting Schedule (which reads, "If a DLJMB Liquidation … in Table 2.") in its entirety and replacing such sentence with the following:

        "If a DLJMB Liquidation Event (as defined below) occurs, then, unless otherwise provided by the Committee in its sole discretion, the portion of the Option governed by this Performance Vesting Option Schedule will become immediately vested and exercisable in full."

        (b)   The Performance Vesting Schedule is hereby amended by deleting Table 2 thereof. For the avoidance of doubt, the sentence following such Table 2 (which reads, "This Performance Vesting Option will … Event (the 'Time of Termination').") shall remain unchanged.

        2.Amendment of Interest Rate on Coinvestment Share Loan.    The first sentence of Section 2.1(b) of the Agreement is hereby amended by deleting the parenthetical "(the 'Interest Rate')" and replacing such parenthetical with the following: "through March 31, 2003, and at a fixed rate of 2.97% per annum commencing on April 1, 2003 (as in effect from time to time, the "Interest Rate")".

        3.Amendment of Coinvestment Share Loan and Bonus Eligibility.    The attachment to the Agreement entitled "Terms and Conditions of Nonrecourse Purchase Loan" is hereby amended by inserting at the end of such attachment the following:

        "Bonus Eligibility and Debt Reduction.    Without limiting the Committee's or Merrill's other rights and powers under this Agreement or the DI Plan, the following shall apply:

        (a)    Bonus Eligibility.    Subject to the other provisions hereof, Merrill shall (or shall cause the applicable Subsidiary to) pay to the Employee a bonus (the "Bonus") on April 15, 2008 (the "Payment Date"), if the following conditions are satisfied:

        (i)    the Employee has been continuously employed by Merrill or any Subsidiary from the date of this Agreement through the Payment Date; and

        (ii)   if a DLJMB Liquidation Event (as defined in the DI Plan, for purposes of this Section entitled "Bonus Eligibility and Debt Reduction") does not occur prior to the Payment Date, then either (A) the EBITDA (as defined below) for Merrill's fiscal year ended January 31, 2008 is $85 million or more or (B) the sum obtained by adding the EBITDA for each of Merrill's fiscal years ended January 31, 2004 through January 31, 2008 is $372 million or more.

        "EBITDA" means for any applicable period, the sum of consolidated (i) net income; (ii) depreciation and amortization and other non-cash charges or expenses; (iii) income taxes; (iv) interest expense; (v) net loss realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring loss; minus (vi) net gain realized in connection with any sale or other disposition of any asset or any extraordinary or non-recurring gain.

        (b)    Bonus Amount.    The amount of the Bonus (the "Bonus Amount") shall be equal to the sum of the following (each to the extent applicable):

        (i)    the unpaid principal balance of the Purchase Loan as of the Payment Date, plus

        (ii)   the accrued and unpaid interest on the Purchase Loan as of the Payment Date, plus

        (iii)  if a DLJMB Liquidation Event occurs prior to the Payment Date, the amount applied as full or partial payment of the Purchase Loan (principal and interest) in connection with such DLJMB Liquidation Event pursuant to Paragraph (e) below, plus

        (iv)  a Gross Up Amount with respect to the sum of the immediately preceding clauses (i), (ii) and (iii).

        "Gross Up Amount" means, with respect to any payment, an amount equal to the difference obtained by subtracting (1) the product of (y) the dollar amount of such payment, multiplied by (z) the quotient of $1.00 divided by x, where x is equal to $1.00 minus the sum of all federal, state, local and foreign income taxes that would be imposed on $1.00 of additional ordinary income at the highest marginal rates in effect for the applicable individual for the year during which such payment is to be paid, taking into account whatever deduction for state income taxes is then permitted by the Internal Revenue Code and whatever deduction for federal income taxes is then permitted by the laws of the applicable state (e.g., if the sum of all such taxes were $0.43, then x would be $1.00 - $0.43, which is $0.57, and the multiplier from clause (z) would be 1.7544), minus (2) the dollar amount of such payment.

        (c)    Application of Bonus.    Merrill (or the applicable Subsidiary) shall retain the amount of the Bonus and apply such amount first to satisfy any tax withholding requirements related to the Bonus, then as full or partial payment of the Purchase Loan and all accrued and unpaid interest thereon, and then any (if any) remaining portion of the Bonus shall be remitted to the Employee.

        (d)    Further Limitations.    Merrill shall not have any obligation to pay (nor shall it have any obligation to cause any Subsidiary to pay) the Bonus if an Event of Default shall have occurred. Merrill shall only (and shall only be required to cause the applicable Subsidiary to) pay the Bonus as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, Merrill or any Subsidiary.

        (e)    Application of DLJMB Liquidation Event Consideration.    Merrill may obtain and retain any consideration or other payment in respect of the Coinvestment Shares held by the Employee in connection with a DLJMB Liquidation Event and apply such consideration or payment (or any portion thereof) as full or partial payment of the Purchase Loan (including all accrued and unpaid interest thereon). If the total amount of such consideration or payment exceeds the amount so applied by Merrill to the Purchase Loan, then Merrill shall remit such excess to the Employee. If such consideration or payment is in a form other than cash, then the Committee shall determine the fair market value of such consideration or payment for purposes of such application.

        (f)    Additional Effect of Adverse Action.    In addition to Merrill's rights regarding an Adverse Action described in clause (1) or (2) of Section 8.7(b)(i) of the DI Plan, upon such an Adverse Action (i) the principal of the Purchase Loan and all accrued but unpaid interest thereon shall be immediately due and payable by the Employee in a single payment, pursuant to the terms and conditions of the DI Plan and the Agreement, (ii) the date (as determined by the Committee) of such Adverse Action shall be the Maturity Date, unless an earlier Maturity Date has already been established and (iii) an Event of Default shall be deemed to have occurred."

        4.Other Provisions.    Merrill and the Employee shall each take and cause to be taken, from time to time, all reasonable actions and things necessary, proper or advisable to cause the consummation of

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the matters contemplated hereby. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument. Except to the extent amended hereby, the Agreement, including each attachment thereto, shall remain in full force and effect in accordance with its terms.

*          *          *          *           *

IN WITNESS WHEREOF, each party has executed this First Amendment to Participation Agreement, effective as of the date first above written.

MERRILL CORPORATION

By:                                                           
                John W. Castro

Its:

Chief Executive Officer

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Exhibit 10.7

FIRST AMENDMENT TO PARTICIPATION AGREEMENT

EX-10.8

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Exhibit 10.8

MERRILL CORPORATION 2003 LONG TERM INCENTIVE PLAN

        1.    Adoption and Purpose.    This 2003 Long Term Incentive Plan (the "Plan") of Merrill Corporation (the "Company") was adopted on December 31, 2002, to provide to certain employees opportunities to receive additional compensation and benefit from the growth of the Company and its Subsidiaries through voluntary grants.

        2.    Definitions.    Except as otherwise defined herein, each capitalized term herein shall have the respective meaning set forth below.

        (a)   "Adverse Action" means any action by a Participant that the Board of Directors of the Company (the "Board"), in its sole discretion, determines to be adverse to the interests of the Company or any Subsidiary, including without limitation (i) disclosing confidential information of the Company or any Subsidiary to any person or entity not authorized by the Company or such Subsidiary to receive it, (ii) engaging, directly or indirectly, in any commercial activity that in the judgment of the Board competes with the business of the Company or any Subsidiary or (iii) interfering with the relationships of the Company or any Subsidiary and their respective employees and customers.

        (b)   "Cause" means a Participant's (i) dishonesty, fraud, misrepresentation, embezzlement or other act of dishonesty with respect to the Company or any Subsidiary, (ii) unlawful or criminal activity of a serious nature, (iii) intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant's overall duties, (iv) material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary or (v) Adverse Action.

        (c)   "DLJMB" means DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors' Agreement.

        (d)   "DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a sale or other transfer by DLJMB of 90% or more of its shares of common equity in the Company (including all common equity originally purchased by DLJMB and any additional common equity purchased by DLJMB 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 Securities Exchange Act of 1934, as amended) 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.

        (e)   "Earned Unit" means a Potential Unit that becomes earned pursuant to the provisions of the Plan.

        (f)    "Earning Schedule" means a schedule determined by the Board on which Potential Units become Earned Units under the terms, and subject to the conditions, of the Plan.

        (g)   "Eligibility Notice" means a written notice by the Company to a Participant stating a grant of Potential Units to such Participant. Each Eligibility Notice shall be in substantially the form attached hereto as Exhibit A, with any modifications the Board determines.

        (h)   "Enterprise Value" means, at any time, a value equal to six times the Pro-Forma EBITDA as shown on the Company's consolidated statement of operations for its most recent four fiscal quarters.

        (i)    "Formula Value" means the price determined on a Valuation Date by subtracting (i) Total Debt and (ii) Total Preferred Stock from the Enterprise Value, adding Total Cash to this difference and dividing such sum by the aggregate of the number of shares of capital stock of the Company outstanding on such Valuation Date, all Potential Units and Earned Units that are outstanding on such Valuation Date and all shares of common equity of the Company which may be issuable upon the exercise of options and warrants of the Company outstanding on such Valuation Date (whether or not then exercisable).

        (j)    "Investors' Agreement" means the Investors' Agreement, dated November 23, 1999, by and among the Company and its shareholders, as amended from time to time.

        (k)   "Partial Termination" means a change in a Participant's employment or other service with the Company or any Subsidiary such that the number of hours worked by such Participant is substantially reduced for any reason as the Board in its sole discretion may determine from the number of hours such Participant is required to work for the Company or any Subsidiary and such reduction is expected to extend for an indefinite period of time.

        (l)    "Participant" means an employee of the Company or any Subsidiary designated by the Board as a participant in the Plan.

        (m)  "Potential Unit" means a right granted to a Participant under the Plan that remains contingent until such Potential Unit becomes an Earned Unit pursuant to the Plan.

        (n)   "Pro-Forma EBITDA" means earnings before interest, taxes, depreciation, amortization and non-cash compensation expenses, as computed using generally accepted accounting principles on a pro-forma basis as allowed by Regulation S-X of the Securities Act of 1933, as amended.

        (o)   "Subsidiary" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Board.

        (p)   "Total Cash" means the total amount of cash and cash equivalents shown on the Company's consolidated balance sheet as of its most recent fiscal quarter end.

        (q)   "Total Debt" means any indebtedness of the Company 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 the Company's consolidated balance sheet as of its most recent fiscal quarter end.

        (r)   "Total Preferred Stock" means the total amount of the liquidation preference on all of the Company's issued and outstanding preferred stock as of its most recent fiscal quarter end.

        (s)   "Unit Base Amount" means a dollar amount regarding each Potential Unit (and the Earned Unit, if any, derived therefrom) that is set by the Board and specified in the Eligibility Notice for such Potential Unit.

        (t)    "Valuation Date" means such date provided in Section 4(a)(ii) or established by the Board pursuant to Section 7.

        3.    Granting of Potential Units; Earned Units.    

        (a)   The Board, in its sole discretion, may grant Potential Units to any Participant from time to time upon the terms and conditions set forth in the Plan. A Participant may receive Potential

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Units only by an Eligibility Notice under the terms hereof. An Eligibility Notice shall name the Participant and specify the effective date of the grant, the number of Potential Units granted, the Unit Base Amount of each of such Potential Units, the Earning Schedule for such Potential Units and any additional terms that apply to such Potential Units. In the case of any inconsistency between the Plan and any Eligibility Notice, the Plan shall govern.

        (b)   Each Potential Unit that is earned in accordance with the Plan shall be an "Earned Unit." So long as a Participant remains continuously employed by the Company or any Subsidiary, Potential Units granted to such Participant shall become Earned Units based on the Earning Schedule in the Eligibility Notice granting such Potential Units. Each Potential Unit granted to a Participant and not thereafter earned or cancelled shall automatically become one Earned Unit (i) upon a DLJMB Liquidation Event, if the Participant is then employed by the Company or any Subsidiary or (ii) upon action of the Board pursuant to Section 7.

        (c)   If a Participant ceases to be employed by the Company or any Subsidiary for any reason other than a termination for Cause (including without limitation resignation, death, disability, retirement or a termination that is not for Cause), then (i) following such termination, such Participant shall continue to hold each Earned Unit held by such Participant, as of the defective date of such termination, subject to the terms of the Plan, and (ii) each Potential Unit previously granted to such Participant and not earned in accordance with the Plan shall, as of the effective date of such termination, be cancelled without action of the Company, no compensation shall be paid in respect of such Potential Units and all rights of such Participant in respect of such Potential Units shall automatically terminate and cease to be of any further force or effect. If a Participant's employment with the Company or any Subsidiary is terminated for Cause, then each Potential Unit previously granted to such Participant and each Earned Unit held by such Participant shall, as of the effective date of such termination, be cancelled without action of the Company, no compensation shall be paid in respect of such Potential Units and Earned Units and all rights of such Participant in respect of such Potential Units and Earned Units shall automatically terminate and cease to be of any further force or effect. Additionally, Section 7 shall apply to, and with respect to, all Potential Units and Earned Units.

        (d)   The maximum number of Potential Units for which Eligibility Notices may be given under the Plan is 110,000 (provided, however, that any Potential Unit that is cancelled shall thereafter again be eligible to be included in any Eligibility Notice).

        4.    Payments.    

        (a)   The amount payable to a Participant under the Plan shall be determined upon the earlier of:

          (i)  a DLJMB Liquidation Event, in which case such Participant shall be entitled to receive for each Earned Unit then held by such Participant an amount (if positive) equal to (A) the per-share amount received in connection with such DLJMB Liquidation Event by a holder of shares of common equity of the Company who is not a DLJMB Entity, minus (B) the Unit Base Amount of such Earned Unit; or

         (ii)  April 1, 2009, in which case such Participant shall be entitled to receive for each Earned Unit held by such Participant an amount (if positive) equal to (A) the Formula Value of such Earned Unit as of April, 2009, minus (B) the Unit Base Amount of such Earned Unit.

        (b)   If any amount under Section 4(a) is payable under

          (i)  Section 4(a)(i), then the Company shall make such payment to such Participant on or before the 10^th business day following the effective date of such DLJMB Liquidation Event; or

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         (ii)  Section 4(a)(ii), then the Company shall make such payment to such Participant (or to such Participant's legal representative if the Participant dies or, if applicable, becomes disabled) on or before July 1, 2009 (provided, however, that the Company shall only be required to make such payment as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, the Company).

        5.    Administration.    The Board (or a committee appointed by the Board) shall administer the Plan and have exclusive power to make grants. As used in the Plan, "Board" shall refer to the Board or to such committee, if appointed. Subject to Section 6, the Board shall have the exclusive discretion and authority to interpret the Plan and each grant of Potential Units; to establish, amend, waive and rescind terms or conditions relating to the Plan; to determine the terms of grants; and to make all other determinations and adjustments necessary or advisable for the administration of the Plan (including adjustments to the terms and number of Potential Units and Earned Units held by Participants to conduct the Plan in an equitable manner). Each determination of the Board shall be final and binding.

        6.    Amendment.    The Board may amend the Plan at any time and from time to time; provided, however, that no such amendment shall adversely affect any right relating to any Potential Unit or Earned Unit actually granted prior to such amendment without the consent of the affected Participant.

        7.    Board Discretion.    The Board shall have the power, at its discretion,

        (a)   at any time, and from time to time, to cause all Potential Units held by all of the Participants that have not been earned or cancelled to become Earned Units;

        (b)   at any time prior to an event referred to in Section 4(a), to declare payable all outstanding Earned Units (including any Potential Units the Board may have caused to become Earned Units pursuant to Section 7(a)) held by all of the Participants and to declare an associated Valuation Date; and if the Board does so, then each Participant shall receive (on or before the 90^th day following such Valuation Date) for each Earned Unit held by such Participant an amount (if positive) equal to (i) the Formula Value of such Earned Unit as of such Valuation Date, minus (ii) the Unit Base Amount of such Earned Unit;

        (c)   at any time after a Partial Termination of a Participant, to modify the terms of any Potential Unit then held by such Participant, including without limitation the immediate cancellation of each Potential Unit previously granted to such Participant (and not previously earned in accordance with the Plan) without compensation by the Company, and thereupon all rights of such Participant in respect of such Potential Units shall automatically terminate and cease to be of any further force or effect; and

        (d)   if a Participant takes an Adverse Action (i) prior to such Participant's termination of employment with the Company and all Subsidiaries or (ii) during the period ending twelve months following the date of such Participant's termination of employment with the Company and all Subsidiaries, to cancel each Potential Unit and Earned Unit previously granted to such Participant without compensation by the Company (notwithstanding whether such Participant's employment shall have been terminated for a reason other than for Cause), and thereupon all rights of such Participant in respect of such Potential Units and Earned Units shall automatically terminate and cease to be of any further force or effect.

        8.    Other Provisions.    

        (a)    No Right to Employment.    Participation in the Plan shall not be construed as giving a Participant any right to be employed, nor shall it affect the Company's (or a Subsidiary's) right to terminate a Participant's employment, with or without cause.

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        (b)    Withholding and Taxes.    Payments under the Plan shall be subject to the deduction of any Federal, state, local or foreign income taxes or other taxes or withholdings required to be withheld therefrom. Any such taxes or withholdings may be withheld from such payment or any other payment or compensation owed to such Participant, as determined by the Company. The Company provides no assurances, guarantees or advice regarding the tax treatment of amounts payable under the Plan, and each Participant is solely responsible for all applicable taxes, penalties and interest.

        (c)    No Interest; Cancellation.    No Participant shall be entitled to any interest on any payment under the Plan, regardless of when such Participant receives payment. Upon payment for any Earned Unit, such Earned Unit shall be cancelled and all rights with respect to such Earned Unit shall terminate and be of no further force or effect.

        (d)    No Trust or Fund.    Neither the Plan nor any participation therein shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Participant or any other person or entity. To the extent any person or entity has a right to receive any payment from the Company relating to the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company.

        (e)    No Assignment.    A Participant shall not sell, assign, transfer, encumber or otherwise convey any right under or with respect to the Plan (except by will or the laws of descent). The Company may offset its obligations to any Participant under the Plan by any amount such Participant owes to the Company.

        (f)    Enforceability.    If any provision of the Plan is held illegal or invalid, such illegality or invalidity shall not affect any other part of the Plan, and the Plan shall be construed and enforced to the maximum extent permitted.

        (g)    Headings.    Section headings hereof are for convenience of reference only and shall not be considered a part of the text of the Plan or influence its interpretation.

        (h)    Choice of Law.    The validity, construction and effect of the Plan and any payment thereunder shall be determined in accordance with the laws of the State of Minnesota, without giving effect to principles of conflicts of law.

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Exhibit A to 2003 Long Term Incentive Plan

MERRILL CORPORATION
2003 LONG TERM INCENTIVE PLAN
ELIGIBILITY NOTICE

To:

The Company hereby grants Potential Units to you under the 2003 Long Term Incentive Plan (the "Plan"), as follows:

Date of Grant:
Number of Potential Units:
Unit Base Amount for each such Potential Unit:
Earning Schedule:

Anniversary of Date of Grant Number of Earned Units

This Eligibility Notice shall be governed by the terms and provisions of the Plan. If there is any inconsistency between this Eligibility Notice and the Plan, the provisions of the Plan shall govern. Each capitalized term used but not otherwise defined herein shall have the meaning provided therefor in the Plan.

MERRILL CORPORATION

By:

Its:

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MERRILL CORPORATION
2003 LONG TERM INCENTIVE PLAN
ELIGIBILITY NOTICE

To: «First Name» «Last Name»

The Company hereby grants Potential Units to you under the 2003 Long Term Incentive Plan (the "Plan"), as follows:

Date of Grant: January 31, 2003
Number of Potential Units: «OptionsAccept»
Unit Base Amount for each such Potential Unit: $19.00
Earning Schedule:

Anniversary of Date of Grant	Number of Earned Units
Date of Grant	25	%
First Anniversary of Date of Grant	25	%
Second Anniversary of Date of Grant	25	%
Third Anniversary of Date of Grant	25	%

This Eligibility Notice shall be governed by the terms and provisions of the Plan. If there is any inconsistency between this Eligibility Notice and the Plan, the provisions of the Plan shall govern. Each capitalized term used but not otherwise defined herein shall have the meaning provided therefor in the Plan.

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Exhibit 10.8

MERRILL CORPORATION 2003 LONG TERM INCENTIVE PLAN

Exhibit A to 2003 Long Term Incentive Plan

MERRILL CORPORATION 2003 LONG TERM INCENTIVE PLAN ELIGIBILITY NOTICE
MERRILL CORPORATION 2003 LONG TERM INCENTIVE PLAN ELIGIBILITY NOTICE

EX-10.9

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Exhibit 10.9

MERRILL CORPORATION
2003 LONG TERM INCENTIVE PLAN
ELIGIBILITY NOTICE

        To:

The Company hereby grants Potential Units to you under the 2003 Long Term Incentive Plan (the "Plan"), as follows:

Date of Grant: January 31, 2003
Number of Potential Units:
Unit Base Amount for each such Potential Unit:    $19.00
Earning Schedule:

Anniversary of Date of Grant	Number of Earned Units
Date of Grant	25	%
First Anniversary of Date of Grant	25	%
Second Anniversary of Date of Grant	25	%
Third Anniversary of Date of Grant	25	%

This Eligibility Notice shall be governed by the terms and provisions of the Plan. If there is any inconsistency between this Eligibility Notice and the Plan, the provisions of the Plan shall govern. Each capitalized term used but not otherwise defined herein shall have the meaning provided therefor in the Plan.

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Exhibit 10.9

MERRILL CORPORATION 2003 LONG TERM INCENTIVE PLAN ELIGIBILITY NOTICE

EX-10.10

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Exhibit 10.10

MERRILL CORPORATION
SECOND 2003 LONG TERM INCENTIVE PLAN

        1.    Adoption and Purpose.    This Second 2003 Long Term Incentive Plan (the "Plan") of Merrill Corporation was adopted effective as of December 1,2003, to provide to certain employees opportunities to receive additional compensation and benefit from the growth of Merrill Corporation and its Subsidiaries through voluntary grants.

        2.    Definitions.    Except as otherwise defined herein, each capitalized term herein shall have the respective meaning set forth below.

        (a)   "Adverse Action" means any action by a Participant that the Board of Directors of the Company (the "Board"), in its sole discretion, determines to be adverse to the interests of the Company or any Subsidiary, including without limitation (i) disclosing confidential information of the Company or any Subsidiary to any person or entity not authorized by the Company or such Subsidiary to receive it, (ii) engaging, directly or indirectly, in any commercial activity that in the judgment of the Board competes with the business of the Company or any Subsidiary or (iii) interfering with the relationships of the Company or any Subsidiary and their respective employees and customers.

        (b)   "Cause" means a Participant's (i) dishonesty, fraud, misrepresentation, embezzlement or other act of dishonesty with respect to the Company or any Subsidiary, (ii) unlawful or criminal activity of a serious nature, (iii) intentional and deliberate breach of a duty or duties that, individually or in the aggregate, are material in relation to the Participant's overall duties, (iv) material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Subsidiary or (v) Adverse Action.

        (c)   "Company" means, at any time prior to a DLJMB Liquidation Event, Merrill Corporation, and "Company" means, at any time after a DLJMB Liquidation Event, Merrill Corporation or a successor entity of Merrill Corporation (or a successor to, or transferee of, all or substantially all of its assets) as a result of such DLJMB Liquidation Event (including without limitation any surviving entity of a merger or consolidation with Merrill Corporation).

        (d)   "DLJMB" means DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors' Agreement.

        (e)   "DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a sale or other transfer by DLJMB of 90% or more of its shares of common equity in the Company (including all common equity originally purchased by DLJMB and any additional common equity purchased by DLJMB 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 Securities Exchange Act of 1934, as amended) 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.

        (f)    "Earned Unit" means a Potential Unit that becomes earned pursuant to the provisions of the Plan.

        (g)   "Earning Schedule" means a schedule determined by the Board on which Potential Units become Earned Units under the terms, and subject to the conditions, of the Plan.

        (h)   "Eligibility Notice" means a written notice by the Company to a Participant stating a grant of Potential Units to such Participant. Each Eligibility Notice shall be in substantially the form attached hereto as Exhibit A, with any modifications the Board determines.

        (i)    "Enterprise Value" means, at any time, a value equal to six times the Pro-Forma EBITDA as shown on the Company's consolidated statement of operations for its most recent four fiscal quarters.

        (j)    "Formula Value" means the price determined on a Valuation Date by subtracting (i) Total Debt and (ii) Total Preferred Stock from the Enterprise Value, adding Total Cash to this difference and dividing such sum by the aggregate of the number of shares of capital stock of the Company outstanding on such Valuation Date, all Potential Units and Earned Units that are outstanding on such Valuation Date and all shares of common equity of the Company which may be issuable upon the exercise of options and warrants of the Company outstanding on such Valuation Date (whether or not then exercisable).

        (k)   "Investors' Agreement" means the Investors' Agreement, dated November 23, 1999, by and among the Company and its shareholders, as amended from time to time.

        (l)    "Partial Termination" means a change in a Participant's employment or other service with the Company or any Subsidiary such that the number of hours worked by such Participant is substantially reduced for any reason as the Board in its sole discretion may determine from the number of hours such Participant is required to work for the Company or any Subsidiary and such reduction is expected to extend for an indefinite period of time.

        (m)  "Participant" means an employee of the Company or any Subsidiary designated by the Board as a participant in the Plan.

        (n)   "Potential Unit" means a right granted to a Participant under the Plan that remains contingent until such Potential Unit becomes an Earned Unit pursuant to the Plan.

        (o)   "Pro-Forma EBITDA" means earnings before interest, taxes, depreciation, amortization and non-cash compensation expenses, as computed using generally accepted accounting principles on a pro-forma basis as allowed by Regulation S-X of the Securities Act of 1933, as amended.

        (p)   "Subsidiary" means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Board.

        (q)   "Total Cash" means the total amount of cash and cash equivalents shown on the Company's consolidated balance sheet as of its most recent fiscal quarter end.

        (r)   "Total Debt" means any indebtedness of the Company 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 the Company's consolidated balance sheet as of its most recent fiscal quarter end.

        (s)   "Total Preferred Stock" means the total amount of the liquidation preference on all of the Company's issued and outstanding preferred stock as of its most recent fiscal quarter end.

        (t)    "Unit Base Amount" means a dollar amount regarding each Potential Unit (and the Earned Unit, if any, derived therefrom) that is set by the Board and specified in the Eligibility Notice for such Potential Unit.

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        (u)   "Valuation Date" means such date provided in Section 4(a)(ii) or established by the Board pursuant to Section 7.

        3.    Granting of Potential Units; Earned Units.

        (a)    Grants and Eligibility Notices.    The Board, in its sole discretion, may grant Potential Units to any Participant from time to time upon the terms and conditions set forth in the Plan. A Participant may receive Potential Units only by an Eligibility Notice under the terms hereof. An Eligibility Notice shall name the Participant and specify the effective date of the grant, the number of Potential Units granted, the Unit Base Amount of each of such Potential Units, the Earning Schedule for such Potential Units and any additional terms that apply to such Potential Units. In the case of any inconsistency between the Plan and any Eligibility Notice, the Plan shall govern.

        (b)    Earning of Units.    Each Potential Unit that is earned in accordance with the Plan shall be an "Earned Unit." So long as a Participant remains continuously employed by the Company or any Subsidiary, Potential Units granted to such Participant shall become Earned Units based on the Earning Schedule in the Eligibility Notice granting such Potential Units; provided, however, that no Potential Unit shall become an Earned Unit after a DLJMB Liquidation Event. Each Potential Unit granted to a Participant and not thereafter earned or cancelled shall also become one Earned Unit upon action of the Board pursuant to Section 7.

        (c)    Effects of Termination of Employment.    If, prior to a DLJMB Liquidation Event, a Participant ceases to be employed by the Company or any Subsidiary for any reason other than a termination for Cause (including without limitation resignation, death, disability, retirement or a termination that is not for Cause), "then (i) following such termination, such Participant shall continue to hold each Earned Unit held by such Participant, as of the effective date of such termination, subject to the terms of the Plan, and (ii) each Potential Unit previously granted to such Participant and not earned in accordance with the Plan shall, as of the effective date of such termination, be cancelled without action of the Company, no amount shall be paid in respect of such Potential Units and all rights of such Participant in respect of such Potential Units shall automatically terminate and cease to be of any further force or effect. If, prior to a DLJMB Liquidation Event, a Participant's employment with the Company or any Subsidiary is terminated for Cause, then each Potential Unit previously granted to such Participant and each Earned Unit held by such Participant shall, as of the effective date of such termination, be cancelled without action of the Company, no amount shall be paid in respect of such Potential Units and Earned Units and all rights of such Participant in respect of such Potential Units and Earned Units shall automatically terminate and cease to be of any further force or effect. Additionally, Section 7 shall apply to, and with respect to, all Potential Units and Earned Units.

        (d)    Number Authorized.    The maximum number of Potential Units for which Eligibility Notices may be given under the Plan is 75,000 (provided, however, that any Potential Unit that is cancelled shall thereafter again be eligible to be included in any Eligibility Notice).

        4.    Payments.

        (a)    Determining Amount Payable.    The amount payable to a Participant under the Plan shall be determined upon the earlier of:

        (i)    a DLJMB Liquidation Event, in which case such Participant shall be entitled to receive for each Potential Unit (subject to Section 4(b)(i) and 4(c)) and Earned Unit then held by such Participant an amount (if positive) equal to (A) the per-share amount received in connection with such DLJMB Liquidation Event by a holder of shares of common equity of the Company who is not a DLJMB Entity, minus (B) the Unit Base Amount of such Potential Unit or Earned Unit (as the case may be); or

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        (ii)   December 1, 2009, in which case such Participant shall be entitled to receive for each Earned Unit held by such Participant an amount (if positive) equal to (A) the Formula Value of such Earned Unit as of December 1, 2009, minus (B) the Unit Base Amount of such Earned Unit.

        (b)    Timing of Payments.    If any amount under Section 4(a) is payable under

        (i)    Section 4(a)(i), then

        (A)  for each Earned Unit held by such Participant at the time of such DLJMB Liquidation Event, the Company shall pay to such Participant the portion of such amount that relates to such Earned Unit on or before the 10^th business day following the effective date of such DLJMB Liquidation Event and

        (B)  for each Potential Unit held by such Participant at the time of such DLJMB Liquidation Event, the Company shall, subject to Section 4(c), on or before the 10^th business day following the effective date of such DLJMB Liquidation Event, place the portion of such amount that relates to such Potential Unit (along with any or all amounts payable regarding any Potential Unit of any or all Participants under the Plan) in an escrow account, a so-called "Rabbi Trust" or a similar account or fund under terms determined by the Company from time to time, in its discretion; provided, however, that (1) the Company shall pay (or cause to be paid) to such Participant such portion of such amount in installments over a period that is the shorter of two years from the date of such DLJMB Liquidation Event or the remainder of the period in which such Potential Units would otherwise have become Earned Units pursuant to their associated Earning Schedule, (2) such installments shall be allocated equally over such period and shall not be paid less frequently than once per calendar quarter, (3) any (if any) interest or other earnings or proceeds earned thereon shall be for the benefit of the applicable Participant and (4) the Company may cause such portion of such amount to be prepaid to the Participant in whole or in part at any time and from time to time, including on or before such 10^thbusiness day following the effective date of such DLJMB Liquidation Event; or

        (ii)   Section 4(a)(ii), then the Company shall make such payment to such Participant (or to such Participant's legal representative if the Participant dies or, if applicable, becomes disabled) on or before February 1, 2010.

        (c)    Certain Other Conditions.    Notwithstanding any other provision herein, the following shall apply:

        (i)    Certain Terminations.    If, in connection with or after a DLJMB Liquidation Event, a Participant's employment with the Company or any Subsidiary is terminated for Cause or by resignation by such Participant (other than a bona fide retirement substantiated and documented as determined, and subject to conditions stated, by the Company), then after the effective date of such termination or resignation (as applicable) no amount shall be payable under the Plan in respect of any Potential Unit held by such Participant and all amounts in respect of each such Potential Unit held in an escrow account, a so-called "Rabbi Trust" or a similar account or fund pursuant to Section 4(b)(i)(B) shall immediately revert to and be owned by the Company.

        (ii)    Further Restriction on the Company.    In electing how to proceed under Section 4(b)(i)(B), the Company shall not place any amount in an escrow account, a so-called "Rabbi Trust" or a similar account or fund (as contemplated in such Section), unless (A) such placement is not a taxable event in which income is presently recognized for any Participant at the time the Company does so or (B) if such placement is a taxable event described in the preceding clause (A), then the Company causes there to be a

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payment of tax, or takes such other action, so that such taxable event does not cause any reduction (from withholding or otherwise) in such Participant's usual and regular employment compensation. (As examples only regarding the preceding clause (B), the Company could withhold from such amount the taxes required to be withheld by it and then place only the balance in such an escrow account, so-called "Rabbi Trust" or similar account or fund, or the Company could make a gross up payment to such Participant (and the corresponding withholdings therefrom) at the time of such placement in an amount sufficient to pay such Participant's associated tax obligations.) If the Company is not able to so place such amount without such placement being such a taxable event and the Company does not take any such action contemplated by the preceding clause (B), then the Company shall pay to the Participant the amount owed under Section 4(b)(i)(B) for each Potential Unit on or before the 10^th business day following the effective date of such DLJMB Liquidation Event.

        (iii)    Other Covenants and Obligations.    The Company shall only be required to make payments in connection with the Plan as rapidly as is permissible to avoid breaching or violating, or creating or accelerating any right or obligation with respect to, any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction, then applicable to, or binding upon, the Company; provided, however, that at and after a DLJMB Liquidation Event, the foregoing shall not restrict any such payment to a greater extent than such payment could have been restricted based on any loan, credit or debt arrangement, or any covenant, obligation or other contractual restriction that applied to, or was binding upon, the Company immediately prior to such DLJMB Liquidation Event or, if no DLJMB Liquidation Event has occurred, on December 1, 2009.

        5.    Administration.    The Board (or a committee appointed by the Board) shall administer the Plan and have exclusive power to make grants. As used in the Plan, "Board" shall refer to the Board or to such committee, if appointed. Subject to Section 6, the Board shall have the exclusive discretion and authority to interpret the Plan and each grant of Potential Units; to establish, amend, waive and rescind terms or conditions relating to the Plan; to determine the terms of grants; and to make all other determinations and adjustments necessary or advisable for the administration of the Plan (including without limitation adjustments to the terms and number of Potential Units and Earned Units held by Participants to conduct the Plan in an equitable manner). Each determination of the Board shall be final and binding.

        6.    Amendment.    The Board may amend the Plan at any time and from time to time; provided, however, that no such amendment shall adversely affect any right relating to any Potential Unit or Earned Unit actually granted prior to such amendment without the consent of the affected Participant.

        7.    Board Discretion.    The Board shall have the power, at its discretion,

        (a)   at any time, and from time to time, to cause all Potential Units held by all of the Participants that have not been earned or cancelled to become Earned Units;

        (b)   at any time prior to an event referred to in Section 4(a), to declare payable all outstanding Earned Units (including any Potential Units the Board may have caused to become Earned Units pursuant to Section 7(a)) held by all of the Participants and to declare an associated Valuation Date; and if the Board does so, then each Participant shall receive (on or before the 90^th day following such Valuation Date) for each Earned Unit held by such Participant an amount (if positive) equal to (i) the Formula Value of such Earned Unit as of such Valuation Date, minus (ii) the Unit Base Amount of such Earned Unit;

        (c)   at any time after a Partial Termination of a Participant, to modify the terms of any Potential Unit then held by such Participant, including without limitation the immediate

5

cancellation of each Potential Unit previously granted to such Participant (and not previously earned in accordance with the Plan) without compensation by the Company, and thereupon all rights of such Participant in respect of such Potential Units shall automatically terminate and cease to be of any further force or effect; and

        (d)   if a Participant takes an Adverse Action (i) prior to such Participant's termination of employment with the Company and all Subsidiaries or (ii) during the period ending twelve months following the date of such Participant's termination of employment with the Company and all Subsidiaries, to cancel each Potential Unit and Earned Unit previously granted to such Participant without compensation by the Company (notwithstanding whether such Participant's employment shall have been terminated for a reason other than for Cause), and thereupon all rights of such Participant in respect of such Potential Units and Earned Units shall automatically terminate and cease to be of any further force or effect.

        8.    Other Provisions.

        (a)    No Right to Employment.    Participation in the Plan shall not be construed as giving a Participant any right to be employed, nor shall it affect the Company's (or a Subsidiary's) right to terminate a Participant's employment, with or without cause.

        (b)    Withholding and Taxes.    Payments under the Plan shall be subject to the deduction of any Federal, state, local or foreign income taxes or other taxes or withholdings required to be withheld therefrom. Any such taxes or withholdings may be withheld from such payment or any other payment or compensation owed to such Participant, as determined by the Company (including without limitation in connection with Section 4(b)). The Company provides no assurances, guarantees or advice regarding the tax treatment of amounts payable under the Plan, and each Participant is solely responsible for all applicable taxes, penalties and interest.

        (c)    No Interest; Cancellation.    No Participant shall be entitled to any interest on any payment under the Plan, regardless of when such Participant receives payment. Upon payment for any Earned Unit, such Earned Unit shall be cancelled and all rights with respect to such Earned Unit shall terminate and be of no further force or effect.

        (d)    No Trust or Fund.    Neither the Plan nor any participation therein shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Participant or any other person or entity, and to the extent any person or entity has a right to receive any payment from the Company relating to the Plan, such right shall be no greater than the right of any unsecured general creditor of the Company, except in each case to the extent the Company expressly elects to act otherwise pursuant to Section 4(b).

        (e)    No Assignment.    A Participant shall not sell, assign, transfer, encumber or otherwise convey any right under or with respect to the Plan (except by will or the laws of descent). The Company may offset its obligations to any Participant under the Plan by any amount such Participant owes to the Company.

        (f)    Enforceability.    If any provision of the Plan is held illegal or invalid, such illegality or invalidity shall not affect any other part of the Plan, and the Plan shall be construed and enforced to the maximum extent permitted.

        (g)    Headings.    Section headings hereof are for convenience of reference only and shall not be considered a part of the text of the Plan or influence its interpretation.

        (h)    Choice of Law.    The validity, construction and effect of the Plan and any payment thereunder shall be determined in accordance with the laws of the State of Minnesota, without giving effect to principles of conflicts of law.

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Exhibit A to Second 2003 Long Term Incentive Plan

MERRILL CORPORATION
SECOND 2003 LONG TERM INCENTIVE PLAN
ELIGIBILITY NOTICE

        To:                              

        The Company hereby grants Potential Units to you under the Second 2003 Long Term Incentive Plan (the "Plan"), as follows:

        Date of Grant:                              

        Number of Potential Units:                              

        Unit Base Amount for each such Potential Unit:                              

        Earning Schedule:

Date
Number of Earned Units

        This Eligibility Notice shall be governed by the terms and provisions of the Plan. If there is any inconsistency between this Eligibility Notice and the Plan, the provisions of the Plan shall govern. Each capitalized term used but not otherwise defined herein shall have the meaning provided therefor in the Plan.

MERRILL CORPORATION

By:

Its:

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Exhibit 10.10

MERRILL CORPORATION SECOND 2003 LONG TERM INCENTIVE PLAN

Exhibit A to Second 2003 Long Term Incentive Plan

MERRILL CORPORATION SECOND 2003 LONG TERM INCENTIVE PLAN ELIGIBILITY NOTICE

EX-10.11

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Exhibit 10.11

MERRILL CORPORATION
SECOND 2003 LONG TERM INCENTIVE PLAN
ELIGIBILITY NOTICE

        To:

The Company hereby grants Potential Units to you under the Second 2003 Long Term Incentive Plan (the "Plan"), as follows:

Date of Grant: December 1, 2003
Number of Potential Units:
Unit Base Amount for each such Potential Unit: $6.30
Earning Schedule:

Date	Number of Earned Units
December 1, 2006	25%
December 1, 2007	25%
December 1, 2008	25%
December 1, 2009	25%

This Eligibility Notice shall be governed by the terms and provisions of the Plan. If there is any inconsistency between this Eligibility Notice and the Plan, the provisions of the Plan shall govern. Each capitalized term used but not otherwise defined herein shall have the meaning provided therefor in the Plan.

MERRILL CORPORATION
By:	John W. Castro
Its:	Chief Executive Officer

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Exhibit 10.11

MERRILL CORPORATION SECOND 2003 LONG TERM INCENTIVE PLAN ELIGIBILITY NOTICE

EX-10.12

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Exhibit 10.12

MERRILL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As Adopted Effective August 1, 1995

CERTIFICATE

        The undersigned, being the duly acting Secretary of Merrill Corporation, certifies that attached is a copy of the Merrill Corporation Supplemental Executive Retirement Plan as authorized by the Compensation Committee of Merrill Corporation's Board of Directors at its April 10, 1995 meeting.

Dated: February     , 1996 /s/ STEVEN J. MACHOV Secretary

MERRILL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Table of Contents

ARTICLE 1		Description	1
	1.1	Plan Name	1
	1.2	Plan Purpose	1
	1.3	Plan Type	1
ARTICLE 2		Participation	2
	2.1	Eligibility	2
	2.2	Condition of Participation	2
	2.3	Termination of Participation	2
ARTICLE 3		Benefits	3
	3.1	Participant Accounts	3
	3.2	Employer Credit	3
	3.3	Earnings Credit	3
	3.4	Vesting	3
ARTICLE 4		Distribution	4
	4.1	Distribution to Participant	4
	4.2	Distribution to Beneficiary	7
	4.3	Payment in Event of Incapacity	8
ARTICLE 5		Source of Payments; Nature of Interest	9
	5.1	Establishment of Trust	9
	5.2	Source of Payments	9
	5.3	Status of Plan	9
	5.4	Non-assignability of Benefits	10
ARTICLE 6		Adoption, Amendment, Termination	11
	6.1	Adoption	11
	6.2	Amendment	11
	6.3	Termination of Participation	11
	6.4	Termination	12
ARTICLE 7		Definition, Construction and Interpretation	13
	7.1	Account	13
	7.2	Active Participant	13
	7.3	Administrator	13
	7.4	Affiliated Organization	13

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	7.5	Beneficiary	13
	7.6	Board	13
	7.7	Change in Control	13
	7.8	Code	15
	7.9	Company	15
	7.10	Cross Reference	15
	7.11	Effective Date	15
	7.12	ERISA	15
	7.13	Excess Pensionable Earnings	15
	7.14	Governing Law	15
	7.15	Headings	15
	7.16	Number and Gender	15
	7.17	Participant	15
	7.18	Participating Employer	15
	7.19	Plan	15
	7.20	Plan Year	16
	7.21	Plan Rules	16
	7.22	Retirement Plan	16
	7.23	Termination of Employment	16
	7.24	Trust	16
	7.25	Trustee	16
	7.26	Valuation Date	16
ARTICLE 8		Administration	17
	8.1	Administrator	17
	8.2	Plan Rules	17
	8.3	Administrator's Discretion	17
	8.4	Specialist's Assistance	17
	8.5	Indemnification	17
	8.6	Benefit Claim Procedure	17
	8.7	Disputes	18
ARTICLE 9		Miscellaneous	19
	9.1	Withholding and Offsets	19
	9.2	Other Benefits	19
	9.3	No Warranties Regarding Tax Treatment	19
	9.4	No Employment Rights Created	19
	9.5	Successors	19

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MERRILL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

ARTICLE 1
Description

1.1

Plan Name.    The name of the Plan is the "Merrill Corporation Supplemental Executive Retirement Plan."

1.2

Plan Purpose.    The Plan provides Active Participants with additional benefits with respect to compensation that may not be taken into account for purposes of the Retirement Plan because of the limitations imposed by Code section 401(a)(17).

1.3

Plan Type.    The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, and, as such, is intended to be exempt from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by operation of sections 201(2), 301(a)(3) and 401(a)(4) thereof, respectively, and from the provisions of Title IV of ERISA, to the extent otherwise applicable, by operation of section 4021(b)(6) thereof. The Plan is also intended to be unfunded for tax purposes. The Plan will be construed and administered in a manner that is consistent with and gives effect to the foregoing.

ARTICLE 2
Participation

2.1

Eligibility.

(A)

To be eligible to have credits made to his or her Account pursuant to Section 3.2 for a Plan Year, an individual must

(1)

be an employee of a Participating Employer on whose behalf the Participating Employer makes a Retirement Plan contribution for the Plan Year,

(2)

have Excess Pensionable Earnings for the Plan Year,

(3)

be a member of a select group of management or highly compensated employees as determined by the Administrator, and

(4)

be selected by the Administrator for the Plan Year.

(B)

The fact that an individual has been eligible to have credits made to his or her Account pursuant to Section 3.2 with respect to any particular Plan Year does not give the individual any right to have such credits made to his or her Account with respect to any other Plan Year.

2.2

Condition of Participation.    As a condition of participation, each Participant is bound by all the terms and conditions of the Plan and the Plan Rules, including but not limited to the reserved right of the Company to amend or terminate the Plan and the provisions of Sections 4.1(D)(3) and 8.7, and must furnish to the Administrator such pertinent information, and must execute such election forms and other instruments, as the Administrator or Plan Rules may require by such dates as the Administrator or Plan Rules may establish.

2.3

Termination of Participation.    A Participant will cease to be such as of the later of the date on which

(a)

he or she ceases to be an Active Participant or

(b)

his or her entire Account balance has been distributed or forfeited.

2

ARTICLE 3
Benefits

3.1

Participant Accounts.    The Administrator will establish and maintain an Account for each Participant to evidence amounts credited with respect to the participant pursuant to Section 3.2 and 3.3. If any Active Participant receives a credit pursuant to Section 3.2 for any Plan Year for which more than one Participating Employer makes a Retirement Plan contribution on his or her behalf, the Administrator will establish a separate Account for the Participant with respect to each such Participating Employer and will apportion the credit among such Accounts in a manner determined by the Administrator to be appropriate.

3.2

Employer Credit

(A)

For each Plan Year, the Account of an Active Participant will be credited with an amount, if any, equal to a percentage, determined by the Administrator, of his or her Excess Pensionable Earnings for the Plan Year.

(B)

Credits for a Plan Year pursuant to this section will be made as of the date on which the Participating Employers' Retirement Plan contributions for the Plan Year have been made in full.

3.3

Earnings Credits.    As of each Valuation Date, each Participant's Account will be adjusted to reflect gains, losses, income and expense since the immediately preceding Valuation Date to the same extent as if his or her Account balance had been part of his or her Retirement Plan account balance for the period.

3.4

Vesting.

(A)

Subject to Section 4.1(D)(3), a Participant's vested interest in his or her Account at any time will be the same as the Participant's vested interest in his or her account at that time under the Retirement Plan. The nonvested portion of a Participant's Account will be permanently forfeited at the time the Account is distributed pursuant to Article 4, whether or not his or her account under the Retirement Plan has then been forfeited or is subsequently restored.

(B)

The Administrator may at any time accelerate the vesting of all or any part of the nonvested portion of a Participant's Account.

3

ARTICLE 4
Distribution

4.1

Distribution to Participant.

(A)

Form.

(1)

Disability.    If a Participant is determined by the Administrator to be absent from active employment because he or she has an illness, injury or disease that is likely to be of long or indefinite duration or result in death, distribution to the Participant will be made in the form of a lump sum payment.

(2)

Other.    Except as provided in clause (1), distribution to a Participant will be made in the form of five annual installment payments made on or around the same date in each of five consecutive calendar years.

(B)

Time.    Distribution to a Participant pursuant to Subsection (A)(1) will be made as soon as administratively practicable after the last day of the Plan Year during which the Participant is determined to be disabled. Distribution to a Participant pursuant to Subsection (A)(2) will commence on a date, determined by the Administrator, within the 180-day period following the date on which the Participant terminates employment.

(C)

Amount.    If distribution is made in the form of a lump sum payment, the amount of the payment will be equal to the balance of the Participant's Account as of the Valuation Date immediately preceding the date of the distribution increased by the amount of any subsequent credit pursuant to Section 3.3. If distribution is made in the form of installment payments, the amount of the payment each year will be determined by dividing the Participant's Account balance as of the Valuation Date immediately preceding the payment date by the total number of remaining payments (including the payment in question).

(D)

Special Rules.    The provisions of this subsection apply notwithstanding Subsection (A), (B) or (C) or any election by a Participant to the contrary.

(1)

Nondeductibility.    If the Administrator determines in good faith that there is a reasonable likelihood that any compensation paid to a Participant by an Affiliated Organization for a taxable year of the Affiliated Organization would not be deductible by the Affiliated Organization solely by reason of the limitation under Code section 162(m), to the extent deemed necessary by the Administrator to ensure that the entire amount of any distribution to the Participant is deductible, the Administrator may defer all or any portion of the distribution. Any amounts deferred pursuant to this subsection will continue to be credited with earnings in accordance with Section 3.3. The deferred amounts and earnings thereon will be distributed to the Participant, or to his or her Beneficiary in the case of the Participant's death, at the earliest possible date, as determined by the Administrator in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Affiliated

4

Organization during which the distribution is made will not be limited by Code section 162(m).

(2)

Divestitures.

(a)

If some or all of the assets of a Participating Employer are sold or otherwise disposed of to an unrelated third party, the Administrator may, but is not required to, cause to be distributed the Account of any Participant whose employment with all Affiliated Organizations is terminated in connection with the sale or disposition unless the acquiror adopts a successor plan which is substantially similar to the Plan in all material respects and expressly assumes the Participating Employer's obligation to provide benefits to the Participant, in which case the Participating Employer will cease to have any obligation to provide benefits to the Participant pursuant to the Plan as of the effective date of the assumption. Any such distribution will be made in the form of a lump sum payment as soon as administratively practicable after the date of the sale or disposition. The amount of the payment will be determined in accordance with Subsection (C).



(b)

If a Participating Employer ceases to be an Affiliated Organization, unless otherwise provided in an agreement between an Affiliated Organization and the Participating Employer or an Affiliated Organization and an unrelated third-party acquiror



(i)

a Participant who is employed with the Participating Employer or



(ii)

a Participant who is not employed with the Participating Employer but has an Account balance attributable to the Participating Employer

will not become entitled to his or her Account balance attributable to the Participating Employer solely as a result of the cessation and the Participating Employer will, after the date on which it ceases to be an Affiliated Organization, continue to be solely responsible to provide benefits to the Participant at least equal to the balance of the Account as of the effective date of the cessation and as thereafter increased by deferral credits relating to the period before the effective date and earnings credits pursuant to Section 3.3.

(3)

Effect of Competition.

(a)

If, at any time, the Administrator has reason to believe that a Participant is competing with an Affiliated Organization, the Administrator will temporarily suspend any distributions to which the Participant would otherwise be entitled pursuant to the Plan. The Administrator will promptly inform the Participant of the suspension and provide the Participant with a reasonable

5

opportunity to establish to the Administrator's reasonable satisfaction that he or she is not competing with an Affiliated Organization. Within a reasonable period of time thereafter, the Administrator will make a final determination as to whether the Participant is competing with an Affiliated Organization based on the information then available to the Administrator and will communicate the final determination to the Participant.

(b)

If the Administrator's final determination is that the Participant is not competing with an Affiliated Organization, the Administrator will lift the suspension on distributions. If the Participant would have received a lump sum distribution during the suspension period but for the suspension, distribution to the Participant will be made within the 60-day period following the date on which the Administrator lifts the suspension in the form of a lump sum payment in an amount equal to the balance of the Participant's Account as of the Valuation Date immediately preceding the date of the distribution. If the Participant would have received one or more installment payments during the suspension period but for the suspension, within the 60-day period following the date on which the Administrator lifts the suspension, the Participant will receive a distribution equal to the balance of his or her Account as of the Valuation Date immediately preceding the date of the distribution multiplied by a fraction, the numerator of which is the number of missed payments and the denominator of which is the number of remaining annual installment payments immediately before the suspension. Thereafter, any remaining installment payments will be paid as if the suspension had not occurred. If the Participant would not have otherwise received a distribution during the suspension period, distribution to the Participant will be made or commence following the date on which the suspension is lifted in accordance with the foregoing subsections of this section.



(c)

If the Administrator's final determination is that the Participant is competing with an Affiliated Organization, the entire balance of the Participant's Account will be forfeited and the Participant will not be entitled to receive any benefit pursuant to the Plan.



(d)

For purposes of applying this clause, a Participant will be deemed to be competing with an Affiliated Organization if the Administrator determines in good faith that the Participant, directly or indirectly, alone or as a partner, officer, director, shareholder, sole proprietor, employee or consultant of any other firm or entity, is or intends to engage in any commercial activity in competition with any part of the business of any Affiliated Organization as conducted at the time in question. For purposes of applying the foregoing, "shareholder" does not include beneficial ownership of less than one percent of the combined voting power of all issued and outstanding voting securities of a publicly held corporation the

6

stock of which is traded on a major stock exchange or quoted on NASDAQ.

(E)

Reduction of Account Balance.    The balance of the Account from which a distribution is made will be reduced by the amount of the distribution as of the date of the distribution.

4.2

Distribution to Beneficiary.

(A)

Form.    In the event of a Participant's death, the balance of the Participant's Account will be distributed to the Participant's Beneficiary in a lump sum payment whether or not payments had commenced to the Participant in the form of installments prior to his or her death.

(B)

Time.    Distribution to a Beneficiary will be made within 60 days after the date on which the Administrator receives notice of the Participant's death.

(C)

Amount.    The amount of the payment will be determined in accordance with Section 4.1(C).

(D)

Reduction of Account Balance.    The balance of the Account from which a distribution is made will be reduced by the amount of the distribution as of the date of the distribution.

(E)

Beneficiary Designation.

(1)

A Participant may designate, on a form furnished by the Administrator, one or more primary Beneficiaries or alternative Beneficiaries to receive all or a specified part of his or her Account after his or her death, and the Participant may change or revoke any such designation from time to time. No such designation, change or revocation is effective unless executed by the Participant and received by the Administrator during the Participant's lifetime. No designation of a Beneficiary other than the Participant's spouse is effective unless the spouse consents to the designation or the Administrator determines that spousal consent cannot be obtained because the spouse cannot reasonably be located or is legally incapable of consenting. The consent must be in writing, must acknowledge the effect of the election and must be witnessed by a notary public. The consent is effective only with respect to the Beneficiary or class of Beneficiaries so designated and only with respect to the spouse who so consented.

(2)

If a Participant

(a)

fails to designate a Beneficiary, or

(b)

revokes a Beneficiary designation without naming another Beneficiary, or

(c)

designates one or more Beneficiaries none of whom survives the Participant or exists at the time in question,

7

for all or any portion of his or her Account, such Account or portion will be paid to the Participant's surviving spouse or, if the Participant is not survived by a spouse, to the representative of the Participant's estate.

(3)

The automatic Beneficiaries specified above and, unless the designation otherwise specifies, the Beneficiaries designated by the Participant, become fixed as of the Participant's death so that, if a Beneficiary survives the Participant but dies before the receipt of the payment due such Beneficiary, the payment will be made to the representative of such Beneficiary's estate. Any designation of a Beneficiary by name that is accompanied by a description of relationship or only by statement of relationship to the Participant is effective only to designate the person or persons standing in such relationship to the Participant at the Participant's death.

4.3

Payment in Event of Incapacity.    If any individual entitled to receive any payment under the Plan is, in the judgment of the Administrator, physically, mentally or legally incapable of receiving or acknowledging receipt of the payment, and no legal representative has been appointed for the individual, the Administrator may (but is not required to) cause the payment to be made to any one or more of the following as may be chosen by the Administrator: the Beneficiary (in the case of the incapacity of a Participant); the institution maintaining the individual; a custodian for the individual under the Uniform Transfers to Minors Act of any state; or the individual's spouse, children, parents, or other relatives by blood or marriage. The Administrator is not required to see to the proper application of any such payment and the payment completely discharges all claims under the Plan against the Participating Employer, the Plan and Trust to the extent of the payment.

8

ARTICLE 5
Source of Payments; Nature of Interest

5.1

Establishment of Trust.

(A)

A Participating Employer may establish a Trust, or may be covered by a Trust established by another Participating Employer, with an independent corporate trustee. The Trust must be a grantor trust that conforms substantially with the model trust described in Revenue Procedure 92-64. The Participating Employers may from time to time transfer to the Trust cash, marketable securities or other property acceptable to the Trustee in accordance with the terms of the Trust.

(B)

Notwithstanding Subsection (A), not later than the effective date of a Change in Control, each Participating Employer must transfer to the Trust an amount not less than the amount by which (1) 125 percent of the aggregate balance of all Participant's Accounts attributable to the Participating Employer as of the last day of the month immediately preceding the effective date of the Change in Control exceeds (2) the value of the Trust assets attributable to amounts previously contributed by the Participating Employer as of the most recent date as of which such value was determined.

5.2

Source of Payments.

(A)

Each Participating Employer will pay, from its general assets, the portion of any benefit pursuant to Article 4 or Section 6.3 or 6.4 attributable to a Participant's Account with respect to that Participating Employer, and all costs, charges and expenses relating thereto.

(B)

The Trustee will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer's obligations under the Plan in accordance with the terms of the Trust. The Participating Employer is responsible for paying any benefits attributable to a Participant's Account with respect to that Participating Employer that are not paid by the Trust.

(C)

To the extent a Participating Employer other than the Company fails for any reason to pay any benefit pursuant to the Plan when it is due and the benefit is not paid by the Trustee from the Trust, the Company will pay the unpaid portion of the benefit in accordance with the terms of the Plan as if it were the Participating Employer obligated to pay the benefit pursuant to Subsection (A).

5.3.

Status of Plan.    Nothing contained in the Plan or Trust is to be construed as providing for assets to be held for the benefit of any Participant or any other person or persons to whom benefits are to be paid pursuant to the terms of this Plan, the Participant's or other person's only interest under the Plan being the right to receive the benefits set forth herein. The Trust is established only for the convenience of the Participating Employers and no Participant has any interest in the assets of the Trust. To the extent the Participant or any other person acquires a right to receive benefits under this Plan, such right in no greater that the right of any unsecured general creditor of the Participating Employer.

9

5.4

Non-assignability of Benefits.    The benefits payable under the Plan and the right to receive future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process.

10

ARTICLE 6
Adoption, Amendment, Termination

6.1

Adoption.    Any Affiliated Organization that has adopted the Retirement Plan may adopt the Plan and become a Participating Employer by furnishing to the Administrator a certified copy of a resolution of its Board adopting the Plan.

6.2

Amendment.

(A)

The Company reserves the right to amend the Plan at any time to any extent that it may deem advisable. To be effective, an amendment must be stated in a written instrument approved in advance or ratified by the Company's Board and executed in the name of the Company by its President or a Vice President and attested by the Secretary or an Assistant Secretary.

(B)

An amendment adopted in accordance with Subsection (A) is binding on all interested parties as of the effective date stated in the amendment; provided, however, that no amendment will have any retroactive effect so as to deprive any Participant, or the Beneficiary of a deceased Participant, of any benefits to which he or she is entitled under the terms of the Plan in effect immediately prior to the effective date of the amendment, determined in the case of a Participant who is employed by an Affiliated Organization, as if he or she had terminated employment immediately prior to the effective date of the amendment. Notwithstanding the foregoing, the Company may amend the Plan at any time to change the method for determining the earnings credit pursuant to Section 3.3 and such amendment may be applied both to future credits to Participants' Accounts and to existing Account balances.

(C)

The provisions of the Plan in effect at the termination of a Participant's employment will, except as otherwise expressly provided by a subsequent amendment, continue to apply to such Participant.

6.3

Termination of Participation.    Notwithstanding any other provision of the Plan to the contrary, if determined by the Administrator to be necessary to ensure that the Plan is exempt from ERISA to the extent contemplated by Section 13, or upon the Administrator's determination that a Participant's interest in the Plan has been or is likely to be includable in the Participant's gross income for federal income tax purposes prior to the actual payment of benefits pursuant to the Plan, the Administrator may take any or all of the following steps:

(a)

terminate the Participant's future participation in the Plan;

(b)

cause the Participant's entire interest in the Plan to be distributed to the Participant in the form of an immediate lump sum; and/or

(c)

transfer the benefits that would otherwise be payable pursuant to the Plan for all or any of the Participants to a new plan that is similar in all material respects (other than those which require the action in question to be taken.)

11

6.4

Termination.    The Company reserves the right to terminate the Plan in its entirety at any time. Each Participating Employer reserves the right to cease its participation in the Plan at any time. The Plan will terminate in its entirety or with respect to a particular Participating Employer as of the date specified by the Company or such Participating Employer in a written instrument by its authorized officers to the Administrator, adopted in the manner of an amendment. Upon the termination of the Plan in its entirety or with respect to any Participating Employer, the Company or Participating Employer, as the case may be, will either cause (a) any benefits to which Participants have become entitled prior to the effective date or the termination to continue to be paid in accordance with the provisions of Article 4 or (b) the entire interest in the Plan of any or all Participants, or the Beneficiaries of any or all deceased Participants, to be distributed in the form of an immediate lump sum payment.

12

ARTICLE 7
Definitions, Construction and Interpretation

        The definitions and rules of construction and interpretation set forth in this article apply in construing the Plan unless the context otherwise indicates.

7.1

Account.    "Account" means the bookkeeping account or accounts maintained with respect to a Participant pursuant to Section 3.1.

7.2

Active Participant.    "Active Participant" with respect to a Plan Year is an individual who the Administrator has determined pursuant to Section 2.1 is eligible to have credits made to his or her Account pursuant to Section 3.2 for the Plan Year.

7.3

Administrator.    The "Administrator" of the Plan is the Compensation Committee of the Company's Board or the person to whom administrative duties are delegated pursuant to the provisions of Section 8.1, as the context requires.

7.4

Affiliated Organization.    An "Affiliated Organization" is the Company and any corporation that is a member of a controlled group of corporations within the meaning of Code section 414(b) that includes the Company.

7.5

Beneficiary.    "Beneficiary" with respect to a Participant is the person designated or otherwise determined under the provisions of Section 4.2(E) as the distributee of benefits payable after the Participant's death. A person designated or otherwise determined to be a Beneficiary under the terms of the Plan has no interest in or right under the Plan until the Participant in question has died. A Beneficiary will cease to be such on the day on which all benefits to which he, she or it is entitled under the Plan have been distributed.

7.6

Board.    "Board" means the board of directors of the Affiliated Organization in question. When the Plan provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by the board of directors in question.

7.7

Change in Control.

(A)

"Change in Control" is any of the following:

(1)

the sale, lease, exchange or other transfer, directly or indirectly, of all or substantially all of the assets of the Company, in one transaction or in a series of related transactions, to any person;

(2)

the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;

(3)

any person is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (a) 20 percent or more, but not more than 50 percent, of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the continuity directors or (b) more than 50

13

percent of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the continuity directors);

(4)

a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to the effective date of such merger or consolidation have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving company representing (a) 50 percent or more, but not more than 80 percent, of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the continuity directors, or (b) less than 50 percent of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the continuity directors);



(5)

the continuity directors cease for any reason to constitute at least a majority of the Company's board of directors; or



(6)

a change in control of the Company of a nature that would be required to be reported pursuant to section 13 or 15(d) of the Exchange Act, whether or not the Company is then subject to such reporting requirement.



(B)

For purposes of this section:



(1)

a "continuity director" means any individual who is a member of the Company's board of directors on the Effective Date while he or she is a member of the board, and any individual who subsequently becomes a member of the Company's board of directors whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors who are continuity directors (either by a specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for director without objection to such nomination);



(2)

"Exchange Act" is the Securities Exchange Act of 1934, as amended from time to time; and



(3)

"person" includes any individual, corporation, partnership, group, association or other "person," as such term is defined in section 14(d) of the Exchange Act, other than (i) the Company; (ii) any corporation at least a majority of whose securities having ordinary voting power for the election of directors is owned, directly or indirectly, by the Company; (iii) any other entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of the entity's governing body; or (iv) any benefit plan sponsored by the Company, a corporation described in clause (ii) or an entity described in clause (iii).

14

7.8

Code.    "Code" means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes a reference to that provision as it may be amended from time to time and to any successor provision.

7.9

Company.    "Company" means Merrill Corporation.

7.10

Cross Reference.    References within a section of the Plan to a particular subsection refer to that subsection within the same section and references within a section or subsection to a particular clause refer to that clause within the same section or subsection, as the case may be.

7.11

Effective Date.    "Effective Date" means August 1, 1995.

7.12

ERISA.    "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. Any reference to a specific provision of ERISA includes a reference to that provision as it may be amended from time to time and to any successor provision.

7.13

Excess Pensionable Earnings.    "Excess Pensionable Earnings" with respect to a Participant for a Plan Year means the amount, if any, by which (a) the amount of compensation that would have been taken into account in computing the Retirement Plan contribution made on the Participant's behalf for a Plan Year but for (i) a deferral pursuant to the Merrill Corporation Income Deferral Plan and (ii) the limitation under Code section 401(a)(17) exceeds (b) the limitation in effect under Code section 401(a)(17) for the Plan Year.

7.14

Governing Law.    To the extent that state law is not preempted by the provisions of ERISA, or any other laws of the United States, all questions pertaining to the construction, validity, effect and enforcement of the Plan will be determined in accordance with the internal, substantive laws of the State of Minnesota without regard to the conflict of law principles of the State of Minnesota or any other jurisdiction.

7.15

Headings.    The headings of articles and sections are included solely for convenience of reference; if there exists any conflict between such headings and the text of the Plan, the text will control.

7.16

Number and Gender.    Wherever appropriate, the singular may be read as the plural, the plural may be read as the singular and one gender may be read as the other gender.

7.17

Participant.    "Participant" is a current or former Active Participant to whose Account amounts have been credited pursuant to Article 3 and who has not ceased to be a Participant pursuant to Section 2.3.

7.18

Participating Employer.    "Participating Employer" is the Company and any other Affiliated Organization that has adopted the Plan, or all of them collectively, as the context requires. An Affiliated Organization will cease to be a Participating Employer upon a termination of the Plan as to its Employees and the satisfaction in full of all of its obligations under the Plan or upon its ceasing to be an Affiliated Organization.

7.19

Plan.    "Plan" means the Merrill Corporation Supplemental Executive Retirement Plan, as from time to time amended or restated.

15

7.20

Plan Year.    "Plan Year" means the period beginning on the Effective Date and ending on January 31, 1996 and, thereafter, the period beginning on February 1 of each calendar year and ending on January 31 of the following calendar year.

7.21

Plan Rules.    "Plan Rules" are rules, policies, practices or procedures adopted by the Administrator pursuant to Section 8.2.

7.22

Retirement Plan.    "Retirement Plan" means the Merrill Corporation Retirement Plan.

7.23

Termination of Employment.    An individual will be deemed to have terminated employment for purposes of the Plan only if he or she has completely severed his or her employment relationship with all Affiliated Organizations.

7.24

Trust.    "Trust" means any trust or trusts established by a Participating Employer pursuant to Section 5.1.

7.25

Trustee.    "Trustee" means the independent corporate trustee or trustees that at the relevant time has or have been appointed to act as Trustee of the Trust.

7.26

Valuation Date.    "Valuation Date" means each valuation date as defined in the Retirement Plan.

16

ARTICLE 8
Administration

8.1

Administrator.    The general administration of the Plan and the duty to carry out its provisions is vested in the Compensation Committee of the Board. Such Committee may delegate such duty or any portion thereof to a named person and may from time to time revoke such authority and delegate it to another person.

8.2

Plan Rules.    The Administrator has the discretionary power and authority to make such Plan Rules as the Administrator determines to be consistent with the terms, and necessary or advisable in connection with the administration, of the Plan and to modify or rescind any such Plan Rules.

8.3

Administrator's Discretion.    The Administrator has the discretionary power and authority to make all determinations necessary for administration of the Plan, except those determinations that the Plan requires other to make, and to contrue, interpret, apply and enforce the provisions of the Plan and Plan Rules whenever necessary to carry out its intent and purpose and to facilitate its administration, including, without limitation, the discretionary power and authority to remedy ambiguities, inconsistencies, omissions and erroneous benefit calculations. In the exercise of its discretionary power and authority, the Administrator will treat all similarly situated persons uniformly.

8.4

Specialist Assistance.    The Administrator may retain such actuarial, accounting, legal, clerical and other services as may reasonably be required in the administration of the Plan, any may pay reasonable compensation for such services. All costs of administering the Plan will be paid by the Participating Employers.

8.5

Indemnification.    The Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee of any Affiliated Organization against any and all liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services in connection with the Plan, but only if such person did not act dishonestly or in bad faith or in willful violation of the law or regulations under which such liability, loss, cost or expense arises. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action for which a person may be entitled to indemnification under this provision.

8.6

Benefit Claim Procedure.

(A)

If a request for a benefit by a Participant or Beneficiary of a deceased Participant is denied in whole or in part, he or she may, not later than 30 days after the denial, file with the Administrator a written claim objecting to the denial.

(B)

The Administrator, not later than 90 days after receipt of such claim, will render a written decision to the claimant on the claim. If the claim is denied, in whole or in part, such decision will include the reason or reasons for the denial; a reference to the Plan provisions on which the denial is based; a description of any additional material or information, if any, necessary for the claimant to perfect his or her

17

claim; an explanation as to why such information or material is necessary; and an explanation of the Plan's claim procedure.

(C)

The claimant may file with the Administrator, not later than 60 days after receiving the Administrator's written decision, a written notice of request for review of the Administrator's decision, and the claimant or his or her representative may thereafter review Plan documents which relate to the claim and may submit written comments to the Administrator.



(D)

Not later than 60 days receipt of such review request, the Administrator will render a written decision on the claim, which decision will include the specific reasons for the decision, including a reference to the Plan's specific provisions where appropriate.



(E)

The foregoing 90 and 60-day periods during which the Administrator must respond to the claimant may be extended by up to an additional 90 or 60 days, respectively, if special circumstances beyond the Administrator's control so require and notice of such extension is given to the claimant prior to the expiration of such initial 90 or 60-day period, as the case may be.



(F)

A Participant or Beneficiary must exhaust the procedure described in this section before making any claim of entitlement to benefits pursuant to the Plan in any court or other proceeding.

8.7

Disputes.

(A)

In the case of a dispute between a Participant or Beneficiary and a Participating Employer, the Administrator or other person relating to or arising from the Plan, the United States District Court for the District of Minnesota is a proper venue for any action initiated by or against the Participating Employer; Administrator or other person and such court will have personal jurisdiction over any Participant or Beneficiary named in the action.

(B)

Regardless of where an action relating to or arising from the Plan is pending, the law as stated and applied by the United States Court of Appeals for the Eighth Circuit or the United States District Court for the District of Minnesota will apply to and control all actions relating to the Plan brought against the Plan, a Participating Employer, the Administrator or any other person or against any Participant or Beneficiary.

18

ARTICLE 9
Miscellaneous

9.1

Withholding and Offsets.    The Participating Employers and the Trustee retain the right to withhold from any compensation or benefit payment pursuant to the Plan, any and all income, employment, excise and other tax as the Participating Employers or Trustee deems necessary and the Participating Employers may offset against amounts then payable to a Participant or Beneficiary under the Plan any amounts then owing to the Participating Employers by such Participant or Beneficiary.

9.2

Other Benefits.    Neither amounts deferred nor amounts paid pursuant to the Plan constitute salary or compensation for the purpose of computing benefits under any other benefit plan, practice, policy or procedure of a Participating Employer unless otherwise expressly provided thereunder.

9.3

No Warranties Regarding Tax Treatment.    The Participating Employers make no warranties regarding the tax treatment to any person of any credits or payments made pursuant to the Plan and each Participant will hold the Administrator and the Participating Employers and their officers, directors, employees, agents and advisors harmless from any liability resulting from any tax position taken in good faith in connection with the Plan.

9.4

No Employment Rights Created.    Neither the establishment of or participation in the Plan gives any Employee the right to continued employment or limits the right of the Participating Employer to discharge, transfer, demote, modify terms and conditions of employment or otherwise deal with any Employee without regard to the effect which such action might have on him or her with respect to the Plan.

9.5

Successors.    Except as otherwise expressly provided in the Plan, all obligations of the Participating Employers under the Plan are binding on any successor to the Participating Employer whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Participating Employer.

19

MERRILL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

First Declaration of Amendment

        Pursuant to the retained power of amendment contained in Section 6.2 of the Merrill Corporation Supplemental Executive Retirement Plan, the undersigned hereby amends the Plan in the manner described below.

1.

Section 1.2 of the Plan is amended to read as follows:

1.2

Plan Purpose.    The Plan provides Active Participants with additional benefits with respect to compensation that may not be taken into for purposes of the "employer contribution" pursuant to the Savings Plan because of the limitations imposed by Code section 401(a)(17).

2.

Section 2.1(A)(1) of the Plan is amended to read as follows:

(1)

be an employee of a Participating Employer on whose behalf the Participating Employer makes an "employer contribution" pursuant to Section 3.3 of the Savings Plan for the Plan Year,

3.

Section 3.1 of the Plan is amended to read as follows:

3.1

Participant Accounts.    The Administrator will establish and maintain an Account for each Participant to evidence amounts credited with respect to the Participant pursuant to Sections 3.2 and 3.3. If an Active Participant receives a credit pursuant to Section 3.2 for any Plan Year for which more than one Participating Employer makes a Savings Plan contribution on his or her behalf, the Administrator will establish a separate Account for the Participant with respect to each such Participating Employer and will apportion the credit among such Accounts in a manner determined by the Administrator to be appropriate.

4.

Section 3.2(B) of the Plan is amended to read as follows:

(B)

Credits for a Plan Year pursuant to this section will be made as of the date on which the Participating Employer's "employer contribution" pursuant to Section 3.3 of the Savings Plan for the Plan Year has been made in full.

5.

Section 3.3 of the Plan is amended to read as follows:

3.3

Earnings Credits.    As of each Valuation Date, the Administrator will, in accordance with Plan Rules, credit a Participant's Account, including the undistributed portion of an Account being distributed in the form of installment payments, with earnings in an amount equal to the "applicable percentage" of the

balance of the Account as of the first day of the month that includes the Valuation Date. Except as provided in Section 4.1(D)(3), the applicable percentage for a given monthly period is equal to the sum of:

(A)

one-half of the percentage increase or decrease in the Standard & Poor's 500 Index (also known as the "S&P 500 Index") for the prior month, measured from the first business day of the month to the last business day of the month as determined by a source deemed reliable by the Administrator; and



(B)

one-half the monthly equivalent of the annual yield in the Moody's Bond Record, published by Moody's Investor's Service, Inc. (or any successor thereto) under the heading of "Moody's Corporate Bond Yield Averages—Av. Corp" or, if such yield is no longer available, a substantially similar average selected by the Administrator, for the prior month.

6.

Section 3.4(A) of the Plan is amended to read as follows:

(A)

Subject to Section 4.1(D)(3), a Participant's vested interest in his or her Account at any time will be the same as the Participant's vested interest at that time in his or her "employer contribution account" under the Savings Plan. The nonvested portion of a Participant's Account will be permanently forfeited at the time the Account is distributed pursuant to Article 4, whether or not his or her employer contribution account under the Savings Plan has then been forfeited or is subsequently restored.

7.

Section 4.1(A)(2) of the Plan is redesignated Section 4.1(A)(3) and amended to read as follows:

(3)

Other.    Except as provided in clause (1) or (2), distribution to a Participant will be made in the form of

(a)

a lump sum payment if, as of the date on which distribution to the Participant would otherwise commence in the form of installment payments, the balance of the Participant's Account, determined in accordance with Subsection (C), is not more than $5000 or

(b)

five annual installment payments made on or around the same date in each of five consecutive calendar years if clause (a) does not apply.

8.

A new Section 4.1(A)(2) is added to read as follows:

(2)

Administrator's Discretion.    At the sole discretion of the Administrator, distribution to a Participant may be made in the form of a lump sum payment.

2

9.

Section 4.1(B) of the Plan is amended to read as follows:

(B)

Time.    Distribution to a Participant pursuant to Subsection (A)(1) will be made as soon as administratively practicable after the last day of the Plan Year during which the Participant is determined to be disabled. Distribution to a Participant pursuant to Subsection (A)(2) or Subsection (A)(3) will be made or will commence, as the case may be, on a date, determined by the Administrator, within the 180-day period following the date on which the Participant terminates employment.

10.

Section 7.7 of the Plan is amended by adding a new Subsection (C) which reads as follows:

(C)

A Change in Control will occur at the end of the effective term of the merger of Viking Merger Sub, Inc. with and into Merrill Corporation. In conjunction with the Change in Control, each Participating Employer will make a contribution to the Trust in accordance with Section 5.1(B). With respect to credits made pursuant to Section 3.2 after the Change in Control and related Earnings Credits pursuant to Section 3.3, Section 5.1(B) will not apply unless and until another Change in Control occurs.

11.

Section 7.13 of the Plan is amended to read as follows:

7.13

Excess Pensionable Earnings.    "Excess Pensionable Earnings" with respect to a Participant for a Plan Year means the amount, if any, by which (a) the amount of compensation that would have been taken into account in computing the "employer contribution" made on the Participant's behalf for a Plan Year pursuant to Section 3.3 of the Savings Plan but for (i) a deferral pursuant to the Merrill Corporation Income Deferral Plan and (ii) the limitation under Code section 401(a)(17) exceeds (b) the limitation in effect under Code section 401(a)(17) for the Plan Year.

12.

Section 7.22 of the Plan is amended to read as follows:

7.22

Savings Plan.    "Savings Plan" means the Merrill Corporation 401(k) Incentive Savings Plan.

13.

Section 7.26 of the Plan is amended to read as follows:

7.26

Valuation Date.    "Valuation Date" means the last day of each month.

The amendments set forth at items 1, 2, 3, 4, 6, 11 and 12 above are effective as of February 1, 1998 and apply to all Participants and Beneficiaries, including Participants who terminated employment before February 1, 1998 and Beneficiaries of Participants who died before February 1, 1998.

3

The amendments set forth at items 7, 8, and 9 above are effective as of February 1, 1999 and apply to all Participants, including Participants who terminated employment before February 1, 1999. If a Participant terminated employment prior to February 1, 1999 and as of the date of this instrument, the balance of his or her Account, determined in accordance with Section 4.1(C) of the Plan, is not more than $5000 and distribution to the Participant in the form of installment payments has not commenced, distribution to the Participant of a lump sum payment pursuant to Section 4.1(A)(3)(a) of the Plan will be made by a date determined in accordance with Section 4.1(B) of the Plan or as soon as administratively practicable after the date of this instrument, whichever is later.

The amendments set forth at items 5, 10, and 13 above are effective on November 1, 1999, and apply to all Participants and Beneficiaries including Participants who terminated employment before November 1, 1999 and Beneficiaries of Participants who died before November 1, 1999.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 19th day of November, 1999.

		MERRILL CORPORATION
Attest:	/s/  STEVEN J. MACHOV Secretary	By	/s/  KATHLEEN LARKIM
		Title:	VP Human Resources

4

MERRILL CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Second Declaration of Amendment

Pursuant to the retained power of amendment contained in Section 6.2 of the Merrill Corporation Supplemental Executive Retirement Plan, the undersigned hereby amends the Plan in the manner described below.

1.

Section 7.7 of the Plan is amended to read as follows:

(A)

A Change in Control occurred on November 23, 1999 at the end of the effective term of the merger of Viking Merger Sub, Inc. with and into Merrill Corporation. In conjunction with the Change in Control, each Participating Employer made a contribution to the Trust in accordance with Section 5.1(B). With respect to credits made pursuant to Section 3.2 after the Change in Control and related Earnings Credits pursuant to Section 3.3, Section 5.1(B) will not apply unless and until another Change in Control occurs.

(B)

After November 23, 1999 "Change in Control" means, a "DLJMB Liquidation Event" within the meaning of Merrill Corporation 1999 Stock Option Plan as amended from time to time.

2.

Section 7.9 of the Plan is amended to read as follows:

7.9

Company.    "Company" means Merrill Communications LLC.

The amendment set forth at item 1 above is effective November 23, 1999. The amendment set forth at item 2 is effective January 1, 2000.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 18^th day of August 2004.

		MERRILL CORPORATION
Attest:	/s/  STEVEN J. MACHOV	By:	/s/  ROBERT H. NAZARIAN
	Secretary	Its:	Executive VP and CFO
		Agreed and Consented to by
		MERRILL COMMUNICATIONS LLC
Attest:	/s/  STEVEN J. MACHOV	By:	/s/  ROBERT H. NAZARIAN
	Secretary	Its:	Executive VP and CFO

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Exhibit 10.12

MERRILL CORPORATION SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CERTIFICATE
Table of Contents
ARTICLE 1 Description
ARTICLE 2 Participation
ARTICLE 3 Benefits
ARTICLE 4 Distribution
ARTICLE 5 Source of Payments; Nature of Interest
ARTICLE 6 Adoption, Amendment, Termination
ARTICLE 7 Definitions, Construction and Interpretation
ARTICLE 8 Administration
ARTICLE 9 Miscellaneous

EX-10.13

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Exhibit 10.13

MERRILL CORPORATION
INCOME DEFERRAL PLAN

As Adopted Effective August 1, 1995

MERRILL CORPORATION
INCOME DEFERRAL PLAN

Table of Contents

ARTICLE 1		Description	1
	1.1	Plan Name	1
	1.2	Plan Purpose	1
	1.3	Plan Type	1
ARTICLE 2		Participation	2
	2.1	Eligibility	2
	2.2	Transfer Among Participating Employers	2
	2.3	Multiple Employment	3
	2.4	Termination or Ceasing to be a Qualified Employee	3
	2.5	Condition of Participation	3
	2.6	Termination of Participation	3
ARTICLE 3		Benefits	4
	3.1	Participant Accounts	4
	3.2	Deferral Credits	4
	3.3	Employer Credit	6
	3.4	Earnings Credits	6
	3.5	Vesting	6
ARTICLE 4		Distribution	7
	4.1	Distribution to Participant	7
	4.2	Distribution to Beneficiary	10
	4.3	Payment in Event of Incapacity	12
ARTICLE 5		Source of Payments; Nature of Interest	13
	5.1	Establishment of Trust	13
	5.2	Source of Payments	13
	5.3	Status of Plan	13
	5.4	Non-assignability of Benefits	14
ARTICLE 6		Adoption, Amendment, Termination	15
	6.1	Adoption	15
	6.2	Amendment	15
	6.3	Termination of Participation	15
	6.4	Termination	16

i

ARTICLE 7		Definitions, Construction and Interpretation	17
	7.1	Account	17
	7.2	Active Participant	17
	7.3	Administrator	17
	7.4	Affiliated Organization	17
	7.5	Annual Bonus	17
	7.6	Base Salary	17
	7.7	Beneficiary	18
	7.8	Board	18
	7.9	Change in Control	18
	7.10	Code	19
	7.11	Commissions	19
	7.12	Company	19
	7.13	Cross Reference	19
	7.14	Effective Date	19
	7.15	Employee	19
	7.16	ERISA	20
	7.17	Governing Law	20
	7.18	Headings	20
	7.19	Number and Gender	20
	7.20	Participant	20
	7.21	Participating Employer	20
	7.22	Plan	20
	7.23	Plan Year	20
	7.24	Plan Rules	20
	7.25	Retirement Age	20
	7.26	Qualified Employee	20
	7.27	Termination of Employment	20
	7.28	Trust	20
	7.29	Trustee	21
	7.30	Unforeseeable Emergency	21
ARTICLE 8		Administration	22
	8.1	Administrator	22
	8.2	Plan Rules	22
	8.3	Administrator's Discretion	22
	8.4	Specialist's Assistance	22
	8.5	Indemnification	22
	8.6	Benefit Claim Procedure	22
	8.7	Disputes	23
ARTICLE 9		Miscellaneous	24
	9.1	Withholding and Offsets	24
	9.2	Other Benefits	24
	9.3	No Warranties Regarding Tax Treatment	24
	9.4	No Employment Rights Created	24
	9.5	Successors	24

ii

MERRILL CORPORATION
INCOME DEFERRAL PLAN

ARTICLE 1
Description

1.1

Plan Name.    The name of the Plan is the "Merrill Corporation Income Deferral Plan."

1.2

Plan Purpose.    The purpose of the Plan is to provide Active Participants with the opportunity to defer receipt of a portion of the Base Salary, Annual Bonus and Commissions that would otherwise be payable to them.

1.3

Plan Type.    The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees and, as such, is intended to be exempt from the provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by operation of sections 201(2), 301(a)(3) and 401(a)(4) thereof, respectively, and from the provisions of Title IV of ERISA, to the extent otherwise applicable, by operation of section 4021(b)(6) thereof. The Plan is also intended to be unfunded for tax purposes. The Plan will be construed and administered in a manner that is consistent with and gives effect to the foregoing.

ARTICLE 2
Participation

2.1

Eligibility.

(A)

Prior to the beginning of each Plan Year, the Administrator will determine which Qualified Employees, if any, are eligible to make deferral elections pursuant to Section 3.2 with respect to the Plan Year.

(B)

At any time during a Plan Year, the Administrator may determine that a Qualified Employee who became such after the beginning of the Plan Year is eligible to make a deferral election pursuant to Section 3.2 with respect to the remainder of the Plan Year.

(C)

The fact that an Employee has been eligible to make deferral elections with respect to any particular Plan Year does not give the Employee any right to make deferral elections in any other Plan Year.

(D)

An Active Participant who, pursuant to Section 3.2(B)(3), has revoked an Annual Bonus deferral election in connection with an Unforseeable Emergency is not eligible to elect additional deferrals (of Base Salary, Annual Bonus or Commissions) with respect to the remainder of the Plan Year during which the revocation occurs or the immediately following Plan Year. A Participant who has received a distribution pursuant to Section 4.1(D)(3) is not eligible to elect additional deferrals (of Base Salary, Annual Bonus or Commissions) with respect to the Plan Year during which the distribution is received or the four immediately following Plan Years. In either case, however, for the Plan Year during which the revocation or distribution occurs, the Participant's Account will be credited with the amount, if any, determined pursuant to Section 3.3 based on his or her deferrals for the portion of the Plan Year preceding the revocation or distribution.

(E)

In conjunction with his or her initial election to participate in the Plan, a Participant must elect whether his or her distribution made pursuant to Section 4.1(A)(2) following his or her disability or termination of employment on or after attaining Retirement Age will (1) be made or commence within 60 days after the determination that he or she is disabled or his or her termination of employment or within the first 60 days of the following calendar year and (2) be made in the form of a lump sum payment or installments. Such elections are irrevocable and apply to all benefits distributed to the Participant pursuant to the Plan.

2.2

Transfer Among Participating Employers.    An Active Participant who transfers employment from one Participating Employer to another Participating Employer and who continues to be a Qualified Employee after the transfer will, for the duration of the Plan Year during which the transfer occurs, continue to participate in the Plan, in accordance with the election in effect for the portion of the Plan Year before the transfer, as a Qualified Employee of such other Participating Employer.

2

2.3

Multiple Employment.    An Active Participant who is simultaneously employed as a Qualified Employee with more than one Participating Employer will participate in the Plan as a Qualified Employee of all such Participating Employers on the basis of a single deferral election pursuant to Section 3.2 applied separately to his or her Base Salary, Annual Bonus and Commissions from each such Participating Employer.

2.4

Termination or Ceasing to be a Qualified Employee.    An Active Participant who, during a Plan Year, terminates his or her employment with all Participation Employers or is determined by the Administrator to have otherwise ceased to be a Qualified Employee is not eligible for further deferral credits for the Plan Year pursuant to Section 3.2 other than such credits relating to Base Salary and Commissions with respect to the period prior to such termination or cessation.

2.5

Condition of Participation.    Each Qualified Employee, as a condition of participation, is bound by all the terms and conditions of the Plan and the Plan Rules, including but not limited to the reserved right of the Company to amend or terminate the Plan and the provisions of Sections 4.1(D)(4) and 8.7, and must furnish to the Administrator such pertinent information, and must execute such election forms and other instruments, as the Administrator or Plan Rules may require by such dates as the Administrator or Plan Rules may establish.

2.6

Termination of Participation.    A Participant will cease to be such as of the date on which he or she is not then eligible to make deferrals and his or her entire Account balance has been distributed.

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ARTICLE 3
Benefits

3.1

Participant Accounts.    The Administrator will establish and maintain an Account for each Participant to evidence amounts credited with respect to the Participant pursuant to Sections 3.2, 3.3 and 3.4. If a Participant makes deferrals with respect to Base Salary, Annual Bonus or Commissions from more than one Participating Employer, the Administrator will establish a separate Account for the Participant with respect to each such Participating Employer.

3.2

Deferral Credits.

(A)

Base Salary deferrals will be made in accordance with the following rules:

(1)

An Active Participant may elect to defer a portion of his or her Base Salary for a Plan Year from a minimum percentage or dollar amount to a maximum percentage or dollar amount, as specified in Plan Rules. Any percentage so elected will automatically apply to the Participant's Base Salary as adjusted from time to time.

(2)

An election made pursuant to this subsection will not be effective unless it is made on a properly completed election form received by the Administrator by a date specified by the Administrator which is prior to the first day of the Plan Year to which the election relates or, in the case of an Active Participant who is determined by the Administrator to be eligible to participate for a Plan Year pursuant to Section 2.1(B), within 30 days after the Administrator's determination.

(3)

An Active Participant may revoke a deferral election made pursuant to this subsection at any time. The revocation will be effective as soon as administratively practicable after the Administrator receives a properly completed revocation form. Upon making a revocation, the Active Participant will be unable to make further deferrals of Base Salary until the first following Plan Year in which he or she is again determined by the Administrator to be eligible to make deferrals.

(4)

Any election or revocation pursuant to this subsection applies only to Base Salary relating to services performed after the effective date of the election or revocation.

(B)

Annual Bonus deferrals will be made in accordance with the following rules:

(1)

An Active Participant who is determined by the Administrator to be eligible to participate for a Plan Year pursuant to Section 2.1(A) may elect to defer a portion of his or her Annual Bonus for the Plan Year from a minimum percentage or dollar amount to a maximum percentage or dollar amount, as specified in Plan Rules. An Active Participant who is determined by the Administrator to be eligible to participate for a Plan Year pursuant to Section 2.1(B) may, if and to the extent specified by the

4

Administrator in conjunction with such determination, elect to defer a portion of his or her Annual Bonus for the Plan Year.

(2)

An election made pursuant to this subsection will not be effective unless it is made on a properly completed election form received by the Administrator by a date specified in Plan Rules but not later than October 31 of the Plan Year to which the Annual Bonus relates.



(3)

An election pursuant to this subsection is irrevocable after the latest date by which it must be received by the Administrator to be effective; provided, first, that an Active Participant may revoke a deferral election made pursuant to this subsection in connection with an Unforeseeable Emergency in which case no further deferrals (of Base Salary, Annual Bonus or Commissions) will be made with respect to the Participant for the remainder of the Plan Year in which the revocation is made and the next following Plan Year; and, second, that if a Participant terminates employment with all Affiliated Organizations or otherwise ceases to be a Qualified Employee before the date as of which an Annual Bonus deferral is credited to his or her Account, other than in connection with a divestiture contemplated by Section 4.1(D)(2) in which the Participant is covered in a successor plan, the deferral election with respect to such Annual Bonus will automatically be revoked as of the date of the Participant's termination of employment or on which he or she ceases to be a Qualified Employee, as the case may be.



(C)

Commission Deferrals will be made in accordance with the following rules:



(1)

An Active Participant may elect to defer a portion of his or her Commissions for the Plan Year from a minimum percentage or dollar amount to a maximum percentage or dollar amount, as specified in Plan Rules. Plan Rules may provide that only Commissions in excess of annual draw or other prescribed levels are eligible for deferral.



(2)

An election pursuant to this subsection will not be effective unless it is made on a properly completed election form received by the Administrator by a date specified by the Administrator which is prior to the first day of the Plan Year to which the election relates or, in the case of an Active Participant who is determined by the Administrator to be eligible to participate for a Plan Year pursuant to Section 2.1(B), within 30 days after the Administrator's determination.



(3)

An Active Participant may revoke a deferral election made pursuant to this subsection with respect to a Plan Year at any time prior to October 1 of the Plan Year. The revocation will be effective as of the last day of the third month beginning after the Administrator receives a properly completed election form. Upon making a revocation, the Active Participant will be unable to make further deferrals of Commissions until the first following Plan Year in which he or she is again determined by the Administrator to be eligible to make deferrals.

5

(D)

Notwithstanding Subsections (A), (B) and (C), Plan Rules may impose conditions and limitations on participation by any Qualified Employee or any group of similarly situated Qualified Employees including, but not limited to, aggregate maximum deferrals on all types of compensation.



(E)

Reductions of an Active Participant's Base Salary, Annual Bonus and Commissions pursuant to this section will be credited to his or her Account as of the day on which the Participant would have otherwise received the Base Salary, Annual Bonus or Commissions but for his or her deferral election to this section.

3.3

Employer Credit.    The Account of an Active Participant who is eligible to share in the allocation of a Participating Employer's contribution for a Plan Year pursuant to the Merrill Corporation Retirement Plan will be credited with an amount equal to the amount, if any, by which (a) the amount of the contribution that would have been allocated to his or her account under the Retirement Plan for the Plan Year but for deferrals made pursuant to this Plan exceeds (b) the amount of the contribution actually allocated to his or her account under the Retirement Plan for the Plan Year. The Account will be credited as of the first day of the month next following the month during which the Participating Employer's Retirement Plan contribution is made in full.

3.4

Earnings Credits.    As of the last day of each semi-monthly payroll period, the Administrator will, in accordance with Plan Rules, credit a Participant's Account, including the undistributed portion of an Account being distributed in the form of installment payments, with earnings in an amount equal to the "applicable percentage" of the balance of the Account as of the first day of the payroll period. Except as provided in Section 4.1(D)(4) and subject to Section 6.2, the applicable percentage for a given semi-monthly payroll period is the semi-monthly equivalent of the annual yield set forth for the month during which the payroll period begins in the Moody's Bond Record, published by Moody's Investor's Service, Inc. (or any successor thereto) under the heading of "Moody's Corporate Bond Yield Averages—Av. Corp." or, if such yield is no longer available, a substantially similar average selected by the Administrator.

3.5

Vesting.    Each Participant always has a fully vested nonforfeitable interest in his or her Account.

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ARTICLE 4
Distribution

4.1

Distribution to Participant.

(A)

Form.

(1)

Termination Prior to Retirement Age.    If a Participant terminates employment prior to attaining Retirement Age, distribution to the Participant will be made in the form of five annual installment payments made on or around the same date in each of five consecutive calendar years.

(2)

Disability or Termination on or After Retirement Age.    If a Participant

(a)

is determined by the Administrator to be absent from active employment because he or she has an illness, injury or disease that is likely to be of long or indefinite duration or result in death or

(b)

terminates employment on or after attaining Retirement Age.

distribution to the Participant will be made in the form of five annual installment payments made on or around the same date in each of five consecutive calendar years, unless, in conjunction with his or her initial enrollment in the Plan, the Participant makes an irrevocable election to receive his or her distribution in the form of a lump sum payment.

(B)

Time.    Distribution to a Participant pursuant to Subsection (A)(1) will commence within the 180-day period following the date on which the Participant terminates employment. Distribution to a Participant pursuant to Subsection (A)(2) will be made or commence within (1) the 60-day period following the date on which the Participant is determined to be disabled or terminates employment or (2) the first 60 days of the calendar year following the calendar year during which he or she is determined to be disabled or terminates employment if the Participant so elected in conjunction with his or her initial enrollment in the Plan.



(C)

Amount.    If distribution is made in the form of a lump sum payment, the amount of the payment will be equal to the balance of the Participant's Account as of the last day of the semi-monthly payroll period immediately preceding the date of the distribution increased by the amount of any subsequent credit pursuant to Section 3.3. If distribution is made in the form of installment payments, the amount of the payment each year will be determined by dividing the Participant's Account balance as of the last day of the semi-monthly payroll period immediately preceding the payment date by the total number of remaining payments (including the payment in question).



(D)

Special Rules.    The provisions of this subsection apply notwithstanding Subsection (A), (B) or (C) or any election by a Participant to the contrary.

7

(1)

Nondeductibility.    If the Administrator determines in good faith that there is a reasonable likelihood that any compensation paid to a Participant by an Affiliated Organization for a taxable year of the Affiliated Organization would not be deductible by the Affiliated Organization solely by reason of the limitation under Code section 162(m), to the extent deemed necessary by the Administrator to ensure that the entire amount of any distribution to the Participant is deductible, the Administrator may defer all or any portion of the distribution. Any amounts deferred pursuant to this subsection will continue to be credited with earnings in accordance with Section 3.4. The deferred amounts and earnings thereon will be distributed to the Participant, or to his or her Beneficiary in the case of the Participant's death, at the earliest possible date, as determined by the Administrator in good faith, on which the deductibility of compensation paid or payable to the Participant for the taxable year of the Affiliated Organization during which the distribution is made will not be limited by Code section 162(m).



(2)

Divestitures.

(a)

If some or all of the assets of a Participating Employer are sold or otherwise disposed of to an unrelated third party, the Administrator may, but is not required to, cause to be distributed the Account of any Participant whose employment with all Affiliated Organizations is terminated in connection with the sale or disposition unless the acquiror adopts a successor plan which is substantially similar to the Plan in all material respects and expressly assumes the Participating Employer's obligation to provide benefits to the Participant, in which case the Participating Employer will cease to have any obligation to provide benefits to the Participant pursuant to the Plan as of the effective date of the assumption. Any such distribution will be made in the form of a lump sum payment as soon as administratively practicable after the date of the sale or disposition. The amount of the payment will be determined in accordance with Subsection (C).



(b)

If a Participating Employer ceases to be an Affiliated Organization, unless otherwise provided in an agreement between an Affiliated Organization and the Participating Employer or an Affiliated Organization and an unrelated third-party acquiror



(i)

a Participant who is employed with the Participating Employer or



(ii)

a Participant who is not employed with the Participating Employer bus has an Account balance attributable to the Participating Employer

will not become entitled to his or her Account balance attributable to the Participating Employer solely as a result of the cessation and the Participating Employer will, after the date on which it ceases to

8

be an Affiliated Organization, continue to be solely responsible to provide benefits to the Participant at least equal to the balance of the Account as of the effective date of the cessation and as thereafter increased by deferral credits relating to the period before the effective date and earnings credits pursuant to Section 3.4.

(3)

Withdrawals Due to Unforeseeable Emergency.    A distribution will be made to a Participant if the Participant submits a written distribution request to the Administrator and the Administrator determines that the Participant has experienced an Unforeseeable Emergency. The amount of the distribution may no t exceed the lesser of (a) the amount necessary to satisfy the emergency, as determined by the Administrator or (b) the balance of the Account as of the date of the distribution determined in accordance with Subsection (C). The distribution will be made in the form of a lump sum payment as soon as administratively practicable after the Administrator's determination that the Participant has experienced an Unforeseeable Emergency.



(4)

Effect of Competition.

(a)

If, at any time, the Administrator has reason to believe that a Participant is competing with an Affiliated Organization, the Administrator will temporarily suspend any distributions to which the Participant would otherwise be entitled pursuant to the Plan. The Administrator will promptly inform the Participant of the suspension and provide the Participant with a reasonable opportunity to establish to the Administrator's reasonable satisfaction that he or she is not competing with an Affiliated Organization. Within a reasonable period of time thereafter, the Administrator will make a final determination as to whether the Participant is competing with an Affiliated Organization based on the information then available to the Administrator and will communicate the final determination to the Participant.



(b)

If the Administrator's final determination is that the Participant is not competing with an Affiliated Organization, the Administrator will lift the suspension on distributions. If the Participant would have received a lump sum distribution during the suspension period but for the suspension, distribution to the Participant will be made within the 60-day period following the date on which the Administrator lifts the suspension in the form of a lump sum payment in an amount equal to the balance of the Participant's Account as of the last day of the semi-monthly payroll period immediately preceding the date of the distribution. If the Participant would have received one or more installment payments during the suspension period but for the suspension, within the 60-day period following the date on which the Administrator lifts the suspension, the Participant will receive a distribution equal to the balance of his or her Account as of the last day or the semi-monthly payroll period immediately preceding the date of the distribution

9

multiplied by a fraction, the numerator of which is the number of missed payments and the denominator of which is the number of remaining annual installment payments immediately before the suspension. Thereafter, any remaining installment payments will be paid as if the suspension had not occurred. If the Participant would not have otherwise received a distribution during the suspension period, distribution to the Participant will be made or commence following the date on which the suspension is lifted in accordance with the foregoing subsections of this section.

(c)

If the Administrator's final determination is that the Participant is competing with an Affiliated Organization, notwithstanding any other provision of the Plan or election by the Participant to the contrary, distribution to the Participant will be made in a lump sum payment on or as soon as administratively practicable after the earlier of (i) his or her sixty-fifth birthday (ii) the seventh anniversary of the date of the Administrator's final determination or (iii) his or her death, unless the Administrator, in its discretion, causes the distribution to be made at an earlier date. Beginning as of the month first following the date of the Administrator's final determination and through the date of the distribution, the amount of earnings that will be credited to the Participant Account will be 50 percent of the amount that would otherwise be credited pursuant to Section 3.4.



(d)

For purposes of applying this clause, a Participant will be deemed to be competing with an Affiliated Organization if the Administrator determines in good faith that the Participant, directly or indirectly, alone or as a partner, officer, director, shareholder, sole proprietor, employee or consultant of any other firm or entity, is or intends to engage in any commercial activity in competition with any part of the business of any Affiliated Organization as conducted at the time in question. For purposes of applying the foregoing, "shareholder" does not include beneficial ownership of less than one percent of the combined voting power of all issued and outstanding voting securities of a publicly held corporation the stock of which is traded on a major stock exchange or quoted on NASDAQ.



(E)

Reduction of Account Balance.    The balance of the Account from which a distribution is made will be reduced by the amount of the distribution as of the date of the distribution.

4.2

Distribution to Beneficiary.

(A)

Form.    In the event of a Participant's death, the balance of the Participant's Account will be distributed to the Participant's Beneficiary in a lump sum payment whether or not payments had commenced to the Participant in the form of installments prior to his or her death.

10

(B)

Time.    Distribution to a Beneficiary will be made within 60 days after the date on which the Administrator receives notice of the Participant's death.



(C)

Amount.    The amount of the payment will be determined in accordance with Section 4.1(C).



(D)

Reduction of Account Balance.    The balance of the Account from which a distribution is made will be reduced by the amount of the distribution as of the date of the distribution.



(E)

Beneficiary Designation.

(1)

A Participant may designate, on a form furnished by the Administrator, one or more primary Beneficiaries or alternative Beneficiaries to receive all or a specified part of his or her Account after his or her death, and the Participant may change or revoke any such designation from time to time. No such designation, change or revocation is effective unless executed by the Participant and received by the Administrator during the Participant's lifetime. No designation of a Beneficiary other than the Participant's spouse is effective unless the spouse consents to the designation or the Administrator determines that spousal consent cannot be obtained because the spouse cannot reasonably be located or is legally incapable of consenting. The consent must be in writing, must acknowledge the effect of the election and must be witnessed by a notary public. The consent is effective only with respect to the Beneficiary or class of Beneficiaries so designated and only with respect to the spouse who so consented.



(2)

If a Participant—



(a)

fails to designate a Beneficiary, or



(b)

revokes a Beneficiary designation without naming another Beneficiary, or



(c)

designates one or more Beneficiaries none of whom survives the Participant or exists at the time in question,

for all or any portion of his or her Account, such Account or portion will be paid to the Participant's surviving spouse or, if the Participant is not survived by a spouse, to the representative of the Participant's estate.

(3)

The automatic Beneficiaries specified above and, unless the designation otherwise specifies, the Beneficiaries designated by the Participant, become fixed as of the Participant's death so that, if a Beneficiary survives the Participant but dies before the receipt of the payment due such Beneficiary, the payment will be made to the representative of such Beneficiary's estate. Any designation of a Beneficiary by name that is accompanied by a description of relationship or only by statement of relationship to the Participant is effective only to designate the person or persons standing in such relationship to the Participant at the Participant's death.

11

4.3

Payment in Event of Incapacity.    If any individual entitled to receive any payment under the Plan is, in the judgment of the Administrator, physically, mentally or legally incapable of receiving or acknowledging receipt of the payment, and no legal representative has been appointed for the individual, the Administrator may (but is not required to) cause the payment to be made to any one or more of the following as may be chosen by the Administrator: the Beneficiary (in the case of the incapacity of a Participant); the institution maintaining the individual; a custodian for the individual under the Uniform Transfers to Minors Act of any state; or the individual's spouse, children, parents, or other relatives by blood or marriage. The Administrator is not required to see to the proper application of any such payment and the payment completely discharges all claims under the Plan against the Participating Employer, the Plan and Trust to the extent of the payment.

12

ARTICLE 5
Source of Payments; Nature of Interest

5.1

Establishment of Trust

(A)

A Participating Employer May establish a Trust, or may be covered by a Trust established by another Participating Employer, with an independent corporate trustee. The Trust must be a grantor trust that conforms substantially with the model trust described in Revenue Procedure 92-64. The Participating Employers may from time to time transfer to the Trust cash, marketable securities or other property acceptable to the Trustee in accordance with the terms of the Trust.

(B)

Notwithstanding Subsection (A), not later than the effective date of a Change in Control, each Participating Employer must transfer to the Trust an amount not less than the amount by which (1) 125 percent of the aggregate balance of all Participant's Accounts attributable to the Participating Employer as of the last day of the month immediately preceding the effective date of the Change in Control exceeds (2) the value of the Trust assets attributable to amounts previously contributed by the Participating Employer as of the most recent date as of which such value was determined.

5.2

Source of Payments.

(A)

Each Participating Employer will pay, from its general assets, the portion of any benefit pursuant to Article 4 or Section 6.3 or 6.4 attributable to a Participant's Account with respect to that Participating Employer, and all costs, charges and expenses relating thereto.

(B)

The Trustee will make distributions to Participants and Beneficiaries from the Trust in satisfaction of a Participating Employer's obligations under the Plan in accordance with the terms of the Trust. The Participating Employer is responsible for paying any benefits attributable to a Participant's Account with respect to that Participating Employer that are not paid by the Trust.

(C)

To the extent a Participating Employer other than the Company fails for any reason to pay any benefit pursuant to the Plan when it is due and the benefit is not paid by the Trustee from the Trust, the Company will pay the unpaid portion of the benefit in accordance with the terms of the Plan as if it were the Participating Employer obligated to pay the benefit pursuant to Subsection (A).

5.3

Status of Plan.    Nothing contained in the Plan or Trust is to be construed as providing for assets to be held for the benefit of any Participant or any other person or persons to whom benefits are to be paid pursuant to the terms of this Plan, the Participant's or other person's only interest under the Plan being the right to receive the benefits set forth herein. The Trust is established only for the convenience of the Participating Employers, and no Participant has any interest in the assets of the Trust. To the extent the Participant or any other person acquires a right to receive benefits under this Plan, such right is no greater than the right of any unsecured general creditor of the Participating Employer.

13

5.4

Non-assignability of Benefits.    The benefits payable under the Plan and the right to receive future benefits under the Plan may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or subjected to any charge or legal process.

14

ARTICLE 6
Adoption, Amendment, Termination

6.1

Adoption.    With the prior approval of the Administrator, an Affiliated Organization may adopt the Plan and become a Participating Employer by furnishings to the Administrator a certified copy of a resolution of its Board adopting the Plan.

6.2

Amendment.

(A)

The Company Reserves the right to amend the Plan at any time to any extent that it may deem advisable. To be effective, an amendment must be stated in a written instrument approved in advance or ratified by the Company's Board and executed in the name of the Company by its President or a Vice President and attested by the Secretary or an Assistant Secretary.

(B)

An amendment adopted in accordance with Subsection (A) is binding on all interested parties as of the effective date stated in the amendment; provided, however, that no amendment will have any retroactive effect so as to deprive any Participant, or the Beneficiary of a deceased Participant, of any benefit to which he or she is entitled under the terms of the Plan in effect immediately prior to the effective date of the amendment, determined in the case of a Participant who is employed by an Affiliated Organization, as if he or she had termined employment immediately prior to the effective date of the amendment.

(C)

Any amendment that changes the method of determining the earnings credited to Participants' Accounts pursuant to Section 3.4 is effective with respect to the portion of the Accounts attributable to credits made before the date on which the amendment is adopted only if the Company's Board determines in good faith that on that date, it is reasonably likely that, in the long run, the new method will not result in materially lower earnings credits that the old method.

(D)

The provisions of the Plan in effect at the termination of a Participant's employment will, except as otherwise expressly provided by a subsequent amendment, continue to apply to such Participant.

6.3

Termination of Participation.    Notwithstanding any other provision of the Plan to the contrary, if determined by the Administrator to be necessary to ensure that the Plan is exempt from ERISA to the extent contemplated by Section 1.3, or upon the Administrator's determination that a Participant's interest in the Plan has been or is likely to be includable in the Participant's gross income for federal income tax purposes prior to the actual payment of benefits pursuant to the Plan, the Administrator may take any or all of the following steps:

(a)

terminate the Participant's future participation in the Plan;

(b)

cause the Participant's entire interest in the Plan to be distributed to the Participant in the form of an immediate lump sum; and/or

(c)

transfer the benefits that would otherwise be payable pursuant to the Plan for all or any of the Participants to a new plan that is similar in all material

15

respects (other than those which require the action in question to be taken).

6.4

Termination.    The Company reserves the right to terminate the Plan in its entirety at any time. Each Participating Employer reserves the right to cease its participation in the Plan at any time. The Plan will terminate in its entirety or with respect to a particular Participating Employer as of the date specified by the Company or such Participating Employer in a written instrument by its authorized officers to the Administrator, adopted in the manner of an amendment. Upon the termination of the Plan in its entirety or with respect to any Participating Employer, the Company or Participating Employer, as the case may be, will either cause (a) any benefits to which Participants have become entitled prior to the effective date of the termination to continue to be paid in accordance with the provisions of Article 4 or (b) the entire interest in the plan of any or all Participants, or the Beneficiaries of any or all deceased Participants, to be distributed in the form of an immediate lump sum payment.

16

ARTICLE 7
Definitions, Construction and Interpretation

The definitions and rules of construction and interpretation set forth in this article apply in construing the Plan unless the context otherwise indicates.

7.1

Account.    "Account" means the bookkeeping account or accounts maintained with respect to a Participant pursuant to Section 3.1.

7.2

Active Participant.    "Active Participant" with respect to a Plan Year is a Qualified Employee who the Administrator has determined pursuant to Section 2.1 is eligible to make deferrals pursuant to the Plan during the Plan Year, for the portion of the Plan Year during which he or she remains eligible.

7.3

Administrator.    The "Administrator" of the Plan is the Compensation Committee of the Company's Board or the person to whom administrative duties are delegated pursuant to the provisions of Section 8.1, as the context requires.

7.4

Affiliated Organization.    An "Affiliated Organization" is the Company and any corporation that is a member of a controlled group of corporations within the meaning of Code section 414(b) that includes the Company.

7.5

Annual Bonus.    "Annual Bonus" with respect to a Participant for a Plan Year means the discretionary annual cash bonus paid to the Participant by a Participating Employer during the April first following the Plan Year or that would have been so paid but for an election made pursuant to the Plan.

7.6

Base Salary.    "Base Salary" with respect to a Participant for a Plan Year means the regular cash remuneration for services rendered as a Qualified Employee paid to the Participant by a Participating Employer during the Plan Year or that would have been so paid but for an election made pursuant to the Plan, excluding the following:

(a)

any bonus;

(b)

the value of life insurance coverage included in the Participant's wages under Code section 79;

(c)

any car allowance, moving expense or mileage reimbursement;

(d)

any educational assistance payment;

(e)

any severance pay;

(f)

any payments under any qualified or nonqualified plan of deferred compensation;

(g)

any benefit under any qualified or nonqualified stock option or stock purchase plan; or

(h)

any other element of compensation specified in Plan Rules.

17

7.7

Beneficiary.    "Beneficiary" with respect to a Participant is the person designated or otherwise determined under the provisions of Section 4.2(E) as the distributee of benefits payable after the Participant's death. A person designated or otherwise determined to be a Beneficiary under the terms of the Plan has no interest in or right under the Plan until the Participant in question has died. A Beneficiary will cease to be such on the day on which all benefits to which he, she or it is entitled under the Plan have been distributed.

7.8

Board.    "Board" means the board of directors of the Affiliated Organization in question. When the Plan provides for an action to be taken by the Board, the action may be taken by any committee or individual authorized to take such action pursuant to a proper delegation by the board of directors in question.

7.9

Change in Control.

(A)

"Change in Control" is any of the following:

(1)

the sale, lease, exchange or other transfer, directly or indirectly, of all or substantially all of the assets of the Company, in one transaction or in a series of related transactions, to any person;

(2)

the approval by the stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company;

(3)

any person is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (a) 20 percent or more, but not more than 50 percent, of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the continuity directors or (b) more than 50 percent of the combined voting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the continuity directors);

(4)

a merger or consolidation to which the Company is a party if the stockholders of the Company immediately prior to the effective date of such merger or consolidation have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving company representing (a) 50 percent or more, but not more than 80 percent, of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the continuity directors, or (b) less than 50 percent of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the continuity directors);

(5)

the continuity directors cease for any reason to constitute at least a majority of the Company's board of directors; or

18

(6)

a change in control of the Company or a nature that would be required to be reported pursuant to section 13 or 15(d) of the Exchange Act, whether or not the Company is then subject to such reporting requirement.



(B)

For purposes of this section:



(1)

a "continuity director" means any individual who is a member of the Company's board of directors on the Effective Date while he or she is a member of the board, and any individual who subsequently becomes a member of the Company's board of directors whose election or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors who are continuity directors (either by a specific vote or by approval of the proxy statement of the Company in which such individual is named as a nominee for director without objection to such nomination);



(2)

"Exchange Act" is the Securities Exchange Act of 1934, as amended from time to time; and



(3)

"person" includes any individual, corporation, partnership, group, association or other "person," as such term is defined in section 14(d) of the Exchange Act, other than (i) the Company; (ii) any corporation at least a majority of whose securities having ordinary voting power for the election of directors is owned, directly or indirectly, by the Company; (iii) any other entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of the entity's governing body; or (iv) any benefit plan sponsored by the Company, a corporation described in clause (ii) or an entity described in clause (iii).

7.10

Code.    "Code" means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes a reference to that provision as it may be amended from time to time and to any successor provision.

7.11

Commissions.    "Commissions" with respect to a Participant for a Plan Year means cash commissions paid to the Participant by a Participating Employer during the Plan Year or that would have been so paid but for an election made pursuant to the Plan.

7.12

Company.    "Company" means Merrill Corporation.

7.13

Cross Reference.    References within a section of the Plan to a particular subsection refer to that subsection within the same section and references within a section or subsection to a particular clause refer to that clause within the same section or subsection, as the case may be.

7.14

Effective Date.    "Effective Date" means August 1, 1995.

7.15

Employee.    "Employee" is an individual who performs services as a common law employee of a Participating Employer.

19

7.16

ERISA.    "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. Any reference to a specific provision of ERISA includes a reference to that provision as it may be amended from time to time and to any successor provision.

7.17

Governing Law.    To the extent that state law is not preempted by the provisions of ERISA, or any other laws of the United States, all questions pertaining to the construction, validity, effect and enforcement of the Plan will be determined in accordance with the internal, substantive laws of the State of Minnesota without regard to the conflict of law principles of the State of Minnesota or any other jurisdiction.

7.18

Headings.    The headings of articles and sections are included solely for convenience of reference; if there exists any conflict between such headings and the text of the Plan, the text will control.

7.19

Number and Gender.    Wherever appropriate, the singular may be read as the plural, the plural may be read as the singular and one gender may be read as the other gender.

7.20

Participant.    "Participant" is a current or former Active Participant to whose Account amounts have been credited pursuant to Article 3 and who has not ceased to be a Participant pursuant to Section 2.6.

7.21

Participating Employer.    "Participating Employer" is the Company and any other Affiliated Organization that has adopted the Plan, or all of them collectively, as the context requires. An Affiliated Organization will cease to be a Participating Employer upon a termination of the Plan as to its Employees and the satisfaction in full of all of its obligations under the Plan or upon its ceasing to be an Affiliated Organization.

7.22

Plan.    "Plan" means the Merrill Corporation Income Deferral Plan, as from time to time amended or restated.

7.23

Plan Year.    "Plan Year" means the period beginning on the Effective Date and ending on January 31, 1996 and, thereafter, the period beginning on February 1 of each calendar year and ending on January 31 of the following calendar year.

7.24

Plan Rules.    "Plan Rules" are rules, policies, practices or procedures adopted by the Administrator pursuant to Section 8.2.

7.25

Retirement Age.    "Retirement Age" means the earliest age at or after which a termination of employment is considered to be a retirement under policies of the Participating Employer in effect at the time of the termination of employment.

7.26

Qualified Employee.    "Qualified Employee" means an Employee who is considered to be a management or highly compensated employee under Plan Rules.

7.27

Termination of Employment.    An individual will be deemed to have terminated employment for purposes of the Plan only if he or she has completely severed his or her employment relationship with all Affiliated Organizations.

7.28

Trust.    "Trust" means any trust or trusts established by a Participating Employer pursuant to Section 5.1.

20

7.29

Trustee.    "Trustee" means the independent corporate trustee or trustees that at the relevant time has or have been appointed to act as Trustee of the Trust.

7.30

Unforeseeable Emergency.    "Unforeseeable Emergency" means an unanticipated emergency that is caused by an event beyond the Participant's control resulting in a severe financial hardship that cannot be satisfied through other means. The existence of an unforeseeable emergency will be determined by the Administrator.

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ARTICLE 8
Administration

8.1

Administrator.    The general administrator of the Plan and the duty to carry out its provisions is vested in the Compensation Committee of the Board. Such Committee may delegate such duty or any portion thereof to a named person and may from time to time revoke such authority and delegate it to another person.

8.2

Plan Rules.    The Administrator has the discretionary power and authority to make such Plan Rules as the Administrator determines to be consistent with the terms, and necessary or advisable in connection with the administration, of the Plan and to modify or rescind any such Plan Rules.

8.3

Administrator's Discretion.    The Administrator has the discretionary power and authority to make all determinations necessary for administration of the Plan, except those determinations that the Plan requires others to make, and to construe, interpret, apply and enforce the provisions of the Plan and Plan Rules whenever necessary to carry out its intent and purpose and to facilitate its administration, including, without limitation, the discretionary power and authority to remedy ambiguities, inconsistencies, omissions and erroneous benefit calculations. In the exercise of its discretionary power and authority, the Administrator will treat all similarly situated persons uniformly.

8.4

Specialist's Assistance.    The Administrator may retain such actuarial, accounting, legal, clerical and other services as may reasonably be required in the administration of the Plan, and may pay reasonable compensation for such services. All costs of administering the Plan will be paid by the Participating Employers.

8.5

Indemnification.    The Participating Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer, and employee of any Affiliated Organization against any and all liabilities, losses, costs and expenses (including legal fees) of every kind and nature that may be imposed on, incurred by, or asserted against such person at any time by reason of such person's services in connection with the Plan, but only if such person did not act dishonestly or in bad faith or in willful violation of the law or regulations under which such liability, loss, cost or expense arises. The Participating Employers have the right, but not the obligation, to select counsel and control the defense and settlement of any action for which a person may be entitled to indemnification under this provision.

8.6

Benefit Claim Procedure.

(A)

If a request for a benefit by a Participant or Beneficiary of a deceased Participant is denied in whole or in part, he or she may, not later than 30 days after the denial, file with the Administrator a written claim objecting to the denial.

(B)

The Administrator, not later than 90 days after receipt of such claim, will render a written decision to the claimant on the claim. If the claim is denied, in whole or in part, such decision will include the reason or reasons for the denial; a reference to the Plan provisions on which the denial is based; a description of any additional material or information, if any, necessary for the claimant to perfect his or her

22

claim; an explanation as to why such information or material is necessary; and an explanation of the Plan's claim procedure.

(C)

The claimant may file with the Administrator, not later than 60 days after receiving the Administrator's written decision, a written notice of request for review of the Administrator's decision, and the claimant or his or her representative may thereafter review relevant Plan documents which relate to the claim and may submit written comments to the Administrator.



(D)

Not later than 60 days after receipt of such review request, the Administrator will render a written decision on the claim, which decision will include the specific reasons for the decision, including a reference to the Plan's specific provisions where appropriate.



(E)

The foregoing 90 and 60-day periods during which the Administrator must respond to the claimant may be extended by up to an additional 90 or 60 days, respectively, if special circumstances beyond the Administrator's control so require and notice of such extension is given to the claimant prior to the expiration of such initial 90 or 60-day period, as the case may be.



(F)

A Participant or Beneficiary must exhaust the procedure described in this section before making any claim of entitlement to benefits pursuant to the Plan in any court or other proceeding.

8.7

Disputes.

(A)

In the case of a dispute between a Participant or Beneficiary and a Participating Employer, the Administrator or other person relating to or arising from the Plan, the United States District Court for the District of Minnesota is a proper venue for any action initiated by or against the Participating Employer, Administrator or other person and such court will have personal jurisdiction over any Participant or Beneficiary named in the action.

(B)

Regardless of where an action relating to or arising from the Plan is pending, the law as stated and applied by the United States Court of Appeals for the Eighth Circuit or the United States District Court for the District of Minnesota will apply to and control all actions relating to the Plan brought against the Plan, a Participating Employer, the Administrator or any other person or against any Participant or Beneficiary.

23

ARTICLE 9
Miscellaneous

9.1

Withholding and Offsets.    The Participating Employers and the Trustee retain the right to withhold from any compensation, deferral and/or benefit payment pursuant to the Plan, any and all income, employment, excise and other tax as the Participating Employers or Trustee deems necessary and the Participating Employers may offset against amounts then payable to a Participant or Beneficiary under the Plan any amounts then owing to the Participating Employers by such Participant or Beneficiary.

9.2

Other Benefits.    Neither amounts deferred nor amounts paid pursuant to the Plan constitute salary or compensation for the purpose of computing benefits under any other benefit plan, practice, policy or procedure of a Participating Employer unless otherwise expressly provided thereunder.

9.3

No Warranties Regarding Tax Treatment.    The Participating Employers make no warranties regarding the tax treatment to any person of any deferrals or payments made pursuant to the Plan and each Participant will hold the Administrator and the Participating Employers and their officers, directors, employees, agents and advisors harmless from any liability resulting from any tax position taken in good faith in connection with the Plan.

9.4

No Employment Rights Created.    Neither the establishment of or participation in the Plan gives any Employee the right to continued employment or limits the right of the Participating Employer to discharge, transfer, demote, modify terms and conditions of employment or otherwise deal with any Employee without regard to the effect which such action might have on him or her with respect to the Plan.

9.5

Successors.    Except as otherwise expressly provided in the Plan, all obligations of the Participating Employers under the Plan are binding on any successor to the Participating Employer whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or otherwise of all or substantially all of the business and/or assets of the Participating Employer.

24

MERRILL CORPORATION
INCOME DEFERRAL PLAN

FIRST DECLARATION OF AMENDMENT

Pursuant to the retained power of amendment contained in Section 6.2 of the Merrill Corporation Income Deferral Plan, the undersigned hereby amends the Plan in the manner described below.

1.

Section 3.3 of the Plan is amended to read as follows:

3.3

Employer Credit.    The Account of an Active Participant who is eligible to share in the allocation of a Participating Employer's "employer contribution" for a Plan Year pursuant to Section 3.3 of the Merrill Corporation 401(k) Incentive Savings Plan will be credited with an amount equal to the amount, if any, by which (a) the amount of the contribution that would have been allocated to his or her "employer contribution account" under the 401(k) Incentive Savings Plan for the Plan Year but for deferrals made pursuant to this Plan exceeds (b) the amount of the contribution actually allocated to his or her employer contribution account under the 401(k) Incentive Savings Plan for the Plan Year. The Account will be credited for a Plan Year as of the first day of the month next following the month during which the Participating Employer's employer contribution pursuant to Section 3.3 of the 401(k) Incentive Savings Plan for the Plan Year is made in full.

2.

Section 4.1(A) of the Plan is amended by adding a new clause (3) which reads as follows:

(3)

Small Amounts.    Notwithstanding clauses (1) and (2), if, as of the date on which distribution to a Participant would otherwise commence in the form of installment payments, the balance of the Participant's Account, determined in accordance with Subsection (C), is not more than $5000, distribution to the Participant will be made in the form of a lump sum payment.

3.

Section 4.1(B) of the Plan is amended to read as follows:

(B)

Time.    Distribution to a Participant pursuant to Subsection (A)(1) will commence within the 180-day period following the date on which the Participant terminates employment. Distribution to a Participant pursuant to Subsection (A)(2) will be made or commence within (1) the 60-day period following the date on which the Participant is determined to be disabled or terminates employment or (2) the first 60 days of the calendar year following the calendar year during which he or she is determined to be disabled or terminates employment if the Participant so elected in conjunction with his or her initial enrollment in the Plan. Distribution to a Participant pursuant to Subsection (A)(3) will be made on the date on which installment payments would have commenced but for Subsection (A)(3).

4.

Section 7.9 of the Plan is amended to add the following language:

(C)

A Change in Control will occur at the end of the effective term of the merger of Viking Merger Sub, Inc. with and into Merrill Corporation. In conjunction with the Change in Control, each Participating Employer will make a contribution to the Trust in accordance with Section 5.1(B). With respect to credits made

pursuant to Section 3.2 after the Change in Control and related Earnings Credits pursuant to Section 3.3, Section 5.1(B) will not apply unless and until another Change in Control occurs.

The amendment set forth at item 1 above is effective as of February 1, 1998. The amendments set forth at items 2 and 3 above are effective as of February 1, 1999 and apply to all Participants, including Participants who terminated employment before February 1, 1999. If a Participant terminated employment prior to February 1, 1999 and as of the date of this instrument, the balance of his or her Account, determined in accordance with Section 4.1(C) of the Plan, is not more than $5000 and distribution to the Participant in the form of installment payments has not commenced, distribution to the Participant of a lump sum payment pursuant to Section 4.1(A)(3) of the Plan will be made by a date determined in accordance with Section 4.1(B) of the Plan or as soon as administratively practicable after the date of this instrument, whichever is later. The amendment set forth at item 4 above is effective November 1, 1999, and apply to all Participants and Beneficiaries including Participants who terminated employment before November 1, 1999 and Beneficiaries of Participants who died before November 1, 1999.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 19th day of November, 1999.

		MERRILL CORPORATION
Attest:	/s/  STEVEN J. MACHOV Secretary	By	/s/  KATHLEEN LARKIN
		Title:	VP Human Resources

2

MERRILL CORPORATION
INCOME DEFERRAL PLAN

Second Declaration of Amendment

Pursuant to the retained power of amendment contained in Section 6.2 of the Merrill Corporation Income Deferral Plan, the undersigned hereby amends the Plan in the manner described below.

1.

Section 7.9 of the Plan is amended to read as follows:

(A)

A Change in Control occurred on November 23, 1999 at the end of the effective term of the merger of Viking Merger Sub, Inc. with and into Merrill Corporation. In conjunction with the Change in Control, each Participating Employer made a contribution to the Trust in accordance with Section 5.1(B). With respect to credits made pursuant to Section 3.2 after the Change in Control and related Earnings Credits pursuant to Section 3.3, Section 5.1(B) will not apply unless and until another Change in Control occurs.

(B)

After November 23, 1999 "Change in Control" means, a "DLJMB Liquidation Event" within the meaning of Merrill Corporation 1999 Stock Option Plan as amended from time to time.

2.

Section 7.12 of the Plan is amended to read as follows:

7.12

Company.    "Company" means Merrill Communications LLC.

The amendment set forth at item 1 above is effective November 23, 1999. The amendment set forth at item 2 is effective January 1, 2000.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 18th day of August, 2004.

		MERRILL CORPORATION
Attest:	/s/  STEVEN J. MACHOV	By:	/s/  ROBERT H. NAZARIAN
	Secretary	Its:	Executive VP and CFO
		Agreed and Consented to by
		MERRILL COMMUNICATIONS LLC
Attest:	/s/  STEVEN J. MACHOV	By:	/s/  ROBERT H. NAZARIAN
	Secretary	Its:	Executive VP and CFO

MERRILL CORPORATION
INCOME DEFERRAL PLAN

Third Declaration of Amendment

Pursuant to the retained power of amendment contained in Section 6.2 of the Merrill Corporation Income Deferral Plan, the undersigned hereby amends the Plan by adding a new Section 4.1(D)(5) to read as follows, effective as of June 30, 2004:

(5)

One-Time Election to Receive Lump Sum Distribution.    Each Active Participant in the Plan may make a one-time irrevocable election during the period of July 9, 2004 through July 31, 2004, to receive a distribution of their Account subject to the provisions below:



(a)

The Participant must elect to receive the distribution either as a single lump sum payment or in two installment payments; provided that if two installment payments are selected the first payment will be equal to 50% of the Participant's Account and the second payment will be equal to the entire balance of the Participant's Account balance.



(b)

The distribution of the Participant's Account will occur as soon as administratively practicable on or after the date(s) as provided on the election form; provided that no distribution date can be before August 1, 2005 nor after January 31, 2006.



(c)

Any distribution required to be made to the Participant pursuant to Sections 4.1(A) and 4.1(B) which is scheduled to occur before the date of the distribution(s) described in paragraph (b) above, will continue to be made notwithstanding a Participant's election pursuant to this Section 4.1(D)(5); provided that any distributions made to the Participant will reduce the balance of the Participant's Account consistent with Section 4.1(E).



(d)

For purposes of paragraph (a), the balance of the Participant's Account will be determined as of the last day of the semi-monthly payroll period ending on or before the respective distribution date.



(e)

The special rules in Sections 4.1(D) will continue to apply to the Participant and the distribution(s) made pursuant to this Section 4.1(D)(5).



(f)

The Participant's election to receive a distribution pursuant to this Section 4.1(D)(5) must in a form acceptable to the Administrator, and each such election must be received by the Administrator no later than July 31, 2004 to be effective.

(g)

Notwithstanding the above, if a distribution of benefits pursuant to an election made pursuant to this Section 4.1(D)(5) would cause the interest of Participants in the Plan to be included in gross income for federal income tax purposes prior to the payment of benefits pursuant to the Plan, such election will be void, and no subsequent distributions pursuant to a voided election will be made.

IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed by its duly authorized officers this 18th day of August, 2004.

		MERRILL COMMUNICATIONS LLC
Attest:	/s/  STEVEN J. MACHOV Secretary	By:	/s/  ROBERT H. NAZARIAN
		Its:	Executive VP and CFO

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Exhibit 10.13

MERRILL CORPORATION INCOME DEFERRAL PLAN
Table of Contents
ARTICLE 1 Description
ARTICLE 2 Participation
ARTICLE 3 Benefits
ARTICLE 4 Distribution
ARTICLE 5 Source of Payments; Nature of Interest
ARTICLE 6 Adoption, Amendment, Termination
ARTICLE 7 Definitions, Construction and Interpretation
ARTICLE 8 Administration
ARTICLE 9 Miscellaneous

EX-10.14

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Exhibit 10.14

FY06 Management Incentive Plan

FY06 Management Incentive Plan

Plan Summary

Introduction	The Management Incentive Plan (MIP) provides an annual reward opportunity for eligible employees of Merrill Communications, LLC. The plan is designed to provide competitive total cash compensation opportunity that is closely tied to overall company and business unit performance.
	Under the plan, participants can earn an incentive payout based on company financial performance and accomplishment of individual objectives. The payout is structured to have unlimited upside potential for exceeding consolidated quantitative targets as well as downside if targets are not met.
Performance Period	The performance period runs on a fiscal year basis from February 1 through January 31.
Plan Eligibility	Eligibility for the plan is determined annually based on grade level and position. The CEO, President and VP of Human Resources of Merrill Communications have the final authority to approve all participants. Each participant will receive documentation confirming their participation in MIP, which will include details on plan structure and financial targets.
Payout Eligibility	Participants will be eligible for an incentive payout if they are:
	•	A full- or part-time regular employee; and
	•	Employed in an eligible position as of August 1 of the plan year. For individuals hired during the year before August 1, eligibility begins on the first day of employment and incentive awards may be pro-rated from the date of hire; and
	•	Performing at a satisfactory level as determined by management; and
	•	An active regular employee on the date of payout. Participants who leave the company voluntarily or involuntarily before the date of payout will not be entitled to any payout under the plan.
	For individuals who experience job changes during the year that would affect eligibility or incentive targets, payouts may be adjusted, either upward or downward, to reflect the associated job change.

Payout Timing	Incentives earned under the plan are generally paid out within 90 days of the end of the fiscal year. For the FY06 incentive, it is expected that the payout will occur in April 2006.
Performance Measures
	•	Consolidated EBITDA before MIP expense
	•	Business Unit/Group Threshold
	•	Individual goals/objectives. (Individual goals/objectives must be measurable and determined in conjunction with participant's manager or Business Unit/Group management. Emphasis should be revenue/earnings growth, efficiency/cost effectiveness, diversification of the business and attracting/retaining the best people.)
Performance and Payout	The minimum possible payout is zero, with unlimited upside potential for the consolidated quantitative component. The individual component payout, if applicable, may not exceed 100%. Specific provisions for FY06 are:
	CONSOLIDATED QUANTITATIVE COMPONENT
	Consolidated Threshold
	•	A Consolidated EBITDA before MIP expense threshold has been established which serves as an absolute minimum level of financial performance that must be achieved before any payout can be made.
	Consolidated Target
	•	A Consolidated EBITDA before MIP expense target has been established. The Consolidated EBITDA target reflects the results at which a participant may become eligible to receive 100% of their consolidated quantitative MIP component.
	•	The payout percentage is interpolated for results above or below target.
	Business Unit/Group Threshold
	•	In addition, your respective Business Unit/Group has an EBITDA before MIP expense threshold (if applicable). This threshold serves as a gate (an absolute minimum level of financial performance) that must be achieved by your Business Unit/Group before any portion of the consolidated component may be paid. The Business Unit/Group threshold must be met to achieve payout even if the overall consolidated results exceed the consolidated threshold.

	Business Unit/Group Target
	•	A Business Unit/Group EBITDA before MIP expense target has also been established. A Business Unit/Group must meet or exceed their established target to be eligible to receive a consolidated quantitative payout above 100% if consolidated performance is above the Consolidated target.
	INDIVIDUAL GOALS COMPONENT
	•	The Consolidated EBITDA before MIP expense threshold must be met before the individual goals component is eligible for payout. Individual goals and objectives have the opportunity to be paid, regardless of business unit/group performance results.
	•	The manager or Business Unit/Group management will determine performance against goals and resulting award for the participant based on their achievement of the objectives that were established.
	•	The percentage earned could range from 0-100% of the individual component, but may not exceed 100%.
Overall Payout Calculation	Incentive payouts are calculated using eligible base salary at the end of the fiscal year multiplied by the target bonus percent. Each component is weighted and multiplied by performance results and totaled together.

Payout Example
	Goals—	Consolidated Quantitative	Individual Goals
	Weighting	80%	20%
	% Goal Achievement	90% (below target by 10%	100% (met target performance)
	Result (weight × % achievement)	72%	20%

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

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

Plan Modifications

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

Right to Continued Employment

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

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Exhibit 10.14

EX-10.19

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Exhibit 10.19

EXECUTIVE EMPLOYMENT AGREEMENT

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

WITNESSETH:

        WHEREAS, Employee is currently employed by the Company;

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

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

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

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

        SECTION 1.Basic Employment Provisions.    

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

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

        (c)    Certain Definitions.    

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

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

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

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

        SECTION 2.    Compensation.    

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

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

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

        SECTION 3.    Termination.    

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

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

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

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

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

        SECTION 4.    Compensation Following Termination.    

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

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

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

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

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

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

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

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

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

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

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

        (e)Gross-Up Amount.    

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

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

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

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

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

        SECTION 7.    Confidential Information.    

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

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

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

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

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

        SECTION 10.    Enforcement of Restrictions.    

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

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

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

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

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

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

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

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

If to the Company:	Viking Merger Sub, Inc. c/o DLJ Merchant Bank Partners II, L.P. 277 Park Avenue New York, New York 10172 Attention: William F. Dawson, Jr. Fax: (612) 892-7272
	and, after the Effective Time
	Merrill Corporation One Merrill Circle St. Paul, MN 55708 Attention: General Counsel Fax: (651) 649-1348
	with a copy to:
	Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: George R. Bason, Jr. Fax: (212) 450-4800
If to Employee:	Merrill Corporation One Merrill Circle St. Paul, MN 55708
	with a copy to: Faegre & Benson LLP 2200 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402-3901 Attention: William R. Busch, Jr. Fax: (612) 336-3026

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

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

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

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

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

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

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

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

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

THE COMPANY:
VIKING MERGER SUB, INC.
By	/s/  WILLIAM F. DAWSON, JR.
Title	President
EMPLOYEE:
/s/  JOHN CASTRO Name: John Castro

ANNEX I

TERM SHEET
DIRECT INVESTMENT PLAN

Share Price:	Same price as that paid by the DLJMB entities under the Merger Agreement.
Reinvestment and Coinvestment Shares:	The employee will purchase Shares with his or her available funds (each a "Reinvestment Share") and the Company will make a non-recourse loan (the "Loan") to the employee to purchase additional Shares (each a "Coinvestment Share"). (See Schedule A attached for the number of Reinvestment and Coinvestment Shares for each employee.) All Reinvestment Shares and Coinvestment Shares purchased by an employee will be posted as collateral for the Loan to the employee. The value of the collateral must be adequate to assure that the Loan will not be treated as income for tax purposes. The employee may make a Section 83(b) election so that any future gain on the Reinvestment and Coinvestment Shares will be treated as capital gain. All Reinvestment and Coinvestment Shares will be subject to the transfer restrictions and other provisions of the Shareholders Agreement, which will apply to the DLJMB entities and all management investors.
Loan Terms:	The Loan will bear interest at the greater of the Company's credit facility rate or the federal applicable rate. All principal and interest will be repayable in a single payment as of the earlier of (i) the employee's termination of employment or (ii) eight years after the purchase of the Reinvestment and Coinvestment Shares. In the case of the sale of all or part of the Shares, Loan repayment will be immediately due to the extent of the lesser of (i) the pro rata portion of unpaid principal and interest on the Loan attributable to such Shares and (ii) the net after tax proceeds realized upon such sale; provided that the total amount due will not exceed the total amount of the principal and interest outstanding on the Loan.
Termination of Employment/Company Repurchase Right:	In the event an employee's termination of employment prior to a DLJMB liquidation event the Reinvestment Shares and Coinvestment Shares will be subject to a Company repurchase right. The repurchase price will depend on the circumstances of the termination and, in the case of the Coinvestment Shares, the extent to which the Coinvestment Shares have become vested, as follows:
	(a)  Vesting Schedule for Coinvestment Shares

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

(a)  Company Repurchase Price

	Reinvestment Shares and Vested Coinvestment Shares	Unvested Conivestment Shares
Voluntary Resignation, Disability, Death or Termination by Company without Cause	FMV	Lesser of (i) FMV or (ii) purchase price plus Loan interest

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

Termination of Employment without Cause/Employee Put Right

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

Change in Control

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

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Schedule A
Reinvestment and Coinvestment Summary

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

*

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

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ANNEX II

TERM SHEET
MANAGEMENT INCENTIVE PLAN

Recipients/ Number of Shares Covered by Options:	See Schedule A attached.
Grant Date:	Closing Date
Option Exercise Price:	Same as DLJMB entities' buying price under the Merger Agreement.
Time Vesting Option:	Each Time Vesting Option will become vested and exercisable as follows:

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

Performance Vesting Option:	Performance Vesting Options will become vested and exercisable according to the schedule set forth in Exhibit 1, based on whether the Target Implied Common Equity Values set forth in such Exhibit are attained as of the end of the relevant years. Such vesting shall be cumulative; i.e., the percentage of Performance Vesting Options set forth for each year shall be vested as of the end of such year if the Target Implied Common Equity Value for such year is achieved as of such date, regardless of whether the Target Implied Common Equity Values have been achieved in previous years.
	In the event that the DLJMB entities sell 90% or more of their Shares in the Company or substantially all of the assets of the Company and realize an internal rate of return ("DLJMB IRR") of at least 25%, the portion of the Performance Vesting Option which has not previously become vested and exercisable will become vested and exercisable based upon the level of the DLJMB IRR, as set forth in Exhibit 2 attached.
Super Performance Vesting Options:	Each Super Performance Vesting Option will become exercisable if the DLJMB entities sell 90% or more of their Shares in the Company or substantially all the assets of the Company and realize a DLJMB IRR in excess of 50%. To the extent that the vesting of all the Super Performance Vesting Options granted under the Plan would cause the DLJMB IRR to be 50% or less, only that portion of the Super Performance Vesting Options that would result in a DLJMB IRR of 50% will become vested.
Transferability/ Shareholders Agreement:	All Options will be non-transferable. All Shares acquired upon the exercise of the Options will be subject to the transfer restrictions and other provisions set forth in the Shareholders' Agreement which will apply to the DLJMB entities and all management investors.

Termination of Employment:	Resignation, Termination without Cause, Death or Disability—Unvested Options terminate immediately, but vested Options will be retained by the employee.
	Termination for Cause—All vested and unvested Options terminate immediately and all Shares previously acquired upon exercise of Options will be subject to a right of repurchase by the Company at a price equal to the Exercise Price.

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SCHEDULE A

Options

Name	Time Vesting Options		Performance Vesting Options		Super Performance Vesting Options		Total Options		Exercise Price
[TOTAL	5	%*	5	%*	5	%*	15	%*	$	22.00	]

*

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

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EXHIBIT 1

(For calculating vesting under Section 4(b))

Fiscal Year:	2000		2001		2002		2003		2004
Target Implied Common Equity Value of the Company (in millions):	[To be based on 85% of management projections]
Target Vested Percentage:	20	%	40	%	60	%	80	%	100	%

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

EV - TD + Cash,

where

EV (Enterprise Value) is pro forma EBITDA times 6.0

TD is Total Debt

Cash is cash on balance sheet(1)

(1)

As of fiscal year end.

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EXHIBIT 2

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

DLJMB IRR	Percentage of Unvested Cliff Vesting Shares as to which Option becomes vested on Liquidation Event
40% or greater	100%
35.0 - 39.9%	75%
30.0 - 34.9%	50%
25.0 - 29.9%	25%
Less than 20%	0%

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

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Exhibit 10.19

EX-10.20

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EXHIBIT 10.20

EXECUTIVE EMPLOYMENT AGREEMENT

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

WITNESSETH:

        WHEREAS, Employee is currently employed by the Company;

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

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

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

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

        SECTION 1.    Basic Employment Provisions.    

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

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

        (c)    Certain Definitions.    

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

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

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

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

        SECTION 2.    Compensation.    

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

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

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

        SECTION 3.    Termination.    

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

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

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

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

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

        SECTION 4.    Compensation Following Termination.    

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

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

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

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

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

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

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

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

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

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

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

        (e)Gross-Up Amount.    

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

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

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

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

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

        SECTION 7.    Confidential Information.    

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

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

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

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

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

        SECTION 10.    Enforcement of Restrictions.    

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

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

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

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

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

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

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

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

If to the Company:	Viking Merger Sub, Inc. 277 Park Avenue New York, New York 10172 Attention: William F. Dawson, Jr. Fax: (612) 892-7272
	and, after the Effective Time
	Merrill Corporation One Merrill Circle St. Paul, MN 55708 Attention: General Counsel Fax: (651) 649-1348
	with a copy to:
	Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: George R. Bason, Jr. Fax: (212) 450-4800
If to Employee:	Merrill Corporation One Merrill Circle St. Paul, MN 55708
	with a copy to: Faegre & Benson LLP 2200 Norwest Center 90 South Seventh Street Minneapolis, Minnesota 55402-3901 Attention: William R. Busch, Jr. Fax: (612) 336-3026

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

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

        SECTION 17.    Waiver; Third Party Beneficiaries.    No delay or omission by any party hereto to exercise any right or power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. Except as otherwise expressly set forth herein, all remedies

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

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

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

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

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

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

THE COMPANY:
VIKING MERGER SUB, INC.
By	/s/  WILLIAM F. DAWSON, JR.
Title	President
EMPLOYEE:
/s/  RICK ATTERBURY Name: Rick Atterbury

ANNEX I

TERM SHEET
DIRECT INVESTMENT PLAN

Share Price:	Same price as that paid by the DLJMB entities under the Merger Agreement.
Reinvestment and Coinvestment Shares:	The employee will purchase Shares with his or her available funds (each a "Reinvestment Share") and the Company will make a non-recourse loan (the "Loan") to the employee to purchase additional Shares (each a "Coinvestment Share"). (See Schedule A attached for the number of Reinvestment and Coinvestment Shares for each employee.) All Reinvestment Shares and Coinvestment Shares purchased by an employee will be posted as collateral for the Loan to the employee. The value of the collateral must be adequate to assure that the Loan will not be treated as income for tax purposes. The employee may make a Section 83(b) election so that any future gain on the Reinvestment and Coinvestment Shares will be treated as capital gain. All Reinvestment and Coinvestment Shares will be subject to the transfer restrictions and other provisions of the Shareholders Agreement, which will apply to the DLJMB entities and all management investors.
Loan Terms:	The Loan will bear interest at the greater of the Company's credit facility rate or the federal applicable rate. All principal and interest will be repayable in a single payment as of the earlier of (i) the employee's termination of employment or (ii) eight years after the purchase of the Reinvestment and Coinvestment Shares. In the case of the sale of all or part of the Shares, Loan repayment will be immediately due to the extent of the lesser of (i) the pro rata portion of unpaid principal and interest on the Loan attributable to such Shares and (ii) the net after tax proceeds realized upon such sale; provided that the total amount due will not exceed the total amount of the principal and interest outstanding on the Loan.
Termination of Employment/Company Repurchase Right:	In the event an employee's termination of employment prior to a DLJMB liquidation event the Reinvestment Shares and Coinvestment Shares will be subject to a Company repurchase right. The repurchase price will depend on the circumstances of the termination and, in the case of the Coinvestment Shares, the extent to which the Coinvestment Shares have become vested, as follows:
	(a)  Vesting Schedule for Coinvestment Shares

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

(a)  Company Repurchase Price

	Reinvestment Shares and Vested Coinvestment Shares	Unvested Conivestment Shares
Voluntary Resignation, Disability, Death or Termination by Company without Cause	FMV	Lesser of (i) FMV or (ii) purchase price plus Loan interest

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

Termination of Employment without Cause/Employee Put Right

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

Change in Control:

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

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Schedule A
Reinvestment and Coinvestment Summary

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

*

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

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ANNEX II

TERM SHEET
MANAGEMENT INCENTIVE PLAN

Recipients/ Number of Shares Covered by Options:	See Schedule A attached.
Grant Date:	Closing Date
Option Exercise Price:	Same as DLJMB entities' buying price under the Merger Agreement.
Time Vesting Option:	Each Time Vesting Option will become vested and exercisable as follows:

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

Performance Vesting Option:	Performance Vesting Options will become vested and exercisable according to the schedule set forth in Exhibit 1, based on whether the Target Implied Common Equity Values set forth in such Exhibit are attained as of the end of the relevant years. Such vesting shall be cumulative; i.e., the percentage of Performance Vesting Options set forth for each year shall be vested as of the end of such year if the Target Implied Common Equity Value for such year is achieved as of such date, regardless of whether the Target Implied Common Equity Values have been achieved in previous years.
	In the event that the DLJMB entities sell 90% or more of their Shares in the Company or substantially all of the assets of the Company and realize an internal rate of return ("DLJMB IRR") of at least 25%, the portion of the Performance Vesting Option which has not previously become vested and exercisable will become vested and exercisable based upon the level of the DLJMB IRR, as set forth in Exhibit 2 attached.
Super Performance Vesting Options:	Each Super Performance Vesting Option will become exercisable if the DLJMB entities sell 90% or more of their Shares in the Company or substantially all the assets of the Company and realize a DLJMB IRR in excess of 50%. To the extent that the vesting of all the Super Performance Vesting Options granted under the Plan would cause the DLJMB IRR to be 50% or less, only that portion of the Super Performance Vesting Options that would result in a DLJMB IRR of 50% will become vested.
Transferability/ Shareholders Agreement:	All Options will be non-transferable. All Shares acquired upon the exercise of the Options will be subject to the transfer restrictions and other provisions set forth in the Shareholders' Agreement which will apply to the DLJMB entities and all management investors.

Termination of Employment:	Resignation, Termination without Cause, Death or Disability—Unvested Options terminate immediately, but vested Options will be retained by the employee.
	Termination for Cause—All vested and unvested Options terminate immediately and all Shares previously acquired upon exercise of Options will be subject to a right of repurchase by the Company at a price equal to the Exercise Price.

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SCHEDULE A

Options

Name	Time Vesting Options		Performance Vesting Options		Super Performance Vesting Options		Total Options		Exercise Price
[TOTAL	5	%*	5	%*	5	%*	15	%*	$	22.00	]

*

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

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EXHIBIT 1

(For calculating vesting under Section 4(b))

Fiscal Year:	2000		2001		2002		2003		2004
Target Implied Common Equity Value of the Company (in millions):	[To be based on 85% of management projections]
Target Vested Percentage:	20	%	40	%	60	%	80	%	100	%

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

EV - TD + Cash,

where

EV (Enterprise Value) is pro forma EBITDA times 6.0

TD is Total Debt

Cash is cash on balance sheet(1)

(1)

As of fiscal year end.

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EXHIBIT 2

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

DLJMB IRR	Percentage of Unvested Cliff Vesting Shares as to which Option becomes vested on Liquidation Event
40% or greater	100%
35.0 - 39.9%	75%
30.0 - 34.9%	50%
25.0 - 29.9%	25%
Less than 20%	0%

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

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EXHIBIT 10.20

EX-10.21

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Exhibit 10.21

EMPLOYMENT AGREEMENT

        This Employment Agreement is made as of November 18, 2005 between Merrill Communications LLC (the "Company" or "Merrill"), with its principal place of business at One Merrill Circle, St. Paul, MN, 55108 and Perry Solomon (the "Executive" or "you").

        WHEREAS, pursuant to a Plan and Agreement of Merger made as of November 18, 2005 (the "Merger Agreement") by and among a wholly-owned subsidiary of Merrill, Merrill and WordWave, Inc. ("WordWave"), all of the stock of WordWave will be purchased by the wholly-owned subsidiary of Merrill; and

        WHEREAS, this Employment Agreement is a condition to the transactions contemplated by the Merger Agreement, and this Employment Agreement is effective upon the closing of the transactions contemplated by the Merger Agreement; and

        WHEREAS, beginning on the Closing Date of the Merger Agreement, the Executive wishes to be employed by the Company and the Company wishes to employ the Executive; and

        NOW THEREFORE, the Company and the Executive agree to the following terms and conditions:

1.    Position and Duties

a.

Executive shall serve as President of Merrill Legal Services (or subsequently named business unit or division within which the business of WordWave operates), subject to the direction of the President and Chief Operating Officer of Merrill Communications LLC.



b.

Executive shall be employed by the Company on a full-time basis and shall perform such duties and responsibilities on behalf of the Company as are intrinsic to the position and such other duties as may be assigned from time to time by the Company.



c.

The Executive's term of employment with the Company shall be three (3) years, beginning on the Closing Date of the Merger Agreement ("Term"); then "at will," which means either you or the Company may terminate the employment relationship at any time for any reason after the Term has expired.



d.

Executive shall devote his full business time and best efforts and business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company.

2.    Compensation and Benefits

During your employment, as compensation for all services performed by you for Company, the Company will provide you the following compensation:

a.

Base Salary.    The Company shall pay the Executive a base salary at the rate of $325,000 per annum, payable in accordance with the Company's payroll practices and subject to possible increase from time to time based on performance. Such base salary is hereafter referred to as the "Base Salary".



b.

Bonus.    The Executive shall be eligible to earn an annual management incentive bonus. The bonus target is 75% of annual Base Salary, paid in accordance with the achievement of annual Budget Target performance. Actual performance against Budget Target (either above or below) shall affect the bonus paid. Determination of reasonable Budget Target performance shall be set by the Company.

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c.

Stock Options.    Any provisions for equity considerations shall be forwarded under separate cover and incorporated herein or in a separate agreement.



d.

Employee Benefits.    During Executive's employment, and subject to any contributions therefore required of employees of the Company, Executive shall be entitled to participate in any and all benefit plans from time to time in effect for similarly situated executive employees. Executive shall be reimbursed by the Company for his club membership, subject to an annual maximum reimbursement of $6,000, provided Executive complies with documentation requirements. Executive shall receive Company-paid parking if Executive's principal office location is in Boston, Massachusetts. Executive's participation in the Company's benefit plans shall be subject to (i) the terms of the applicable plan documents; (ii) applicable Company policy and (iii) the discretion of the Board of any administrative or other Committee provided for in or contemplated by such plan. The Company may alter, modify, add to or delete its employee benefit plans at any time as it, in its sole discretion, determines to be appropriate, without recourse by the Executive.



e.

Vacation.    During his employment, Executive shall be entitled to take four (4) weeks of paid vacation per year, to be taken at such times and intervals as shall be determined by the Executive and approved by the President and Chief Operating Officer, subject to the reasonable business needs of the Company. Executive understands that he does not accrue vacation time, and therefore will not receive any payments for vacation time upon separation of employment, but that pursuant to Company policy Executive is eligible to take paid time off from work for vacation purposes. The use of vacation shall otherwise be subject to the general applicable policies of the Company, as in effect from time to time.



f.

Business Expenses.    The Company shall pay or reimburse the Executive for all reasonable and necessary business expenses incurred or paid by the Executive in the performance of his duties and responsibilities hereunder, subject to such reasonable substantiation and documentation as may be specified by the Company from time to time, and subject to any applicable Company policies, as in effect from time to time.

3.    Separation of Employment and Post-Employment Payments.

Notwithstanding anything to the contrary contained in this Agreement, the Executive's employment hereunder shall end under the following circumstances:

a.

Death.    In the event of the Executive's death during his employment, the Executive's employment hereunder shall immediately and automatically terminate and the Company shall pay to the Executive's designated beneficiary or, if no beneficiary has been designated by the Executive, to his estate, any earned and unpaid Base Salary and Bonus, through the date of his death and any un-reimbursed business expenses that are properly documented. The Executive shall have such rights under the Company employee benefit plans as are provided to his under the applicable terms thereof.



b.

Disability.

        i.      Upon thirty (30) days' written notice to the Executive, the Company may terminate the Executive's employment hereunder in the event that the Executive becomes disabled during his employment hereunder through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all of his duties and responsibilities hereunder for ninety (90) consecutive days.

        ii.     The President and Chief Operating Officer of Merrill Communications LLC may designate another employee to act in the Executive's place during any period of the Executive's disability. Notwithstanding any such designation, the Executive shall continue to

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receive Base Salary in accordance with Section 2.a and benefits in accordance with Section 2.d, to the extent permitted by the then-current terms of the applicable benefit plans, until the Executive becomes eligible for disability income benefits under the Company's disability plan, if any, or until the termination of this employment, whichever shall first occur.

        iii.    While receiving disability income payments under the Company's disability income plan, if any, the Executive shall not be entitled to receive any Base Salary under Section 2.a or earn bonuses under Section 2.b, but shall continue to participate in Company benefit plans in accordance with Section 2.d and the terms of such plans, until the termination of his employment.

        iv.    If any question shall arise as to whether during any period the Executive is disabled through any illness, injury, accident, or condition of either a physical or psychological nature so as to be unable to perform substantially all of his duties and responsibilities hereunder, the Executive may, and at the request of the Company shall, submit to a medical examination by a physician selected by the Company to which the Executive or his duly appointed guardian, if any, has no reasonable objection to determine whether the Executive is so disabled and such determination shall for the purpose of this Agreement be conclusive of the issue. If such question shall arise and the Executive shall fail to submit to such medical examination, the Company's determination of the issue shall be binding on the Executive.

c.

By the Company for Cause.    The Company may terminate the Executive's employment hereunder for Cause at any time during the Term or thereafter upon written notice to the Executive setting forth in reasonable detail the nature of such Cause. The following as determined by President and Chief Operating Officer in his reasonable judgment, shall constitute Cause for termination: (i) dishonesty, fraud or gross or willful misconduct; (ii) breach of any material provision of this Agreement; or (iii) neglect of duties, provided the Company gives the Executive thirty (30) days' written notice describing any such neglect and Executive fails to remedy such neglect within such thirty (30) day period. Upon the giving of notice of termination of the employment hereunder for Cause, the Company shall have no further obligations or liability to the Executive, other than for Base Salary and Bonus earned and unpaid at the date of termination and any un-reimbursed business expenses that are properly documented. The Executive shall have such rights under Company employee benefit plans as are provided his under the applicable terms thereof.



d.

By the Company Other than for Cause.    The Company may terminate the Executive's employment hereunder other than for Cause at any time during the Term or thereafter upon written notice to the Executive. In the event of such termination during the Term or thereafter, in addition to payment of Base Salary and Bonus earned and unpaid at the date of termination and un-reimbursed business expenses that are documented, the Company will provide the Executive (i) the lesser of (A) special services pay equal to twelve (12) months' Base Salary; or (B) special services pay up to the date the Executive commences employment with another organization; and (ii) any Bonus accrued through the date of termination (determined on a reasonable, pro forma, pro rata basis at the end of the quarter during which the termination occurs); and (iii) a lump sum amount equivalent to the grossed-up cost of twelve (12) months' medical insurance premiums, not to exceed $20,000 net, to offset post-employment medical costs. For purposes of subsection (i)(B), Executive retains sole discretion in accepting subsequent employment. The obligations of the Company to provide the Executive special services pay, Bonus and the lump sum payment hereunder are conditional upon the Executive signing a release of claims in the form of Attachment A hereto (the "Employee Release") within twenty-one days of the date on which he receives notice of termination of his employment and upon his not revoking the Employee Release thereafter. All payments under subsection (i) of this Section shall be paid in accordance with

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regular payroll practices of the Company and shall begin on the Company's next regular pay period following the effective date of the Executive's Release, but shall be retroactive to the date of termination. All payments under subsection (ii) of this Section shall be made in one lump sum payment and shall be made on the Company's next regular payday which occurs after the calculation described in subsection (ii) above and which follows the effective date of the Executive's Release. The payment under (iii) above shall be made on the Company's next regular payday following the effective date of the Executive's Release. The Company intends to fully comply with IRS Code Section 409A with respect to the payments contemplated in this paragraph 3.d.

e.

By the Executive.    The Executive may resign his employment hereunder at any time during the Term or thereafter upon thirty (30) days' written notice to the Company. In the event of resignation by the Executive during the Term or thereafter, the Company may elect to waive the period of notice, or any portion thereof, and, if President and Chief Operating Officer so elects, the Company will pay the Executive his Base Salary for the notice period (or for any remaining portion of the period). The Company will also pay the Executive for any un-reimbursed business expenses that are properly documented.

In the event that the Executive resigns his employment for Good Reason, the Executive shall be entitled to the payment(s) described in paragraph 3.d above, conditional upon him signing a release of claims in the form of the Employee Release within twenty-one days of the date on which he provides notice of resignation of his employment and upon his not revoking the Employee Release thereafter. All payments shall be made in the same circumstances as described in Section 3.d above. For purposes of this Section, Good Reason shall mean (1) a reduction in Base Salary or removal from participation in a Bonus plan, or (2) a material diminution in Executive's responsibility or authority; or (3) the Company requiring Executive to relocate and Executive not agreeing to said relocation. The Company intends to fully comply with IRS Code Section 409A with respect to the payments contemplated in this paragraph 3.e.

4.

Effect of Separation.    The provisions of this Section 4 shall apply to any separation of the Executive's employment.

a.

Except for any right the Executive may have under applicable law to continue to participate in the Company's benefit plan(s) at his cost, and except as otherwise provided herein, following separation of his employment, benefits shall terminate pursuant to the terms of the applicable benefit plans based on the date of separation of the Executive's employment without regard to any other payments to the Executive following such date of separation.

b.

Provisions of this Agreement shall survive any separation of employment if so provided herein or if necessary or desirable to accomplish the purposes of another surviving provision, including without limitation the obligations of the Executive under Section 5 hereof. The Executive recognizes that, except as otherwise expressly provided for in Sections 3 hereof, no monies shall be paid to his after separation of employment.

5.

Confidential Information and Restricted Activities.

a.

Confidential Information.    During the course of your employment with the Company, you will learn of confidential information of the Company and the Merrill Group. For purposes of this Agreement, confidential information includes, by way of example only, information relating to: (i) the development, marketing, sales, operational, production, and financial activities of the Company and the Merrill Group; (ii) the costs, financial performance and strategic and operational plans and processes of the Company and the Merrill Group; (iii) lists of employees, independent contractors, vendors, and clients and prospective clients of the

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Company and the Merrill Group, including but not limited to information regarding, identity, business practices and needs of employees, independent contractors, vendors, and clients and prospective clients of the Company and the Merrill Group; and (iv) the persons and organizations with whom the Company and the Merrill Group have business relationships and the substance of those relationships. Confidential Information also includes any information received by the Company or the Merrill Group from any person with an understanding that is expressed or implied that it will not be disclosed. For purposes of this Agreement, "Merrill Group" means, individually and collectively, Merrill Communications LLC, Merrill Corporation, any entity where more than 50% of the value and of the combined voting power of the outstanding ownership or capital stock is owned by Merrill Communications LLC or Merrill Corporation, and any other trade or business in which Merrill Communications LLC or Merrill Corporation directly or indirectly owns more than 50% of the capital and profit interests. During the course of your employment with the Company, you may develop confidential information on behalf of the Company and Merrill Group. You agree that you will never use or disclose to any Person (except as required by applicable law or for the proper performance of your duties and responsibilities to the Company and the Merrill Group) any trade secrets and/or confidential information of the Company or any trade secrets and/or confidential information of the Merrill Group. You understand that this restriction shall continue to apply after your employment ends, regardless of the reason for such separation. This Section 5.a does not apply if trade secrets and/or confidential information become public due to no fault of the Executive.

b.

Protection of Documents.    All documents, transcripts, records, software, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company and any copies ("Documents"), whether or not prepared by you, shall be the sole and exclusive property of the Company and/or the Merrill Group. You agree to safeguard all Documents and to surrender to the Company and/or to Merrill Group, at the time your employment terminates or at such earlier time or times as President and Chief Operating Officer or its designees may specify, all Documents then in your possession or control.



c.

Non-Competition.    You shall not, during the Term and/or for a period of (1) one year after your employment with the Company ends whichever is later, directly or indirectly, within any geographical area or territory in the United States, the United Kingdom, Australia, New Zealand, Asia, or any other location where the Company and/or the Merrill Group then conducts business, own, manage, operate or control, or participate in the ownership, management, operation or control of, or have any interest in, as a stockholder, member, director, governor, manager, officer, employee, agent, consultant or partner, any business of the type engaged in by the Company or Merrill Group or in which the Company or Merrill Group has committed to engage pursuant to its budget or business plan within the twenty-four (24) month period following such budget or business plan; provided, however, that nothing contained herein will prohibit you from owning less than 3% of any class of securities listed on a national securities exchange or traded publicly in the over-the-counter market. The provisions of this Section will remain in place in the event that the Company and/or Merrill Group sells, transfers, assigns or otherwise disposes of the Company's business to a third party and such third party, in addition to the Company, shall have the benefit of this Section.



d.

Non-Solicitation.    You shall not, during the Term and/or for a period of (1) one year after your employment with the Company ends whichever is later, directly or indirectly, call upon, solicit, contact or serve any of the then-existing clients, customers, vendors or suppliers, of the Company and/or Merrill Group, any clients, customers, vendors or suppliers that have had a relationship with the Company and/or Merrill Group during the preceding twelve (12) months, or any potential clients, customers, vendors or suppliers that were solicited by the Company

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and/or Merrill Group during the preceding twelve (12) months, with respect to products, services or activities that compete in whole or in part with the Company and or Merrill Group.

e.

Non-Solicitation.    You shall not, during the Term and/or for a period of (1) one year after your employment with the Company ends whichever is later, directly or indirectly, employ or attempt to employ (by soliciting or assisting anyone else in the solicitation of) any of the Company and/or Merrill Group's then employees or independent contractors on behalf of any other entity, whether or not such entity competes with the Company and/or the Merrill Group.



f.

Non-Interference.    You shall not, during the Term and/or for a period of (1) one year after your employment with the Company ends whichever is later, directly or indirectly, disrupt, damage, impair, or interfere with the business of the Company and/or the Merrill Group whether by way of interfering with or disrupting relationships with employees, independent contractors, customers, agents, representatives or vendors.



g.

In signing this Agreement you give the Company assurance that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on you under this Section 5. You agree without reservation that these restraints are necessary for the reasonable and proper protection of the Company and the Merrill Group and that each and every one of the restraints is reasonable with respect to subject matter, length of time and geographic area. You further agree that, were you to breach any of the covenants contained in this Section 5, the damage to the Company and the Merrill Group would be irreparable. You therefore agree that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by you of any of those covenants. You and the Company further agree that, in the event that any provision of this Section 5 is determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, that provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. It is also agreed that the Company and/or any entity in the Merrill Group shall have the right to enforce all of your obligations to that entity under this Agreement, including without limitation your obligations pursuant to this Section 5.

6.    Miscellaneous

a.

Mediation & Arbitration.    Any dispute arising out of or relating to this Agreement or the formation, breach, termination or validity thereof, except for injunctive relief contemplated herein (a "Dispute") shall be resolved as follows. If the Dispute cannot be settled through direct discussions, the parties shall first try to settle the Dispute in an amicable manner by mediation under the Commercial Mediation Rules of the American Arbitration Association, before resorting to arbitration. Any Dispute that has not been resolved within 60 days of the initiation of the mediation procedure (the "Mediation Deadline") shall be resolved by binding arbitration in Minnesota by a panel of three (3) arbitrators, selected in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "American Arbitration Rules"). The arbitrators in any such arbitration shall have the discretion to order a pre-hearing exchange of information by the parties, including, without limitation, production of requested documents, exchange of summaries of testimony and proposed witnesses, and examination by deposition of parties. The arbitrators are not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any damages in excess of compensatory damages. Judgment upon any arbitration award may be entered in any court having jurisdiction thereof, and the parties consent to the jurisdiction of the federal and state courts of the State of Minnesota for this purpose. Within twenty (20) days of the

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Mediation Deadline, the Company shall nominate one arbitrator and the Executive shall nominate one arbitrator. Within thirty (30) days of the nomination and appointment of the two arbitrators, the two arbitrators shall select a third arbitrator, and if they fail to do so, a neutral arbitrator shall be chosen in accordance with the American Arbitration Rules.

b.

Governing Law.    This is a Minnesota contract and shall be governed and construed in accordance with the laws of the State of Minnesota without regard to the conflict of laws principles thereof.



c.

Assignment.    The Company reserves the right to assign this Agreement.



d.

Entire Agreement.    This Agreement contains the entire understanding of the parties with respect to its terms, and this Agreement supersedes and replaces any and all previous oral or written agreements regarding terms and conditions of employment, including any and all agreements between Executive and WordWave or any other predecessor entity to the Company.

[Signature Page Follows]

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IN WITNESS WHEREOF, this Agreement has been executed as an instrument by the Company, by its duly authorized representative, and by the Executive, as of the date first above written.

EXECUTIVE

/s/ Perry Solomon
Perry Solomon
Merrill Communications, LLC
By:	/s/ Brenda J. Vale
Title:	VP HR

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Attachment A—Employee Release of Claims

RELEASE

1.     Definitions

•

Words such as "I" or "me" include both me and anyone who has or obtains any legal rights or claims through me. My name is                        (employee #).



•

The "Company" means Merrill Communications LLC, its parent, subsidiaries, successors, assigns, affiliates, predecessors, present or former officers, administrators, employees, agents, Board of Directors, shareholders, counsel, consultants, insurers, indemnitors, assigns, or any pension or other benefit plan applicable to employees or former employees.



•

"My Claims" means all of the rights I now have to any relief of any kind from the Company, whether or not I now know about those rights, arising out of my employment with the Company and my separation of employment, including but not limited to, claims based upon the Age Discrimination in Employment Act (the "ADEA") and similar applicable state law(s); the Americans with Disabilities Act and similar applicable state law(s); Title VII of the Civil Rights Act of 1964, as amended, and similar applicable state law(s); the Family and Medical Leave Act and similar applicable state law(s); Sections 1982 through 1988 of Title 42 of the United States Code; the Fair Labor Standards Act and similar applicable state law(s); the Employee Retirement Income Security Act; the Worker Adjustment Retraining Notification Act and similar applicable state law(s); any and all federal, state or local employment laws, rules or regulations or public policies which apply to me in the state of my legal residence and in any state where I have been employed by the Company; and any other federal, state or local statute, ordinance or law, including civil rights laws, based on any protected class status; and all other claims including those based in contract or tort theories or other common law, including but not limited to: breach of contract; fraud or misrepresentation; defamation; intentional or negligent infliction of emotional distress; breach of the covenant of good faith and fair dealing; promissory estoppel; breach of express or implied promise; negligence or any other breach of duty; wrongful termination of employment; constructive discharge; invasion of privacy; retaliation; harassment; my conduct as a "whistleblower"; attorneys' fees; breach of public policy; failure to pay wages or benefits; or any other claims for unlawful employment practices whether legal or equitable.

2.     Separation Date

My last day of work is                        ("Separation Date").

3.     Period of Time to Consider this Release

I understand that I have 21 days, starting on the day I receive this Release, in which to consider whether to sign this Release. If I decide to sign this Release, it must be signed and returned to the Company by the 21^st day after I receive it. The Company and I agree that any changes made to this Release before I sign it do not restart the time I have to consider it. I understand that I cannot sign this Release until after my Separation Date; if I sign it before the Separation Date, it is void and not enforceable. I understand that I may voluntarily waive the period of time I have within which to consider this Release and sign this Release at any time within the 21 days, so long as I sign after my Separation Date.

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4.     Payments

In consideration of the obligations imposed upon me by this Release, the Company will pay me: (a) an amount equal to twelve (12) months' base salary, less applicable authorized withholdings, paid in regular pay period installments; (b) a lump sum payment of                        , less applicable authorized withholdings, paid within 15 days after the close of the quarter during which the Separation Date occurs; and (c) a lump sum payment of $                        , less applicable authorized withholdings, paid on the next regular payday after the effective date of this Release. I understand that the Company will begin making payments under this Section after 15 days has expired following the Company's receipt of this signed Release and that the Company is only obligated to make payments provided that I do not cancel this Release as explained in paragraph 16. I acknowledge the receipt of all compensation earned while an employee, including bonuses, commissions, incentive compensation, and accrued vacation pay owed to me. The Company will provide me with the necessary information regarding the continuation of medical and dental benefits under COBRA. I understand that I am not entitled to any benefits after the Separation Date, unless specified in this Release.

5.     Release of Claims

In consideration of the obligations imposed upon the Company by this Release, I agree to give up and unconditionally release the Company from My Claims. I will not sue the Company or make any other demands against the Company based on My Claims. I am not waiving any claims, including but not limited to those under the ADEA, that may arise out of events occurring after the date I sign this Release. I agree that I am releasing any claims for damages, by charge or otherwise, that may be made by me or anyone on my behalf, whether governmental or otherwise, and I agree not to bring any claims for damages by any administrative or legal process against the Company. I also waive and release any rights to money damage or other legal relief awarded by any governmental agency related to any charge or other claim. I represent that I am the sole owner of My Claims and that I have not assigned My Claims to anyone.

6.     Agreement Not to Sue

I agree that I have not and will not file any grievance, complaint, claim or charge with any local, state or federal agency or judicial body concerning any matter that is the subject of this Release.

7.     No Admission of Liability

I understand that it is the Company's position that even though it has paid me monies pursuant to this Release, the Company does not admit to any violation of law or wrongdoing.

8.     The Company Property

I promise to return to the Company all of its property in my possession including, without limitation, equipment, supplies, products, credit cards, documents, forms, reports, customer lists, contracts, keys, and all copies of same.

9.     Post-Employment Restrictions

I acknowledge and reaffirm all post-employment restrictions on my professional activities, as more fully described in other enforceable agreements.

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10.   No Defamation

I agree that I will not speak of the Company or its employees in a derogatory or defamatory way.

11.   Confidentiality of Release

I will not disclose the terms of this Release to anyone except my spouse, legal counsel or financial advisor, provided that, in the event of such disclosure, I shall cause such parties to similarly honor the promise of confidentiality.

12.   Consequences of Violating My Promises

If I violate any provision of this Release (including suing the Company over a released Claim), the Company no longer has any obligations under this Release and I must immediately refund all monies already paid to me. In addition, I agree to pay the Company's reasonable attorneys' fees and damages incurred as a result of any breach.

13.   Choice of Law

The parties agree that any disputes arising under this Release shall be governed by Minnesota law and that any litigation related to this Release will be venued in the State of Minnesota or the United States District Court for the District of Minnesota. I agree to the personal jurisdiction of these courts and waive any objection that the venue is inconvenient or improper.

14.   Cooperation

I will cooperate with the Company on any matters pending in its business of which I have knowledge and can assist. For any projects requiring extended time and effort, the Company will pay me at a reasonable market rate.

15.   Opportunity to Seek Advice

I understand that I am advised by the Company to consult with an attorney prior to signing this Release. I acknowledge that I have had an opportunity to consult with an attorney or other personal advisor, and I have signed this Release voluntarily and fully understand its terms.

16.   Revocation

I understand that I may revoke (that is, cancel) this Release, as it pertains to the ADEA, within seven (7) calendar days of signing it. To be effective, my revocation must be in writing and delivered to Ms. Brenda J. Vale, either by hand or by mail. If sent by mail, the revocation must be:

a)

postmarked within the 7-day period;



b)

properly addressed to Ms. Brenda J. Vale, Merrill Communications LLC, One Merrill Circle, St. Paul, MN 55108; and



c)

sent by certified mail, return receipt requested.

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17.   Complete Agreement

This Release represents the entire agreement between the parties with respect to its provisions, and it supersedes all prior oral or written agreements or understandings about those provisions. However, I understand that if I have signed an agreement as an equity participant in Merrill Corporation, any such agreement remains in full force and effect. I also understand that if I have signed other enforceable agreements that contain restrictions on my post-employment activities, that those restrictions remain in full force and effect. This Release cannot be modified or changed, except by a written instrument signed by both parties. If one or more provisions of this Release is ruled void or unenforceable, the remaining provisions are enforceable at the option of the Company.

Merrill Communications LLC

By:	(signature)
Its:	(title)
	(date)
I have been advised and given an opportunity to consult with an attorney or other advisor. I understand the provisions of this Release and have relied only on the promises in this Release and not on any other promise made by The Company. I sign this Release knowingly and voluntarily.
		(signature)
		(date)

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Exhibit 10.21

EMPLOYMENT AGREEMENT

EX-10.22

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Exhibit 10.22

NON-COMPETITION AGREEMENT

THIS NON-COMPETITION AGREEMENT dated as of November 18, 2005 (this "Agreement"), is by and between Merrill Communications LLC, a Delaware limited liability company ("Parent") and Perry Solomon, an individual residing at 26 Homestead Street, Newton, MA 02468 ("Individual").

        WHEREAS, this Agreement is entered into in connection with that certain Agreement and Plan of Merger, dated as of November 18, 2005 (the "Merger Agreement"), by and among Capture Merger Corp., a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub"), Parent, WordWave, Inc., a Delaware corporation ("Company") and Perry Solomon, as Stockholder Representative.

        WHEREAS, pursuant to and subject to the terms of the Merger Agreement, the Merger Sub will be merged with and into the Company, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation, and the Company shall thereupon become a wholly owned subsidiary of Parent.

        WHEREAS, in order to induce Parent to consummate the transactions contemplated by the Merger Agreement (including but not limited to the acquisition by Parent of the Company and the settlement of all of Individual's stock and other equity interests in the Company), and to protect for Parent all of the goodwill associated with the business of the Company and its subsidiaries consisting of litigation support, digital recording and transcription and captioning services (the "Business"), Individual is willing to enter into this Agreement.

        WHEREAS, this Agreement is a material inducement to the willingness of the parties to enter into the Merger Agreement and consummate the transactions contemplated thereby.

        NOW THEREFORE, in consideration of the premises and the mutual promises and obligations contained herein, the parties hereto agree as follows:

        1.    Acknowledgment by Individual.    As a stockholder of the Company, Individual will benefit from the consummation of the transactions contemplated by the Merger Agreement and desires to induce Parent to consummate such transactions by entering into this Agreement. In furtherance thereof, Individual hereby acknowledges and agrees that:

        (a)   Individual has occupied a position of trust and confidence with the Company prior to the date hereof and has become familiar with the following, all of which constitute confidential information (collectively, the "Confidential Information"): (i) any and all trade secrets concerning the Business, product specifications, data, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, past, current and planned research and development, current and planned manufacturing and distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and

database technologies, systems, structures and architectures and related processes, formulae, compositions, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information of the Business and any other information, however documented, of the Business; (ii) any and all information concerning the Business (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; and (iii) any and all notes, analysis, compilations, studies, summaries, and other material prepared by or for the Business containing or based, in whole or in part, on any information included in the foregoing;

        (b)   the products and services of the Business are marketed throughout the countries in which the Company and its subsidiaries operate;

        (c)   the Business competes with other businesses that are or could be located in any part of the world;

        (d)   the Parent has required that Individual make the covenants set forth in Sections 2 and 3 of this Agreement as a condition to the Merger Sub's merger with and into the Company pursuant to the Merger Agreement;

        (e)   the provisions of Sections 2 and 3 of this Agreement are reasonable and necessary to protect and preserve the Business being acquired by the Parent; and

        (f)    the Parent and the Company would be irreparably damaged if Individual were to breach any of the covenants set forth in Sections 2 and 3 of this Agreement.

        2.    Confidential Information.    Individual acknowledges and agrees that all Confidential Information known or obtained by Individual, whether before or after the date hereof, is the property of the Company. Therefore, Individual agrees that Individual will not, at any time, disclose to any unauthorized Person (as defined below) or use for his own account or for the benefit of any third party any Confidential Information, whether Individual has such information in Individual's memory or embodied in writing or other physical form, without the Parent's written consent, unless and to the extent that the Confidential Information is or becomes generally known to and available for use by the public other than as a result of Individual's fault or the fault of any other Person bound by a duty of confidentiality to the Parent or the Company.

        For purposes of this Agreement, "Person" means any individual; corporation; partnership; firm; joint venture; association; joint-stock company; trust; unincorporated organization; federal, state or local government; court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign, including courts of competent jurisdiction; or other entity.

2

        3.    Competitive Activities.    Other than for the Company or one of its affiliates, if applicable:

        (a)   Individual will not, for the period commencing on the date of the consummation of the transactions contemplated by the Merger Agreement (the "Effective Date") and ending on the fifth (5^th) anniversary of the Effective Date of this Agreement (the "Restrictive Period"), directly or indirectly, within any geographical area or territory in the United States, the United Kingdom, Australia, New Zealand, Hong Kong, Singapore, Ireland, Malaysia, China, or any other location where the Business is currently conducted, own, manage, operate or control, or participate in the ownership, management, operation or control of, or have any interest in, as a stockholder, member, director, governor, manager, officer, employee, agent, consultant or partner, any business of the type engaged in by the Business or any type of business that the Business has committed to engage in pursuant to its budget or business plan within the 24 month period following such budget or business plan; provided, however, that nothing contained herein will prohibit Individual from owning less than three percent (3%) of any class of securities listed on a national securities exchange or traded publicly in the over-the-counter market.

        (b)   During the Restrictive Period, Individual will not, directly or indirectly, damage or impair the Business whether by way of interfering with or disrupting the Company's relationship with its employees, consultants, agents, independent contractors, customers, clients, representatives, vendors or suppliers.

        (c)   During the Restrictive Period, Individual will not, directly or indirectly, call upon, solicit, contact or serve any of the then-existing clients, customers, vendors or suppliers, of the Business, any clients, customers, vendors or suppliers that have had a relationship with the Business during the preceding twelve (12) months, or any potential clients, customers, vendors or suppliers that were solicited by the Business during the preceding twelve (12) months with respect to products, services or activities that compete in whole or in part with the Business.

        (d)   During the Restrictive Period, Individual will not, directly or indirectly, employ or attempt to employ (by soliciting or assisting anyone else in the solicitation of) any of the Business's then employees on behalf of Individual or any other Person, whether or not Individual or such Person competes with the Business.

        (e)   During the Restrictive Period, Individual will not solicit, directly or indirectly, any of the Business's then independent contractors on behalf of Individual or any other Person, whether or not Individual or such Person competes with the Business.

        Section 3(a) of this Agreement will cease to be applicable to any activity of Individual from and after such time as the Company has made a decision through Parent's Board of Directors not to continue, or has ceased for a period of six (6) months, the business with which such activity of Individual would be competitive.

        4.    Further Acknowledgement by Individual.    Individual acknowledges and agrees that the restrictions in Sections 2 and 3 of this Agreement are reasonable and valid in geographical and temporal scope and in all other respects. If any of the provisions of this Agreement are

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held to be unenforceable because of the scope, duration or area of its applicability, the court making such determination shall have the power to modify such scope, duration or area or all of them, and such provision shall then be applicable in such modified form.

        5.    Remedies.    If Individual breaches any of the covenants set forth in Section 2 or 3 of this Agreement, the Parent will be entitled to the following remedies:

        (a)   The receipt by the Parent from Individual of funds in the amount equal to any loss, liability, damage or expense to which the Parent or the Company may become subject or which it may suffer or incur, directly or indirectly, as a result from or in connection with such breach by Individual of any of the covenants set forth in Section 2 or 3 of this Agreement, as well as all compensation, profits, moneys, accruals, increments or other benefits derived or received by Individual as a result of any transactions constituting the breach of any of the covenants set forth in Section 2 or 3 of this Agreement, in each case as finally determined by a court of competent jurisdiction or a final arbitration award;

        (b)   The ability to offset against any and all amounts owing to the Individual under the Merger Agreement and all amounts which the Parent claims under Section 5(a) above, together with any related enforcement, collection or related costs incurred by the Parent or the Company; and

        (c)   As a matter of right, and without the need to prove irreparable injury or to post any bond or other security, the ability to obtain an injunction, restraining order, writ of mandamus or other equitable relief (including specific performance) from any court of competent jurisdiction restraining any violation of any provision of Section 2 or 3 of this Agreement.

        With respect to the Parent's rights under Section 5(b) above, if Parent makes a good faith claim against the Individual for a breach of Section 2 or 3 of this Agreement, any amounts otherwise owing to the Individual under the Merger Agreement that are subject to dispute shall be placed in a mutually agreed escrow account and held there pending resolution of the dispute. The rights and remedies of the parties to this Agreement are cumulative and not alternative.

        6.    No Waiver.    No waiver of any breach of any agreement or provision herein contained will be deemed a waiver of any preceding or succeeding breach thereof or of any other agreement or provision herein contained. No extension of time for performance of any obligations or acts will be deemed an extension of the time for performance of any other obligations or acts.

        7.    Successors and Assigns.    This Agreement will bind and inure to the benefit of the parties hereto and their permitted successors and assigns. This Agreement may not be assigned by either party without the prior written consent of the other party, except that the Parent may transfer or assign this Agreement, without the consent of Individual, to (a) any of its affiliates, (b) any Person or entity succeeding to substantially all of the assets or business of the Parent or the Company, including as a result of a consolidation or merger, (c) any Person or entity to which all or substantially all of the assets or stock of the Parent or the Company

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has been sold or (d) any Person or entity involved in a business transaction with the Parent or the Company similar to any of the foregoing.

        8.    Captions.    The captions and headings contained herein are solely for convenience of reference and will not affect the interpretation of any provision hereof.

        9.    Notices.    All notices, requests, demands and other communications required or permitted hereunder will be made in writing and will be deemed to have been duly given and effective: (a) on the date of delivery, if delivered personally; (b) on the first business day following the date of dispatch if delivered by a recognized next-day courier service; (c) on the earlier of the fourth (4th) day after mailing or the date of the return receipt acknowledgement, if mailed, postage prepaid, by certified or registered mail, return receipt requested; or (d) on the date of transmission, if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic communications equipment:

If to the Parent:	Merrill Communications LLC One Merrill Circle St. Paul, MN 55108 Attn: Steven J. Machov
	With a copy to:
	Oppenheimer Wolff & Donnelly LLP 45 South Seventh Street Plaza VII, Suite 3300 Minneapolis, MN 55402 Attn: Bruce A. Machmeier, Esq. Fax: (612) 607-7100
If to Individual:	Perry Solomon 26 Homestead Street Newton, MA 02468
	With a copy to:
	Attention:
	Fax: (            )             -

        10.    Governing Law.    This Agreement and the legal relations among the parties hereto will be governed by and construed in accordance with the internal substantive laws of the State of New York (without regard to the laws of conflict that might otherwise apply) as to all

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matters, including without limitation, matters of validity, construction, effect, performance and remedies.

        11.    Jurisdiction; Service of Process.    The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York or the Commonwealth of Massachusetts over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

        12.    Construction.    Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law. If any provision of this Agreement is to any extent declared invalid by a court of competent jurisdiction under the applicable law, that provision will remain effective to the extent not declared invalid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.

        13.    Complete Agreement.    This Agreement contains the complete agreement of the parties with respect to the subject matter hereof.

        14.    Amendments.    This Agreement may be altered or amended only by an instrument in writing, duly executed by both of the parties hereto.

        15.    Counterparts.    This Agreement may be executed in separate counterparts, each of which when so executed shall be deemed an original and both of which taken together shall constitute one and the same instrument.

[Signature Page Follows]

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        IN WITNESS WHEREOF, Parent and Individual have executed this Agreement as of the date first above written.

MERRILL COMMUNICATIONS LLC

By:	/s/ Brenda Vale	/s/ Perry Solomon Perry Solomon
Its:	VP HR

[Signature Page to Non-Competition Agreement]

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Exhibit 10.22

NON-COMPETITION AGREEMENT

EX-10.23

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Exhibit 10.23

[Merrill Corporation Letterhead]

November 23, 2005

Mr. Craig Levinsohn
1964 Cedar Lake Parkway
Minneapolis, Minnesota 55416

RE: Employment with Merrill Communications LLC

Dear Craig:

        I am pleased to make you a contingent offer of full-time employment with Merrill Communications LLC in the position of Executive Vice President of Marketing reporting to me. I am very much looking forward to your acceptance and the prospect of having you on the team and working with you.

        You will be an executive member of Merrill's senior management team, responsible for all Merrill corporate marketing functions including go-to-market strategy, marketing communications, product marketing and public relations. Should business needs warrant it, your responsibilities and duties may be modified by executive management; provided, however, that any such modification will be comparable to and appropriate for your professional skills and abilities. I expect you will devote full-time attention to your duties, subject to approved time off and reasonable absences on account of temporary illness. I also expect you to diligently and conscientiously perform those duties and comply with Merrill policies and procedures. Your employment is "at will," which means either you or Merrill may terminate this arrangement for any reason at any time. All references to future employment are subject to your at-will employment status.

        Upon commencement, your starting salary will be $230,000 annually, paid in accordance with Merrill's payroll practices (currently semi-monthly). Given your role, you will not receive payment for any overtime worked. You will be eligible to participate in the fringe benefits package on the same terms and conditions we offer our employees, such as life, medical, dental, and disability insurance. Along with the standard benefit package, I am pleased to offer our Executive Management Benefit package that includes a Supplemental Retirement Plan, Supplemental Long Term Disability Plan, Annual Financial Planning assistance, and an Executive Physical Benefit. We will arrange a time to cover these additional benefits in greater detail.

        Executives within Merrill do not accrue an annual paid vacation bank, holiday or sick time; however, you are eligible for paid time off from work (for vacation, holidays, and illness) as mutually agreed upon and as is reasonable given your position. Merrill will also reimburse your ordinary and reasonable expenses incurred in accordance with our policies for reimbursement of employee expenses.

        You will be eligible to participate in the annual Management Incentive Bonus Plan ("MIP") that rewards performance based on the Company's fiscal year (February 1 through January 31) results. Your MIP target bonus will be 50% of your salary. MIP bonuses, if any, are paid in April, upon your achieving the

required performance results and being actively employed at the time of payout. As your commencement date is anticipated to be very late in the current fiscal year and reasonable objectives would not yet be established, I will commit to a $20,000 bonus paid in April, 2006 (in conjunction with the MIP plan payout timing).

        Further, I will recommend to our Compensation Committee of the Board of Directors that you participate in the 1999 Merrill Corporation Stock Option Plan, as amended (the "Plan"). The Compensation Committee meets periodically and you will be notified if a grant is awarded. Upon granting the option award, you will receive information regarding the Plan and the option grant at that time.

        In the event Merrill terminates your employment for any reason other than for Cause, Merrill will provide special services pay equal to four months of base salary. The obligations of the Company to provide the special services pay are conditional upon the Executive signing a release of claims. Cause for termination is defined as (i) dishonesty, fraud or gross or willful misconduct; (ii) breach of any material provision of this Agreement, or (iii) neglect of duties.

        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 separation 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 unless it is necessary for the performance of your work duties as a Merrill employee. Similarly, you also agree that while working at Merrill, you will not disclose or use the confidential information of your former employers.

        One way Merrill invests in its business is to support your efforts to develop and maintain close working relationships with Merrill's clients and vendors. You acknowledge that for one year following the termination of your employment, you agree not to directly or indirectly compete with Merrill's existing businesses and Merrill is entitled to protection from the use or disclosure of the client or vendor 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. The restrictions of the preceding sentence apply only where the client is solicited to purchase a service or product that competes with a service or product of Merrill. You also agree that for one year following the termination of your employment, you will not directly or indirectly solicit any of Merrill's vendors if such termination is for the benefit of any person or entity that competes with Merrill. You also agree that, for one year following termination of your employment, you will not encourage any of Merrill's vendors to diminish their business dealings with Merrill. You further agree that during your employment you will not engage in any business that is competitive with Merrill's and 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.

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        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.

        Based on your representation that you do not have any contractual obligations that prevent you from working for us, we are pleased to make this contingent offer of full-time employment to you with Merrill Communications LLC ("Merrill") on the following terms.

1.

Taking and passing a drug test. No employee may report to work before having received the results. You may request information regarding Merrill's Substance Abuse Policy from Human Resources.



2.

Completion of a criminal background investigation and acceptable results of the investigation.



3.

Proof of eligibility to work in the US for Merrill (US citizen, permanent resident, H1-B, etc.).

Note: you must not report to work before having received acceptable results from the drug test and criminal background investigation.

        This Agreement can be assigned by Merrill. It contains the entire understanding of the parties with respect to the provisions of this offer and supersedes any previous oral or written agreements about those provisions. However, if you have signed or may in the future sign an agreement as an equity participant in Merrill Corporation, any such agreement remains in full force and effect.

        I am very excited to have you join the team—and we look forward to your contributions to the Merrill business results.

        Please sign below where indicated and return one copy of this letter agreement to me acknowledging your acceptance.

Sincerely,

/s/ Rick Atterbury Rick Atterbury
President and Chief Operating Officer
Corporate

I agree and accept the stated
terms and conditions.

/s/ Craig Levinsohn Craig Levinsohn

cc:	HR
	Legal

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Exhibit 10.23

EX-10.24

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EXHIBIT 10.24

FORM OF CHANGE IN CONTROL AGREEMENT
WITH B. MICHAEL JAMES, MARK A. ROSSI AND JOSEPH P. PETTIROSSI

Effective            

[Name and address of Executive]

Dear [executive]:

        The Board considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders. In this connection, the Board recognizes that the possibility of a Change in Control may raise uncertainty and questions among management which may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.

        Accordingly, the Board has determined that appropriate steps should be taken to minimize the risk that Company executive management will depart prior to a Change in Control, thereby leaving the Company without adequate executive management personnel during such a critical period, and to reinforce and encourage the continued attention and dedication of members of the Company's executive management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control.

        The Board recognizes that continuance of your position with the Company involves a substantial commitment to the Company in terms of your personal life and professional career and the possibility of foregoing present and future career opportunities, for which the Company receives substantial benefits. Therefore, to induce you to remain in the employ of the Company, this Agreement, which has been approved by the Board, sets forth the benefits that the Company agrees will be provided to you in the event your employment with the Company is terminated in connection with a Change in Control under the circumstances described below.

        1.DEFINITIONS.    The following terms have the meaning set forth below unless the context clearly requires otherwise. Terms defined elsewhere in this Agreement have the same meaning throughout this Agreement.

        (a)   "Affiliate" means (i) any corporation at least a majority of whose outstanding securities ordinarily having the right to vote at elections of directors is owned directly or indirectly by the Parent Corporation or (ii) any other form of business entity in which the Parent Corporation, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of such entity's governing body.

        (b)   "Agreement" means this letter agreement as amended, extended or renewed from time to time in accordance with its terms.

        (c)   "Base Pay" means your annual base salary from the Company at the rate in effect immediately prior to a Change in Control or at the time Notice of Termination is given, whichever is greater. Base Pay includes only regular cash salary and is determined before any reduction for deferrals pursuant to any nonqualified deferred compensation plan or arrangement, qualified cash or deferred arrangement or cafeteria plan.

        (d)   "Benefit Plan" means any

          (i)  employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended;

         (ii)  cafeteria plan described in Code Section 125;

        (iii)  plan, policy or practice providing for paid vacation, other paid time off or short-or long-term profit sharing, bonus or incentive payments; or

        (iv)  stock option, stock purchase, restricted stock, phantom stock, stock appreciation right or other equity-based compensation plan with respect to the securities of any Affiliate

made available to employees of the Company generally or any group of employees or you in particular.

        (e)   "Board" means the board of directors of the Parent Corporation duly qualified and acting at the time in question. On and after the date of a Change in Control, any duty of the Board in connection with this Agreement is nondelegable and any attempt by the Board to delegate any such duty is ineffective.

        (f)    "Cause" means:

          (i)  your gross misconduct;

         (ii)  your willful and continued failure to perform substantially your duties with the Company (other than any such failure (1) resulting from your incapacity due to bodily injury or physical or mental illness or (2) relating to changes in your duties after a Change in Control which constitute Good Reason) after a demand for substantial performance is delivered to you by the chair of the Board which specifically identifies the manner in which you have not substantially performed your duties and provides for a reasonable period of time within which you may take corrective actions; or

        (iii)  your conviction (including a plea of nolo contendere) of willfully engaging in illegal conduct constituting a felony or gross misdemeanor under federal or state law which is materially and demonstrably injurious to the Company or which impairs your ability to perform substantially your duties for the Company.

        An act or failure to act will be considered "gross or willful" for this purpose only if done, or omitted to be done, by you in bad faith and without reasonable belief that it was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board (or a committee thereof) or based upon the advice of counsel for the Company will be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. It is also expressly understood that your attention to matters not directly related to the business of the Company will not provide a basis for termination for Cause so long as the Board did not expressly disapprove in writing of your engagement in such activities either before or within a reasonable period of time after the Board knew or could reasonably have known that you engaged in those activities. Notwithstanding the foregoing, you may not be terminated for Cause unless and until there has been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in clauses (i), (ii) or (iii) of this definition and specifying the particulars thereof in detail.

        (g)   "Change in Control" means any of the following:

          (i)  the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Parent Corporation, in one transaction or in a series of related transactions, to any Person;

         (ii)  any Person, other than a "bona fide underwriter," becomes, after the date of this Agreement, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),

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directly or indirectly, of 20 percent or more of the combined voting power of the Parent Corporation's outstanding securities ordinarily having the right to vote at elections of directors;

        (iii)  a merger or consolidation to which the Parent Corporation is a party if the stockholders of the Parent Corporation immediately prior to the effective date of such merger or consolidation have, solely on account of ownership of securities of the Parent Corporation at such time, "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of securities of the surviving corporation representing less than 80 percent of the combined voting power of the surviving corporation's then outstanding securities ordinarily having the right to vote at elections of directors;

        (iv)  the continuity directors cease for any reason to constitute at least a majority of the Board; or

         (v)  a change in control of a nature that is determined by outside legal counsel to the Parent Corporation, in a written opinion specifically referencing this provision of the Agreement, to be required to be reported (assuming such event has not been "previously reported") pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Parent Corporation is then subject to such reporting requirement.

        For purposes of this Section 1(g), a "continuity director" means any individual who is a member of the Board on                        , while he or she is a member of the Board, and any individual who subsequently becomes a member of the Board whose election or nomination for election by the Parent Corporation's stockholders was approved by a vote of at least a majority of the directors who are continuity directors (either by a specific vote or by approval of the proxy statement of the Parent Corporation in which such individual is named as a nominee for director without objection to such nomination). For example, if a majority of the 10 individuals constituting the Board on                        approved a proxy statement in which six different individuals were nominated to replace six of the individuals who were members of the Board on                        , upon their election by the Parent Corporation's stockholders, the six newly elected directors would join the four directors who were members of the Board on                        as continuity directors. Similarly, if a majority of those 10 directors approved a proxy statement in which four different individuals were nominated to replace the four remaining directors who were members of the Board on                        , upon their election by the Parent Corporation's stockholders, the four newly elected directors would also become, along with the other six directors, continuity directors. Individuals subsequently joining the Board could become continuity directors under the principles reflected in this example.

        For purposes of this Section 1(g), a "bona fide underwriter" means a Person engaged in business as an underwriter of securities that acquires securities of the Parent Corporation through such Person's participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

        2.     "Code" means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes a reference to such provision as it may be amended from time to time and to any successor provision.

        (a)   "Company" means the Parent Corporation, any Successor and any Affiliate.

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        (b)   "Date of Termination" following a Change in Control (or prior to a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of any Person related to the Change in Control) means:

          (i)  if your employment is to be terminated by you for Good Reason, the date specified in the Notice of Termination which in no event may be a date more than 15 days after the date on which Notice of Termination is given unless the Company agrees in writing to a later date;

         (ii)  if your employment is to be terminated by the Company for Cause, the date specified in the Notice of Termination;

        (iii)  if your employment is terminated by reason of your death, the date of your death; or

        (iv)  if your employment is to be terminated by the Company for any reason other than Cause or your death, the date specified in the Notice of Termination, which in no event may be a date earlier than 15 days after the date on which a Notice of Termination is given, unless you expressly agree in writing to an earlier date.

        In the case of termination by the Company of your employment for Cause, if you have not previously expressly agreed in writing to the termination, then within the 30-day period after your receipt of the Notice of Termination, you may notify the Company that a dispute exists concerning the termination, in which event the Date of Termination will be the date set either by mutual written agreement of the parties or by the judge or arbitrators in a proceeding as provided in Section 11 of this Agreement. During the pendency of any such dispute, you will continue to make yourself available to provide services to the Company and the Company will continue to pay you your full compensation and benefits in effect immediately prior to the date on which the Notice of Termination is given (without regard to any changes to such compensation or benefits that constitute Good Reason) and until the dispute is resolved in accordance with Section 11 of this Agreement. You will be entitled to retain the full amount of any such compensation and benefits without regard to the resolution of the dispute unless the judge or arbitrators decide(s) that your claim of a dispute was frivolous or advanced by you in bad faith.

        (c)   "Exchange Act" means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act or to any rule or regulation thereunder includes a reference to such provision as it may be amended from time to time and to any successor

        (d)   "Good Reason" means:

          (i)  a change in your title(s), status, position(s), authority, duties or responsibilities as an executive of the Company as in effect immediately prior to the Change in Control which, in your reasonable judgment, is material and adverse (other than, if applicable, any such change directly attributable to the fact that the Parent Corporation is no longer publicly owned); provided, however, that Good Reason does not include such a change that is remedied by the Company promptly after receipt of notice of such change is given by you;

         (ii)  a reduction by the Company in your Base Pay, or an adverse change in the form or timing of the payment thereto, as in effect immediately prior to the Change in Control or as thereafter increased;

        (iii)  the failure by the Company to cover you under Benefit Plans that, in the aggregate, provide substantially similar benefits to you and/or your family and dependents at a substantially similar total cost to you (e.g., premiums, deductibles, co-pays, out of pocket maximums, required contributions and the like) relative to the benefits and total costs under the Benefit Plans in which you (and/or your family or dependents) were participating at any time during the 90-day period immediately preceding the Change in Control;

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        (iv)  the Company's requiring you to be based more than 30 miles from where your office is located immediately prior to the Change in Control, except for required travel on the Company's business, and then only to the extent substantially consistent with the business travel obligations which you undertook on behalf of the Company during the 90-day period immediately preceding the Change in Control (without regard to travel related to or in anticipation of the Change in Control);

         (v)  the failure by the Company to obtain from any Successor the assent to this Agreement contemplated by Section 5 of this Agreement;

        (vi)  any purported termination by the Company of your employment that is not properly effected pursuant to a Notice of Termination and pursuant to any other requirements of this Agreement, and, for purposes of this Agreement, no such purported termination will be effective; or

       (vii)  any refusal by the Company to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company which, at any time prior to the Change in Control, you were not expressly prohibited in writing by the Board from attending to or engaging in.

        Your continued employment does not constitute consent to, or waiver of any rights arising in connection with, any circumstances constituting Good Reason. Your termination of employment for Good Reason as defined in this Section 1(1) will constitute Good Reason for all purposes of this Agreement notwithstanding that you may also thereby be deemed to have retired under any applicable benefit plan, policy or practice of the Company.

        (e)   "Notice of Termination" means a written notice given on or after the date of a Change in Control (unless your termination before the date of the Change in Control was either a condition of the Change in Control or was at the request or insistence of any Person related to the Change in Control) which indicates the specific termination provision in this Agreement pursuant to which the notice is given. Any purported termination by the Company or by you for Good Reason on or after the date of a Change in Control (or before the date of a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of any Person related to the Change in Control) must be communicated by written Notice of Termination to be effective; provided, that your failure to provide Notice of Termination will not limit any of your rights under this Agreement except to the extent the Company demonstrates that it suffered material actual damages by reason of such failure.

        (f)    "Parent Corporation" means Merrill Corporation and any Successor.

        (g)   "Person" means any individual, corporation partnership, group, association or other "person," as such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other than the Parent Corporation, any Affiliate or any benefit plan(s) sponsored by the Parent Corporation or an Affiliate.

        (h)   "Successor" means any Person that succeeds to, or has the practical ability to control (either immediately or solely with the passage of time), the Parent Corporation's business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Parent Corporation's outstanding securities ordinarily having the right to vote at the election of directors or all or substantially all of its assets or otherwise.

        3.TERM OF AGREEMENT.    This Agreement is effective immediately and will continue in effect until January 1,        ; provided, however, that commencing on January 1,        and each January 1 thereafter, the term of this Agreement will automatically be extended for 12 additional months beyond the expiration date otherwise then in effect, unless at least 90 calendar days prior to

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any such January 1, the Company or you has given notice that this Agreement will not be extended; and, provided, further, that if a Change in Control has occurred during the term of this Agreement, this Agreement will continue in effect beyond the termination date then in effect for a period of 24 months following the month during which the Change in Control occurs or, if later, until the date on which the Company's obligations to you arising under or in connection with this Agreement have been satisfied in full.

        4.BENEFITS UPON A CHANGE IN CONTROL TERMINATION.    You will become entitled to the benefits described in this Section 3 if and only if (i) the Company terminates your employment for any reason other than your death or Cause, or you terminate your employment with the Company for Good Reason and (ii) the termination occurs either within the period beginning on the date of a Change in Control and ending on the last day of the twenty-fourth month that begins after the month during which the Change in Control occurs or prior to a Change in Control if your termination was either a condition of the Change in Control or was at the request or insistence of a Person related to the Change in Control.

        (a)    Cash Payment.    Not more than five business days following the Date of Termination, or, if later, not more than five business days following the date of the Change in Control, the Company will make a lump-sum cash payment to you in an amount equal to two times the sum of (i) your Base Pay plus (ii) your target cash bonus for the year during which the Change in Control occurs or the average of your cash bonus for the three fiscal years ending immediately prior to the Change in Control, whichever is greater. This payment is in lieu of any other cash bonus payment to which you may otherwise be entitled under any bonus plan for any period ending after your Date of Termination. Cash bonus payments relating to any period ending on or before your Date of Termination will be paid to you in accordance with the terms of the bonus plan.

        (b)    Health Benefits.    During the period beginning on your Date of Termination and ending on the last day of the twenty-fourth month that begins after your Date of Termination, the Company will provide, or arrange to provide, medical, dental and vision benefits (excluding premium conversion or flexible spending accounts under any cafeteria plan) to you (and your family members and dependents who were eligible to be covered at any time during the 90-day period immediately prior to the date of a Change in Control for the period after the Change in Control in which such family members and dependents would otherwise continue to be covered under the terms of the applicable Benefit Plan in effect immediately prior to the Change in Control) under the same terms and at the same cost to you and your family members and dependents as similarly situated individuals who continue to be employed by the Company (without regard to any reduction in such benefits that constitutes Good Reason). To the extent you incur a tax liability (including federal, state and local taxes and any interest and penalties with respect thereto) in connection with a benefit provided pursuant to this Section 3(b) which you would not have incurred had you been an active employee of the Company participating in the Company's group health plan, the Company will make a payment to you in an amount equal to such tax liability plus an additional amount sufficient to permit you to retain a net amount after all taxes (including penalties and interest) equal to the initial tax liability in connection with the benefit. For purposes of applying the foregoing, your tax rate will be deemed to be the highest statutory marginal state and federal tax rate (on a combined basis) then in effect. The payment pursuant to this Section 3(b) will be made within 10 days after your remittal of a written request for payment accompanied by a statement indicating the basis for and amount of the liability.

        (c)    Supplemental Executive Retirement Plan.    The Company will cause your account balance under the Merrill Corporation Supplemental Executive Retirement Plan to become fully vested and nonforfeitable effective as of the Date of Termination and at all times thereafter. In addition, the Company will cause any distribution to which you are entitled under the Merrill Corporation Supplemental Executive Retirement Plan to be made without regard to any provision of the Plan

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that permits your distribution to be deferred to the extent necessary to ensure that no part of the distribution is nondeductible pursuant to Code Section 162(m).

        (d)    Gross-Up Payments.    Following a Change in Control, the Company will cause its independent auditors promptly to review, at the Company's sole expense, the applicability of Code Section 4999 to any payment or distribution of any type by the Company to or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, any Benefit Plan or otherwise (the "Total Payments"). If the auditor determines that the Total Payments result in an excise tax imposed by Code Section 4999 or any comparable state or local law or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the "Excise Tax"), the Company will make an additional cash payment (a "Gross-Up Payment") to you within 10 days after such determination equal to an amount such that after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, you would retain an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments. For purposes of the foregoing determination, your tax rate will be deemed to be the highest statutory marginal state and federal tax rate (on a combined basis) then in effect. If no determination by the Company's auditors is made prior to the time you are required to file a tax return reflecting the Total Payments, you will be entitled to receive from the Company a Gross-Up Payment calculated on the basis of the Excise Tax you reported in such tax return, within 10 days after the later of the date on which you file such tax return or the date on which you provide a copy thereof to the Company. In all events, if any tax authority determines that a greater Excise Tax should be imposed upon the Total Payments than is determined by the Company's independent auditors or reflected in your tax return pursuant to this Section 3(d), you will be entitled to receive from the Company the full Gross-Up Payment calculated on the basis of the amount of Excise Tax determined to be payable by such tax authority within 10 days after you notify the Company of such determination. If any other Benefit Plan or other plan, policy or practice of the Company or any other agreement between you and the Company (an "Other Arrangement") specifically provides that benefits thereunder will be reduced or limited so that such benefits or the Total Payments will not result in the imposition of an excise tax pursuant to Code Section 4999, the reduction or limitation will apply, to the extent provided in the Other Arrangement, solely to the benefits provided pursuant to the Other Arrangement as if the benefits under the Other Arrangement constituted the entire Total Payments, and such reduction or limitation will not otherwise reduce or limit the actual Total Payments.

        If, on or after the date of a Change in Control, an Affiliate is sold, merged, transferred or in any other manner or for any other reason ceases to be an Affiliate or all or any portion of the business or assets of an Affiliate are sold, transferred or otherwise disposed of and the acquiror is not the Parent Corporation or an Affiliate (a "Disposition"), and you remain or become employed by the acquiror or an affiliate of the acquiror (as defined in this Agreement but substituting "acquiror" for "Parent Corporation") in connection with the Disposition. you will be deemed to have terminated employment on the effective date of the Disposition for purposes of this Section 3 unless (x) the acquiror and its affiliates jointly and severally expressly assume and agree, in a manner that is enforceable by you, to perform the obligations of this Agreement to the same extent that the Company would be required to perform if the Disposition had not occurred and (y) the Successor guarantees, in a manner that is enforceable by you, payment and performance by the acquiror.

        5.INDEMNIFICATION.    Following a Change in Control, the Company will indemnify and advance expenses to you for damages, costs and expenses (including, without limitation, judgments, fines, penalties, settlements and reasonable fees and expenses of your counsel) incurred in connection with all matters, events and transactions relating to your service to or status with the Company or any other corporation, employee benefit plan or other entity with whom you served at the request of the

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Company to the extent that the Company would have been required to do so under applicable law, corporate articles, bylaws or agreements or instruments of any nature with or covering you, as in effect immediately prior to the Change in Control and to any further extent as may be determined or agreed upon following the Change in Control.

        6.SUCCESSORS.    The Parent Corporation will seek to have any Successor, by agreement in form and substance satisfactory to you, assent to the fulfillment by the Company of the Company's obligations under this Agreement. Failure of the Parent Corporation to obtain such assent at least three business days prior to the time a Person becomes a Successor (or where the Parent Corporation does not have at least three business days' advance notice that a Person may become a Successor, within one business day after having notice that such Person may become or has become a Successor) will constitute Good Reason for termination by you of your employment. The date on which any such succession becomes effective will be deemed the Date of Termination, and Notice of Termination will be deemed to have been given on that date. A Successor has no rights, authority or power with respect to this Agreement prior to a Change in Control.

        7.BINDING AGREEMENT.    This Agreement inures to the benefit of, and is enforceable by, you, your personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you die while any amount would still be payable to you under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, will be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

        8.NO MITIGATION.    You will not be required to mitigate the amount of any benefits the Company becomes obligated to provide to you in connection with this Agreement by seeking other employment or otherwise. The benefits to be provided to you in connection with this Agreement may not be reduced, offset or subject to recovery by the Company by any benefits you may receive from other employment or otherwise.

        9.NO SETOFF.    The Company has no right to setoff benefits owed to you under this Agreement against amounts owed or claimed to be owed by you to the Company under this Agreement or otherwise.

        10.TAXES.    All benefits to be provided to you in connection with this Agreement will be subject to required withholding of federal, state and local income, excise and employment-related taxes. The Company's good faith determination with respect to its obligation to withhold such taxes relieves it of any obligation that such amounts should have been paid to you.

        11.NOTICES.    For the purposes of this Agreement, notices and all other communications provided for in, or required under, this Agreement must be in writing and will be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid and addressed to each party's respective address set forth on the first page of this Agreement (provided that all notices to the Company must be directed to the attention of the chair of the Board), or to such other address as either party may have furnished to the other in writing in accordance with these provisions, except that notice of change of address will be effective only upon receipt.

        12.DISPUTES.    If you so elect, any dispute, controversy or claim arising under or in connection with this Agreement will be settled exclusively by binding arbitration administered by the American Arbitration Association in Minneapolis, Minnesota in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect; provided that you may seek specific performance of your right to receive benefits until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. Judgment may be entered on the arbitrator's award in any court having jurisdiction. If any dispute, controversy or claim for

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damages arising under or in connection with this Agreement is settled by arbitration, the Company will pay, or if elected by you, reimburse, all fees, costs and expenses incurred by you related to such arbitration unless the arbitrators decide that your claim was frivolous or advanced by you in bad faith. If you do not elect arbitration, you may pursue all available legal remedies. The Company will pay, or if elected by you, reimburse you for, all fees, costs and expenses incurred by you in connection with any actual, threatened or contemplated litigation relating to this Agreement to which you are or reasonably expect to become a party, whether or not initiated by you, if you are successful in recovering any benefit under this Agreement as a result of such action. The parties agree that any litigation arising under or in connection with this Agreement must be brought in a court of competent jurisdiction in the State of Minnesota, and hereby consent to the exclusive jurisdiction of said courts for this purpose and agree not to assert that such courts are an inconvenient forum. The Company will not assert in any dispute or controversy with you arising under or in connection with this Agreement your failure to exhaust administrative remedies.

        13.RELATED AGREEMENTS.    To the extent that any provision of any Benefit Plan or other benefit plan, policy, practice or agreement between the Company or any Affiliate and you (an "Other Arrangement") limits, qualifies or is inconsistent with any provision of this Agreement, then for purposes of this Agreement, while such Other Arrangement remains in force, the provision of this Agreement will control and such provision of such Other Arrangement will be deemed to have been superseded, and to be of no force or effect, as if such Other Arrangement had been formally amended to the extent necessary to accomplish such purpose. Nothing in this Agreement prevents or limits your continuing or future participation in any Other Arrangement for which you may qualify, and nothing in this Agreement limits or otherwise affects the rights you may have under any Other Arrangement. Amounts that are vested benefits or which you are otherwise entitled to receive under any Other Arrangement at or subsequent to the Date of Termination will be payable in accordance with such Other Arrangement.

        14.NO EMPLOYMENT OR SERVICE CONTRACT.    Nothing in this Agreement is intended to provide you with any right to continue in the employ of the Company for any period of specific duration or interfere with or otherwise restrict in any way your rights or the rights of the Company, which rights are hereby expressly reserved to each, to terminate your employment at any time for any reason or no reason whatsoever, with or without cause.

        15.PAYMENT; ASSIGNMENT.    Benefits payable under this Agreement will be paid only from the general assets of the Company. No person has any right to or interest in any specific assets of the Company by reason of this Agreement. To the extent benefits under this Agreement are not paid when due to any individual, he or she is a general unsecured creditor of the Company with respect to any amounts due. Benefits payable pursuant to this Agreement and the right to receive future benefits may not be anticipated, alienated, sold, transferred, assigned, pledged, encumbered or subject to any charge.

        16.SURVIVAL.    The respective obligations of, and benefits afforded to, the Company and you which by their express terms or clear intent survive termination of your employment with the Company or termination of this Agreement, as the case may be, will survive termination of your employment with the Company or termination of this Agreement, as the case may be, and will remain in full force and effect according to their terms.

        17.MISCELLANEOUS.    No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and a duly authorized officer of the Parent Corporation. No waiver by any party to this Agreement at any time of any breach by another party to this Agreement of, or of compliance with any condition or provision of this Agreement to be performed by such party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter to this

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Agreement have been made by any party which are not expressly set forth in this Agreement. This Agreement and the legal relations among the parties as to all matters, including, without limitation, matters of validity, interpretation, construction, performance and remedies, will be governed by and construed exclusively in accordance with the internal laws of the State of Minnesota (without regard to the conflict of laws principles of any jurisdiction). Headings are for purposes of convenience only and do not constitute a part of this Agreement. The parties to this Agreement agree to perform, or cause to be performed, such further acts and deeds and to execute and deliver or cause to be executed and delivered, such additional or supplemental documents or instruments as may be reasonably required by the other party to carry into effect the intent and purpose of this Agreement. The invalidity or unenforceability of all or any part of any provision of this Agreement will not affect the validity or enforceability of the remainder of such provision or of any other provision of this Agreement, which will remain in full force and effect. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument.

        If this letter correctly sets forth our agreement on the subject matter discussed above, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

MERRILL CORPORATION

By:

[Executive]

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EXHIBIT 10.24

EX-10.27

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Exhibit 10.27

PREFERRED STOCKHOLDERS AGREEMENT

        PREFERRED STOCKHOLDERS AGREEMENT dated as of August 9, 2002, by and among Merrill Corporation, a Minnesota corporation (the "Company"), and all of the Company's existing holders of outstanding preferred stock, as such holders are set forth on the signature page of this Agreement (each a "Preferred Stockholder", and collectively, the "Preferred Stockholders").

        WHEREAS, in connection with the restructuring of certain of the Company's debt and equity securities (the "Restructuring") as described in the Company's Offering Circular and Consent Solicitation Statement dated July 3, 2002 (the "Offering Circular") for the exchange offer for the Company's outstanding 12% Senior Subordinated Notes due 2009 (the "Exchange Offer"), a copy of which has been provided to each Preferred Stockholder, the parties to this Agreement have agreed, subject to the terms of this Agreement, to amend the Company's existing certificate of designation (the "Certificate of Designation") relating to its 14.5% Senior Preferred Stock due 2011 (the "Old Preferred Stock") to, among other things, rename the Old Preferred Stock as the Preferred Stock due 2011 (the "New Preferred Stock"); and

        WHEREAS, the Preferred Stockholders collectively hold all of the outstanding shares of Preferred Stock and have, subject to the terms of this Agreement, previously agreed to consent to the amendment to the Certificate of Designation; and

        WHEREAS, in connection with the Restructuring, the parties to this Agreement have agreed, subject to the terms of this Agreement, that the Preferred Stockholders shall have the right to receive in certain circumstances the Company's Series C Warrants (the "Series C Warrants") and Series D Warrants (the "Series D Warrants"), each to purchase shares of the Company's Class B Common Stock, par value $0.01 per share (the "Class B Common Stock"); and

        WHEREAS, the Board of Directors of the Company has approved the terms of the Restructuring;

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.     DEFINITIONS

        Capitalized terms used herein shall have the meanings assigned to them in the Certificate of Designation unless otherwise indicated.

        "Agreement" means this Preferred Stockholders Agreement, as it may be amended, restated, modified or supplemented from time to time in accordance with its terms.

        "Board of Directors" means the board of directors of the Company.

        "Closing Date" means the date on which the Restructuring is consummated.

        "Current Value" means (i) if the Class B Common Stock is registered under the Exchange Act and has traded on the Nasdaq National Market or a national securities exchange for not less than 30 consecutive trading days, the average of the daily closing sale price for that security, for the 30 consecutive trading days immediately preceding that date, or (ii) if the Class B Common Stock is not registered under the Exchange Act, (x) the price paid for the Class B Common Stock in an arm's-length transaction where DLJMB sells 5.0% or more of the Class B Common Stock beneficially owned by it to an unaffiliated third party, and (y) the fair market value of such shares of Class B Common Stock as determined in good faith by the Board of Directors (without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Company's Investors Agreement) if (A) substantially all of the Company's assets (in one transaction or a series of related transactions) are sold, leased or exchanged (directly or indirectly) or (B) as a result of a merger, consolidation or otherwise, the Company's shareholders immediately prior to such transaction no longer have beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of more than 80% of the combined voting power of the surviving corporation's outstanding securities ordinarily having the right to vote at elections of directions. If the holders of a majority of the shares of New Preferred Stock shall object to any determination by the Board of Directors of the Current Value, the Current Value shall be the fair market value per share of Class B Common Stock as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the holders of the majority of the share of New Preferred Stock.

        "DLJMB" means DLJ Merchant Banking Partners II, L.P. or affiliated investors.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "Series C Triggering Event" means the earlier of (i) the first date on which the Current Value of the Class B Common Stock is greater than $15.00 (the "Series C Trigger Price"), on a fully diluted basis, pro forma for the exercise of all Series C Warrants and Series D Warrants (to the extent that such Series D Warrants were not issued or exercised on such date); provided that to the extent that the Series C Warrant Amount is increased pursuant to the proviso of Section 4(a)(ii), the Series C Trigger Price shall be decreased proportionately; provided further, that no Series C Triggering Event shall be deemed to have occurred unless one of the events in clauses (i) or (ii) of the definition of "Current Value" shall have taken place, and (ii) the date on which the Company fails to exercise its Mandatory Redemption Obligation (as such term is defined in the Amended and Restated Certificate of Designation of the New Preferred Stock).

        "Series D Triggering Event" means the earlier of (i) the first date on which the Current Value of the Class B Common Stock is greater than $22.00 (the "Series D Trigger Price"), on a fully diluted basis, pro forma for the exercise of all Series D Warrants and Series C Warrants (to the extent that such Series C Warrants were not issued or exercised on such date); provided that to the extent that the Series D Warrant Amount is increased pursuant to the proviso of Section 4(b)(ii), the Series D Trigger Price shall be decreased proportionately; provided further, that no Series D Triggering Event shall be deemed to have occurred unless one of the events in clauses (i) or (ii) of the definition of "Current Value" shall have taken place, and (ii) the date on which the Company fails to exercise its Mandatory Redemption Obligation (as such

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term is defined in the Amended and Restated Certificate of Designation of the New Preferred Stock). .

2.     CONDITIONS

        This Agreement and any approvals, consents, waivers, agreements and obligations hereunder shall only become operative and have full force and effect upon the prior or concurrent consummation of each element of the Restructuring.

3.     AMENDMENT OF CERTIFICATE OF DESIGNATION

        (a)   Each of the Preferred Stockholders hereby approves, consents and agrees that the powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations and restrictions of the Old Preferred Stock as set forth in the Certificate of Designation are amended and restated in their entirety as set forth in the Amended and Restated Certificate of Designation, in substantially the form attached hereto as Exhibit A.

        (b)   Each of the Preferred Stockholders hereby approves, consents and agrees that Steven J. Machov, the Secretary of the Company, or his designee, is authorized and directed to execute and file the Amended and Restated Certificate of Designation with the Office of the Secretary of State of the State of Minnesota and that the appropriate officers of the Company, or any one or more of them, are authorized and directed to execute such instruments on behalf of the Company and to take such other actions as they deem necessary or advisable to give effect to the Amended and Restated Certificate of Designation.

4.     ISSUANCE OF WARRANTS

        (a)    Series C Warrants.    Within three business days of the Series C Triggering Event, the Company shall send to each Preferred Stockholder, by mail, to the address shown for such Preferred Stockholder in the registry for the New Preferred Stock, Series C Warrants, in substantially the form attached hereto as Exhibit B, the number of which will be equal to the product of (i) a fraction, the numerator of which is the number of shares of New Preferred Stock held of record by such Preferred Stockholder on the Series C Triggering Event and the denominator of which is 500,000 and (ii) 189,101 (the "Series C Warrant Amount"); provided however, to the extent that any event occurs after the date of this Agreement but before the date of issuance of the Series C Warrant which would, if such event were to occur after the date of issuance of the Series C Warrants, increase the number of shares of Class B Common Stock for which the Series C Warrants are exercisable, the Series C Warrant Amount shall be proportionately so increased.

        (b)    Series D Warrants.    Within three business days of the Series D Triggering Event, the Company shall send to each Preferred Stockholder, by mail, to the address shown for such Preferred Stockholder in the registry for the New Preferred Stock, Series D Warrants, in substantially the form attached hereto as Exhibit C, the number of which will be equal to the product of (i) a fraction, the numerator of which is the number of shares of New Preferred Stock held of record by such Preferred Stockholder on the Series D Triggering Event and the denominator of which is 500,000 and (ii) 189,101 (the "Series D Warrant Amount"); provided however, to the extent that any event occurs after the date of this Agreement but before the date

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of issuance of the Series D Warrant which would, if such event were to occur after the date of issuance of the Series D Warrants, increase the number of shares of Class B Common Stock for which the Series D Warrants are exercisable, the Series D Warrant Amount shall be proportionately so increased.

5.     SUCCESSORS

        All of the provisions of this Agreement by or for the benefit of the Company or the Preferred Stockholders shall bind and inure to the benefit of their respective successors, transferees and assigns hereunder.

6.     TERMINATION

        This Agreement shall terminate and be of no further force or effect upon the earlier of the issuance of the Series D Warrants hereunder or the tenth anniversary of the Closing Date.

7.     ENTIRE AGREEMENT

        All prior agreements of the parties concerning the subject matter of this Agreement are expressly superceded by this Agreement. This Agreement contains the entire agreement of the parties concerning the subject matter hereof. Any oral representations or modifications of this Agreement shall be of no effect.

8.     GOVERNING LAW

        This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

9.     COUNTERPARTS

        This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which, together shall constitute one and the same instrument.

10.   AMENDMENTS

        No amendment or waiver of this Agreement nor consent to any departure therefrom shall in any event be effective unless the same shall be in writing and signed by the parties hereto and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

[SIGNATURE PAGE FOLLOWS]

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

MERRILL CORPORATION
By:	/s/ Steven J. Machov Name: Steven J. Machov Title: Vice President, General Counsel and Secretary
DLJ INVESTMENT PARTNERS, L.P.,
By:	DLJ INVESTMENT PARTNERS, INC., as managing general partner
By:	/s/ John M. Moriarty, Jr. Name: John M. Moriarty, Jr. Title: Managing Director
DLJ INVESTMENT PARTNERS II, L.P.,
By:	DLJ INVESTMENT PARTNERS, INC., as managing general partner
By:	/s/ John M. Moriarty, Jr. Name: John M. Moriarty, Jr. Title: Managing Director
BNY CAPITAL CORPORATION
By:	/s/ Branko Kimpotic Name: Branko Kimpotic Title: Vice President

TCG HIGH YIELD, LLC, AS GENERAL PARTNER OF CARLYLE HIGH YIELD PARTNERS, L.P.
By:	/s/ Michael J. Zupon Name: Michael J. Zupon Title: Managing Director
CIG & CO., AS NOMINEE FOR CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By:	/s/ Edward Lewis Name: Edward Lewis Title: Partner
CIG & CO., AS NOMINEE FOR LIFE INSURANCE COMPANY OF NORTH AMERICA
By:	/s/ Edward Lewis Name: Edward Lewis Title: Partner
DLJIP II HOLDINGS, L.P.,
By:	DLJ Investment Partners II, Inc. as managing general partner
By:	/s/ John M. Moriarty, Jr. Name: John M. Moriarty, Jr. Title: Managing Partner

TCW/Crescent Mezzanine Partners II, L.P. and TCW/Crescent Mezzanine Trust II
By:	TCW/Crescent Mezzanine II, L.L.C. its Investment Manager.
By:	TCW/Crescent Mezzanine, L.L.C. As its Managing Owner
By:	/s/ John C. Rocchio Name: John C. Rocchio Title: Managing Director
By:	/s/ James C. Sheviet, Jr. Name: James C. Sheviet, Jr. Title: Senior Vice President
TCW Leveraged Income Trust, L.P.
By:	TCW Advisers (Bermuda), Ltd. as its General Partner
By:	/s/ Randolph R. Birkman Name: Randolph R. Birkman Title: Managing Director
By:	TCW Investment Management Company as Investment Adviser
By:	/s/ James C. Sheviet, Jr. Name: James C. Sheviet, Jr. Title: Senior Vice President
TCW Leveraged Income Trust II, L.P.
By:	TCW (LINC II), L.P. as its General Partner
By:	TCW Advisers (Bermuda), Ltd. its General Partner
By:	/s/ Randolph R. Birkman Name: Randolph R. Birkman Title: Managing Director

By:	TCW Investment Management Company as Investment Adviser
By:	/s/ James C. Sheviet, Jr. Name: James C. Sheviet, Jr. Title: Senior Vice President

EXHIBIT A

AMENDED AND RESTATED CERTIFICATE OF DESIGNATION

[THIS EXHIBIT WILL BE PROVIDED TO THE SEC UPON REQUEST]

EXHIBIT B

MERRILL CORPORATION

FORM OF WARRANT FOR THE PURCHASE OF
CLASS B COMMON STOCK OF MERRILL CORPORATION

NO. SERIES C WARRANTS

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE INVESTORS' AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY OR ANY SUCCESSOR THERETO.

        FOR VALUE RECEIVED, MERRILL CORPORATION, a Minnesota corporation (the "COMPANY"), hereby certifies that                         , its successor or permitted assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant, to purchase from the Company, at the times specified herein, one fully paid and non-assessable share of Class B common stock of the Company, par value $0.01 per share (the "WARRANT SHARES"), for each Warrant evidenced by this Warrant Certificate at a purchase price per share equal to the Exercise Price (as hereinafter defined). The number of Warrant Shares to be received upon the exercise of this Warrant and the price to be paid for a Warrant Share are subject to adjustment from time to time as hereinafter set forth.

        (a)DEFINITIONS.    

        (1)   The following terms, as used herein, have the following meanings:

        "AFFILIATE" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

        "BOARD OF DIRECTORS" means the Company's Board of Directors.

        "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized by law to close.

        "COMMON SHARE" means a share of the Company's Class B Common Stock, par value $0.01 per share.

        "DULY ENDORSED" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or

trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

        "EXERCISE PRICE" means $0.01 per Warrant Share, as such Exercise Price is adjusted from time to time as provided herein.

        "EXPIRATION DATE" means August 8, 2012 at 5:00 p.m. New York City time.

        "FAIR MARKET VALUE" means, with respect to one Common Share on any date, the Current Market Price Per Common Share for purposes of paragraph (h)(6) hereof.

        "INVESTORS AGREEMENT" means the Investors Agreement dated as of November 23, 1999 among Viking Merger Sub, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and the other stockholders listed on the signature pages thereto.

        "OLD PREFERRED STOCK WARRANTS" means the warrants issued to holders of the Company's 14.5% Senior Preferred Stock due 2011 on November 23, 1999.

        "OLD SENIOR SUBORDINATED NOTE WARRANTS" means the warrants issued to holders of the Company's 12% Senior Subordinated Notes due 2009 on November 23, 1999.

        "PERSON" means an individual, partnership, corporation, limited liability company, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        "PREFERRED STOCK" means the Company's Preferred Stock due 2011.

        "PRINCIPAL HOLDERS" means, on any date, the holders of at least 25% of the Warrants.

        "SERIES A WARRANTS" means the Series A Warrants issued by the Company to holders of the Company's 12% Senior Subordinated Notes due 2009 on August 9, 2002.

        "SERIES B WARRANTS" means the Series B Warrants to be issued in certain circumstances by the Company to holders of the Company's Class A Senior Subordinated Notes due 2009 and Class B Senior Subordinated Notes due 2009.

        "SERIES D WARRANTS" means the Series D Warrants to be issued in certain circumstances by the Company to the holders of the Preferred Stock.

        "TRANSFER" shall have the meaning assigned to such term in the Investors' Agreement.

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        "WARRANTS" means the Series C Warrants issued to the holders of the Preferred Stock pursuant to the terms of the Preferred Stockholders Agreement dated August 9, 2002.

        (2)   Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Investors' Agreement.

        (b)EXERCISE OF WARRANT.    

        (1)   The Holder is entitled to exercise this Warrant in whole or in part at any time, or from time to time, until the Expiration Date or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Warrant, the Holder shall execute and deliver to the Company a Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder and payment of the applicable Exercise Price for each Warrant Share subject to such exercise. Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. Notwithstanding anything herein to the contrary, in lieu of payment in cash of the applicable Exercise Price, the Holder may elect (i) to receive upon exercise of this Warrant, the number of Warrant Shares reduced by a number of Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate Exercise Price, Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash or (iii) to deliver as payment, in whole or in part of the aggregate Exercise Price, such number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash. Notwithstanding anything to the contrary in this paragraph (b)(1), if the aggregate Fair Market Value of the Common Shares applied or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise Price, in no event shall the Holder be entitled to receive any amounts from the Company.

        (2)   The Exercise Price may be paid in cash or by certified or official bank check or bank cashier's check payable to the order of the Company or by any combination of such cash or check. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

        (3)   If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company. The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph (f) hereof as may be directed in writing by the Holder and

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deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

        (4)   Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of Common Shares or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, including, if applicable, an amount in cash in lieu of any fraction of a share as provided in paragraph (e) below.

        (c)RESTRICTIVE LEGEND.    Certificates representing Common Shares issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to the Investors' Agreement or applicable securities laws.

        (d)RESERVATION OF SHARES.    The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued Common Shares or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except to the extent set forth in the Investors' Agreement.

        (e)FRACTIONAL SHARES.    No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Current Market Price Per Common Share (as defined in paragraph (h)(6)) at the date of such exercise; PROVIDED that if any of the Company's debt agreements at the time of exercise would prohibit such a payment, no such payment shall be made.

        The Company further agrees that it will not change the par value of the Common Shares to any higher par value which exceeds the Exercise Price then in effect, and will reduce the par value of the Common Shares upon any event described in paragraph (h) that (i) provides for an increase in the number of Common Shares subject to purchase upon exercise of this Warrant, in inverse proportion to and effective at the same time as such number of shares is increased, but only to the extent that such increase in the number of shares, together with all other such increases after the date hereof, causes the aggregate Exercise Price of all Warrants (without giving effect to any exercise thereof) to be greater than the product of all Warrants issued multiplied by $0.01 or (ii) would, but for this provision, reduce the Exercise Price below the par value of the Common Shares.

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        (f)EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.    

        (1)   This Warrant and the Warrant Shares are subject to the provisions of the Investors' Agreement, including the applicable restrictions on transfer. Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Warrant, will be subject to the provisions of, and will have the benefits of, the Investors' Agreement to the extent set forth therein, including the applicable transfer restrictions and the registration rights included therein.

        (2)   Subject to compliance with the transfer restrictions set forth in the Investors' Agreement and with applicable securities laws, upon surrender of this Warrant to the Company, together with the attached Warrant Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and, if the Holder's entire interest is not being assigned, in the name of the Holder and this Warrant shall promptly be canceled.

        (g)LOSS OR DESTRUCTION OF WARRANT.    Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date.

        (h)ANTI-DILUTION PROVISIONS.    The Exercise Price of this Warrant and the number of Common Shares for which this Warrant may be exercised shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this paragraph (h).

        (1)   In case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, (iii) combine or reclassify the outstanding Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination or reclassification shall be proportionately adjusted so that, giving effect to paragraph (h)(9), the exercise of this Warrant after such time shall entitle the holder to receive the aggregate number of Common Shares or other securities of the Company (or shares of any security into which such shares of Common Stock have been reclassified pursuant to clause (iii) or (iv) above) which, if this Warrant

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had been exercised immediately prior to such time, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

        (2)   In case the Company shall issue or sell any Common Shares (other than common shares issued (I) upon exercise of the Warrants, the Old Preferred Stock Warrants, the Old Senior Subordinated Note Warrants, the Series A Warrants, the Series B Warrants or the Series D Warrants, (II) pursuant to any stock option, co-investment or other stock-related employee compensation plan of the Company approved by the Board of Directors, (III) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraphs (h)(3) or (h)(4) hereof or (IV) in any Public Offering (as defined in the Indenture dated as of August 9, 2002 between HSBC Bank USA, as Trustee, the Company and the Guarantors party thereto relating to those certain Class A Senior Subordinated Notes due 2009, as in effect on the date hereof) generating gross proceeds of at least $25.0 million, the Exercise Price to be in effect after such issuance or sale shall be determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the sum of (x) the number of Common Shares outstanding immediately prior to the time of such issuance or sale multiplied by the Current Market Price Per Common Share immediately prior to such issuance or sale and (y) the aggregate consideration, if any, to be received by the Company upon such issuance or sale, and the denominator of which shall be the product of the aggregate number of Common Shares outstanding immediately after such issuance or sale and the Current Market Price Per Common Share immediately prior to such issuance or sale but in no event will such fraction exceed 1. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; PROVIDED that if the Principal Holders shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Principal Holders to determine such fair market value. The Holders shall be notified promptly of any consideration other than cash to be received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

        (3)   In case the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Common Shares or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date Common Shares (or securities convertible into Common Shares) at a price per Common Share (or having a conversion price per share of Common Share, if a security convertible into Common Shares) less than the Current Market Price Per Common Share on such record date, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have

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been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof, as though such maximum number of Common Shares had been so issued for the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of Common Shares to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed, in the former event, or the Exercise Price which would then be in effect if such holder had initially been entitled to such changed number of Common Shares, in the latter event.

        (4)   In case the Company shall sell or issue rights, options (other than options issued pursuant to a plan described in clause II of paragraph (h)(2)) or warrants (other than Series B Warrants or Series D Warrants) entitling the holders thereof to subscribe for or purchase Common Shares (or securities convertible into Common Shares) or shall issue convertible securities and the price per Common Share of such rights, options, warrants or convertible securities (including, in the case of rights, options, warrants or convertible securities, the price at which they may be exercised or converted) is less than the Current Market Price Per Common Share, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof as though such maximum number of Common Shares had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjuted to be the Exercise Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Exercise Price which would then be in effect if such holders had initially been

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entitled to such changed number of Common Shares, in the latter event. No adjustment of the Exercise Price shall be made pursuant to this paragraph (h)(4) to the extent that the Exercise Price shall have been adjusted pursuant to paragraph (h)(3) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

        (5)   In case the Company shall fix a record date for the making of a distribution to holders of Common Shares (including any such distribution made in connection with a consolidation or merger, other than the merger referred to in paragraph (o), in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets or other property (other than dividends payable in Common Shares or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraphs (h)(3) or (h)(4) hereof), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price Per Common Share on such record date, less the fair market value (determined as set forth in paragraph (h)(2) hereof) of the portion of the assets, cash, other property or evidence of indebtedness so to be distributed which is applicable to one Common Share, and the denominator of which shall be such Current Market Price Per Common Share. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

        (6)   For the purpose of any computation under paragraph (e) or paragraph (h)(2), (3), (4) or (5) hereof, on any determination date, the Current Market Price Per Common Share (the "CURRENT MARKET PRICE PER COMMON SHARE") shall be deemed to be the average (weighted by daily trading volume) of the Daily Prices (as defined below) per Common Share for the 20 consecutive trading days ending three days prior to such date. "DAILY PRICE" means (1) if the Common Shares then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the Common Shares then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the Common Shares then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the Common Shares then are not listed and traded on any such securities exchange and not traded on the NASDAQ National Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ; or (5) if such shares are not listed and traded on any such securities exchange, not traded on the NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then the

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average of the closing bid and asked prices, as reported by The Wall Street Journal for the over-the-counter market. If on any determination date the Common Shares are not quoted by any such organization, the Current Market Price Per Common Share shall be the fair market value of such shares on such determination date as determined by the Board of Directors, without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Investors' Agreement. If the Principal Holders shall object to any determination by the Board of Directors of the Current Market Price Per Common Share, the Current Market Price Per Common Share shall be the fair market value per Common Share as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the Principal Holders. For purposes of any computation under this paragraph (h), the number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company.

        (7)   No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; PROVIDED that any adjustments which by reason of this paragraph (h)(7) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (h) shall be made to the nearest one hundredth of a cent or to the nearest hundredth of a share, as the case may be.

        (8)   In the event that, at any time as a result of the provisions of this paragraph (h), the holder of this Warrant upon subsequent exercise shall become entitled to receive any shares of capital stock or other securities of the Company other than Common Shares, the number of such other shares so receivable upon exercise of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

        (9)   Upon each adjustment of the Exercise Price as a result of the calculations made in paragraphs (h)(1), (2), (3), (4) or (5) hereof, the number of shares for which this Warrant is exercisable immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares obtained by (i) multiplying the number of shares covered by this Warrant immediately prior to this adjustment of the number of shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

        (10) The Company shall notify all Holders of the fixing of a record date for the purpose of payment of a cash dividend to holders of Common Shares as soon as reasonably practicable, but in no event less than 20 days prior to any such record date.

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        (11) Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this paragraph (h), the Company shall forthwith file in the custody of this Secretary or an Assistant Secretary at its principal executive office and with its stock transfer agent or its warrant agent, if any, an officers' certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the chairman, president or chief financial officer of the Company and by the secretary or any assistant secretary of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to paragraph (f) and the Company shall, forthwith after each such adjustment, mail a copy, by first-class mail, of such certificate to the Holder.

        (12) The Holder shall, at its option, be entitled to receive, in lieu of the adjustment pursuant to paragraph (h)(5) otherwise required thereof, on the date of exercise of the Warrants, the evidences of indebtedness, other securities, cash, property or other assets which such Holder would have been entitled to receive if it had exercised its Warrants for Common Shares immediately prior to the record date with respect to such distribution. The Holder may exercise its option under this paragraph (h)(12) by delivering to the Company a written notice of such exercise within seven days of its receipt of the certificate of adjustment required pursuant to paragraph (h)(11) to be delivered by the Company in connection with such distribution.

        (i)CONSOLIDATION, MERGER, OR SALE OF ASSETS.    In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Shares) or any sale or transfer of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares for which this Warrant may have been exercised immediately prior to such consolidation, merger, sale or transfer, assuming (i) such holder of Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of a constituent Person and (ii) in the case of a consolidation, merger, sale or transfer which includes an election as to the consideration to be received by the holders, such holder of Common Shares failed to exercise its rights of election, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Common Share held immediately prior to such consolidation, merger, sale or transfer by a Person other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then

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for the purpose of this paragraph (i) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Adjustments for events subsequent to the effective date of such a consolidation, merger and sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease or transfer, or otherwise so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this paragraph (i) shall similarly apply to successive consolidations, mergers, sales, leases or transfers. Notwithstanding the foregoing provisions of this paragraph (i), the treatment of this Warrant in connection with the merger of the Company with and into Merrill Corporation shall be governed by paragraph (o).

        (j)NOTICES.    Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company as the case may be, at its address (or telecopier number) set forth below, or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery:

If to the Company:	Merrill Corporation One Merrill Circle St. Paul, Minnesota 55108 Telecopy: (651) 632-4141 Attention: General Counsel
If to the Holder:	To the address of such holder set forth on the signature page hereof.

        Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.

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        (k)RIGHTS OF THE HOLDER.    Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

        (l)REGISTRATION RIGHTS.    The Holder of this Warrant is entitled to the registration rights relating to the Warrants and the Warrant Shares set forth in the Investors' Agreement.

        (m)GOVERNING LAW.    THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.

        (n)AMENDMENTS; WAIVERS.    Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

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        IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed by its duly authorized officer and to be dated as of                         .

MERRILL CORPORATION
By:
	Name:
	Title:

Acknowledged and Agreed:
[HOLDER]
By:
	Name:
	Title:
	[Address]

WARRANT SUBSCRIPTION FORM

To: Merrill Corporation

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant) and herewith makes payment of $             (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant) (provided that in lieu of payment of $            , the undersigned will receive a number of Shares reduced by a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate Exercise Price for the Shares), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $             of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $             of the aggregate Exercise Price that number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per share (the Exercise Price currently in effect pursuant to the Warrant), and herewith

makes payment of $             of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $             of the aggregate Exercise Price that number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

        Date:                         ,             .

(Signature of Owner)

(Street Address)

(City) (State) (Zip Code)

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Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

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WARRANT ASSIGNMENT FORM

Dated

FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto,
	(the "ASSIGNEE"),
(please type or print in block letters)
(insert address)

its right to purchase up to              Common Shares represented by this Warrant and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises.

Signature

EXHIBIT C

MERRILL CORPORATION

FORM OF WARRANT FOR THE PURCHASE OF
CLASS B COMMON STOCK OF MERRILL CORPORATION

NO.                         SERIES D WARRANTS

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE INVESTORS' AGREEMENT (AS HEREIN DEFINED), COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY OR ANY SUCCESSOR THERETO.

        FOR VALUE RECEIVED, MERRILL CORPORATION, a Minnesota corporation (the "COMPANY"), hereby certifies that                         , its successor or permitted assigns (the "HOLDER"), is entitled, subject to the provisions of this Warrant, to purchase from the Company, at the times specified herein, one fully paid and non-assessable share of Class B common stock of the Company, par value $0.01 per share (the "WARRANT SHARES"), for each Warrant evidenced by this Warrant Certificate at a purchase price per share equal to the Exercise Price (as hereinafter defined). The number of Warrant Shares to be received upon the exercise of this Warrant and the price to be paid for a Warrant Share are subject to adjustment from time to time as hereinafter set forth.

        (a)   DEFINITIONS.

        (1)   The following terms, as used herein, have the following meanings:

        "AFFILIATE" shall have the meaning given to such term in Rule 12b-2 promulgated under the Securities and Exchange Act of 1934, as amended.

        "BOARD OF DIRECTORS" means the Company's Board of Directors.

        "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized by law to close.

        "COMMON SHARE" means a share of the Company's Class B Common Stock, par value $0.01 per share.

        "DULY ENDORSED" means duly endorsed in blank by the Person or Persons in whose name a stock certificate is registered or accompanied by a duly executed stock assignment separate from the certificate with the signature(s) thereon guaranteed by a commercial bank or

trust company or a member of a national securities exchange or of the National Association of Securities Dealers, Inc.

        "EXERCISE PRICE" means $0.01 per Warrant Share, as such Exercise Price is adjusted from time to time as provided herein.

        "EXPIRATION DATE" means August 8, 2012 at 5:00 p.m. New York City time.

        "FAIR MARKET VALUE" means, with respect to one Common Share on any date, the Current Market Price Per Common Share for purposes of paragraph (h)(6) hereof.

        "INVESTORS AGREEMENT" means the Investors Agreement dated as of November 23, 1999 among Viking Merger Sub, Inc., DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P., DLJ ESC II L.P., DLJ First ESC, L.P., DLJ Investment Partners II, L.P., DLJ Investment Funding II, Inc. and the other stockholders listed on the signature pages thereto.

        "OLD PREFERRED STOCK WARRANTS" means the warrants issued to holders of the Company's 14.5% Senior Preferred Stock due 2011 on November 23, 1999.

        "OLD SENIOR SUBORDINATED NOTE WARRANTS" means the warrants issued to holders of the Company's 12% Senior Subordinated Notes due 2009 on November 23, 1999.

        "PERSON" means an individual, partnership, corporation, limited liability company, trust, joint stock company, association, joint venture, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        "PREFERRED STOCK" means the Company's Preferred Stock due 2011.

        "PRINCIPAL HOLDERS" means, on any date, the holders of at least 25% of the Warrants.

        "SERIES A WARRANTS" means the Series A Warrants issued by the Company to holders of the Company's 12% Senior Subordinated Notes due 2009 on August 9, 2002.

        "SERIES B WARRANTS" means the Series B Warrants to be issued in certain circumstances by the Company to holders of the Company's Class A Senior Subordinated Notes due 2009 and Class B Senior Subordinated Notes due 2009.

        "SERIES C WARRANTS" means the Series C Warrants to be issued in certain circumstances by the Company to the holders of the Preferred Stock.

        "TRANSFER" shall have the meaning assigned to such term in the Investors' Agreement.

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        "WARRANTS" means the Series D Warrants issued to the holders of the Preferred Stock pursuant to the terms of the Preferred Stockholders Agreement dated August 9, 2002.

        (2)   Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Investors' Agreement.

        (b)   EXERCISE OF WARRANT.

        (1)   The Holder is entitled to exercise this Warrant in whole or in part at any time, or from time to time, until the Expiration Date or, if such day is not a Business Day, then on the next succeeding day that shall be a Business Day. To exercise this Warrant, the Holder shall execute and deliver to the Company a Warrant Exercise Subscription Form forming a part hereof duly executed by the Holder and payment of the applicable Exercise Price for each Warrant Share subject to such exercise. Upon such delivery and payment, the Holder shall be deemed to be the holder of record of the Warrant Shares subject to such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. Notwithstanding anything herein to the contrary, in lieu of payment in cash of the applicable Exercise Price, the Holder may elect (i) to receive upon exercise of this Warrant, the number of Warrant Shares reduced by a number of Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares, (ii) to deliver as payment, in whole or in part of the aggregate Exercise Price, Common Shares having the aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash or (iii) to deliver as payment, in whole or in part of the aggregate Exercise Price, such number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value equal to the aggregate Exercise Price for the Warrant Shares in respect of which the Exercise Price is not being paid in cash. Notwithstanding anything to the contrary in this paragraph (b)(1), if the aggregate Fair Market Value of the Common Shares applied or delivered pursuant to (i), (ii) or (iii) above exceeds the aggregate Exercise Price, in no event shall the Holder be entitled to receive any amounts from the Company.

        (2)   The Exercise Price may be paid in cash or by certified or official bank check or bank cashier's check payable to the order of the Company or by any combination of such cash or check. The Company shall pay any and all documentary, stamp or similar issue or transfer taxes payable in respect of the issue or delivery of the Warrant Shares.

        (3)   If the Holder exercises this Warrant in part, this Warrant Certificate shall be surrendered by the Holder to the Company and a new Warrant Certificate of the same tenor and for the unexercised number of Warrant Shares shall be executed by the Company. The Company shall register the new Warrant Certificate in the name of the Holder or in such name or names of its transferee pursuant to paragraph (f) hereof as may be directed in writing by the Holder and

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deliver the new Warrant Certificate to the Person or Persons entitled to receive the same.

        (4)   Upon surrender of this Warrant Certificate in conformity with the foregoing provisions, the Company shall transfer to the Holder of this Warrant Certificate appropriate evidence of ownership of Common Shares or other securities or property (including any money) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, the name or names of the Holder or such transferee as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including any money) to the Person or Persons entitled to receive the same, including, if applicable, an amount in cash in lieu of any fraction of a share as provided in paragraph (e) below.

        (c)   RESTRICTIVE LEGEND. Certificates representing Common Shares issued pursuant to this Warrant shall bear a legend substantially in the form of the legend set forth on the first page of this Warrant Certificate to the extent that and for so long as such legend is required pursuant to the Investors' Agreement or applicable securities laws.

        (d)   RESERVATION OF SHARES. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant such number of its authorized but unissued Common Shares or other securities of the Company from time to time issuable upon exercise of this Warrant as will be sufficient to permit the exercise in full of this Warrant. All such shares shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable, free and clear of all liens, security interests, charges and other encumbrances or restrictions on sale and free and clear of all preemptive rights, except to the extent set forth in the Investors' Agreement.

        (e)   FRACTIONAL SHARES. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant and in lieu of delivery of any such fractional share upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the Current Market Price Per Common Share (as defined in paragraph (h)(6)) at the date of such exercise; PROVIDED that if any of the Company's debt agreements at the time of exercise would prohibit such a payment, no such payment shall be made.

        The Company further agrees that it will not change the par value of the Common Shares to any higher par value which exceeds the Exercise Price then in effect, and will reduce the par value of the Common Shares upon any event described in paragraph (h) that (i) provides for an increase in the number of Common Shares subject to purchase upon exercise of this Warrant, in inverse proportion to and effective at the same time as such number of shares is increased, but only to the extent that such increase in the number of shares, together with all other such increases after the date hereof, causes the aggregate Exercise Price of all Warrants (without giving effect to any exercise thereof) to be greater than the product of all Warrants issued multiplied by $0.01 or (ii) would, but for this provision, reduce the Exercise Price below the par value of the Common Shares.

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        (f)    EXCHANGE, TRANSFER OR ASSIGNMENT OF WARRANT.

        (1)   This Warrant and the Warrant Shares are subject to the provisions of the Investors' Agreement, including the applicable restrictions on transfer. Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that the registered holder hereof may be treated by the Company and all other persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented hereby. The Holder, by its acceptance of this Warrant, will be subject to the provisions of, and will have the benefits of, the Investors' Agreement to the extent set forth therein, including the applicable transfer restrictions and the registration rights included therein.

        (2)   Subject to compliance with the transfer restrictions set forth in the Investors' Agreement and with applicable securities laws, upon surrender of this Warrant to the Company, together with the attached Warrant Assignment Form duly executed, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee or assignees named in such instrument of assignment and, if the Holder's entire interest is not being assigned, in the name of the Holder and this Warrant shall promptly be canceled.

        (g)   LOSS OR DESTRUCTION OF WARRANT. Upon receipt by the Company of evidence satisfactory to it (in the exercise of its reasonable discretion) of the loss, theft, destruction or mutilation of this Warrant Certificate, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant Certificate, if mutilated, the Company shall execute and deliver a new Warrant Certificate of like tenor and date.

        (h)   ANTI-DILUTION PROVISIONS. The Exercise Price of this Warrant and the number of Common Shares for which this Warrant may be exercised shall be subject to adjustment from time to time upon the occurrence of certain events as provided in this paragraph (h).

        (1)   In case the Company shall at any time after the date hereof (i) declare a dividend or make a distribution on Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, (iii) combine or reclassify the outstanding Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of Common Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination or reclassification shall be proportionately adjusted so that, giving effect to paragraph (h)(9), the exercise of this Warrant after such time shall entitle the holder to receive the aggregate number of Common Shares or other securities of the Company (or shares of any security into which such shares of Common Stock have been reclassified pursuant to clause (iii) or (iv) above) which, if this Warrant

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had been exercised immediately prior to such time, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination or reclassification. Such adjustment shall be made successively whenever any event listed above shall occur.

        (2)   In case the Company shall issue or sell any Common Shares (other than common shares issued (I) upon exercise of the Warrants, the Old Preferred Stock Warrants, the Old Senior Subordinated Note Warrants, the Series A Warrants, the Series B Warrants or the Series C Warrants, (II) pursuant to any stock option, co-investment or other stock-related employee compensation plan of the Company approved by the Board of Directors, (III) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraphs (h)(3) or (h)(4) hereof or (IV) in any Public Offering (as defined in the Indenture dated as of August 9, 2002 between HSBC Bank USA, as Trustee, the Company and the Guarantors party thereto relating to those certain Class A Senior Subordinated Notes due 2009, as in effect on the date hereof) generating gross proceeds of at least $25.0 million, the Exercise Price to be in effect after such issuance or sale shall be determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction, the numerator of which shall be the sum of (x) the number of Common Shares outstanding immediately prior to the time of such issuance or sale multiplied by the Current Market Price Per Common Share immediately prior to such issuance or sale and (y) the aggregate consideration, if any, to be received by the Company upon such issuance or sale, and the denominator of which shall be the product of the aggregate number of Common Shares outstanding immediately after such issuance or sale and the Current Market Price Per Common Share immediately prior to such issuance or sale but in no event will such fraction exceed 1. In case any portion of the consideration to be received by the Company shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined by the Board of Directors of the Company; PROVIDED that if the Principal Holders shall object to any such determination, the Board of Directors shall retain an independent appraiser reasonably satisfactory to the Principal Holders to determine such fair market value. The Holders shall be notified promptly of any consideration other than cash to be received by the Company and furnished with a description of the consideration and the fair market value thereof, as determined by the Board of Directors.

        (3)   In case the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Common Shares or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date Common Shares (or securities convertible into Common Shares) at a price per Common Share (or having a conversion price per share of Common Share, if a security convertible into Common Shares) less than the Current Market Price Per Common Share on such record date, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have

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been issued and outstanding as of such record date and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof, as though such maximum number of Common Shares had been so issued for the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of Common Shares to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed, in the former event, or the Exercise Price which would then be in effect if such holder had initially been entitled to such changed number of Common Shares, in the latter event.

        (4)   In case the Company shall sell or issue rights, options (other than options issued pursuant to a plan described in clause II of paragraph (h)(2)) or warrants (other than Series B Warrants) entitling the holders thereof to subscribe for or purchase Common Shares (or securities convertible into Common Shares) or shall issue convertible securities and the price per Common Share of such rights, options, warrants or convertible securities (including, in the case of rights, options, warrants or convertible securities, the price at which they may be exercised or converted) is less than the Current Market Price Per Common Share, the maximum number of Common Shares issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the Exercise Price shall be adjusted pursuant to paragraph (h)(2) hereof as though such maximum number of Common Shares had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such Common Shares. In case any portion of such consideration shall be in a form other than cash, the fair market value of such noncash consideration shall be determined as set forth in paragraph (h)(2) hereof. Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein which are no more favorable in their entirety than those contained in this paragraph (h)), the Exercise Price shall again be adjuted to be the Exercise Price which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the Exercise Price which would then be in effect if such holders had initially been entitled to

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such changed number of Common Shares, in the latter event. No adjustment of the Exercise Price shall be made pursuant to this paragraph (h)(4) to the extent that the Exercise Price shall have been adjusted pursuant to paragraph (h)(3) upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of Common Shares to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

        (5)   In case the Company shall fix a record date for the making of a distribution to holders of Common Shares (including any such distribution made in connection with a consolidation or merger, other than the merger referred to in paragraph (o), in which the Company is the continuing corporation) of evidences of indebtedness, cash, assets or other property (other than dividends payable in Common Shares or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraphs (h)(3) or (h)(4) hereof), the Exercise Price to be in effect after such record date shall be determined by multiplying the Exercise Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price Per Common Share on such record date, less the fair market value (determined as set forth in paragraph (h)(2) hereof) of the portion of the assets, cash, other property or evidence of indebtedness so to be distributed which is applicable to one Common Share, and the denominator of which shall be such Current Market Price Per Common Share. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such record date had not been fixed.

        (6)   For the purpose of any computation under paragraph (e) or paragraph (h)(2), (3), (4) or (5) hereof, on any determination date, the Current Market Price Per Common Share (the "CURRENT MARKET PRICE PER COMMON SHARE") shall be deemed to be the average (weighted by daily trading volume) of the Daily Prices (as defined below) per Common Share for the 20 consecutive trading days ending three days prior to such date. "DAILY PRICE" means (1) if the Common Shares then are listed and traded on the New York Stock Exchange, Inc. ("NYSE"), the closing price on such day as reported on the NYSE Composite Transactions Tape; (2) if the Common Shares then are not listed and traded on the NYSE, the closing price on such day as reported by the principal national securities exchange on which the shares are listed and traded; (3) if the Common Shares then are not listed and traded on any such securities exchange, the last reported sale price on such day on the National Market of the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"); (4) if the Common Shares then are not listed and traded on any such securities exchange and not traded on the NASDAQ National Market, the average of the highest reported bid and lowest reported asked price on such day as reported by NASDAQ; or (5) if such shares are not listed and traded on any such securities exchange, not traded on the NASDAQ National Market and bid and asked prices are not reported by NASDAQ, then the

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average of the closing bid and asked prices, as reported by The Wall Street Journal for the over-the-counter market. If on any determination date the Common Shares are not quoted by any such organization, the Current Market Price Per Common Share shall be the fair market value of such shares on such determination date as determined by the Board of Directors, without regard to considerations of the lack of liquidity, applicable regulatory restrictions or any of the transfer restrictions or other obligations imposed on such shares set forth in the Investors' Agreement. If the Principal Holders shall object to any determination by the Board of Directors of the Current Market Price Per Common Share, the Current Market Price Per Common Share shall be the fair market value per Common Share as determined by an independent appraiser retained by the Company at its expense and reasonably acceptable to the Principal Holders. For purposes of any computation under this paragraph (h), the number of Common Shares outstanding at any given time shall not include shares owned or held by or for the account of the Company.

        (7)   No adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; PROVIDED that any adjustments which by reason of this paragraph (h)(7) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (h) shall be made to the nearest one hundredth of a cent or to the nearest hundredth of a share, as the case may be.

        (8)   In the event that, at any time as a result of the provisions of this paragraph (h), the holder of this Warrant upon subsequent exercise shall become entitled to receive any shares of capital stock or other securities of the Company other than Common Shares, the number of such other shares so receivable upon exercise of this Warrant shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein.

        (9)   Upon each adjustment of the Exercise Price as a result of the calculations made in paragraphs (h)(1), (2), (3), (4) or (5) hereof, the number of shares for which this Warrant is exercisable immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Exercise Price, that number of Common Shares obtained by (i) multiplying the number of shares covered by this Warrant immediately prior to this adjustment of the number of shares by the Exercise Price in effect immediately prior to such adjustment of the Exercise Price and (ii) dividing the product so obtained by the Exercise Price in effect immediately after such adjustment of the Exercise Price.

        (10) The Company shall notify all Holders of the fixing of a record date for the purpose of payment of a cash dividend to holders of Common Shares as soon as reasonably practicable, but in no event less than 20 days prior to any such record date.

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        (11) Not less than 10 nor more than 30 days prior to the record date or effective date, as the case may be, of any action which requires or might require an adjustment or readjustment pursuant to this paragraph (h), the Company shall forthwith file in the custody of this Secretary or an Assistant Secretary at its principal executive office and with its stock transfer agent or its warrant agent, if any, an officers' certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment and the manner of computing such adjustment. Each such officers' certificate shall be signed by the chairman, president or chief financial officer of the Company and by the secretary or any assistant secretary of the Company. Each such officers' certificate shall be made available at all reasonable times for inspection by the Holder or any holder of a Warrant executed and delivered pursuant to paragraph (f) and the Company shall, forthwith after each such adjustment, mail a copy, by first-class mail, of such certificate to the Holder.

        (12) The Holder shall, at its option, be entitled to receive, in lieu of the adjustment pursuant to paragraph (h)(5) otherwise required thereof, on the date of exercise of the Warrants, the evidences of indebtedness, other securities, cash, property or other assets which such Holder would have been entitled to receive if it had exercised its Warrants for Common Shares immediately prior to the record date with respect to such distribution. The Holder may exercise its option under this paragraph (h)(12) by delivering to the Company a written notice of such exercise within seven days of its receipt of the certificate of adjustment required pursuant to paragraph (h)(11) to be delivered by the Company in connection with such distribution.

        (i)    CONSOLIDATION, MERGER, OR SALE OF ASSETS. In case of any consolidation of the Company with, or merger of the Company into, any other Person, any merger of another Person into the Company (other than a merger which does not result in any reclassification, conversion, exchange or cancellation of outstanding Common Shares) or any sale or transfer of all or substantially all of the assets of the Company or of the Person formed by such consolidation or resulting from such merger or which acquires such assets, as the case may be, the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares for which this Warrant may have been exercised immediately prior to such consolidation, merger, sale or transfer, assuming (i) such holder of Common Shares is not a Person with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an Affiliate of a constituent Person and (ii) in the case of a consolidation, merger, sale or transfer which includes an election as to the consideration to be received by the holders, such holder of Common Shares failed to exercise its rights of election, as to the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer (provided that if the kind or amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer is not the same for each Common Share held immediately prior to such consolidation, merger, sale or transfer by a Person other than a constituent Person or an Affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then

10

for the purpose of this paragraph (i) the kind and amount of securities, cash and other property receivable upon such consolidation, merger, sale or transfer for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Adjustments for events subsequent to the effective date of such a consolidation, merger and sale of assets shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. In any such event, effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease or transfer, or otherwise so that the provisions set forth herein for the protection of the rights of the Holder shall thereafter continue to be applicable; and any such resulting or surviving corporation shall expressly assume the obligation to deliver, upon exercise, such shares of stock, other securities, cash and property. The provisions of this paragraph (i) shall similarly apply to successive consolidations, mergers, sales, leases or transfers. Notwithstanding the foregoing provisions of this paragraph (i), the treatment of this Warrant in connection with the merger of the Company with and into Merrill Corporation shall be governed by paragraph (o).

        (j)    NOTICES. Any notice, demand or delivery authorized by this Warrant Certificate shall be in writing and shall be given to the Holder or the Company as the case may be, at its address (or telecopier number) set forth below, or such other address (or telecopier number) as shall have been furnished to the party giving or making such notice, demand or delivery:

If to the Company:	Merrill Corporation One Merrill Circle St. Paul, Minnesota 55108 Telecopy: (651) 632-4141 Attention: General Counsel
If to the Holder:	To the address of such holder set forth on the signature page hereof.

        Each such notice, demand or delivery shall be effective (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified herein and the intended recipient confirms the receipt of such telecopy or (ii) if given by any other means, when received at the address specified herein.

11

        (k)   RIGHTS OF THE HOLDER. Prior to the exercise of any Warrant, the Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote, to receive dividends or other distributions or to receive any notice of meetings of shareholders or any notice of any proceedings of the Company except as may be specifically provided for herein.

        (l)    REGISTRATION RIGHTS. The Holder of this Warrant is entitled to the registration rights relating to the Warrants and the Warrant Shares set forth in the Investors' Agreement.

        (m)  GOVERNING LAW. THIS WARRANT CERTIFICATE AND ALL RIGHTS ARISING HEREUNDER SHALL BE CONSTRUED AND DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS AND THE PERFORMANCE THEREOF SHALL BE GOVERNED AND ENFORCED IN ACCORDANCE WITH SUCH LAWS.

        (n)   AMENDMENTS; WAIVERS. Any provision of this Warrant Certificate may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Holder and the Company, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

12

        IN WITNESS WHEREOF, the Company has duly caused this Warrant Certificate to be signed by its duly authorized officer and to be dated as of                         .

MERRILL CORPORATION
By:
	Name: Title:

Acknowledged and Agreed:
[HOLDER]
By:
	Name: Title:
	[Address]

WARRANT SUBSCRIPTION FORM

To:

Merrill Corporation

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant) and herewith makes payment of $             (such payment being made in cash or by certified or official bank or bank cashier's check payable to the order of the Company or by any permitted combination of such cash or check), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant) (provided that in lieu of payment of $            , the undersigned will receive a number of Shares reduced by a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to the aggregate Exercise Price for the Shares), all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per Share (the Exercise Price currently in effect pursuant to the Warrant), and herewith makes payment of $             of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $             of the aggregate Exercise Price that number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

-OR-

        The undersigned irrevocably exercises the Warrant for the purchase of                          Common Shares (the "SHARES"), par value $0.01 per share, of Merrill Corporation (the "COMPANY") at $             per share (the Exercise Price currently in effect pursuant to the Warrant), and herewith

makes payment of $             of the aggregate Exercise Price for the Shares in cash, certified or official bank or bank cashier's check (or a combination of cash and check), and herewith delivers as payment of $             of the aggregate Exercise Price that number of Warrants which, if exercised, would result in a number of Common Shares having an aggregate Fair Market Value (as defined in the Warrant) equal to such non-cash portion of the aggregate Exercise Price for the Shares, all on the terms and conditions specified in the within Warrant Certificate, surrenders this Warrant Certificate and all right, title and interest therein to the Company and directs that the Shares deliverable upon the exercise of this Warrant be registered or placed in the name and at the address specified below and delivered thereto.

        Date:                         ,             .

(Signature of Owner)

(Street Address)

(City) (State) (Zip Code)

2

Securities and/or check to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Any unexercised portion of the Warrant evidenced by the within Warrant Certificate to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

3

WARRANT ASSIGNMENT FORM

Dated

FOR VALUE RECEIVED,
hereby sells, assigns and transfers unto,
	(the "ASSIGNEE"),
(please type or print in block letters)
(insert address)

its right to purchase up to              Common Shares represented by this Warrant and does hereby irrevocably constitute and appoint                                                   Attorney, to transfer the same on the books of the Company, with full power of substitution in the premises.

Signature

QuickLinks

Exhibit 10.27

PREFERRED STOCKHOLDERS AGREEMENT

EXHIBIT A

AMENDED AND RESTATED CERTIFICATE OF DESIGNATION

EXHIBIT B

MERRILL CORPORATION FORM OF WARRANT FOR THE PURCHASE OF CLASS B COMMON STOCK OF MERRILL CORPORATION
WARRANT SUBSCRIPTION FORM
WARRANT ASSIGNMENT FORM

EXHIBIT C

MERRILL CORPORATION FORM OF WARRANT FOR THE PURCHASE OF CLASS B COMMON STOCK OF MERRILL CORPORATION
WARRANT SUBSCRIPTION FORM
WARRANT ASSIGNMENT FORM

EX-10.28

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Exhibit 10.28

Execution Version

LENDER CONSENT LETTER

MERRILL CORPORATION

To:

BANK OF AMERICA, N.A., as Administrative Agent
101 North Tryon St.
Charlotte, NC 28255

Ladies and Gentlemen:

        Reference is made to the following:

          (i)  the $165,000,000 Credit Agreement ("Existing Base Credit Agreement"), dated as of July 30, 2004, among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation ("Holdings"), certain financial institutions and other Persons from time to time party thereto as lenders, Bank of America, N.A. ("BANA"), as the administrative agent and the collateral agent, Credit Suisse First Boston, acting through its Cayman Islands Branch ("CSFB"), as a joint lead arranger, a joint bookrunner and the syndication agent, Banc of America Securities LLC ("BAS"), as a joint lead arranger and a joint bookrunner and Calyon New York Branch and LaSalle Bank, N.A., as the co-documentation agents;

         (ii)  the $45,000,000 Credit Agreement ("Existing Refinancing Credit Agreement", and together with the Existing Base Credit Agreement, the "Existing Credit Agreements"), dated as of July 30, 2004, among the Borrower, Holdings, certain financial institutions and other Persons from time to time party thereto as lenders, BANA, as the administrative agent and the collateral agent, CSFB, as a joint lead arranger, a joint bookrunner and the syndication agent, BAS, as a joint lead arranger and a joint bookrunner and Calyon New York Branch and LaSalle Bank, N.A., as the co-documentation agents; and

        (iii)  the proposed Amended, Restated and Combined Credit Agreement attached hereto as Exhibit A (the "Amendment"; capitalized terms used but not defined herein shall have the respective meanings set forth for such terms in the Amendment), which provides (a) for the continuation of the Initial Term Loans (as defined under each of the Existing Credit Agreements) and the continuation of certain letters of credit outstanding under the Existing Base Agreement Credit, in each case subject to the amendment of the terms thereof as provided in the Amendment, (b) that on the Effective Date, the aggregate commitments available under the Existing Credit Agreements will be increased to $535,000,000, (c) that the new Loans in excess of the Existing Loans shall be made by the Lenders to Borrower (x) on the Effective Date, as Initial Term Loans, (y) on the Effective Date and from time to time thereafter, as Revolving Loans and Revolving Loan Commitments and (z) on a date on or after the Effective Date and on or prior to the Delayed Draw Term Loan Commitment Termination Date, as Delayed Draw Term

Loans, and (d) for certain other amendments to the Existing Credit Agreements and related documents on the terms set forth in the Amendment.

        The undersigned (i) is a Lender under both of the Existing Credit Agreements, (ii) consents to the Amendment pursuant to Section 10.1 of each Existing Credit Agreement to which it is a party, (iii) acknowledges that its Existing Loans as set forth on Schedule 2.1 to the Amendment will, pursuant to and as further provided under Section 2.1.1 of the Amendment, remain outstanding on and after the Effective Date as Initial Term Loans under the Amendment and (iv) authorizes BANA, in its capacity as Administrative Agent and the Collateral Agent under the Existing Credit Agreements and the Amendment, to execute the Amendment on its behalf and agrees that once BANA so executes the Amendment, the undersigned shall be a Lender under the Amendment holding the Initial Term Loans continued as described above.

        Other than with respect to the continuation of its Existing Loans as described above and in the Amendment, unless otherwise agreed by the undersigned after the date hereof, the undersigned shall have no Term Loan Commitment under the Amendment on the date hereof or immediately after the effectiveness of the Amendment.

[Remainder of Page Intentionally Left Blank]

Very truly yours,

General Electric Capital Corporation

By	/s/ Marie G. Mollo
	Name:  Marie G. Mollo
	Title:  Duly Authorized Signatory

Dated as of December 22, 2005

Very truly yours,

Venture IV CDO Ltd.

By its investment advisor, MJX Asset Management, LLC

By	/s/ Hans Christensen
	Name:  Hans Christensen
	Title:  Chief Investment Officer

Dated as of December 22, 2005

Very truly yours,

Hewitt's Island CLO II Ltd

By	/s/ John Frabott by Michelle Patterson
	Name:  John Frabotta
	Title:  Managing Director

Dated as of December 22, 2005

Very truly yours,

Archimedes Funding III
Archimedes Funding IV
Endurance CLO I Ltd
Nemean CLO Ltd

By	/s/ Helen Y. Rhee
	Name:  Helen Y. Rhee
	Title:  Senior Credit Analyst

Dated as of December 22, 2005

Very truly yours,

Landmark IV CDO Ltd.
By: Aladdin Capital management LLC, as Manager

By	/s/ Joseph Moroney
	Name: Joseph Moroney, CFA
	Title: Authorized Signatory

Dated as of December 22, 2005

Very truly yours,

Dryden VII—Leveraged Loan CDO 2004
By: Prudential Investment Management,
Inc., as Collateral Manager

By	/s/ George W. Edwards
	Name:  George W. Edwards
	Title:  Principal

Dated as of December 22, 2005

Very truly yours,

Loan Funding V, LLC, for itself or as agent
for Corporate Loan Funding V LLC
By: Prudential Investment Management,
Inc., as Portfolio Manager

By	/s/ George W. Edwards
	Name:  George W. Edwards
	Title:  Principal

Dated as of December 22, 2005

Very truly yours,

Dryden III—Leveraged Loan CDO 2002
By: Prudential Investment Management, Inc.,
as Collateral Manager

By	/s/ George W. Edwards
	Name:  George W. Edwards
	Title:  Principal

Dated as of December 22, 2005

Very truly yours,

Van Kampen
Senior Loan Fund
By: Van Kampen Asset Management

By	/s/ Darvin D. Pierce
	Name:  Darvin D. Pierce
	Title:  Executive Director

Dated as of December 22, 2005

Very truly yours,

Van Kampen
Senior Income Trust
By: Van Kampen Asset Management

By	/s/ Darvin D. Pierce
	Name:  Darvin D. Pierce
	Title:  Executive Director

Dated as of December 22, 2005

Very truly yours,

LFC2 Loan Funding LLC, for itself or as agent
for Loan Funding Corp. THC, Ltd

By	/s/ Eugene Caraus
	Name:  Eugene Caraus
	Title:  Attorney-in-Fact

Dated as of December 22, 2005

Very truly yours,

Morgan Stanley Prime Income Trust

By	/s/ Jinny K. Kim
	Name:  Jinny K. Kim
	Title:  Executive Director

Dated as of December 22, 2005

Very truly yours,

ING Prime Rate Trust
By:	ING Investment Management Co. as its investment manager
By	/s/ Mohamed Basma
	Name:  Darvin D. Pierce
	Title:  Vice President

ING Senior Income Fund
By:	ING Investment Management Co. as its investment manager
By	/s/ Mohamed Basma
	Name:  Darvin D. Pierce
	Title:  Vice President

ING International (II)—Senior Bank Loans Euro
By:	ING Investment Management Co. as its investment manager
By	/s/ Mohamed Basma
	Name:  Darvin D. Pierce
	Title:  Vice President

Dated as of December 22, 2005

Very truly yours,

OAK HILL CREDIT PARTNERS III, LIMITED

By: Oak Hill CLO Management III, LLC
As Investment Manager

By	/s/ Scott D. Krase
	Name:  Scott D. Krase
	Title:  Authorized Person

Dated as of December 22, 2005

Very truly yours,

Flagship CLO 2001-1
By: Flagship Capital Management, Inc.

By	/s/ Eric S. Meyer
	Name:  Eric S. Meyer
	Title:  Director

Flagship CLO III
By: Flagship Capital Management, Inc.

By	/s/ Eric S. Meyer
	Name:  Eric S. Meyer
	Title:  Director

Dated as of December 22, 2005

Very truly yours,

Stone Tower CLO II Ltd
By: Stone Tower Debt Advisors LLC,
As it's collateral manager

By	/s/ Michael W. Delpercio
	Name:  Michael W. Delpercio
	Title:  Authorized Signatory

Dated as of December 22, 2005

Very truly yours,

EV CDO III Ltd.
EV Floating Rate Income
EV VT Floating Rate
Grayson & Co.
Institutional Senior
Norinchukin Bank (New York Branch)

Senior Debt Portfolio

By	/s/ Michael B. Botthof
	Name:  Michael D. Botthof
	Title:  Vice President

Dated as of December 22, 2005

Very truly yours,

Costantinus EV CDO V
EV CDO VI Ltd
EV Senior Floating Rate
Limited Duration Income
Senior Income Trust

By	/s/ Michael B. Botthof
	Name:  Michael D. Botthof
	Title:  Vice President

Dated as of December 22, 2005

Very truly yours,

Green Lane CLO Ltd

By	/s/ Kaitlin Trinh
	Name:  Kaitlin Trinh
	Title:  Director

Dated as of December 22, 2005

Execution Version

EXHIBIT A TO
LENDER CONSENT LETTER

AMENDED, RESTATED AND COMBINED
CREDIT AGREEMENT
dated as of December 22, 2005

among

MERRILL COMMUNICATIONS LLC,
as the Borrower,

MERRILL CORPORATION,
as Holdings,

VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders,

BANK OF AMERICA, N.A.,
as the Administrative Agent and the Collateral Agent for the Lenders,

CREDIT SUISSE,
as a Joint Lead Arranger and a Joint Bookrunner,

BANC OF AMERICA SECURITIES LLC,
as a Joint Lead Arranger and a Joint Bookrunner,

DEUTSCHE BANK SECURITIES INC.,
as a Joint Bookrunner and Syndication Agent

and

CALYON NEW YORK BRANCH,
NATIONAL CITY BANK,
and
LASALLE BANK, N.A.

as Co-Documentation Agents

$535,000,000 Term Loan, Delayed Draw Term Loan and Revolving Credit Facility

TABLE OF CONTENTS

			Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS			2
	SECTION 1.1 Defined Terms		2
	SECTION 1.2 Use of Defined Terms		36
	SECTION 1.3 Cross-References		36
	SECTION 1.4 Accounting and Financial Determinations		36
	SECTION 1.5 Letter of Credit Amounts		37
ARTICLE II COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES, NOTES AND LETTERS OF CREDIT			37
	SECTION 2.1 Commitments		37
		SECTION 2.1.1 Term Loan Commitment	38
		SECTION 2.1.2 Revolving Loan Commitment	38
		SECTION 2.1.3 Letter of Credit Commitment	38
		SECTION 2.1.4 Lenders Not Permitted or Required to Make the Loans	39
		SECTION 2.1.5 Issuer Not Permitted or Required to Issue Letters of Credit	39
	SECTION 2.2 Changes in Commitment Amount		40
		SECTION 2.2.1 Reduction of Revolving Loan Commitment Amount and Delayed Draw Term Loan Commitment Amount	40
		SECTION 2.2.2 Additional Term Loan Commitments	40
	SECTION 2.3 Borrowing Procedures and Funding Maintenance		41
		SECTION 2.3.1 Term Loans and Revolving Loans	41
	SECTION 2.4 Continuation and Conversion Elections		41
	SECTION 2.5 Funding		42
	SECTION 2.6 Issuance Procedures		42
		SECTION 2.6.1 Other Lenders' Participation	43
		SECTION 2.6.2 Disbursements; Conversion to Revolving Loans	43
		SECTION 2.6.3 Reimbursement	44
		SECTION 2.6.4 Deemed Disbursements	44
		SECTION 2.6.5 Nature of Reimbursement Obligations	45
		SECTION 2.6.6 Applicability of ISP and UCP	45
		SECTION 2.6.7 Existing Letters of Credit	46

i

	SECTION 2.7 Register; Notes		46
ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES			47
	SECTION 3.1 Repayments and Prepayments; Application		47
		SECTION 3.1.1 Repayments and Prepayments	47
		SECTION 3.1.2 Application	51
	SECTION 3.2 Interest Provisions		51
		SECTION 3.2.1 Rates	51
		SECTION 3.2.2 Post-Maturity Rates	51
		SECTION 3.2.3 Payment Dates	52
	SECTION 3.3 Fees		52
		SECTION 3.3.1 Commitment Fee	52
		SECTION 3.3.2 Administrative Agent Fee	52
		SECTION 3.3.3 Letter of Credit Fee	52
		SECTION 3.3.4 Fronting Fee and Documentary and Processing Charges Payable to Issuer	53
		SECTION 3.3.5 Delayed Draw Term Loan Commitment Fee	53
ARTICLE IV CERTAIN LIBO RATE AND OTHER PROVISIONS			53
	SECTION 4.1 LIBO Rate Lending Unlawful		53
	SECTION 4.2 Deposits Unavailable		54
	SECTION 4.3 Increased LIBO Rate Loan Costs, etc.		54
	SECTION 4.4 Funding Losses		54
	SECTION 4.5 Increased Capital Costs		55
	SECTION 4.6 Taxes		55
	SECTION 4.7 Payments, Computations, etc.		58
	SECTION 4.8 Sharing of Payments		58
	SECTION 4.9 Setoff		59
	SECTION 4.10 Mitigation		59
	SECTION 4.11 Replacement of Lenders; Defaulting Lenders		59
ARTICLE V CONDITIONS TO CREDIT EXTENSIONS			61
	SECTION 5.1 Initial Credit Extension		61
		SECTION 5.1.1 Resolutions, etc.	61

ii

		SECTION 5.1.2 Effective Date Certificate	61
		SECTION 5.1.3 Delivery of Notes	61
		SECTION 5.1.4 Guaranty	61
		SECTION 5.1.5 Pledge and Security Agreement, etc.	61
		SECTION 5.1.6 Financial Information	62
		SECTION 5.1.7 Opinions of Counsel	62
		SECTION 5.1.8 Insurance	62
		SECTION 5.1.9 Closing Fees, Expenses, etc.	63
		SECTION 5.1.10 Interest and Fees Under Existing Credit Agreements	63
		SECTION 5.1.11 Repayment of Senior Subordinated Notes	63
		SECTION 5.1.12 Money Laundering and PATRIOT Act	63
	SECTION 5.2 All Credit Extensions		63
		SECTION 5.2.1 Compliance with Warranties, No Default, etc.	63
		SECTION 5.2.2 Credit Extension Request	64
	SECTION 5.3 Delayed Draw Term Loan Credit Date		64
		SECTION 5.3.1 Merger	64
		SECTION 5.3.2 Resolutions, etc.	64
		SECTION 5.3.3 Financial Information; Compliance Certificate	64
		SECTION 5.3.4 Guaranty	65
		SECTION 5.3.5 Pledge and Security Agreement, etc.	65
		SECTION 5.3.6 Opinions of Counsel	66
		SECTION 5.3.7 Insurance	66
		SECTION 5.3.8 Repayment of Existing Debt	66
		SECTION 5.3.9 No WordWave Material Adverse Effect	66
		SECTION 5.3.10 No Material Litigation	66
ARTICLE VI REPRESENTATIONS AND WARRANTIES			67
	SECTION 6.1 Organization, etc.		67
	SECTION 6.2 Due Authorization, Non-Contravention, etc.		67
	SECTION 6.3 Government Approval, Regulation, etc.		67
	SECTION 6.4 Validity, etc.		68
	SECTION 6.5 Financial Information		68

iii

	SECTION 6.6 No Material Adverse Change		68
	SECTION 6.7 Litigation, etc.		68
	SECTION 6.8 Subsidiaries		68
	SECTION 6.9 Ownership of Properties		68
	SECTION 6.10 Taxes		69
	SECTION 6.11 Pension and Welfare Plans		69
	SECTION 6.12 Environmental Matters		69
	SECTION 6.13 Regulations U and X		70
	SECTION 6.14 Accuracy of Information		70
	SECTION 6.15 Solvency		70
ARTICLE VII COVENANTS			71
	SECTION 7.1 Affirmative Covenants		71
		SECTION 7.1.1 Financial Information, Reports, Notices, etc.	71
		SECTION 7.1.2 Compliance with Laws, etc.	73
		SECTION 7.1.3 Maintenance of Properties	74
		SECTION 7.1.4 Insurance	74
		SECTION 7.1.5 Books and Records	74
		SECTION 7.1.6 Environmental Covenant	74
		SECTION 7.1.7 Future Subsidiaries	75
		SECTION 7.1.8 Future Leased Property and Future Acquisitions of Real Property; Future Acquisition of Other Property	76
		SECTION 7.1.9 Use of Proceeds, etc.	77
		SECTION 7.1.10 Hedging Obligations	77
		SECTION 7.1.11 Rating of Loans	77
		SECTION 7.1.12 Undertaking	78
		SECTION 7.1.13 Mortgages	78
	SECTION 7.2 Negative Covenants		79
		SECTION 7.2.1 Business Activities	79
		SECTION 7.2.2 Indebtedness	80
		SECTION 7.2.3 Liens	81
		SECTION 7.2.4 Financial Covenants	83
		SECTION 7.2.5 Investments	84

iv

		SECTION 7.2.6 Restricted Payments, etc.	87
		SECTION 7.2.7 Capital Expenditures, etc.	90
		SECTION 7.2.8 Consolidation, Merger, etc.	91
		SECTION 7.2.9 Asset Dispositions, etc.	91
		SECTION 7.2.10 Modification of Certain Agreements	92
		SECTION 7.2.11 Transactions with Affiliates	93
		SECTION 7.2.12 Negative Pledges, Restrictive Agreements, etc.	93
		SECTION 7.2.13 Securities of Subsidiaries	94
		SECTION 7.2.14 Sale and Leaseback	94
ARTICLE VIII EVENTS OF DEFAULT			94
	SECTION 8.1 Listing of Events of Default		94
		SECTION 8.1.1 Non-Payment of Obligations	94
		SECTION 8.1.2 Breach of Warranty	94
		SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations	94
		SECTION 8.1.4 Non-Performance of Other Covenants and Obligations	94
		SECTION 8.1.5 Default on Other Indebtedness	95
		SECTION 8.1.6 Judgments	95
		SECTION 8.1.7 Pension Plans	95
		SECTION 8.1.8 Change in Control	95
		SECTION 8.1.9 Bankruptcy, Insolvency, etc.	95
		SECTION 8.1.10 Impairment of Security, etc.	96
		SECTION 8.1.11 Permitted Subordinated Debt	96
	SECTION 8.2 Action if Bankruptcy, etc.		97
	SECTION 8.3 Action if Other Event of Default		97
ARTICLE IX THE ADMINISTRATIVE AGENT; OTHER AGENTS			97
	SECTION 9.1 Actions		97
	SECTION 9.2 Funding Reliance, etc.		98
	SECTION 9.3 Exculpation; Notice of Default		99
	SECTION 9.4 Successor		99
	SECTION 9.5 Credit Extensions by the Administrative Agent and Issuers		100
	SECTION 9.6 Credit Decisions		100

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	SECTION 9.7 Copies, etc.	100
	SECTION 9.8 The Administrative Agent	100
	SECTION 9.9 Syndication Agent; Documentation Agent; Lead Arrangers; Bookrunners	100
	SECTION 9.10 Collateral Agent	101
	SECTION 9.11 Collateral and Guaranty Matters	101
	SECTION 9.12 Reliance by Administrative Agent	101
ARTICLE X MISCELLANEOUS PROVISIONS		102
	SECTION 10.1 Waivers, Amendments, etc.	102
	SECTION 10.2 Notices; Time	104
	SECTION 10.3 Payment of Costs and Expenses	104
	SECTION 10.4 Indemnification	105
	SECTION 10.5 Survival	107
	SECTION 10.6 Severability	107
	SECTION 10.7 Headings	107
	SECTION 10.8 Execution in Counterparts Effectiveness, etc.	107
	SECTION 10.9 Governing Law; Entire Agreement	107
	SECTION 10.10 Successors and Assigns	107
	SECTION 10.11 Sale and Transfer of Loans, Notes and Commitments; Participations in Loans, Notes and Commitments	107
	SECTION 10.12 Other Transactions	111
	SECTION 10.13 Forum Selection and Consent to Jurisdiction	111
	SECTION 10.14 Waiver of Jury Trial	112
	SECTION 10.15 Confidentiality	112
	SECTION 10.16 USA PATRIOT Act Notice	113
	SECTION 10.17 Amendment and Restatement	113

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SCHEDULE I	—	Disclosure Schedule
SCHEDULE II	—	Borrower and Lender Notice Information; Percentages
SCHEDULE III	—	Existing Letters of Credit
EXHIBIT A-1	—	Form of Revolving Note
EXHIBIT A-2	—	Form of Term Note
EXHIBIT B-1	—	Form of Borrowing Request
EXHIBIT B-2	—	Form of Issuance Request
EXHIBIT C	—	Form of Continuation/Conversion Notice
EXHIBIT D	—	Form of Effective Date Certificate
EXHIBIT E	—	Form of Compliance Certificate
EXHIBIT F	—	Form of Pledge and Security Agreement
EXHIBIT G	—	Form of Guaranty
EXHIBIT H	—	Form of Lender Assignment Agreement
EXHIBIT I-1	—	Form of New York Counsel Opinion
EXHIBIT I-2	—	Form of Special Minnesota Counsel Opinion
EXHIBIT I-3	—	Form of Special Delaware Counsel Opinion
EXHIBIT I-4	—	Form of General Counsel Opinion

vii

AMENDED, RESTATED AND COMBINED CREDIT AGREEMENT

        THIS AMENDED, RESTATED AND COMBINED CREDIT AGREEMENT, dated as of December 22, 2005, is among MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Borrower"), MERRILL CORPORATION, a Minnesota corporation ("Holdings"), the various financial institutions that are or may become parties hereto (collectively, the "Lenders"), BANK OF AMERICA, N.A. ("BANA"), as administrative agent (in such capacity, the "Administrative Agent") for the Lenders, CREDIT SUISSE ("Credit Suisse"), as Joint Lead Arranger and Joint Bookrunner, BANC OF AMERICA SECURITIES LLC ("BAS"), as Joint Lead Arranger (and together with Credit Suisse, the "Lead Arrangers") and Joint Bookrunner, DEUTSCHE BANK SECURITIES INC. ("DBSI"), as Joint Bookrunner (and, together with Credit Suisse and DBSI, the "Bookrunners") and Syndication Agent (in such capacity, the "Syndication Agent") and CALYON NEW YORK BRANCH, NATIONAL CITY BANK and LASALLE BANK, N.A. as Co-Documentation Agents (in such capacity, the "Co-Documentation Agents").

W I T N E S S E T H:

        WHEREAS, capitalized terms used but not defined in these recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;

        WHEREAS, Holdings, the Borrower, the various lenders party thereto (the "Existing Base Lenders"), the Administrative Agent and the Collateral Agent are party to the Existing Base Credit Agreement;

        WHEREAS, Holdings, the Borrower, the lenders party thereto (the "Existing Refinancing Credit Agreement Lenders" and, together with the Existing Base Lenders, the "Existing Lenders"), the Administrative Agent and the Collateral Agent are party to the Existing Refinancing Credit Agreement;

        WHEREAS, immediately prior to the Effective Date, the aggregate principal amount of the Existing Loans outstanding under the Existing Credit Agreements is approximately $158,000,000;

        WHEREAS, Holdings, the Borrower, the Agents and the Lenders party hereto desire to amend, restate and combine the Existing Credit Agreements to provide (i) for the continuation of the Existing Loans and the continuation of certain letters of credit outstanding under the Existing Base Agreement Credit, in each case subject to the amendment of the terms thereof as provided in this Agreement, (ii) that on the Effective Date, the aggregate commitments available under the Existing Credit Agreements will be increased to $535,000,000, (iii) that the new Loans in excess of the Existing Loans shall be made by the Lenders to Borrower (x) on the Effective Date, as Initial Term Loans, (y) on the Effective Date and from time to time thereafter, as Revolving Loans and Revolving Loan Commitments and (z) on a date on or after the Effective Date and on or prior to January 31, 2006, as Delayed Draw Term Loans, and (iv) for certain other amendments to the Existing Credit Agreements and related documents on the terms set forth herein;

        WHEREAS, the proceeds of the Loans to be made hereunder will be used to finance the acquisition (the "Acquisition") of WordWave, Inc., a Delaware corporation ("WordWave"), by the Borrower pursuant to a merger of Capture Merger Corp., a newly-formed, wholly-owned Subsidiary of the Borrower into WordWave with WordWave being the survivor of such merger, to redeem in full the Borrower's outstanding Senior Subordinated Notes (the "Refinancing"), to pay certain fees and expenses incurred in connection with the amendment, restatement and combination of the Existing Credit Agreements, the Refinancing and the Acquisition (the "Expense Payments"; the making of the Expense Payments, together with the Refinancing, the entry by the parties hereto into this Agreement, the making of new Term Loans and Revolving Loans hereunder on the Effective Date and the continuation of existing loans and letters of credit under the Existing Credit Agreement, and on and after the Delayed Draw Term Loan Credit Date, the Acquisition and the making of the Delayed Draw Term Loans are collectively referred to herein as the "Transaction") and for the ongoing working capital and other general corporate purposes of Borrower and its Subsidiaries;

        WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Credit Agreements, but rather that this Agreement amend, restate and combine in their entireties the Existing Credit Agreements and re-evidence the Obligations outstanding; and

        WHEREAS, it is the intent of Holdings and the Borrower to confirm that all Obligations of the Loan Parties under the other Loan Documents (as defined in either Existing Credit Agreement), as amended hereby or pursuant hereto, shall continue in full force and effect and that, from and after the Effective Date, all references to the "Credit Agreement" contained therein shall be deemed to refer to this Agreement.

        NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

        SECTION 1.1    Defined Terms.    The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof):

        "Acquired Controlled Person" means any Person (i) in which Holdings, the Borrower or any of the Restricted Subsidiaries has made an Investment permitted under clause (1)(i)(y) of Section 7.2.5 and (ii) as to which Holdings, the Borrower or such Restricted Subsidiary exercises control. For purposes hereof, "control" means the power to appoint a majority of the board of directors (or other equivalent governing body) of such Person or to otherwise direct or cause the direction of the management or policies of such Person, whether by contractual arrangement or otherwise.

        "Acquisition" is defined in the recitals.

        "Additional Term Loan" is defined in clause (b) of Section 2.1.1.

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        "Additional Term Loan Commitment" is defined in Section 2.2.2.

        "Additional Term Loan Commitment Amount" is defined in Section 2.2.2.

        "Additional Term Loan Commitment Termination Date" means, with respect to any Additional Term Loan Commitment, the earliest of (a) any date agreed by the Borrower, the Lender providing such Additional Term Loan Commitment and the other Lenders providing related Additional Term Loan Commitments, (b) the date upon which Additional Term Loans in an aggregate principal amount equal to the related Additional Term Loan Commitment Amount shall have been made (immediately after the making of such Additional Term Loans on such date) and (c) the date on which any Commitment Termination Event occurs.

        "Administrative Agent" is defined in the preamble and includes each other Person as shall have subsequently been appointed as the successor Administrative Agent pursuant to Section 9.4.

        "Administrative Services Agreement" means that certain Administrative Services Agreement between Holdings and the Borrower pursuant to which the benefits and burdens of certain contracts of Holdings are provided to and undertaken by the Borrower, as in effect on the Effective Date and as such agreement may be amended from time to time thereafter to the extent permitted under Section 7.2.10.

        "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding (x) any trustee under, or any committee with responsibility for administering, any Plan and (y) Credit Suisse and its affiliates (other than the DLJMB Entities that hold directly, or are general partners or managers of DLJMB Entities that hold directly, equity interests in Holdings)). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (i) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

        "Agents" means the Administrative Agent, the Collateral Agent, the Lead Arrangers, the Bookrunners, the Syndication Agent and the Documentation Agent.

        "Agents' Fee Letter" means the confidential fee letter, dated November 18, 2005, among Holdings, the Lead Arrangers, the Bookrunners, BANA and DBTCA.

        "Agreement" means in respect of the period prior to the Effective Date, the Existing Credit Agreements, and in respect of any period on and after the Effective Date, this Amended, Restated and Combined Credit Agreement dated as of December 22, 2005, as the same may hereafter be amended, supplemented, amended and restated, or otherwise modified from time to time.

        "Alternate Base Rate" means, on any date and with respect to all Base Rate Loans, a fluctuating rate of interest per annum equal to the higher of (a) the Base Rate in effect on such day and (b) the Federal Funds Rate in effect on such day plus ¹/2 of 1%. Changes in the rate of interest on that portion of any Loans maintained as Base Rate Loans will take effect

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simultaneously with each change in the Alternate Base Rate. The Administrative Agent will give notice promptly to the Borrower and the Lenders of changes in the Alternate Base Rate; provided that the failure to give such notice shall not affect the Alternate Base Rate in effect after such change.

        "Annualized" means (i) with respect to the end of the first Fiscal Quarter of Holdings ending after the Effective Date, the applicable amount for such Fiscal Quarter multiplied by four, (ii) with respect to the second Fiscal Quarter of Holdings ending after the Effective Date, the applicable amount for such Fiscal Quarter and the immediately preceding Fiscal Quarter multiplied by two, and (iii) with respect to the third Fiscal Quarter of Holdings ending after the Effective Date, the applicable amount for such Fiscal Quarter and the immediately preceding two Fiscal Quarters multiplied by one and one-third.

        "Applicable Margin" means at all times on and after the Effective Date,

        (a)   with respect to the unpaid principal amount of each Additional Term Loan of any Tranche maintained as a (i) Base Rate Loan, the rate per annum agreed by the Borrower and the Lenders that have agreed to provide the Additional Term Loan Commitments pursuant to which such Additional Term Loan, and the other Additional Term Loans of such Tranche, were made and (ii) LIBO Rate Loan, the rate per annum agreed by the Borrower and the Lenders that have agreed to provide the Additional Term Loan Commitment pursuant to which such Additional Term Loan, and the other Additional Term Loans of such Tranche, were made;

        (b)   at all times, with respect to the unpaid principal amount of each Initial Term Loan and Delayed Draw Term Loan (if any), the rate determined by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Initial Term Loan and Delayed Draw Term Loan (if any)" in the column entitled "Applicable Margin for Base Rate Loans", in the case of Base Rate Loans, or by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Initial Term Loan and Delayed Draw Term Loan (if any)" in the column entitled "Applicable Margin for LIBO Rate Loans", in the case of LIBO Rate Loans:

	Applicable Margin Initial Term Loan and Delayed Draw Term Loan (if any)
Leverage Ratio	Applicable Margin For Base Rate Loans		Applicable Margin For LIBO Rate Loans
greater than or equal to 2.75:1.00	1.00	%	2.25	%

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less than 2.75:1.00 0.75 % 2.00 %

        (c)   at all times, with respect to the unpaid principal amount of each Revolving Loan, the rate determined by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Revolving Loans" in the column entitled "Applicable Margin for Base Rate Loans", in the case of Base Rate Loans, or by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Revolving Loans" in the column entitled "Applicable Margin for LIBO Rate Loans", in the case of LIBO Rate Loans:

	Applicable Margin Revolving Loans
Leverage Ratio	Applicable Margin For Base Rate Loans		Applicable Margin For LIBO Rate Loans
greater than or equal to 3.25:1.00	1.25	%	2.50	%
less than 3.25:1.00 but greater than or equal to 2.75:1.00	1.00	%	2.25	%
less than 2.75:1.00 but greater than or equal to 2.25:1.00	0.75	%	2.00	%
less than 2.25:1.00	0.50	%	1.75	%

        The Leverage Ratio used to compute the Applicable Margin for any day shall be (x) 3.25:1.00 at any time prior to the first day following delivery of the first Compliance Certificate delivered pursuant to clause (c) of Section 7.1.1 after the Effective Date and (y) thereafter, the Leverage Ratio set forth in the Compliance Certificate most recently delivered by the Borrower to the Administrative Agent on or prior to such day pursuant to clause (c) of Section 7.1.1. Changes in the Applicable Margin resulting from a change in the Leverage Ratio shall become effective on the first day following delivery by the Borrower to the Administrative Agent of a new Compliance Certificate pursuant to clause (c) of Section 7.1.1. If the Borrower shall fail to

5

deliver a Compliance Certificate within the number of days after the end of any Fiscal Quarter as required pursuant to clause (c) of Section 7.1.1 (without giving effect to any grace period), the Applicable Margin from and including the first day after the date on which such Compliance Certificate was required to be delivered to the date the Borrower delivers to the Administrative Agent the next Compliance Certificate shall conclusively equal the highest Applicable Margin set forth above. Notwithstanding the foregoing, the Borrower may, in its sole discretion, within ten Business Days following the end of any Fiscal Quarter, deliver to the Administrative Agent a written estimate (the "Leverage Ratio Estimate") setting forth the Borrower's good faith estimate of the Leverage Ratio (based on calculations set forth in an estimated Compliance Certificate) that will be set forth in the next Compliance Certificate required to be delivered by the Borrower to the Administrative Agent pursuant to clause (c) of Section 7.1.1. In the event that the Leverage Ratio Estimate indicates that there would be a change in the Applicable Margin resulting from a change in the Leverage Ratio, such change will become effective on the first day following delivery of the Leverage Ratio Estimate. In the event that, once the next Compliance Certificate is delivered, the Leverage Ratio as set forth in such Compliance Certificate differs from that calculated in the Leverage Ratio Estimate delivered for the Fiscal Quarter with respect to which such Compliance Certificate has been delivered, and such difference results in an Applicable Margin which is greater than the Applicable Margin theretofore in effect, then (A) such greater Applicable Margin shall be deemed to be in effect for all purposes of this Agreement from the first day following the delivery of the Leverage Ratio Estimate and (B) if the Borrower shall have theretofore made any payment of interest, or of letter of credit fees pursuant to Section 3.3.3, in any such case in respect of the period from the first day following the delivery of the Leverage Ratio Estimate to the actual date of delivery of such Compliance Certificate, then, on the next Quarterly Payment Date, the Borrower shall pay as a supplemental payment of interest and/or letter of credit fees, an amount which equals the difference between the amount of interest and letter of credit fees that would otherwise have been paid based on such new Leverage Ratio and the amount of such interest and letter of credit fees actually so paid.

        "Approved Fund" means any Person (other than a natural Person) that (a) is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business, and (b) is administered or managed by a Lender, an Affiliate of a Lender or an entity or an Affiliate of an entity that administers or manages a Lender.

        "Assignee Lender" is defined in Section 10.11

        "Assumed Indebtedness" means Indebtedness of a Person which is (i) in existence at the time such Person becomes a Restricted Subsidiary or (ii) is assumed in connection with an Investment in or acquisition of such Person, and has not been incurred or created by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary.

        "Authorized Officer" means, relative to any Obligor, those of its officers (or equivalent members) whose signatures and incumbency shall have been certified to the Administrative Agent and the Lenders pursuant to Section 5.1.1.

        "BANA" is defined in the preamble.

6

        "BAS" is defined in the preamble.

        "Base Amount" is defined in Section 7.2.7.

        "Base Rate" means, at any time, the rate of interest then most recently established by the Administrative Agent in New York as its base rate for Dollars loaned in the United States. The Base Rate is not necessarily intended to be the lowest rate of interest determined by the Administrative Agent in connection with extensions of credit.

        "Base Rate Loan" means a Loan bearing interest at a fluctuating rate determined by reference to the Alternate Base Rate.

        "BBA LIBOR" is defined in the definition of "LIBO Rate".

        "Bookrunners" is defined in the preamble.

        "Borrower" is defined in the preamble.

        "Borrower Materials" is defined in Section 7.1.1(j).

        "Borrowing" means Loans of the same type and Tranche and, in the case of LIBO Rate Loans, having the same Interest Period made by the relevant Lenders on the same Business Day and pursuant to the same Borrowing Request in accordance with Section 2.1.

        "Borrowing Request" means a loan request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit B-1 hereto.

        "Business Day" means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York City or Charlotte, North Carolina and, with respect to Borrowings of, Interest Periods with respect to, payments of principal and interest in respect of, and conversions of Base Rate Loans into, LIBO Rate Loans, on which dealings in Dollars are carried on in the London interbank market.

        "Capital Expenditures" means for any period, the sum, without duplication, of (i) the aggregate amount of all expenditures of Holdings, the Borrower and the Restricted Subsidiaries for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures, and (ii) the aggregate amount of the principal component of all Capitalized Lease Liabilities incurred during such period by Holdings, the Borrower and the Restricted Subsidiaries; provided that Capital Expenditures shall not include (i) any such expenditures or any such principal component funded with (x) any Casualty Proceeds, as permitted under clause (e) of Section 3.1.1, or (y) any Net Disposition Proceeds of any asset sale permitted under clause (c) of Section 7.2.9 or any asset sale of obsolete or worn out equipment permitted under subclause (a)(i) of Section 7.2.9 or (ii) any Investment made under Section 7.2.5 (other than pursuant to clause (d) thereof).

        "Capital Stock" means, (i) in the case of a corporation, any and all capital or corporate stock, including shares of preferred or preference stock of such corporation, (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other

7

equivalents (however designated) in respect of corporate or capital stock, (iii) in the case of a partnership or limited liability company, any and all partnership or membership interests (whether general or limited) and (iv) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

        "Capitalized Lease Liabilities" means, without duplication, all monetary obligations of Holdings, the Borrower or any Restricted Subsidiary under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.

        "Cash Equivalent Investment" means, at any time:

        (a)   any evidence of Indebtedness, maturing not more than one year after such time, issued directly by the United States of America or any agency thereof or guaranteed by the United States of America or any agency thereof;

        (b)   commercial paper, maturing not more than nine months from the date of issue, which is (i) rated at least A-l by S&P or P-l by Moody's and not issued by an Affiliate of any Obligor, or (ii) issued by any Lender (or its holding company);

        (c)   any time deposit, certificate of deposit or bankers acceptance, maturing not more than one year after such time, maintained with or issued by either (i) a commercial banking institution (including U.S. branches of foreign banking institutions) that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, or (ii) any Lender;

        (d)   short-term tax-exempt securities rated not lower than MIG-1/1+ by either Moody's or S&P with provisions for liquidity or maturity accommodations of 183 days or less;

        (e)   repurchase agreements which (i) are entered into with any entity referred to in clause (b) or (c) above or any other financial institution whose unsecured long-term debt (or the unsecured long-term debt of whose holding company) is rated at least A-or better by S&P or Baa1 or better by Moody's and maturing not more than one year after such time, (ii) are secured by a fully perfected security interest in securities of the type referred to in clause (a) above and (iii) have a market value at the time of such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into;

        (f)    any money market or similar fund not less than 95% of the assets of which are comprised of any of the items specified in clauses (a) through (e) above and as to which withdrawals are permitted at least every 90 days; or

8

        (g)   in the case of any Restricted Subsidiary organized or having its principal place of business outside the United States, investments denominated in the currency of the jurisdiction in which such Subsidiary is organized or has its principal place of business which are similar to the items specified in clauses (a) through (f) above.

        "Cash Management Services Agreement" means any agreement to provide cash management services, including treasury, depositary, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

        "Casualty Event" means the damage, destruction or condemnation, as the case may be, of any property of Holdings, the Borrower or any of the Restricted Subsidiaries.

        "Casualty Proceeds" means, with respect to any Casualty Event, the amount of any insurance proceeds or condemnation awards received by Holdings, the Borrower or any of the Restricted Subsidiaries in connection therewith, but excluding any proceeds or awards required to be paid to a creditor (other than the Lenders) which holds a Lien on the property which is the subject of such Casualty Event which Lien (x) is permitted by Section 7.2.3and (y) has priority over the Liens securing the Obligations.

        "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

        "CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List.

        "Change in Control" means (i) the failure of Holdings at any time to own, directly or indirectly, free and clear of all Liens and encumbrances (other than Liens of the types permitted to exist under clauses (b), (d) and (g) of Section 7.2.3), all right, title and interest in 100% of the Voting Stock of the Borrower; (ii) following an initial public offering of the common stock of Holdings, any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Equity Investors and their affiliates and officers, directors, employees and Independent Contractors of Holdings, the Borrower and the Restricted Subsidiaries (a) shall have acquired beneficial ownership of more than the greater of (x) 35% and (y) the aggregate percentage held by the Equity Investors and their affiliates and officers, directors, employees and Independent Contractors of Holdings, the Borrower and their Restricted Subsidiaries, in each case on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Holdings or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board of Directors (or similar governing body) of Holdings; (iii) prior to an initial public offering of the common stock of Holdings, (a) the failure of the Equity Investors and their affiliates and officers, directors, employees and Independent Contractors of Holdings, the Borrower and the Restricted Subsidiaries to own at least 51% (on a fully diluted basis) of the economic and voting interests in the Voting Stock of Holdings; (b) the failure of the Equity Investors and their Affiliates and officers, directors, employees and Independent Contractors of Holdings, the Borrower and the Restricted Subsidiaries at any time to have the right to designate or nominate at least 51% of the Board of Directors of Holdings; or (c) the failure of the DLJMB Entities

9

and their Affiliates to continue to own at least 50% of the economic and voting interests in the Voting Stock of Holdings owned by the DLJMB Entities and their Affiliates on the Effective Date; or (iv) the occurrence of a "change of control" as defined in the Permitted Subordinated Debt Documents, if any.

        "Charter Document" means, relative to any Obligor, its certificate of incorporation, its by-laws or other constituent documents and all shareholder agreements, voting trusts and similar arrangements to which such Obligor is a party applicable to any of its authorized shares of Capital Stock.

        "Co-Documentation Agents" is defined in the preamble.

        "Code" means the Internal Revenue Code of 1986, as amended.

        "Collateral Agent" means BANA in its capacity as collateral agent for the Secured Parties.

        "Commitment" means, as the context may require, a Lender's Initial Term Loan Commitment, Delayed Draw Term Loan Commitment, Additional Term Loan Commitment, Revolving Loan Commitment or Letter of Credit Commitment.

        "Commitment Amount" means, as the context may require, the Initial Term Loan Commitment Amount, the Delayed Draw Term Loan Commitment Amount, an Additional Term Loan Commitment Amount, the Revolving Loan Commitment Amount or the Letter of Credit Commitment Amount.

        "Commitment Termination Date" means, as the context may require, the Revolving Loan Commitment Termination Date or a Term Loan Commitment Termination Date.

        "Commitment Termination Event" means (i) the occurrence of any Event of Default described in clauses (b) through (d) of Section 8.1.9 with respect to any Obligor (other than Subsidiaries that are not Material Subsidiaries), or (ii) the occurrence and continuance of any other Event of Default and either (x) the declaration of the Loans to be due and payable pursuant to Section 8.3, or (y) in the absence of such declaration, the giving of notice to the Borrower by the Administrative Agent, acting at the direction of the Required Lenders, that the Commitments have been terminated.

        "Compliance Certificate" means a certificate duly completed and executed by an Authorized Officer that is the president, the chief executive officer, the treasurer or the chief financial or accounting officer of Holdings, substantially in the form of Exhibit E hereto.

        "Continuing Lenders" means each of the Lenders that holds Existing Loans and/or Revolving Loan Commitments (as defined in the Existing Base Credit Agreement) on the Effective Date and consents to the continuation of such Loans and/or Commitments under this Agreement.

        "Continuing Consenting Lenders" means each of the Continuing Lenders executing consent letters on the Effective Date.

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        "Contingent Liability" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount of the debt, obligation or other liability guaranteed thereby.

        "Continuation/Conversion Notice" means a notice of continuation or conversion and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit C hereto.

        "Controlled Group" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Holdings, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA, or for purposes of Section 412 of the Code, Section 414(m) or Section 414(o) of the Code.

        "Credit Extension" means, as the context may require, (i) the making of a Loan by a Lender, or (ii) the issuance of any Letter of Credit, or the extension of any Stated Expiry Date of any previously issued Letter of Credit, by any Issuer.

        "Credit Extension Request" means, as the context may require, any Borrowing Request or Issuance Request.

        "Credit Suisse" is defined in the preamble.

        "Current Assets" means, on any date, without duplication, all assets which, in accordance with GAAP, would be included as current assets on a consolidated balance sheet of Holdings, the Borrower and the Restricted Subsidiaries at such date as current assets (excluding, however, (x) cash and Cash Equivalent Investments, (y) amounts due and to become due from Affiliates of Holdings which have arisen from transactions which are other than arm's-length and in the ordinary course of its business and (z) deferred taxes).

        "Current Liabilities" means, on any date, without duplication, all amounts which, in accordance with GAAP, would be included as current liabilities on a consolidated balance sheet of Holdings, the Borrower and the Restricted Subsidiaries at such date, excluding current maturities of Indebtedness and deferred taxes.

        "DBSI" is defined in the preamble.

        "DBTCA" means Deutsche Bank Trust Company Americas.

        "Debt" means, without duplication, the outstanding principal amount of all Indebtedness of Holdings, the Borrower and the Restricted Subsidiaries that (i) is of the type referred to in clause (a), (b) (other than undrawn commercial letters of credit and undrawn letters of credit in

11

respect of workers' compensation, insurance, performance and surety bonds and similar obligations, in each case incurred in the ordinary course of business) or (c) of the definition of "Indebtedness" and (ii) any Contingent Liability in respect of any of the foregoing types of Indebtedness.

        "Default" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would, unless cured or waived, constitute an Event of Default.

        "Defaulting Lender" means any Lender which defaults in its obligation under Section 2.6.1 to reimburse drawings made under any Letter of Credit.

        "Delayed Draw Term Loan" means a Delayed Draw Term Loan made by a Lender to the Borrower pursuant to Section 2.1.

        "Delayed Draw Term Loan Commitment" means the commitment of a Lender to make or otherwise fund a Delayed Draw Term Loan and "Delayed Draw Term Loan Commitments" means such commitments of all Lenders in the aggregate. The amount of each Lender's Delayed Draw Term Loan Commitment, if any, is set forth on Schedule IIor in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Delayed Draw Term Loan Commitments as of the Effective Date is equal to the Delayed Draw Term Loan Commitment Amount.

        "Delayed Draw Term Loan Commitment Amount" means $155,000,000.

        "Delayed Draw Term Loan Commitment Period" means the time period commencing on the Effective Date through and including the Delayed Draw Term Loan Commitment Termination Date.

        "Delayed Draw Term Loan Credit Date" means the date of funding of the Delayed Draw Term Loans.

        "Delayed Draw Term Loan Commitment Termination Date" means the earliest of (a) December 22, 2005, if the Initial Term Loans have not been made on or prior to such date, (b) the Delayed Draw Term Loan Credit Date (immediately after the making of the Delayed Draw Term Loans on such date), (c) January 31, 2006 and (d) the date on which any Commitment Termination Event occurs.

        "Disbursement" is defined in Section 2.6.2.

        "Disbursement Date" is defined in Section 2.6.2.

        "Disbursement Due Date" is defined in Section 2.6.2.

        "Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented or otherwise modified from time to time by the Borrower with the written consent of the Required Lenders.

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        "DLJMB Entities" means, collectively, DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ MB Funding II, Inc., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ EAB Partners, L.P., DLJ ESC II, L.P. and DLJ First ESC, L.P. and any other fund under common control with any of the foregoing.

        "Dollar" and the sign "$" mean lawful money of the United States.

        "Earn-Out Payment Obligations" means the obligation under the Merger Agreement to make the Earn-Out Payment (as defined in the Merger Agreement) and any other obligation to make any other earn-out payment in connection with any acquisition permitted hereunder.

        "EBITDA" means, for any applicable period, subject to clause (b)of Section 1.4, the sum (without duplication) for Holdings, the Borrower and the Restricted Subsidiaries on a consolidated basis of

        (a)   Net Income;

plus

        (b)   the amount deducted in determining Net Income representing (i) net periodic post-retirement benefits paid in cash and (ii) depreciation, amortization and all other non-cash charges or expenses (excluding any non-cash charges representing an accrual of or reserve for cash charges to be paid within the next twelve months and any non-cash charges representing reversals of items increasing Net Income in any prior period),

plus

        (c)   the amount deducted in determining Net Income representing income taxes (whether paid or deferred),

plus

        (d)   the amount deducted in determining Net Income representing (i) Interest Expense, and (ii) fees, expenses and management bonuses (to the extent, in the case of management bonuses, paid at or prior to the Effective Date),

plus

        (e)   any non-capitalized transaction fees and costs incurred in connection with the Transaction,

plus

        (f)    any amounts deducted in determining Net Income representing mark-to-market losses that must be recognized currently in net income under Financial Accounting Standards Board Statement 133,

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plus

        (g)   any amounts deducted in determining Net Income representing payments made pursuant to the Financial Advisory Agreement,

plus

        (h)   any amounts deducted in determining net losses in connection with the Borrower's employee loan forgiveness program,

minus

        (i)    any amounts added in determining Net Income representing mark-to-market gains that must be recognized currently in net income under Financial Accounting Standards Board Statement 133.

        "Effective Date" means the date this Agreement becomes effective pursuant to Section 10.8.

        "Effective Date Certificate" means the certificate of an Authorized Officer of the Borrower delivered pursuant to Section 5.1.2, substantially in the form of Exhibit D hereto.

        "Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) any other financial institution, (e) any fund that invests in commercial loans in the ordinary course of its business and that, together with its Related Funds, has net assets in excess of $100,000,000 or (f) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) in the case of any assignment of a Revolving Loan Commitment, the Issuer, and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any of Holdings' Affiliates or Subsidiaries.

        "Eligible Institution" means a financial institution that has combined capital and surplus of not less than $500,000,000 or its equivalent in foreign currency, whose long-term certificate of deposit rating or long-term senior unsecured debt rating is rated "BBB" or higher by S&P and "Baa2" or higher by Moody's or an equivalent or higher rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of investments.

        "Environmental Laws" means all applicable federal, state or local statutes, laws, ordinances, codes, rules and regulations (including consent decrees and administrative orders) relating to the protection of the environment or the effect of the environment on human health and safety.

        "Equity Investors" means (i) the DLJMB Entities and (ii) the other institutional investors holding Capital Stock of Holdings on the Effective Date.

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended.

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        "Event of Default" is defined in Section 8.1.

        "Excess Cash Flow" means, for any applicable period, the excess (if any), of

(a)

EBITDA for such applicable period;

over

(b)

the sum, without duplication (for such applicable period) of

        (i)    the cash portion of Interest Expense (net of interest income) for such applicable period;

plus

        (ii)   scheduled payments, to the extent actually made, of the principal amount of the Term Loans and scheduled payments and optional and mandatory prepayments of the principal of any other funded Debt (including Capitalized Lease Liabilities), mandatory prepayments of the principal amount of Revolving Loans pursuant to clause (f) of Section 3.1.1 in connection with a permanent reduction of any Revolving Loan Commitment Amount to the extent actually made and for such applicable period and any Earn-Out Payments made during such period;

plus

        (iii)  all federal, state and foreign income taxes actually paid in cash by Holdings, the Borrower and the Restricted Subsidiaries for such applicable period;

plus

        (iv)  Capital Expenditures actually made during such applicable period pursuant to clause (a) or (b)(ii) of Section 7.2.7 (excluding Capital Expenditures constituting Capitalized Lease Liabilities and by way of the incurrence of Indebtedness permitted pursuant to clause (c) of Section 7.2.2 to a vendor or financer of any assets permitted to be acquired pursuant to Section 7.2.7 to finance the acquisition of such assets);

plus

        (v)   the amount of the net increase or net decrease of Current Assets over Current Liabilities of Holdings, the Borrower and the Restricted Subsidiaries for such applicable period;

plus

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        (vi)  Investments permitted and actually made, in cash, pursuant to clause (d), (l), (q) or (r) of Section 7.2.5 during such applicable period (excluding Investments financed with the proceeds of any issuance of Capital Stock or Indebtedness other than Revolving Loans);

plus

        (vii) amounts paid in cash in respect of periodic post-retirement benefits (whether or not previously accrued);

plus

        (viii) Restricted Payments of the type described in clause (c) of Section 7.2.6 made during such applicable period;

plus

        (ix)  transaction fees and costs paid in connection with the Transaction;

plus

        (x)   payments made pursuant to the Financial Advisory Agreement for such applicable period;

plus

        (xi)  cash payments for such period in connection with the Borrower's employee loan forgiveness program.

        "Excluded Equity Proceeds" means any proceeds received by Holdings, the Borrower or any of their respective Subsidiaries from the sale or issuance by such Person of its Capital Stock or any warrants or options in respect of any such Capital Stock or the exercise of any such warrants or options, in each case pursuant to any such sale, issuance or exercise constituting or resulting from (i) capital contributions to, or Capital Stock issuances by, Holdings, the Borrower or any of their respective Subsidiaries, including without limitation, any issuance of Preferred Stock as payment of accrued dividends on the Preferred Stock (exclusive of any such contribution or issuance resulting from a Public Offering or a widely distributed private offering exempted from the registration requirements of Section 5 of the Securities Act of 1933, as amended), (ii) any subscription agreement, employment agreement, incentive plan or similar arrangement with any officer, employee, director or Independent Contractor of such Person or any of its Subsidiaries, (iii) any loan made by Holdings, the Borrower or any of their respective Subsidiaries pursuant to clause (g) of Section 7.2.5, (iv) the sale of any Capital Stock of Holdings to any officer, director, employee or Independent Contractor described in clause (ii) above, or (v) the exercise of the Warrants or of any options or warrants issued to any officer, employee or director described in clause (ii) above.

        "Excluded Matter" means any one or more of the following: (a) the effect of any change in the United States or foreign economies (which change does not disproportionately affect

16

WordWave in any material respect); (b) the effect of any change that generally affects the litigation support, digital recording and transcription and captioning services industries (which change does not disproportionately affect WordWave in any material respect); (c) the effect of any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date of the Merger Agreement; provided that WordWave's operations are not directly and adversely affected by such action or occurrence; (d) the effect of any action taken by the Borrower or its Subsidiaries with respect to the transactions contemplated by the Merger Agreement or with respect to WordWave which is in contravention of the terms or provisions of the Merger Agreement; or (e) any effect resulting from the public announcement of the Merger Agreement.

        "Existing Base Credit Agreement" means the $165,000,000 Credit Agreement, dated as of July 30, 2004, among the Borrower, Holdings, certain financial institutions and other Persons from time to time party thereto as lenders, BANA, as the administrative agent and the collateral agent, Credit Suisse First Boston, acting through its Cayman Islands Branch, as a joint lead arranger, a joint bookrunner and the syndication agent, BAS, as a joint lead arranger and a joint bookrunner, Calyon New York Branch and LaSalle Bank, N.A., as the co-documentation agents, as the same shall have been amended, amended and restated, modified or supplemented prior to the Effective Date.

        "Existing Intellectual Property Filings" means the filings with the United States Patent and Trademark Office made in connection with the Existing Credit Agreements.

        "Existing Credit Agreements" means, collectively, the Existing Base Credit Agreement and the Existing Refinancing Credit Agreement, and "Existing Credit Agreement" means either of the foregoing.

        "Existing Issuers" means U.S. Bank National Association, as issuer under the Existing Base Credit Agreement and BANA, as issuer under the Existing WordWave Credit Agreement.

        "Existing Letters of Credit" as set forth on Schedule III.

        "Existing Refinancing Credit Agreement" means the $45,000,000 Credit Agreement, dated as of July 30, 2004, among the Borrower, Holdings, certain financial institutions and other Persons from time to time party thereto as lenders, BANA, as the administrative agent and the collateral agent, Credit Suisse First Boston, acting through its Cayman Islands Branch, as a joint lead arranger, a joint bookrunner and the syndication agent, BAS, as a joint lead arranger and a joint bookrunner, Calyon New York Branch and LaSalle Bank, N.A., as the co-documentation agents, as the same shall have been amended, amended and restated, modified or supplemented prior to the Effective Date.

        "Existing Loans" is defined in Section 2.1.1.

        "Existing WordWave Credit Agreement" means the Fourth Amended and Restated Revolving Credit and Term Loan Agreement, dated January 20, 2005, by and among WordWave, BANA, as agent, BAS and General Electric Capital Corporation, as co-lead

17

arrangers and BAS, as book manager, as amended prior to the Delayed Draw Term Loan Credit Date.

        "Expense Payments" is defined in the recitals.

        "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to (i) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or (ii) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

        "Filing Statement" means any UCC financing statement (Form UCC-1) or other similar statement or UCC termination statement (Form UCC-3) required pursuant to the Loan Documents.

        "Financial Advisory Agreement" means the financial advisory agreement between Holdings and certain of the Equity Investors.

        "Fiscal Quarter" means any fiscal quarter of a Fiscal Year.

        "Fiscal Year" means any twelve-month period ending on January 31 of any calendar year.

        "Foreign Subsidiary" means any Subsidiary that is not a U.S. Subsidiary.

        "F.R.S. Board" means the Board of Governors of the Federal Reserve System or any successor thereto.

        "Granting Lender" is defined in clause (g) of Section 10.11.

        "Guaranty" means the Amended and Restated Guaranty executed and delivered by an Authorized Officer of Holdings and each Subsidiary Guarantor pursuant to Section 5.1.4, substantially in the form of Exhibit G hereto, together with any supplements thereto delivered pursuant to the terms of this Agreement, in each case, as amended, supplemented, amended and restated or otherwise modified from time to time.

        "Hazardous Material" means

        (a)   any "hazardous substance", as defined by CERCLA;

        (b)   any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended;

        (c)   any petroleum product; or

18

        (d)   any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any other applicable Environmental Law.

        "Hedging Obligations" means, with respect to any Person, all liabilities of such Person under interest rate or currency swap agreements, interest or exchange rate cap agreements and interest or exchange rate collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates, currency exchange rates or commodity prices.

        "herein", "hereof", "hereto", "hereunder" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document.

        "Holdings" is defined in the preamble.

        "Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of any Obligor, any qualification or exception to such opinion or certification (i) which is of a "going concern" or similar nature, (ii) which relates to the limited scope of examination of matters relevant to such financial statement (except, in the case of matters relating to any acquired business or assets, in respect of the period prior to the acquisition by such Obligor of such business or assets), or (iii) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause the Borrower to be in default of any of its obligations under Section 7.2.4.

        "including" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned.

        "Indebtedness" of any Person means, without duplication:

        (a)   all obligations of such Person for borrowed money or for the deferred purchase price of property or services (exclusive of (i) deferred purchase price arrangements in the nature of open or other accounts payable owed to suppliers on normal terms in connection with the purchase of goods and services in the ordinary course of business, (ii) usual and customary compensation arrangements in the ordinary course of business for officers, employees, directors and Independent Contractors and (iii) Earn-Out Payments that are not, at the time, due and payable) and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

        (b)   all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person;

        (c)   all Capitalized Lease Liabilities of such Person;

19

        (d)   net liabilities of such Person under all Hedging Obligations;

        (e)   whether or not so included as liabilities in accordance with GAAP, all Indebtedness of the types referred to in clauses (a) through (d) above (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including Indebtedness arising under conditional sales or other title retention agreements), whether or not such Indebtedness shall have been assumed by such Person or is limited in recourse; provided that, to the extent such Indebtedness is limited in recourse to the assets securing such Indebtedness, the amount of such Indebtedness shall be limited to the fair market value of such assets; and

        (f)    all Contingent Liabilities of such Person in respect of any of the foregoing.

For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer (to the extent such Person is liable for such Indebtedness).

        "Indemnified Liabilities" is defined in Section 10.4.

        "Indemnified Parties" is defined in Section 10.4.

        "Independent Contractor" means individuals or personal service corporations that provide consulting or related services to Holdings, the Borrower and their Subsidiaries on a regular or continuing basis.

        "Initial Term Loans" means an Initial Term Loan made, or deemed made, by a Lender to the Borrower pursuant to Section 2.1.

        "Initial Term Loan Commitment" means the commitment of a Lender to make or be deemed to make Initial Term Loans and "Initial Term Loan Commitments" means such commitments of all Lenders in the aggregate. The amount of each Lender's Initial Term Loan Commitment, if any, is set forth on Schedule II or in the applicable Lender Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Initial Term Loan Commitments as of the Effective Date is equal to the Initial Term Loan Commitment Amount.

        "Initial Term Loan Commitment Amount" means $320,000,000.

        "Initial Term Loan Commitment Termination Date" means the earliest of (a) December 22, 2005, if the Initial Term Loans have not been made on or prior to such date, (b) the Effective Date (immediately after the making of the Initial Term Loans on such date), and (c) the date on which any event referred to in clause (i) of the definition of Commitment Termination Event occurs.

        "Intercompany Loan" means the loan made by the Borrower to Holdings on November 23, 1999 for purposes of consummating the merger of Viking Merger Sub, Inc. with and into Holdings.

20

        "Interest Coverage Ratio" means, at the end of any Fiscal Quarter, subject to clause (b) of Section 1.4, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters of:

        (a)   EBITDA for all such Fiscal Quarters

to

        (b)   the cash portion of Interest Expense (net of interest income and excluding any mark-to-market gains or losses that must be recognized currently in computing interest expense under Financial Accounting Standards Board Statement 133) for all such Fiscal Quarters; provided that for the first three Fiscal Quarters ending after the Effective Date, Interest Expense shall be determined on an Annualized basis.

        "Interest Expense" means, for any applicable period, the aggregate consolidated interest expense of Holdings, the Borrower and the Restricted Subsidiaries for such applicable period, as determined in accordance with GAAP, including the portion of any payments made in respect of Capitalized Lease Liabilities allocable to interest expense, but excluding (to the extent included in interest expense) up-front fees and expenses and the amortization of all deferred financing costs.

        "Interest Period" means, as to any LIBO Rate Loan, the period commencing on the Borrowing date of such Loan or on the date on which the Loan is converted into or continued as a LIBO Rate Loan, and ending on the date one, two, three, six or, if available to each applicable Lender, nine or twelve months thereafter as selected by the Borrower in its Borrowing Request or its Conversion/Continuation Notice; provided that:

        (i)    if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

        (ii)   any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;

        (iii)  no Interest Period for any Loan shall extend beyond the Stated Maturity Date for such Loan;

        (iv)  no Interest Period applicable to a Term Loan or portion thereof shall extend beyond any date upon which is due any scheduled principal payment in respect of the Term Loans unless the aggregate principal amount of Term Loans represented by Base Rate Loans, or by LIBO Rate Loans having Interest Periods that will expire on or before such date, equals or exceeds the amount of such principal payment; and

        (v)   there shall be no more than twenty Interest Periods in the aggregate in effect hereunder at any one time;

21

provided, further, that (i) with respect to each Borrowing of Initial Term Loans consisting of LIBO Rate Loans made (or deemed made) on the Effective Date and each Borrowing of Delayed Draw Term Loans consisting of LIBO Rate Loans made on the Delayed Draw Term Loan Credit Date, the initial Interest Period shall be the period commencing on (and including) the Business Day on which such Borrowing is made (or deemed made) and ending on (and including) the last Business Day of the calendar month following the month in which such Borrowing is made (or deemed made) and (ii) with respect to each Borrowing of Additional Term Loans of any Tranche, the initial Interest Period (or, if there shall be more than one Interest Period then in effect in respect of outstanding Term Loans of such Tranche, initial Interest Periods) in respect of the Loans constituting such Borrowing shall be the period (or periods) commencing on (and including) the Business Day on which such Borrowing is made and ending on (and including) (x) if there are Term Loans of such Tranche then outstanding, the last day (or days) of the Interest Period (or Interest Periods) applicable to Term Loans of such Tranche then outstanding (with, if there is more than one Interest Period with respect to outstanding Term Loans of such Tranche then in effect, the aggregate principal amount of such Additional Term Loans with initial Interest Periods ending on the last day of each such Interest Period being in proportion to the aggregate principal amount of the outstanding Term Loans of such Tranche having Interest Periods ending on such day) and (y) if there are no Term Loans of such Tranche then outstanding, the last Business Day of the calendar month following the month in which such Borrowing is made.

        "Investment" means, relative to any Person, (i) any loan or advance made by such Person to any other Person (excluding commission, travel, relocation and similar advances to officers, directors and employees (or individuals acting in similar capacities) made in the ordinary course of business), and (ii) any ownership or similar interest (in the nature of Capital Stock) held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property at the time of such transfer or exchange.

        "ISP" means, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

        "Issuance Request" means a Letter of Credit request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit B-2 hereto.

        "Issuer" means (i) BANA, in its capacity as issuer of Letters of Credit, (ii) each Existing Issuer in its capacity as issuer of certain Existing Letters of Credit as listed on Schedule III hereto, and (iii) any Lender as may be designated by the Borrower (and consented to by the Administrative Agent and such Lender, such consent by the Administrative Agent not to be unreasonably withheld) in its capacity as issuer of Letters of Credit.

        "Lead Arrangers" means Credit Suisse and BAS.

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        "Lender Assignment Agreement" means a Lender Assignment Agreement substantially in the form of Exhibit H hereto.

        "Lenders" is defined in the preamble.

        "Letter of Credit" is defined in Section 2.1.3.

        "Letter of Credit Commitment" means, with respect to any Issuer, such Issuer's obligation to issue Letters of Credit pursuant to Section 2.1.3 and, with respect to each of the other Lenders that has a Revolving Loan Commitment, the obligation of each such Lender to participate in such Letters of Credit pursuant to Section 2.6.1.

        "Letter of Credit Commitment Amount" means, on any date, a maximum amount of $15,000,000, as such amount may be reduced from time to time pursuant to Section 2.2.1.

        "Letter of Credit Outstandings" means, on any date, an amount equal to the sum of

        (a)   the then aggregate amount which is undrawn and available under all issued and outstanding Letters of Credit,

plus

        (b)   the then aggregate amount of all unpaid and outstanding Reimbursement Obligations in respect of such Letters of Credit.

        For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.5. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available to be drawn.

        "Leverage Ratio" means, at the end of any Fiscal Quarter, subject to clause (b) of Section 1.4, the ratio of

        (a)   total Debt less cash and Cash Equivalent Investments of Holdings, the Borrower and the Restricted Subsidiaries on a consolidated basis outstanding at such time;

to

        (b)   EBITDA for the period of four consecutive Fiscal Quarters ended on such date.

        "Leverage Ratio Estimate" is defined in the definition of Applicable Margin.

        "LIBO Rate" means, for any Interest Period with respect to a LIBO Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published

23

by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the "LIBO Rate" for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBO Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America's London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

        "LIBO Rate Loan" means a Loan bearing interest, at all times during an Interest Period applicable to such Loan, at a fixed rate of interest determined by reference to the LIBO Rate (Reserve Adjusted).

        "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made, continued or maintained as, or converted into, a LIBO Rate Loan for any Interest Period, the rate of interest per annum (rounded upwards to the next 1/100th of 1%) determined by the Administrative Agent as follows:

LIBO Rate	=	LIBO Rate
(Reserve Adjusted)		1.00 - LIBOR Reserve Percentage

        The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans will be adjusted automatically as to all LIBO Rate Loans then outstanding as of the effective date of any change in the LIBOR Reserve Percentage.

        "LIBOR Office" means, relative to any Lender, the office of such Lender designated as such on Schedule II hereto or in the Lender Assignment Agreement pursuant to which such Lender became a Lender hereunder or such other office of a Lender as shall be so designated from time to time by notice from such Lender to the Borrower and the Administrative Agent, which shall be making or maintaining LIBO Rate Loans of such Lender hereunder.

        "LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO Rate Loans, the percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day (whether or not applicable to any Lender) under regulations issued from time to time by the F.R.S. Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the F.R.S. Board).

        "Lien" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property, or any filing or recording of any instrument or document in respect of the foregoing, to secure payment of a debt or performance of an obligation or any other priority or preferential treatment

24

of any kind or nature whatsoever that has the practical effect of creating a security interest in property.

        "Loan" means, as the context may require, a Revolving Loan or a Term Loan, of any type.

        "Loan Document" means this Agreement, the Notes, the Letters of Credit, each Borrowing Request, each Issuance Request, the Agents' Fee Letter, the Pledge and Security Agreement, the Guaranty, each Mortgage (upon execution and delivery thereof) and each other agreement, document or instrument delivered in connection with this Agreement or any other Loan Document, whether or not specifically mentioned herein or therein.

        "Material Adverse Effect" means (a) a material adverse effect on the financial condition, operations, assets, business, properties or prospects of Holdings, the Borrower and the Restricted Subsidiaries, taken as a whole, (b) a material impairment of the ability of the Borrower or any other Obligor to perform its respective material obligations under the Loan Documents to which it is or will be a party, or (c) an impairment of the validity or enforceability of, or a material impairment of the rights, remedies or benefits available to each Issuer, the Administrative Agent, the Lead Arrangers, the Bookrunners or the Lenders under, this Agreement or any other Loan Document.

        "Material Documents" means the Charter Documents of each of the Borrower and Holdings, the Stockholders' Agreement, the Warrants, the Administrative Services Agreement, the Merger Agreement and the Permitted Subordinated Debt Documents, each as amended, supplemented, amended and restated or otherwise modified from time to time as permitted in accordance with the terms hereof or of any other Loan Document.

        "Material Subsidiary" means (i) any direct or indirect Restricted Subsidiary of Holdings which holds, owns or contributes, as the case may be, 3% or more of the gross revenues, assets or EBITDA of Holdings, the Borrower and the Restricted Subsidiaries, on a consolidated basis, and (ii) any Restricted Subsidiary designated by the Borrower as a Material Subsidiary. The Borrower shall designate one or more Restricted Subsidiaries as Material Subsidiaries if, in the absence of such designation, the aggregate gross revenues, assets or EBITDA of all Restricted Subsidiaries that are not Material Subsidiaries would exceed 3% of the gross revenues, assets or EBITDA of Holdings, the Borrower and the Restricted Subsidiaries, on a consolidated basis.

        "Merger Agreement" means the Agreement and Plan of Merger, dated as of November 18, 2005, by and among Capture Merger Corp., the Borrower, WordWave and Perry Solomon, as Stockholder Representative, as it may, subject to Section 7.2.10, be amended, modified or supplemented (it being understood that an amendment to the Merger Agreement in substantially the form of the OWD draft (2) of December 21, 2005 of the Closing Agreement and Amendment No. 1 to the Merger Agreement shall be permitted).

        "Merrill Business" is defined in Section 7.2.1.

        "Merrill Office Tiger" means Merrill Office Tiger LLC, a Delaware limited liability company.

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        "Moody's" means Moody's Investors Service, Inc.

        "Mortgage" means, collectively, each Mortgage or Deed of Trust executed and delivered pursuant to the terms of either Existing Credit Agreement or this Agreement, as amended, supplemented, amended and restated or otherwise modified from time to time.

        "Net Debt Proceeds" means, with respect to the incurrence, sale or issuance by Holdings, the Borrower or any Restricted Subsidiary of any Debt (other than Debt permitted by Section 7.2.2), the excess of:

        (a)   the gross cash proceeds received by Holdings, the Borrower or any such Restricted Subsidiary from such incurrence, sale or issuance,

over

        (b)   the sum (without duplication) of (i) all reasonable and customary underwriting commissions and legal, investment banking, brokerage and accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such incurrence, sale or issuance, and (ii) in the case of any Debt incurred, sold or issued by any Foreign Subsidiary, any taxes or other costs or expenses resulting from repatriating any such proceeds to the United States.

        "Net Disposition Proceeds" means, with respect to any sale, transfer or other disposition of any assets of Holdings, the Borrower or any of the Restricted Subsidiaries (other than sales permitted pursuant to clause (a), (b), (d) or (e) of Section 7.2.9, but including any sale or issuance of Capital Stock of any such Subsidiary to any Person other than Holdings, the Borrower or any of the Subsidiaries), the excess of

        (a)   the sum of the gross cash proceeds received, directly or indirectly, by Holdings, the Borrower or any of the Restricted Subsidiaries from any such sale, transfer or other disposition and any cash payments received in respect of promissory notes or other non-cash consideration delivered to Holdings, the Borrower or such Restricted Subsidiary in respect thereof,

less

        (b)   the sum (without duplication) of (i) all reasonable and customary fees and expenses with respect to legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such sale, transfer or other disposition, (ii) all taxes and other governmental costs and expenses actually paid or estimated by the Borrower (in good faith) to be payable in cash in connection with such sale, transfer or other disposition (including, in the event of a transfer, sale or other disposition of non-U.S. assets, any such taxes or other costs or expenses resulting from repatriating any such proceeds to the United States), (iii) payments made by Holdings, the Borrower or any of the

26

Restricted Subsidiaries to retire Indebtedness (other than the Loans) of Holdings, the Borrower or any of the Restricted Subsidiaries where payment of such Indebtedness is required in connection with such sale, transfer or other disposition and (iv) reserves for purchase price adjustments and retained fixed liabilities reasonably expected to be payable by Holdings, the Borrower and the Restricted Subsidiaries in cash in connection therewith;

provided that if, after the payment of all taxes, purchase price adjustments and retained fixed liabilities with respect to such sale, transfer or other disposition, the amount of estimated taxes, purchase price adjustments or retained fixed liabilities, if any, pursuant to clause (b)(ii) or (b)(iv) above exceeded the tax, purchase price adjustment or retained fixed liabilities amount actually paid in cash in respect of such sale, transfer or other disposition, the aggregate amount of such excess shall, at such time, constitute Net Disposition Proceeds.

        "Net Equity Proceeds" means with respect to any sale or issuance by Holdings or the Borrower to any Person of any Capital Stock of Holdings or the Borrower, as the case may be, or any warrants or options with respect to any such Capital Stock or the exercise of any such warrants or options after the Effective Date (exclusive of any such proceeds constituting Excluded Equity Proceeds) the excess of:

        (a)   the gross cash proceeds received by Holdings or the Borrower from such sale, exercise or issuance,

over

        (b)   the sum, without duplication, of (i) all reasonable and customary underwriting commissions and legal, investment banking, brokerage, accounting and other professional fees, sales commissions and disbursements and all other reasonable fees, expenses and charges, in each case actually incurred in connection with such sale or issuance and (ii) the amount of such proceeds used by Holdings, the Borrower or any Restricted Subsidiary to make an Investment permitted by clause (l) of Section 7.2.5.

        "Net Income" means, for any period, the net income of Holdings, the Borrower and the Restricted Subsidiaries for such period on a consolidated basis, excluding (a) net losses or gains realized in connection with any sale, lease, conveyance or other disposition of any asset (other than in the ordinary course of business) and (b) extraordinary or nonrecurring income (or expense), any restructuring costs, or costs reasonably determined by the Borrower to be associated with facility or product line closures, consolidation or rationalization, together with any related provision for taxes and any compensation charge incurred in connection with the Transaction; provided that the Net Income or loss of any Person that is not Holdings, the Borrower or a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid to Holdings, the Borrower or a Restricted Subsidiary in cash.

        "Non-Consenting Lender" means any Lender that, in response to any request by the Borrower or any Agent to a departure from, waiver of or amendment to any provision of any Loan Document that requires the agreement of all Lenders or all Lenders with respect to a particular Tranche, which departure, waiver or amendment receives the consent of the Required Lenders or the holders of a majority of the Commitments or (if the applicable Commitments in

27

respect of such Tranche shall have expired or been terminated) outstanding Credit Extensions in respect of such Tranche, as the case may be, shall not have given its consent to such departure, waiver or amendment.

        "Non-Defaulting Lender" means a Lender that is neither a Defaulting Lender nor a Non-Funding Lender.

        "Non-Funding Lender" means a Lender that shall have failed to fund any Loan hereunder that it was required to have funded in accordance with the terms hereof, which Loan was included in any Borrowing in respect of which a majority of the aggregate principal amount of all Loans included in such Borrowing were funded by the Lenders party thereto.

        "Non-Recourse Debt" means Indebtedness (i) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of Holdings, the Borrower or any of the Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity, and (ii) as to which the lenders have been notified in writing that they will not have any recourse to the Capital Stock or assets of Holdings, the Borrower or any of the Restricted Subsidiaries (other than Capital Stock of Unrestricted Subsidiaries pledged by Holdings, the Borrower or a Restricted Subsidiary to secure Debt of such Unrestricted Subsidiary); provided that in no event shall Indebtedness of any Unrestricted Subsidiary fail to be Non-Recourse Debt solely as a result of any default provisions contained in a guarantee thereof by Holdings, the Borrower or any of the Restricted Subsidiaries if Holdings, the Borrower or such Restricted Subsidiary was otherwise permitted to incur such guarantee under this Agreement.

        "Non-U.S. Lender" means any Lender (including each Assignee Lender) that is not (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or any state thereof, or (iii) an estate or trust that is subject to U.S. Federal income taxation regardless of the source of its income.

        "Note" means, as the context may require, a Revolving Note or a Term Note.

        "Obligations" means all obligations (monetary or otherwise) of the Borrower and each other Obligor arising under or in connection with this Agreement and each other Loan Document.

        "Obligor" means Holdings, the Borrower or any other Person (other than the Agents, any Issuer or any Lender) obligated under any Loan Document.

        "Participant" is defined in clause (d) of Section 10.11.

        "Patriot Act" is defined in Section 10.16.

        "PBGC" means the Pension Benefit Guaranty Corporation and any successor entity.

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        "Pension Plan" means a "pension plan", as such term is defined in Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which Holdings or any corporation, trade or business that is, along with Holdings, a member of a Controlled Group, has or within the prior six years has had any liability, including any liability by reason of having been a substantial employer within the meaning of Section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under Section 4069 of ERISA.

        "Percentage" means, relative to any Lender, the applicable percentage relating to Initial Term Loans, Delayed Draw Term Loans, Additional Term Loans, or Revolving Loans, as the case may be, as set forth in Schedule II hereto or in an amendment thereto reflecting any Additional Term Loan Commitments or, in any such case, in a Lender Assignment Agreement(s) under the applicable column heading, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11. A Lender shall not have any Commitment to make Loans of any Tranche if its percentage under the respective column heading is zero.

        "Permitted Subordinated Debt" means unsecured subordinated notes issued by the Borrower or Holdings having terms consistent with the following: (i) subordination in right of payment to the Obligations pursuant to terms and conditions substantially similar to those set forth in the Senior Subordinated Note Indentures (as in effect immediately prior to the Effective Date) or other terms and conditions reasonably acceptable to the Administrative Agent, (ii) no scheduled payments of principal for at least one year following the latest Stated Maturity Date, (iii) commercially reasonable interest rates, (iv) the absence of financial maintenance covenants, and (v) the absence of covenants or any other terms or conditions that, taken as a whole, are more restrictive than the covenants, terms and restrictions contained in this Agreement and the other applicable Loan Documents.

        "Permitted Subordinated Debt Documents" means all loan agreements, indentures, note purchase agreements, promissory notes, guarantees, and other instruments and agreements evidencing or executed in connection with Permitted Subordinated Debt, in each case as amended, supplemented, amended and restated or otherwise modified in accordance with Section 7.2.10.

        "Person" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency, limited liability company or any other entity, whether acting in an individual, fiduciary or other capacity.

        "Plan" means any Pension Plan or Welfare Plan.

        "Platform" is defined in Section 7.1.1(j).

        "Pledge and Security Agreement" means the Amended and Restated Pledge and Security Agreement executed and delivered by an Authorized Officer of the Borrower, Holdings and each Subsidiary Guarantor pursuant to Section 5.1.5, substantially in the form of Exhibit F hereto, together with any supplements thereto delivered pursuant to the terms thereof or of this

29

Agreement, in each case as amended, supplemented, amended and restated or otherwise modified from time to time.

        "Preferred Stock" means the Preferred Stock due 2011 of Holdings, originally issued pursuant to the Subscription Agreement dated as of November 23, 1999 among Viking Merger Sub, Inc., the DLJMB Entities, DLJ Investment Funding II, Inc., DLJ Investment Partners, L.P., DLJ Investment Partners II, L.P., Donaldson, Lufkin & Jenrette Securities Corporation, BNY Capital Corporation, Carlyle High Yield Partners, L.P., Connecticut General Life Insurance Company and Life Insurance Company of North America, the rights and restrictions with respect to which were designated by the Certificate of Designation that was filed with the Office of the Secretary of State of the State of Minnesota on November 19, 1999, as the same has been amended, modified or supplemented through the Effective Date (including pursuant to the Preferred Stockholders Agreement and the Amended and Restated Certificate of Designation of Preferred Stock due 2011 filed with the Office of the Secretary of State of the State of Minnesota on August 9, 2002) and may, subject to Section 7.2.10, be amended, modified or supplemented thereafter.

        "Preferred Stockholders Agreement" means the Preferred Stockholders Agreement dated as of August 9, 2002 among Holdings and all of the then-existing holders of Holdings' outstanding preferred stock.

        "Pro Forma Financial Statements" means the proforma consolidated balance sheet and related proforma consolidated statements of income of Holdings and its Subsidiaries for the twelve month period ended October 31, 2005, after giving effect to the Transaction.

        "Public Lender" is defined in Section 7.1.1(j).

        "Public Offering" means, for any Person, any sale after the Effective Date of the Capital Stock of such Person to the public pursuant to a primary offering registered under the Securities Act of 1933, as amended.

        "Quarterly Payment Date" means the last day of each of April, July, October and January, or, if any such day is not a Business Day, the next succeeding Business Day, commencing with January 31, 2006 with respect to payments of interest and fees, and April 30, 2006, with respect to payments of principal.

        "Rate Protection Agreement" means any interest rate swap, cap, collar or similar agreement entered into by Holdings, the Borrower or any Restricted Subsidiary under which the counterparty to such agreement is (or at the time such Rate Protection Agreement was entered into, was) a Lender, an Agent or an Affiliate of a Lender or an Agent.

        "Refinancing" is defined in the recitals.

        "Register" is defined in clause (b) of Section 2.7.

        "Reimbursement Obligation" is defined in Section 2.6.3.

        "Reinstatement Date" is defined in Section 4.1.

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        "Related Fund" means, with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

        "Release" means a "release", as such term is defined in CERCLA.

        "Replacement Lender" is defined in Section 4.11.

        "Replacement Notice" is defined in Section 4.11.

        "Required Lenders" means, at any time, Non-Defaulting Lenders holding more than 50% of the Total Exposure Amount.

        "Resource Conservation and Recovery Act" means the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to time.

        "Restricted Agreements" is defined in Section 7.2.10.

        "Restricted Payments" is defined in Section 7.2.6.

        "Restricted Subsidiary" means any Subsidiary of Holdings (other than the Borrower) that is not an Unrestricted Subsidiary.

        "Retained Interests" means the assets, rights, operations, liabilities, obligations and other interests of whatsoever kind or nature retained by Holdings in respect of (A) leases, contract rights and other assets the transfer of which require the consent or approval of (or give rise to any right of termination by or any right to a penalty in favor of) any third party or governmental authority and (B) certain litigation.

        "Revolving Loans" is defined in Section 2.1.2.

        "Revolving Loan Commitment" is defined in Section 2.1.2.

        "Revolving Loan Commitment Amount" means, on any date, $60,000,000, as such amount may be reduced from time to time pursuant to Section 2.2.1.

        "Revolving Loan Commitment Termination Date" means the earliest of (i) the fifth anniversary of the Effective Date, (ii) the date on which the Revolving Loan Commitment Amount is terminated in full or reduced to zero pursuant to Section 2.2.1, and (iii) the date on which any Commitment Termination Event occurs.

        "Revolving Note" means a promissory note of the Borrower payable to any Lender, substantially in the form of Exhibit A-1 (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Revolving Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

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        "S&P" means Standard & Poor's Ratings Group, a division of The McGraw Hill Companies, Inc.

"Secured Obligations" means, collectively, (i) the Obligations and (ii) all obligations of any Obligor under a Rate Protection Agreement or Cash Management Services Agreement with any Person that is (or at the time such Rate Protection Agreement or Cash Management Services Agreement was entered into, was) an Agent or a Lender hereunder or an affiliate thereof.

        "Secured Parties" means, collectively, the Lenders, the Issuers, the Administrative Agent, the Collateral Agent, and each counterparty to a Rate Protection Agreement or Cash Management Services Agreement that is (or at the time such Rate Protection Agreement or Cash Management Services Agreement was entered into, was) a Lender hereunder or an Affiliate thereof.

        "Senior Subordinated Note Indentures" means the senior subordinated note indentures dated August 9, 2002, as amended by the first supplemental indentures dated July 30, 2004, executed by Holdings and HSBC Bank USA, as trustee, pursuant to which the Senior Subordinated Notes were issued.

        "Senior Subordinated Notes" means the Class A and Class B senior subordinated notes due 2009 issued by Holdings pursuant to the Senior Subordinated Notes Indentures.

        "Solvent" means, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (d) such Person is not engaged in business or a transaction, and such Person is not about to engage in business or a transaction, for which such Person's property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at such time, can reasonably be expected to become an actual or matured liability.

        "SPC" is defined in clause (g) of Section 10.11.

        "Stated Amount" of each Letter of Credit means the maximum amount available to be drawn under such Letter of Credit upon the issuance thereof.

        "Stated Expiry Date" is defined in Section 2.6.

        "Stated Maturity Date" means (i) in the case of any Revolving Loan, the fifth anniversary of the Effective Date, (ii) in the case of any Initial Term Loan and any Delayed Draw Term Loan, the seventh anniversary of the Effective Date or, in the case of any such day that is not a Business Day, the first Business Day following such day, provided however that the Stated Maturity Date of the Initial Term Loans and any Delayed Draw Term Loan shall be May 15, 2011 in the event that, on or prior to such date, the Preferred Stock has not been (a) amended to extend the mandatory redemption date in respect thereof to a date not earlier than seven years

32

and six months after the Effective Date, (b) refinanced with the proceeds of common equity or new preferred stock with no mandatory redemption date prior to seven years and six months after the Effective Date or (c) otherwise redeemed pursuant to one or more transactions permitted hereunder, and (iii) in the case of any Additional Term Loan, the date set forth in the agreement pursuant to which the applicable Lenders agreed to provide the Additional Term Commitment in respect of such Additional Term Loan.

        "Stockholders' Agreement" means the Investors' Agreement, dated as of November 23, 1999, among Viking Merger Sub, Inc., the DLJMB Entities, DLJ Investment Funding II, Inc., DLJ Investment Partners, L.P., DLJ Investment Partners II, L.P., Donaldson, Lufkin & Jenrette Securities Corporation, BNY Capital Corporation, Carlyle High Yield Partners, L.P., Connecticut General Life Insurance Company, Life Insurance Company of North America, John W. Castro and Rick R. Atterbury, as the same has been amended, modified or supplemented through the Effective Date and may, subject to Section 7.2.10, be amended, modified or supplemented thereafter.

        "Subject Lender" is defined in Section 4.11.

        "Subsidiary" means, with respect to any Person, any corporation, partnership or other business entity of which more than 50% of the outstanding Capital Stock (or other ownership interests) having ordinary voting power to elect a majority of the board of directors, managers or other voting members of the governing body of such entity (irrespective of whether at the time Capital Stock (or other ownership interests) of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person. For purposes of this Agreement and the other Loan Documents, any Acquired Controlled Person shall be deemed to be a "Subsidiary" of the Borrower for purposes of Sections 6.1, 6.7, 6.9, 6.10, 6.11, 6.12, 7.1.2, 7.1.3, 7.1.4, 7.1.5, 7.1.6, 7.1.7(b), 7.2.1, 7.2.2, 7.2.3, 7.2.5, 7.2.6, 7.2.9, 7.2.11, 7.2.12 and 7.2.14 and, to the extent (and only to the extent) that it relates to any of the foregoing Sections, Article VIII.

        "Subsidiary Guarantor" means each U.S. Subsidiary of the Borrower that has executed and delivered the Guaranty (or a supplement thereto).

        "Syndication Agent" is defined in the preamble.

        "Taxes" is defined in Section 4.6.

        "Term Loan Commitment Termination Date" means, as the context may require, the Initial Term Loan Commitment Termination Date, the Delayed Draw Term Loan Commitment Termination Date and any Additional Term Loan Commitment Termination Date.

        "Term Loan Commitments" means, collectively, the Initial Term Loan Commitments, the Delayed Draw Term Loan Commitments and any Additional Term Loan Commitments.

        "Term Loans" means, collectively, the Initial Term Loans, any Delayed Draw Term Loans and any Additional Term Loans.

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        "Term Note" means a promissory note of the Borrower payable to the order of any Lender, substantially in the form of Exhibit A-2 hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of the Borrower to such Lender resulting from outstanding Term Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof.

        "Termination Date" means the date on which all Obligations have been paid in full in cash, all Letters of Credit have been terminated, expired or cash collateralized and all Commitments shall have terminated.

        "Total Exposure Amount" means, on any date of determination (and without duplication), the outstanding principal amount of all Loans, the aggregate amount of all Letter of Credit Outstandings and the unfunded amount of all Commitments.

        "Tranche" means, as the context may require, the Loans constituting Term Loans or Revolving Loans; provided that Term Loans having different Stated Maturity Dates or different amortization schedules shall constitute different Tranches.

        "Transaction" is defined in the recitals.

        "type" means, relative to any Loan, the portion thereof, if any, being maintained as a Base Rate Loan or a LIBO Rate Loan.

        "UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that if, with respect to any Filing Statement or by reason of any mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the security interests granted to the Collateral Agent pursuant to the applicable Loan Document is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United States other than New York, UCC means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions of this Agreement, each Loan Document and any Filing Statement relating to such perfection or effect of perfection or non-perfection.

        "UCP" means Uniform Customs and Practice for Documentary Credits.

        "United States" or "U.S." means the United States of America, its fifty states and the District of Columbia.

        "U.S. Subsidiary" means any Subsidiary of Holdings that is incorporated or organized in or under the laws of the United States, any state thereof or the District of Columbia.

        "Unrestricted Subsidiary" means (i) Cetara Corporation and (ii) any Subsidiary of Holdings that is designated by a resolution of the Board of Directors of Holdings as an Unrestricted Subsidiary, but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or understanding with Holdings, the Borrower or any Restricted Subsidiary unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to Holdings, the Borrower or such Restricted Subsidiary than those that might be obtained at the time from

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Persons who are not Affiliates of Holdings or the Borrower; (c) is a Person with respect to which neither Holdings, the Borrower nor any of the Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Capital Stock or warrants, options or other rights to acquire Capital Stock or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of Holdings, the Borrower or any of the Restricted Subsidiaries. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes hereof. Subject to the foregoing, the Board of Directors of Holdings may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary or any Restricted Subsidiary to be an Unrestricted Subsidiary; provided (i) such designation shall only be permitted if no Default or Event of Default would be in existence following such designation, (ii) that any designation of an Unrestricted Subsidiary as a Restricted Subsidiary shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary, (iii) that any designation of a Restricted Subsidiary as an Unrestricted Subsidiary shall be deemed to be an Investment in an Unrestricted Subsidiary equal to the fair market value of the Subsidiary so designated and (iv) no more than two designations shall be made pursuant to this definition of "Unrestricted Subsidiary" in respect of any single Subsidiary of Holdings (including any other Subsidiary of Holdings substantially all of the assets and business of which constitutes substantially all of the assets and business of such Subsidiary).

        "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees (or Persons performing similar functions) of any Person (irrespective of whether or not, at the time, Capital Stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency).

        "Waiver" means an agreement in favor of the Administrative Agent for the benefit of the Lenders in form and substance reasonably satisfactory to the Administrative Agent.

        "Warrants" means (i) the warrants to purchase common shares of Holdings (as successor by merger to Viking Merger Sub, Inc.), dated as of November 23, 1999, issued to DLJ ESC II L.P., DLJ Investment Funding II, Inc., DLJ Investment Partners, L.P., DLJ Investment Partners II, L.P., Donaldson, Lufkin & Jenrette Securities Corporation, BNY Capital Corporation, Carlyle High Yield Partners, L.P., Connecticut General Life Insurance Company and Life Insurance Company of North America, (ii) the warrants to purchase common shares (or Class B Common Shares, as applicable) of Holdings (as successor by merger to Viking Merger Sub, Inc.) issued in connection with the issuance of the Senior Subordinated Notes, pursuant to the Warrant Agreement, dated as of November 23, 1999, between Holdings (as successor by merger to Viking Merger Sub, Inc.) and Norwest Bank Minnesota, N.A., as Warrant Agent, (iii) the Series C Warrants to purchase Class B Common Stock of Holdings to be issued, if any, pursuant to the Preferred Stockholders Agreement, and (iv) the Series D Warrants to purchase Class B Common Stock of Holdings to be issued, if any, pursuant to the Preferred Stockholders Agreement, in each case as the same have been amended, modified or supplemented through the Effective Date and may, subject to Section 7.2.10, be amended, modified or supplemented thereafter.

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        "Welfare Plan" means a "welfare plan", as such term is defined in Section 3(1) of ERISA, and to which Holdings, the Borrower or any Restricted Subsidiary has any liability.

        "wholly-owned Subsidiary" means, with respect to any Person, any Subsidiary of such Person all of the Capital Stock (and all rights and options to purchase such Capital Stock) of which, other than directors' qualifying shares, are owned, beneficially and of record, by such Person and/or one or more wholly-owned Subsidiaries of such Person.

        "WordWave" is defined in the recitals.

        "WordWave Material Adverse Effect" means in respect of the Delayed Draw Term Loan Credit Date only, an event, change or occurrence which, individually or together with any other event, change or occurrence, has or is reasonably likely to have (a) a material adverse effect on the business, assets, properties, results of operations or financial condition of WordWave and its Subsidiaries, taken as a whole, or (b) a material adverse effect on the ability of WordWave to consummate the transactions contemplated by the Merger Agreement, in either case other than an effect resulting from an Excluded Matter.

        SECTION 1.2    Use of Defined Terms.    Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and in each other Loan Document, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document.

        SECTION 1.3    Cross-References.    Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition.

        SECTION 1.4    Accounting and Financial Determinations.

        (a)   Unless otherwise specified and subject to clause (b) of this Section 1.4, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles as in effect from time to time in the United States, applied on a basis consistent (except for changes concurred in by the Borrower's independent public accountants) with the most recent audited consolidated financial statements of Holdings and its Subsidiaries delivered to the Lenders ("GAAP"); provided, however, that, if the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant in Section 7.2.4, the definition of EBITDA, Leverage Ratio, Capital Expenditure, Net Income, Interest Expense, Applicable Margin, or clause (b) or (d) of Section 3.1.1 to eliminate the effect of any change in GAAP on the operation of such covenant, definition or clause (or if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend any such covenant, definition or clause for such

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purpose), then Holdings' and the Borrower's compliance with such covenant shall be determined, and such definitions and clauses shall be applied, on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant, definition or clause is amended in a manner satisfactory to the Borrower and the Required Lenders.

        (b)   For purposes of computing the Interest Coverage Ratio and Leverage Ratio (and any financial calculations required to be made or included within such ratios) as of any date, all components of such ratios, including Capital Expenditures, in the case of any disposition, but excluding Capital Expenditures, in the case of any acquisition, for the period of four Fiscal Quarters ending at the end of the Fiscal Quarter most recently ended on or prior to such date shall include or exclude, as the case may be, without duplication, such components of such ratios attributable to any business or assets that have been acquired or disposed of by Holdings, the Borrower or the Restricted Subsidiaries (including through mergers or consolidations) after the first day of such period of four Fiscal Quarters and prior to such date, as determined in good faith by the Borrower on a pro forma basis for such period of four Fiscal Quarters as if such acquisition or disposition had occurred on such first day of such period (including cost savings that would have been realized had such acquisition occurred on such day and which inclusion when not otherwise permitted under GAAP has been approved by a majority of the board of directors of Holdings).

        SECTION 1.5    Letter of Credit Amounts.    Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases (i.e., increases that are not subject to any consent by the Issuer or the Required Lenders or any right of the Issuer or the Required Lenders to prevent such increase) in the stated amount thereof (other than an increase in the amount of, and contingent upon the payment of, a Reimbursement Obligation in respect of such Letter of Credit), the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

ARTICLE II

COMMITMENTS, BORROWING AND ISSUANCE PROCEDURES,
NOTES AND LETTERS OF CREDIT

        SECTION 2.1    Commitments.    On the terms and subject to the conditions of this Agreement (including Sections 2.1.4, 2.1.5 and Article V),

        (a)   each Lender severally agrees to make or continue Loans as described in this Section 2.1; and

        (b)   each Issuer severally agrees that it will issue Letters of Credit pursuant to Section 2.1.3, and each other Lender that has a Revolving Loan Commitment severally

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agrees that it will purchase participation interests in such Letters of Credit pursuant to Section 2.6.1.

        SECTION 2.1.1    Term Loan Commitment.

        (a)   The Initial Term Loans outstanding under the Existing Credit Agreements in the principal amounts, and held by the respective Lenders, set forth in Schedule 2.1 (the "Existing Loans") shall remain outstanding on and after the Effective Date as Initial Term Loans hereunder that shall, from and after the Effective Date, be deemed to have been made hereunder on the Effective Date and such Initial Term Loans shall, on and after the Effective Date, have all of the rights and benefits of Initial Term Loans as set forth in this Agreement and the other Loan Documents. Each Lender severally agrees to make, on the Effective Date, an Initial Term Loan to the Borrower in an amount equal to the difference between the principal amount of such Lender's Existing Loans and such Lender's Initial Term Loan Commitment. No amounts prepaid or repaid with respect to Initial Term Loans may be reborrowed.

        (b)   On any date on or prior to the Additional Term Loan Commitment Termination Date with respect to any Additional Term Loan Commitment, each Lender that has a Percentage in excess of zero of such Additional Term Loan Commitment will make a loan (each such loan an "Additional Term Loan") to the Borrower equal to such Lender's Percentage of the aggregate Borrowing or Borrowings of Additional Term Loans requested by the Borrower to be made on such date pursuant to such Additional Term Loan Commitment. No amounts prepaid or repaid with respect to Additional Term Loans may be reborrowed.

        (c)   During the Delayed Draw Term Loan Commitment Period, subject to the terms and conditions hereof, each Lender that has a Percentage in excess of zero of the Delayed Draw Term Loan Commitment severally agrees to make a Delayed Draw Term Loan to the Borrower equal to such Lender's Percentage of the aggregate Borrowing or Borrowings of Delayed Draw Term Loans requested by the Borrower to be made on the Delayed Draw Term Loan Credit Date. No amounts prepaid or repaid with respect to Delayed Draw Term Loans may be reborrowed.

        SECTION 2.1.2    Revolving Loan Commitment.    Subject to compliance by the Borrower with Sections 2.1.4 and 5.2, from time to time on any Business Day occurring on or after the Effective Date but prior to the Revolving Loan Commitment Termination Date, each Lender that has a Percentage of the Revolving Loan Commitment in excess of zero will make loans (relative to such Lender, its "Revolving Loans") to the Borrower equal to such Lender's Percentage of the aggregate amount of the Borrowing or Borrowings of Revolving Loans requested by the Borrower to be made on such day. The Commitment of each Lender described in this clause is herein referred to as its "Revolving Loan Commitment". On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow Revolving Loans.

        SECTION 2.1.3    Letter of Credit Commitment.    Subject to compliance by the Borrower with Sections 2.1.5 and 5.2, from time to time on any Business Day occurring on or after the

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Effective Date to, but excluding, the date which is ten days before the Revolving Loan Commitment Termination Date, the applicable Issuer will (i) issue one or more standby or commercial letters of credit (each referred to as a "Letter of Credit") for the account of Holdings, the Borrower or any of the Restricted Subsidiaries in the Stated Amount requested by the Borrower on such day, or (ii) renew an existing standby or commercial Letter of Credit previously issued hereunder (including any Letter of Credit deemed issued hereunder pursuant to Section 2.6) by extending the Stated Expiry Date thereof to a date not later than the earlier to occur of (x) seven days prior to the Revolving Loan Commitment Termination Date (without regard to clauses (ii) and (iii) of the definition thereof) and (y) the date which is 12 months from the date of such renewal; provided that, notwithstanding the terms of this clause (y), a Letter of Credit may, if required by the beneficiary thereof, contain "evergreen" provisions pursuant to which the Stated Expiry Date shall be automatically extended, unless notice to the contrary shall have been given to the beneficiary by the applicable Issuer, or to the beneficiary and the applicable Issuer by the Borrower, of such Letter of Credit (which notice by the Borrower shall have been provided to the applicable Issuer in writing) more than a specified period prior to the then existing Stated Expiry Date.

        SECTION 2.1.4    Lenders Not Permitted or Required to Make the Loans.    No Lender shall be permitted or required to, and the Borrower shall not request any Lender to, make

        (a)   any Initial Term Loan if, after giving effect thereto, the aggregate original principal amount of all the Initial Term Loans of such Lender would exceed such Lender's Percentage of the Initial Term Loan Commitment Amount;

        (b)   any Delayed Draw Term Loan if, after giving effect thereto, the aggregate original principal amount of all the Delayed Draw Term Loans of such Lender would exceed such Lender's Percentage of the Delayed Draw Term Loan Commitment Amount;

        (c)   any Additional Term Loan pursuant to any Additional Term Loan Commitment if, after giving effect thereto, the aggregate original principal amount of all Additional Term Loans of such Lender made pursuant to such Additional Term Loan Commitment would exceed such Lender's Percentage of the Additional Term Loan Commitment Amount in respect of such Additional Term Loan Commitment; and

        (d)   any Revolving Loan if, after giving effect thereto, the aggregate outstanding principal amount of all the Revolving Loans of all the Lenders with Revolving Loan Commitments, together with the Letter of Credit Outstandings, would exceed the then existing Revolving Loan Commitment Amount.

        SECTION 2.1.5    Issuer Not Permitted or Required to Issue Letters of Credit.    No Issuer shall be permitted or required to issue any Letter of Credit if:

        (a)   after giving effect thereto, the aggregate amount of all Letter of Credit Outstandings would exceed the Letter of Credit Commitment Amount; or

        (b)   after giving effect thereto, the sum of the aggregate amount of all Letter of Credit Outstandings plus the aggregate principal amount of all Revolving Loans then outstanding would exceed the Revolving Loan Commitment Amount.

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        SECTION 2.2    Changes in Commitment Amount.

        SECTION 2.2.1    Reduction of Revolving Loan Commitment Amount and Delayed Draw Term Loan Commitment Amount.    The Borrower may, from time to time on any Business Day occurring after the Effective Date, voluntarily reduce the Revolving Loan Commitment Amount or the Delayed Draw Term Loan Commitment Amount; provided that all such reductions shall require at least three Business Days' prior notice to the Administrative Agent and be permanent, and any partial reduction of the Revolving Loan Commitment Amount or the Delayed Draw Term Loan Commitment Amount shall be in an aggregate amount of $500,000 or any larger integral multiple of $100,000. Any such reduction of the Revolving Loan Commitment Amount which reduces the Revolving Loan Commitment Amount below the Letter of Credit Commitment Amount shall result in an automatic and corresponding reduction of the Letter of Credit Commitment Amount, as the case may be, to an aggregate amount not in excess of the Revolving Loan Commitment Amount, as so reduced, without any further action on the part of the applicable Issuer.

        SECTION 2.2.2    Additional Term Loan Commitments.    At any time that no Event of Default has occurred and is continuing, and prior to the Stated Maturity Date of the Initial Term Loans and Delayed Draw Term Loans, the Borrower may notify the Administrative Agent that the Borrower is requesting that, on the terms and subject to the conditions contained in this Agreement, the Lenders and/or other lenders not then a party to this Agreement provide additional commitments to make term loans (any such commitment, an "Additional Term Loan Commitment"; and the aggregate amount thereof agreed to be provided by the applicable Lenders or other lenders in response to any such request, an "Additional Term Loan Commitment Amount") in an aggregate amount not to exceed $50,000,000. Upon receipt of such notice, the Lead Arrangers shall use commercially reasonable efforts to arrange for the Lenders or other Eligible Institutions to provide such Additional Term Loan Commitments; provided, however, that the Lead Arrangers will first offer each of the Lenders that then has a Percentage in excess of zero with respect to the applicable Tranche a pro rata portion of any such Additional Term Loan Commitments. Alternatively, Credit Suisse and/or BANA may commit to provide the full amount of the requested Additional Term Loan Commitments and then offer portions of such Additional Term Loan Commitments to the Lenders or other Eligible Institutions, subject to the proviso to the immediately preceding sentence. Nothing contained in this Section or otherwise in this Agreement is intended to commit any Lender or Agent to provide any portion of any such Additional Term Loan Commitments. If and to the extent that any Lenders and/or other lenders agree, in their sole discretion, to provide any such Additional Term Loan Commitments, (i) in the case of any Additional Term Loan Commitment with a Stated Maturity Date, and an amortization schedule, identical to the Stated Maturity Date, and remaining amortization schedule, of the Initial Term Loans and Delayed Draw Term Loans, upon the making of any Additional Term Loans pursuant to such Additional Term Loan Commitment, the Administrative Agent will adjust the amortization schedule set forth in clause (g) of Section 3.1.1 so that the Borrower will repay an additional amount on each Quarterly Payment Date equal to whatever percentage of the outstanding principal amount of the Initial Term Loans and Delayed Draw Term Loans would have otherwise been due on such Quarterly Payment Date multiplied by the aggregate principal amount of such Additional Term Loans, with any remaining principal amount of such Additional Term Loans to be due and payable on the Stated Maturity Date for the applicable Tranche, (ii) in the case of any Additional Term Loan

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Commitment for which the Stated Maturity Date, or amortization schedule, is not identical to the Stated Maturity Date, and remaining amortization schedule, of the Initial Term Loans and Delayed Draw Term Loans, upon the making of any Additional Term Loans pursuant to such Additional Term Loan Commitment, Section 3.1.1 will be amended by adding a new clause thereto (and making conforming amendments to the other provisions of this Agreement) to provide for the amortization of such Additional Term Loans on the schedule agreed between the Borrower and the Lenders that agreed to provide the Additional Term Loan Commitments pursuant to which such Additional Term Loans were made, and (iii) the Borrower shall execute and deliver any additional Notes, other amendments or modifications to any Loan Document, and any other certificates, consents or legal opinions as the Administrative Agent may reasonably request.

        SECTION 2.3    Borrowing Procedures and Funding Maintenance.    Loans shall be made by the Lenders in accordance with Section 2.3.1.

        SECTION 2.3.1    Term Loans and Revolving Loans.    By delivering a Borrowing Request to the Administrative Agent on or before 2:00 p.m., New York time, on a Business Day, the Borrower may from time to time irrevocably request, no later than the requested date of any borrowing (in the case of Base Rate Loans) or upon three Business Days' notice (in the case of LIBO Rate Loans) but upon no more than five Business Days' notice (in the case of any Loans), that a Borrowing be made in an aggregate amount of $1,000,000 or any larger integral multiple of $500,000, or in the unused amount of the applicable Commitment. No Borrowing Request shall be required, and the minimum aggregate amounts specified under this Section 2.3.1 shall not apply, in the case of Revolving Loans deemed made under Section 2.6.2 in respect of unreimbursed Disbursements. On the terms and subject to the conditions of this Agreement, each Borrowing shall be comprised of the type of Loans, and shall be made on the Business Day, specified in such Borrowing Request. On or before 2:00 p.m., New York time, on such Business Day each Lender with a Commitment of greater than zero with respect to the applicable Tranche shall deposit with the Administrative Agent same day funds in an amount equal to such Lender's Percentage of the requested Borrowing. Such deposit will be made to an account which the Administrative Agent shall specify from time to time by notice to the Lenders. To the extent funds are received from the Lenders, the Administrative Agent shall make such funds available to the Borrower by wire transfer to the accounts the Borrower shall have specified in its Borrowing Request. No Lender's obligation to make any Loan shall be affected by any other Lender's failure to make any Loan. In respect of the Initial Term Loans made on the Effective Date, the Borrower shall choose LIBOR Rate Loans with an Interest Period ending on December 30, 2005, and shall be deemed to continue the Existing Term Loans which are deemed to become Initial Term Loans pursuant to Section 2.1.1 as LIBOR Rate Loans with an Interest Period ending on December 30, 2005.

        SECTION 2.4    Continuation and Conversion Elections.    By delivering a Continuation/Conversion Notice to the Administrative Agent on or before 12:00 p.m., New York time, on a Business Day, the Borrower may from time to time irrevocably elect, on not less than three Business Days' notice nor more than five Business Days' notice (in the case of any Loans) that all, or any portion in a minimum amount of $1,000,000 or any larger integral multiple of $500,000, be, in the case of Base Rate Loans, converted into LIBO Rate Loans or, in the case of LIBO Rate Loans, converted into Base Rate Loans or continued as LIBO Rate Loans (in the

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absence of delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three Business Days before the last day of the then current Interest Period with respect thereto, such LIBO Rate Loan shall on such last day, (i) in the case of any Revolving Loan, automatically convert to a Base Rate Loan and (ii) in the case of any Term Loan, automatically be continued as a LIBO Rate Loan with a new Interest Period of one month); provided that (x) each such conversion or continuation shall be pro rated among the applicable outstanding Loans of the relevant Lenders, and (y) no portion of the outstanding principal amount of any Loans may be continued as, or be converted into, LIBO Rate Loans when any Default has occurred and is continuing.

        SECTION 2.5    Funding.    Each Lender may, if it so elects, fulfill its obligation to make, continue or convert LIBO Rate Loans hereunder by causing one of its foreign branches or affiliates (or an international banking facility created by such Lender) to make or maintain such LIBO Rate Loan, so long as such action does not result in increased costs to the Borrower; provided that such LIBO Rate Loan shall nonetheless be deemed to have been made and to be held by such Lender, and the obligation of the Borrower to repay such LIBO Rate Loan shall nevertheless be to such Lender for the account of such foreign branch, affiliate or international banking facility; and provided further, that, except for purposes of determining whether any such increased costs are payable by the Borrower, such Lender shall cause such foreign branch, affiliate or international banking facility to comply with the applicable provisions of clause (b) of Section 4.6 with respect to such LIBO Rate Loan. In addition, the Borrower hereby consents and agrees that, for purposes of any determination to be made for purposes of Section 4.1, 4.2, 4.3 or 4.4, it shall be conclusively assumed that each Lender elected to fund all LIBO Rate Loans by purchasing Dollar deposits in its LIBOR Office's interbank Eurodollar market.

        SECTION 2.6    Issuance Procedures.    By delivering to the applicable Issuer and the Administrative Agent an Issuance Request on or before 1:00 p.m., New York time, on a Business Day, the Borrower may, from time to time irrevocably request, on not less than three Business Days' notice (or such shorter or longer notice as may be acceptable to the applicable Issuer), prior to an initial issuance of a Letter of Credit, the then existing Stated Expiry Date of a Letter of Credit or the effective date of a requested amendment or modification, that such Issuer issue, extend, modify or amend an irrevocable Letter of Credit on behalf of the Borrower (whether issued for the account of or on behalf of the Borrower or any of the Restricted Subsidiaries) in such form as may be requested by the Borrower and approved by such Issuer, for the purposes described in Section 7.1.9. Notwithstanding anything to the contrary contained herein or in any separate application for any Letter of Credit, the Borrower hereby acknowledges and agrees that it shall be obligated to reimburse the applicable Issuer upon each Disbursement paid under a Letter of Credit, and it shall be deemed to be the obligor for purposes of each such Letter of Credit issued hereunder (whether the account party on such Letter of Credit is Holdings, the Borrower or a Subsidiary of Holdings or the Borrower). Upon receipt of an Issuance Request, the Administrative Agent shall promptly notify the applicable Issuer and each Lender that has a Revolving Loan Commitment thereof. Each Letter of Credit shall by its terms be stated to expire on a date (its "Stated Expiry Date") no later than the earlier to occur of (x) seven days prior to the Revolving Loan Commitment Termination Date (without regard to clauses (ii) and (iii) of the definition thereof) and (y) the date which is 12 months from the date of issuance of such Letter of Credit; provided that notwithstanding the terms of clause (y) above, a Letter of Credit may, if required by the beneficiary thereof, contain "evergreen" provisions pursuant to which the Stated

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Expiry Date shall be automatically extended, unless notice to the contrary shall have been given to the beneficiary by the applicable Issuer, or to the beneficiary and the applicable Issuer by the Borrower more than a specified period prior to the then existing Stated Expiry Date. The applicable Issuer will make available to the beneficiary thereof the original of each Letter of Credit which it issues hereunder. In the event that the Issuer is other than the Administrative Agent, such Issuer will send by facsimile transmission to the Administrative Agent, promptly on the first Business Day of each week, its daily maximum amount available to be drawn under the Letters of Credit issued by such Issuer for the previous week. The Administrative Agent shall deliver to each Lender upon each calendar month end, and upon each payment of the letter of credit fees payable pursuant to Section 3.3.3, a report setting forth the daily maximum amount available to be drawn for all Issuers during such period.

        SECTION 2.6.1    Other Lenders' Participation.    Upon the issuance (or in the case of Existing Letters of Credit, deemed issuance) of each Letter of Credit issued by an Issuer pursuant hereto, and without further action, each Lender (other than such Issuer) that has a Revolving Loan Commitment shall be deemed to have irrevocably purchased from such Issuer, to the extent of its Percentage in respect of the Revolving Loan Commitments, and such Issuer shall be deemed to have irrevocably granted and sold to such Lender a participation interest in such Letter of Credit (including the Contingent Liability and any Reimbursement Obligation and all rights with respect thereto), and such Lender shall, to the extent of its Percentage in respect of the Revolving Loan Commitments, be responsible for reimbursing promptly (and in any event within one Business Day) the applicable Issuer through the Administrative Agent for Reimbursement Obligations which have not been reimbursed by the Borrower in accordance with Section 2.6.3. In addition, such Lender shall, to the extent of its Percentage in respect of the Revolving Loan Commitments, be entitled to receive a ratable portion of the letter of credit fees payable pursuant to Section 3.3.3 with respect to each Letter of Credit and of interest payable pursuant to Section 2.6.2 with respect to any Reimbursement Obligation. To the extent that any Lender has reimbursed the applicable Issuer for a Disbursement as required by this Section, such Lender shall be entitled to receive its ratable portion of any amounts subsequently received (from the Borrower or otherwise) in respect of such Disbursement.

        SECTION 2.6.2    Disbursements; Conversion to Revolving Loans.    The applicable Issuer will notify the Borrower and the Administrative Agent promptly of the presentment for payment of any drawing under any Letter of Credit issued by such Issuer, together with notice of the date (the "Disbursement Date") such payment shall be made (each such payment, a "Disbursement"). Subject to the terms and provisions of such Letter of Credit and this Agreement, such Issuer shall make such payment to the beneficiary of such Letter of Credit. Prior to 2:30 p.m., New York time, on the first Business Day following the Disbursement Date (the "Disbursement Due Date"), the Borrower will reimburse the Administrative Agent, for the account of such Issuer, for all amounts which such Issuer has disbursed under such Letter of Credit, together with interest thereon at the rate per annum otherwise applicable to Revolving Loans (made as Base Rate Loans) from and including the Disbursement Date to but excluding the Disbursement Due Date and, thereafter (unless such Disbursement is converted into a Base Rate Loan on the Disbursement Due Date), at a rate per annum equal to the rate per annum then in effect with respect to overdue Revolving Loans (made as Base Rate Loans) pursuant to Section 3.2.2 for the period from the Disbursement Due Date through the date of such reimbursement; provided that, if no Default shall have then occurred and be continuing, unless the Borrower has notified the

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Administrative Agent no later than one Business Day prior to the Disbursement Due Date that it will reimburse such Issuer for the applicable Disbursement, then the amount of the Disbursement shall be deemed to be a Borrowing of Revolving Loans constituting Base Rate Loans and following the giving of notice thereof by the Administrative Agent to the Lenders, each Lender with a Revolving Loan Commitment (other than such Issuer) will deliver to such Issuer through the Administrative Agent on the Disbursement Due Date immediately available funds in an amount equal to such Lender's Percentage of such Borrowing. Each conversion of Disbursement amounts into Revolving Loans shall constitute a representation and warranty by the Borrower that on the date of the making of such Revolving Loans all of the statements set forth in Section 5.2.1 are true and correct.

        SECTION 2.6.3    Reimbursement.    The obligation (a "Reimbursement Obligation") of the Borrower under Section 2.6.2 to reimburse the applicable Issuer with respect to each Disbursement (including interest thereon) not converted into a Base Rate Loan pursuant to Section 2.6.2, and, upon the Borrower failing or electing not to reimburse such Issuer and the giving of notice thereof by the Administrative Agent to the Lenders, each Lender's (to the extent it has a Revolving Loan Commitment) obligation under Section 2.6.1 to reimburse such Issuer or under Section 2.6.3 to fund its Percentage of any Disbursement converted into a Base Rate Loan, shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which the Borrower or such Lender, as the case may be, may have or have had against such Issuer or any such Lender, including any defense based upon the failure of any Disbursement to conform to the terms of the applicable Letter of Credit (if, in such Issuer's good faith opinion, such Disbursement is determined to be appropriate) or any non-application or misapplication by the beneficiary of the proceeds of such Letter of Credit; provided that after paying in full its Reimbursement Obligation hereunder, nothing herein shall adversely affect the right of the Borrower or such Lender, as the case may be, to commence any proceeding against such Issuer for any wrongful Disbursement made by such Issuer under a Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of such Issuer.

        SECTION 2.6.4    Deemed Disbursements.    Upon the occurrence and during the continuation of any Event of Default of the type described in clauses (b) through (d) of Section 8.1.9 with respect to any Obligor (other than Subsidiaries that are not Material Subsidiaries) or, with notice from the Administrative Agent acting at the direction of the Required Lenders, upon the occurrence and during the continuation of any other Event of Default,

        (a)   an amount equal to that portion of all Letter of Credit Outstandings attributable to the then aggregate amount which is undrawn and available under all Letters of Credit issued and outstanding shall, without demand upon or notice to the Borrower or any other Person, be deemed to have been paid or disbursed by the applicable Issuer under such Letters of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed); and

        (b)   upon notification by the Administrative Agent to the Borrower of its obligations under this Section, the Borrower shall be immediately obligated to reimburse

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the applicable Issuer for the amount deemed to have been so paid or disbursed by such Issuer.

Any amounts so payable by the Borrower pursuant to this Section shall be deposited in cash with the Administrative Agent and held as collateral security for the Obligations in connection with the Letters of Credit issued by the applicable Issuer. At such time as the Events of Default giving rise to the deemed disbursements hereunder shall have been cured or waived, the Administrative Agent shall return to the Borrower all amounts then on deposit with the Administrative Agent pursuant to this Section, together with accrued interest at the Federal Funds Rate, which have not been applied to the satisfaction of such Obligations.

        SECTION 2.6.5    Nature of Reimbursement Obligations.    The Borrower and, to the extent set forth in Section 2.6.1, each Lender with a Revolving Loan Commitment, shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. No Issuer (except to the extent of its own gross negligence or willful misconduct) shall be responsible for:

        (a)   the form, validity, sufficiency, accuracy, genuineness or legal effect of any Letter of Credit or any document submitted by any party in connection with the application for and issuance of a Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged;

        (b)   the form, validity, sufficiency, accuracy, genuineness or legal effect of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or the proceeds thereof in whole or in part, which may prove to be invalid or ineffective for any reason;

        (c)   failure of the beneficiary to comply fully with conditions required in order to demand payment under a Letter of Credit;

        (d)   errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise; or

        (e)   any loss or delay in the transmission or otherwise of any document or draft required in order to make a Disbursement under a Letter of Credit.

None of the foregoing shall affect, impair or prevent the vesting of any of the rights or powers granted to any Issuer or any Lender with a Revolving Loan Commitment hereunder. In furtherance and extension and not in limitation or derogation of any of the foregoing, any action taken or omitted to be taken by the applicable Issuer in good faith (and not constituting gross negligence or willful misconduct) shall be binding upon the Borrower, each Obligor and each such Lender, and shall not put such Issuer under any resulting liability to the Borrower, any Obligor or any such Lender, as the case may be.

        SECTION 2.6.6    Applicability of ISP and UCP.    Unless otherwise expressly agreed by the applicable Issuer and the Borrower (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as

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most recently published by the International Chamber of Commerce at the time of issuance thereof, shall apply to each commercial Letter of Credit.

        SECTION 2.6.7    Existing Letters of Credit.    Notwithstanding anything to the contrary herein, (a) the Existing Letters of Credit for the account of or on behalf of Holdings, the Borrower or any of the Restricted Subsidiaries that are outstanding on the Effective Date (as set forth in Schedule III hereto) shall be deemed to be Letters of Credit issued hereunder on the Effective Date and (b) the Existing Letters of Credit for the account of or on behalf of WordWave or any of its Subsidiaries that are outstanding on the Delayed Draw Term Loan Credit Date (as set forth in Schedule III hereto) shall be deemed to be Letters of Credit issued hereunder on the Delayed Draw Term Loan Credit Date. The Borrower shall, to the extent the Existing Letters of Credit issued by U.S. Bank National Association have not previously expired or been terminated, replace such Existing Letters of Credit with Letters of Credit issued by an Issuer other than U.S. Bank National Association no later than 90 days after the Effective Date.

        SECTION 2.7    Register; Notes.

        (a)   Each Lender may maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. In the case of a Lender that does not request, pursuant to clause (b)(ii) below, execution and delivery of a Note evidencing the Loans made by such Lender to the Borrower, such account or accounts shall, to the extent not inconsistent with the notations made by the Administrative Agent in the Register, be conclusive and binding on the Borrower absent manifest error; provided that the failure of any Lender to maintain such account or accounts shall not limit or otherwise affect any Obligations of the Borrower or any other Obligor.

        (b)   (i) The Borrower hereby designates the Administrative Agent to serve as the Borrower's agent, solely for the purpose of this clause (b), to maintain a register (the "Register") on which the Administrative Agent will record each Lender's Commitments, the Loans made by each Lender and each repayment in respect of the principal amount of the Loans of each Lender and annexed to which the Administrative Agent shall retain a copy of each Lender Assignment Agreement delivered to the Administrative Agent pursuant to Section 10.11. Failure to make any recordation, or any error in such recordation, shall not affect the Borrower's obligation in respect of such Loans. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person in whose name a Loan (and as provided in clause (ii) the Note evidencing such Loan, if any) is registered as the owner thereof for all purposes of this Agreement, notwithstanding notice or any provision herein to the contrary. A Lender's Commitment and the Loans made pursuant thereto may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer in the Register. Any assignment or transfer of a Lender's Commitment or the Loans made pursuant thereto shall be registered in the Register only upon delivery to the Administrative Agent of a Lender Assignment Agreement duly executed by the assignor thereof. No assignment or transfer of a Lender's Commitment or the Loans made pursuant thereto shall be effective unless such

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assignment or transfer shall have been recorded in the Register by the Administrative Agent as provided in this Section.

         (ii)  The Borrower agrees that, upon the request to the Administrative Agent by any Lender, the Borrower will execute and deliver to such Lender, as applicable, a Revolving Note and a Term Note, evidencing the Loans made by such Lender. The Borrower hereby irrevocably authorizes each Lender to make (or cause to be made) appropriate notations on the grid attached to such Lender's Notes (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal amount of, and the interest rate and Interest Period applicable to the Loans evidenced thereby. Such notations shall, to the extent not inconsistent with the notations made by the Administrative Agent in the Register, be conclusive and binding on the Borrower absent manifest error; provided that the failure of any Lender to make any such notations or any error in any such notations shall not limit or otherwise affect any Obligations of the Borrower or any other Obligor. The Loans evidenced by any such Note and interest thereon shall at all times (including after assignment pursuant to Section 10.11) be represented by one or more Notes payable to the order of the payee named therein and its registered assigns. A Note and the obligation evidenced thereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of such Note and the obligation evidenced thereby in the Register (and each Note shall expressly so provide). Any assignment or transfer of all or part of an obligation evidenced by a Note shall be registered in the Register only upon surrender for registration of assignment or transfer of the Note evidencing such obligation, accompanied by a Lender Assignment Agreement duly executed by the assignor thereof, and thereupon, if requested by the assignee, one or more new Notes shall be issued to the designated assignee and the old Note shall be returned by the Administrative Agent to the Borrower marked "exchanged". No assignment of a Note and the obligation evidenced thereby shall be effective unless it shall have been recorded in the Register by the Administrative Agent as provided in this Section.

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

        SECTION 3.1    Repayments and Prepayments; Application.

        SECTION 3.1.1    Repayments and Prepayments.    The Borrower shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date therefore, together with any unpaid interest or fees or other amounts relating thereto. Prior thereto, payments and repayments of Loans shall or may be made as set forth below.

        (a)   From time to time on any Business Day, the Borrower may make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided that

        (A)  any such prepayment of the Term Loans shall be made pro rata among Term Loans of the same type and Tranche and, if applicable,

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having the same Interest Period of all Lenders that have made such Term Loans, and any such prepayment of Revolving Loans shall be made pro rata among the Revolving Loans of the same type and Tranche and, if applicable, having the same Interest Period of all Lenders that have made such Revolving Loans;

        (B)  the Borrower shall comply with Section 4.4 in the event that any LIBO Rate Loan is prepaid on any day other than the last day of the Interest Period for such Loan;

        (C)  all such voluntary prepayments shall require at least one Business Day's notice in the case of Base Rate Loans, three Business Days' notice in the case of LIBO Rate Loans, but no more than five Business Days' notice in the case of any Loans, in each case in writing to the Administrative Agent; and

        (D)  all such voluntary partial prepayments shall be in an aggregate amount of $1,000,000 or any larger integral multiple of $500,000 or in the aggregate principal amount of all Loans of the applicable Tranche and type then outstanding.

        (b)   No later than five Business Days following the delivery by the Borrower of its annual audited financial reports required pursuant to clause (b) of Section 7.1.1(beginning with the financial reports delivered in respect of the Fiscal Year ending on January 31, 2007), the Borrower shall deliver to the Administrative Agent a calculation of the Excess Cash Flow for the Fiscal Year last ended and, no later than five Business Days following the delivery of such calculation, make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to (i) 50% (or, to the extent that the amount of Debt, as reduced by giving effect to such prepayment, would result in a Leverage Ratio of less than 3.00:1.00 on a pro forma basis as of the date of, and after giving effect to, such prepayment, 25%) of the Excess Cash Flow (if any) for such Fiscal Year less (ii) the aggregate amount of all voluntary prepayments of the principal of the Term Loans actually made in such Fiscal Year pursuant to clause (a) of Section 3.1.1, to be applied as set forth in Section 3.1.2; provided that such prepayment shall only be required to be made to the extent that the amount of Debt, as reduced by giving effect to such prepayment, would result in a Leverage Ratio of greater than or equal to 2.00:1.00 on a pro forma basis as of the date of, and after giving effect to, such prepayment.

        (c)   No later than (i) one Business Day (in the case of Net Debt Proceeds) or (ii) 30 calendar days (in the case of Net Disposition Proceeds) following the receipt of any Net Disposition Proceeds or Net Debt Proceeds by the Borrower or any Restricted Subsidiary, the Borrower shall deliver to the Administrative Agent a calculation of the amount of such Net Disposition Proceeds or Net Debt Proceeds, as the case may be, and, to the extent the amount of such Net Disposition Proceeds or Net Debt Proceeds, as the case may be, with respect to any single transaction or series of related transaction, exceeds $2,000,000 make a mandatory prepayment of the Term Loans in an amount equal to 100% of such Net Disposition Proceeds or Net Debt Proceeds, as the case may

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be, to be applied as set forth in Section 3.1.2; provided that no mandatory prepayment on account of such Net Disposition Proceeds shall be required under this clause if the Borrower informs the Administrative Agent no later than 30 days following the receipt of any Net Disposition Proceeds of its or its Restricted Subsidiary's good faith intention to apply such Net Disposition Proceeds to the acquisition of other assets or property consistent with the Merrill Business (including by way of merger or investment) within 365 days following the receipt of such Net Disposition Proceeds, with the amount of such Net Disposition Proceeds unused after such 365 day period being applied to the Term Loans as set forth in Section 3.1.2.

        (d)   The Borrower shall, concurrently with the receipt of any Net Equity Proceeds by Holdings, the Borrower or any Restricted Subsidiary, deliver to the Administrative Agent a calculation of the amount of such Net Equity Proceeds, and no later than five Business Days following the delivery of such calculation, and, to the extent that the amount of such Net Equity Proceeds with respect to any single transaction or series of related transactions exceeds $2,000,000, make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to 50% (or, to the extent that the amount of Debt, as reduced by giving effect to such prepayment, would result in a Leverage Ratio of less than 3.00:1.00 on a pro forma basis as of the date of, and after giving effect to, such prepayment, 25%) of such Net Equity Proceeds to be applied as set forth in Section 3.1.2; provided that such prepayment shall only be required to be made to the extent that the amount of Debt, as reduced by giving effect to such prepayment, would result in a Leverage Ratio of greater than or equal to 2.00:1.00 on a pro forma basis as of the date of, and after giving effect to, such prepayment.

        (e)   The Borrower shall, no later than the 60th calendar day following the receipt by Holdings, the Borrower or any of the Restricted Subsidiaries of any Casualty Proceeds in excess of $2,000,000 (individually or in the aggregate in any Fiscal Year), make or cause to be made a mandatory prepayment of the Term Loans in an amount equal to 100% of such Casualty Proceeds, to be applied as set forth in Section 3.1.2; provided that no mandatory prepayment on account of Casualty Proceeds shall be required under this clause if the Borrower informs the Administrative Agent no later than 60 days following the occurrence of the Casualty Event resulting in such Casualty Proceeds of its or the Restricted Subsidiary's good faith intention to apply such Casualty Proceeds to the rebuilding or replacement of the damaged, destroyed or condemned assets or property subject to such Casualty Event or the acquisition of other assets or property consistent with the Merrill Business (including by way of merger or Investment) and in fact uses such Casualty Proceeds to rebuild or replace the damaged, destroyed or condemned assets or property subject to such Casualty Event or to acquire such other property or assets within 365 days following the receipt of such Casualty Proceeds, with the amount of such Casualty Proceeds unused after such 365 day period being applied to the Term Loans as set forth in Section 3.1.2; provided further, that at any time when any Event of Default shall have occurred and be continuing or Casualty Proceeds not applied as provided above shall exceed $2,000,000, such Casualty Proceeds will be deposited in an account maintained with the Administrative Agent for disbursement at the request of the Borrower to pay for such rebuilding, replacement or acquisition.

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        (f)    On each date when any reduction in the Revolving Loan Commitment Amount shall become effective, the Borrower shall make a mandatory prepayment of Revolving Loans and (if necessary) deposit with the Administrative Agent cash collateral for Letter of Credit Outstandings in an aggregate amount equal to the excess, if any, of the sum of (x) the aggregate outstanding principal amount of all Revolving Loans and (y) the aggregate amount of all Letter of Credit Outstandings over the Revolving Loan Commitment Amount as so reduced.

        (g)   The Borrower shall, on the Stated Maturity Date and on each Quarterly Payment Date set forth, or occurring during any period set forth, below, make a scheduled repayment of the outstanding principal amount, if any, of Initial Term Loans and Delayed Draw Term Loans in an aggregate amount equal to the percentage of the aggregate principal amount of Initial Term Loans and Delayed Draw Term Loans, if any, borrowed (or deemed borrowed) hereunder set forth below opposite such Stated Maturity Date or period, as applicable (as such amounts may have otherwise been reduced pursuant to this Agreement):

Period	Scheduled Principal Repayment
April 30, 2006 to and including January 31, 2012	0.25%
the Stated Maturity Date	100% of the then-outstanding principal amount

        (h)   Following the prepayment in full of the Term Loans, on the date the Term Loans would otherwise have been required to be prepaid on account of any Net Disposition Proceeds, Net Debt Proceeds, Excess Cash Flow, Net Equity Proceeds or Casualty Proceeds, the Borrower shall prepay Revolving Loans (to the extent then outstanding) in an aggregate amount equal to the amount by which the Term Loans would otherwise have been required to be prepaid if Term Loans had been outstanding.

        (i)    The Borrower shall, immediately upon any acceleration of the Stated Maturity Date of any Loans or Obligations pursuant to Section 8.2 or Section 8.3, repay all outstanding Loans and other Obligations, unless, pursuant to Section 8.3, only a portion of all Loans and other Obligations are so accelerated (in which case the portion so accelerated shall be so prepaid).

        Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty, except as may be required by Section 4.4. No prepayment of principal of any Revolving Loans pursuant to clause (a) or (h) of this Section 3.1.1 shall cause a reduction in the Revolving Loan Commitment Amount.

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        SECTION 3.1.2    Application.    (a) Subject to clauses (b) and (c) below, each prepayment or repayment of principal of the Loans of any Tranche shall be applied, to the extent of such prepayment or repayment, first, to the principal amount thereof being maintained as Base Rate Loans, and second, to the principal amount thereof being maintained as LIBO Rate Loans.

        (b)   Each prepayment of Term Loans made pursuant to clauses (a), (b), (c), (d) and (e) of Section 3.1.1 shall be applied in direct order of maturity of the remaining scheduled quarterly amortization payments in respect thereof.

        (c)   Each prepayment of Term Loans made pursuant to clauses (b), (c), (d) and (e) of Section 3.1.1 shall be applied pro rata to each Tranche of Term Loans until all Term Loans have been paid in full and further to permanently reduce the undrawn Delayed Draw Term Loan Commitments (if any).

        SECTION 3.2    Interest Provisions.    Interest on the outstanding principal amount of the Loans shall accrue and be payable in accordance with this Section 3.2.

        SECTION 3.2.1    Rates.    (a) Each Base Rate Loan shall accrue interest on the unpaid principal amount thereof for each day from and including the day upon which such Loan was made or converted to a Base Rate Loan to but excluding the date such Loan is repaid or converted to a LIBO Rate Loan at a rate per annum equal to the sum of the Alternate Base Rate for such day plus the Applicable Margin for such Loan on such day.

        (b)   Each LIBO Rate Loan shall accrue interest on the unpaid principal amount thereof for each day during each Interest Period applicable thereto at a rate per annum equal to the sum of the LIBO Rate (Reserve Adjusted) for such Interest Period plus the Applicable Margin for such Loan on such day. All LIBO Rate Loans shall bear interest from and including the first day of the applicable Interest Period to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such LIBO Rate Loan or, in the case of the LIBO Rate Loans outstanding on the Effective Date in respect of Existing Term Loans which are deemed to become Initial Term Loans pursuant to Section 2.1.1, from and including the Effective Date to (but not including) the last day of such Interest Period at the interest rate determined as applicable to such LIBO Rate Loan.

        SECTION 3.2.2    Post-Maturity Rates.    After the date any principal amount of any Loan shall have become due and payable (whether on the applicable Stated Maturity Date, upon acceleration or otherwise), or any other monetary Obligation (other than overdue Reimbursement Obligations which shall bear interest as provided in Section 2.6.2) of the Borrower shall have become due and payable, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to (a) in the case of any overdue principal of Loans, overdue interest thereon, overdue commitment fees or other overdue amounts in respect of Loans or other obligations (or the related Commitments) under a particular Tranche, the rate that would otherwise be applicable to Base Rate Loans under such Tranche pursuant to Section 3.2.1 plus 2%, and (b) in the case of other overdue monetary Obligations, the rate that would otherwise be applicable to Revolving Loans that were Base Rate Loans plus 2%.

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        SECTION 3.2.3    Payment Dates.    Interest accrued on each Loan shall be payable, without duplication:

        (a)   on the Stated Maturity Date therefor;

        (b)   in the case of a LIBO Rate Loan, on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan, to the extent of the unpaid interest accrued through such date on the principal so paid or prepaid;

        (c)   with respect to Base Rate Loans, on each Quarterly Payment Date occurring after the date of the initial Borrowing hereunder;

        (d)   with respect to LIBO Rate Loans, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed three months, at intervals of three months after the first day of such Interest Period); and

        (e)   on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration.

Interest accrued on Loans, Reimbursement Obligations or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand.

        SECTION 3.3    Fees.    The Borrower agrees to pay the fees set forth in this Section 3.3. All such fees shall be non-refundable.

        SECTION 3.3.1    Commitment Fee.    The Borrower agrees to pay to the Administrative Agent for the account of each Lender that has a Revolving Loan Commitment hereunder, for each day during the period (including any portion thereof when any of the Lenders' Revolving Loan Commitments are suspended by reason of the Borrower's inability to satisfy any condition of Article V) commencing on the Effective Date and continuing to but excluding the Revolving Loan Commitment Termination Date, a commitment fee on such Lender's Percentage of the unused portion, whether or not then available, of the Revolving Loan Commitment Amount (net of Letter of Credit Outstandings) for such date at a rate per annum equal to 0.50%. Such commitment fee shall be payable by the Borrower in arrears on each Quarterly Payment Date, commencing with the first such day following the Effective Date, and on the Revolving Loan Commitment Termination Date.

        SECTION 3.3.2    Administrative Agent Fee.    Holdings agrees to pay an administration fee to the Administrative Agent, for its own account, in the amount, and at the times, set forth in the Agents' Fee Letter.

        SECTION 3.3.3    Letter of Credit Fee.    The Borrower agrees to pay to the Administrative Agent, for the pro rata account of the applicable Issuer and each other Lender that has a Revolving Loan Commitment hereunder, a letter of credit fee for each day on which there shall be any Letters of Credit outstanding at a rate per annum equal to the then Applicable Margin for Revolving Loans maintained as LIBO Rate Loans, multiplied by the Stated Amount of each such

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Letter of Credit, such fees being payable quarterly in arrears on the first Business Day after the end of each April, July, October and January, commencing with the first such date to occur after the issuance of such Letter of Credit.

        SECTION 3.3.4    Fronting Fee and Documentary and Processing Charges Payable to Issuer.    The Borrower shall pay directly to the Issuer for its own account a fronting fee for each day on which there shall be Letters of Credit issued by such Issuer outstanding at the rate of 0.25% per annum, on the Stated Amount of such Letter of Credit, such fees being payable quarterly in arrears on the first Business Day after the end of each April, July, October and January, commencing with the first such date to occur after the issuance of such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.5. In addition, the Borrower shall pay directly to the Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

        SECTION 3.3.5    Delayed Draw Term Loan Commitment Fee.    The Borrower agrees to pay to the Administrative Agent for the account of each Lender that has a Delayed Draw Term Loan Commitment hereunder, for each day during the period (including any portion thereof when any of the Lenders' Delayed Draw Term Loan Commitments are suspended by reason of the Borrower's inability to satisfy any condition of Article V) commencing on the Effective Date and continuing to but excluding the Delayed Draw Term Loan Commitment Termination Date, a commitment fee on such Lender's Percentage of the unused portion, whether or not then available, of the Delayed Draw Term Loan Commitment Amount for such date at a rate per annum equal to 0.50%. Such commitment fee shall be payable by the Borrower in arrears on each Quarterly Payment Date, commencing with the first such day following the Effective Date, and on the Delayed Draw Term Loan Commitment Termination Date.

ARTICLE IV

CERTAIN LIBO RATE AND OTHER PROVISIONS

        SECTION 4.1    LIBO Rate Lending Unlawful.    If any Lender shall determine (which determination shall, in the absence of manifest error, upon notice thereof to the Borrower and the Lenders, be conclusive and binding on the Borrower) that the introduction of or any change in or in the interpretation of any law, in each case after the date upon which such Lender shall have become a Lender hereunder, makes it unlawful, or any central bank or other governmental authority asserts, after such date, that it is unlawful, for such Lender to make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate Loan, the obligations of such Lender to make, continue, maintain or convert any Loans as or to LIBO Rate Loans shall, upon such determination, forthwith be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, which such Lender shall do promptly upon obtaining actual knowledge of such change in circumstances (provided that the rights and benefits of such Lender under this clause relating to any period prior to such failure to give prompt notice shall not be limited or otherwise adversely affected as a result of such failure) (with the date of such notice being the "Reinstatement Date"), and (i) all LIBO Rate

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Loans previously made by such Lender shall automatically convert into Base Rate Loans at the end of the then current Interest Periods with respect thereto or sooner, if required by such law or assertion and (ii) all Loans thereafter made by such Lender and outstanding prior to the Reinstatement Date shall be made as Base Rate Loans, with interest thereon being payable on the same date that interest is payable with respect to the corresponding Borrowing of LIBO Rate Loans made by Lenders not so affected.

        SECTION 4.2    Deposits Unavailable.    If the Administrative Agent shall have determined that (i) Dollar deposits in the relevant amount and for the relevant Interest Period are not available to the Administrative Agent in its relevant market, or (ii) by reason of circumstances affecting the Administrative Agent's relevant market, adequate means do not exist for ascertaining the interest rate applicable hereunder to LIBO Rate Loans, then, upon notice from the Administrative Agent to the Borrower and the Lenders, the obligations of all Lenders under Section 2.3 and Section 2.4 to make or continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall forthwith be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist, which the Administrative Agent shall do promptly upon obtaining actual knowledge of such change in circumstances (provided that the rights and benefits of the Administrative Agent under this clause relating to any period prior to such failure to give prompt notice shall not be limited or otherwise adversely affected as a result of such failure).

        SECTION 4.3    Increased LIBO Rate Loan Costs, etc.    The Borrower agrees to reimburse each Lender for any increase in the cost to such Lender of, or any reduction in the amount of any sum receivable by such Lender in respect of, making, continuing or maintaining (or of its obligation to make, continue or maintain) any Loans as, or of converting (or of its obligation to convert) any Loans into, LIBO Rate Loans (excluding any amounts, whether or not constituting Taxes, referred to in Section 4.6) arising as a result of any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority that occurs after the date upon which such Lender became a Lender hereunder. Such Lender shall promptly notify the Administrative Agent and the Borrower in writing of the occurrence of any such event, such notice to state, in reasonable detail, the reasons therefor and the additional amount required fully to compensate such Lender for such increased cost or reduced amount. Such additional amounts shall be payable by the Borrower directly to such Lender within five days of its receipt of such notice, and such notice shall, in the absence of manifest error, be conclusive and binding on the Borrower.

        SECTION 4.4    Funding Losses.    In the event any Lender shall incur any loss or expense (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to make, continue or maintain any portion of the principal amount of any Loan as, or to convert any portion of the principal amount of any Loan into, a LIBO Rate Loan, but excluding any loss of margin after the date of any such conversion, repayment, prepayment or failure to borrow, continue or convert) as a result of (i) any conversion or repayment or prepayment of the principal amount of any LIBO Rate Loans on a date other than the scheduled last day of the Interest Period applicable thereto, whether pursuant to Section 3.1 or otherwise, (ii) any Loans not being borrowed as LIBO Rate Loans in

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accordance with the Borrowing Request therefor, or (iii) any Loans not being continued as, or converted into, LIBO Rate Loans in accordance with the Continuation/ Conversion Notice therefor, then, upon the written notice of such Lender to the Borrower (with a copy to the Administrative Agent), the Borrower shall, within five days of its receipt thereof, pay directly to such Lender such amount as will (in the reasonable determination of such Lender) reimburse such Lender for such loss or expense. Such written notice (which shall include calculations in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower.

        SECTION 4.5    Increased Capital Costs.    If any change in, or the introduction, adoption, effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation, directive, guideline, decision or request (whether or not having the force of law) of any court, central bank, regulator or other governmental authority, in each case occurring after the applicable Lender becomes a Lender hereunder, affects or would affect the amount of capital required or expected to be maintained by any Lender or any Person controlling such Lender, and such Lender determines (in its reasonable discretion) that the rate of return on its or such controlling Person's capital as a consequence of its Commitments, participation in Letters of Credit or the Loans made by such Lender is reduced to a level below that which such Lender or such controlling Person could have achieved but for the occurrence of any such circumstance, then, in any such case upon notice from time to time by such Lender to the Borrower, which such Lender shall give promptly upon its obtaining actual knowledge of such circumstances (provided that the rights and benefits of such Lender under this clause relating to any period to such failure to give prompt notice shall not be limited or otherwise adversely affected as a result of such failure), the Borrower shall, within five days of its receipt thereof, pay directly to such Lender additional amounts sufficient to compensate such Lender or such controlling Person for such reduction in rate of return. A statement of such Lender as to any such additional amount or amounts (including calculations thereof in reasonable detail) shall, in the absence of manifest error, be conclusive and binding on the Borrower. In determining such amount, such Lender may use any method of averaging and attribution that it (in its sole and absolute discretion) shall deem applicable; provided that such Lender may not impose materially greater costs on the Borrower than on other similarly situated borrowers by virtue of any such averaging or attribution method.

        SECTION 4.6    Taxes.    (a) All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder or under any other Loan Document (including Reimbursement Obligations, fees and expenses) shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever, imposed by any taxing authority from or through which payments originate or are made or deemed made by or to the Borrower, but excluding (i) any income, excise, stamp or franchise taxes and other similar taxes, fees, duties, withholdings or other charges imposed on any Lender or the Administrative Agent by a jurisdiction under the laws of which such Lender or the Administrative Agent is organized or in which its principal executive office is located, or otherwise as a result of a present or former connection between the applicable lending office (or office through which it performs any of its actions as Lender or the Administrative Agent) of such Lender or the Administrative Agent and the jurisdiction of the governmental authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender having executed, delivered or

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performed its obligations or received a payment under, or taken any action to enforce, this Agreement or any Note) or (ii) any income, excise, stamp or franchise taxes and other similar taxes, fees, duties, withholdings or other charges to the extent that they are in effect and would apply as of the date any Person becomes a Lender or Assignee Lender hereunder, or as of the date that any Lender changes its applicable lending office, to the extent such taxes become applicable as a result of such change (other than a change in an applicable lending office made pursuant to Section 4.10 below) (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will (i) pay directly to the relevant taxing authority the full amount required to be so withheld or deducted, (ii) promptly forward to the Administrative Agent an official receipt or other documentation available to the Borrower reasonably satisfactory to the Administrative Agent evidencing such payment to such authority, and (iii) pay to the Administrative Agent for the account of the Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required; provided that the Borrower shall not be required to pay any such additional amounts in respect of amounts payable to any Lender that is not organized under the laws of the United States or a state thereof to the extent that the related tax is imposed (or an exemption therefrom is not available) as a result of such Lender or the Administrative Agent failing to comply with the requirements of clause (b) of Section 4.6.

        Moreover, if any Taxes are directly asserted against the Administrative Agent or any Lender with respect to any payment received by the Administrative Agent or such Lender hereunder, the Administrative Agent or such Lender may pay such Taxes and the Borrower will promptly pay to such Person such additional amount (including any penalties, interest or expenses) as is necessary in order that the net amount received by such Person (including any Taxes on such additional amount) shall equal the amount of such Taxes paid by such Person; provided that the Borrower shall not be obligated to make payment to the Lenders or the Administrative Agent (as the case may be) pursuant to this sentence in respect of penalties or interest attributable to any Taxes, if written demand therefor has not been made by such Lenders or the Administrative Agent within 60 days from the date on which such Lenders or the Administrative Agent knew of the imposition of Taxes by the relevant taxing authority or for any additional imposition which may arise from the failure of the Lenders or the Administrative Agent to apply payments in accordance with the tax law after the Borrower has made the payments required hereunder, provided further, that the Borrower shall not be required to pay any such additional amounts in respect of any amounts payable to any Lender or the Administrative Agent (as the case may be) that is not organized under the laws of the United States or a state thereof to the extent the related Tax is imposed as a result of such Lender failing to comply with the requirements of clause (b) of Section 4.6. After the Lenders or the Administrative Agent (as the case may be) learn of the imposition of Taxes, such Lenders and the Administrative Agent will act in good faith to notify the Borrower of its obligations hereunder as soon as reasonably possible.

        If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the Borrower shall indemnify the Lenders for

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any incremental Taxes, interest or penalties that may become payable by any Lender as a result of any such failure.

        (b)   Each Non-U.S. Lender shall, (i) on or prior to the Effective Date, in the case of each Lender listed on the signature pages hereof, or, in the case of an Assignee Lender, on or prior to the date it becomes a Lender, execute and deliver to the Borrower and the Administrative Agent, two or more (as the Borrower or the Administrative Agent may reasonably request) United States Internal Revenue Service Forms W-8ECI or Forms W-8BEN (or successor forms) establishing the Lender's exemption from United States federal withholding tax, or, solely if such Lender is claiming exemption from United States withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", United States Internal Revenue Service Forms W-8BEN and a certificate signed by a duly authorized officer of such Lender representing that such Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, or such other forms or documents (or successor forms or documents), appropriately completed, establishing that payments to such Lender are exempt from withholding or deduction of United States federal withholding taxes; and (ii) to the extent permitted under applicable law, deliver to the Borrower and the Administrative Agent two further copies of any such form or document on or before the date that any such form or document expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent such form or document previously delivered by it to the Borrower. Each Lender and the Administrative Agent agree, to the extent reasonable and without material cost to it, to provide to the Borrower and the Administrative Agent such other applicable forms or certificates as would reduce or eliminate any Tax otherwise applicable.

        (c)   If the Borrower determines in good faith that a reasonable basis exists for contesting the imposition of a Tax with respect to a Lender or the Administrative Agent, the relevant Lender or the Administrative Agent, as the case may be, shall cooperate with the Borrower in challenging such Tax at the Borrower's expense if requested by the Borrower; provided that nothing in this Section 4.6 shall require any Lender or the Administrative Agent to submit to the Borrower or any Person any tax returns or any part thereof, or to prepare or file any tax returns other than as such Lender or the Administrative Agent in its sole discretion shall determine.

        (d)   If a Lender or the Administrative Agent shall receive a refund (including any offset or credits from a taxing authority (as a result of any error in the imposition of Taxes by such taxing authority)) of any Taxes paid by the Borrower pursuant to clause (a) of this Section 4.6, such Lender or the Administrative Agent (as the case may be) shall promptly pay the Borrower the amount so received, with interest from the taxing authority with respect to such refund, net of any tax liability incurred by such Lender or the Administrative Agent that is attributable to the receipt of such refund and such interest.

        (e)   Each Lender and the Administrative Agent agrees, to the extent reasonable and without material cost to it, to cooperate with the Borrower to minimize any amounts payable by the Borrower under this Section 4.6; provided that nothing in this Section 4.6 shall require any Lender or the Administrate Agent to take any action which, in the sole discretion of such Lender or the Administrative Agent, is inconsistent with its internal policy and legal and regulatory restrictions.

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        (f)    If the Borrower is required to pay additional amounts to or for the account of any Lender or the Administrative Agent pursuant to clause (a) of this Section 4.6 as a result of a change of law occurring after the Effective Date, then such Lender or the Administrative Agent, at the request of the Borrower, will change the jurisdiction of its applicable lending office (or office through which it performs any of its actions as Administrative Agent) if such Lender or the Administrative Agent has an office in another jurisdiction and if such change (i) would eliminate or reduce any such additional payment which may thereafter accrue and (ii) is not, in the good faith determination of such Lender or the Administrative Agent, otherwise disadvantageous to such Lender or the Administrative Agent.

        SECTION 4.7    Payments, Computations, etc.    Unless otherwise expressly provided, all payments by or on behalf of the Borrower pursuant to this Agreement or any other Loan Document shall be made by the Borrower to the Administrative Agent for the pro rata account of the Lenders or Administrative Agent, as applicable, entitled to receive such payment. All such payments required to be made to the Administrative Agent shall be made, without setoff, deduction or counterclaim, not later than 2:00 p.m., New York time, on the date due, in same day or immediately available funds, to such account as the Administrative Agent shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Administrative Agent on the next succeeding Business Day. The Administrative Agent shall promptly remit in same day funds to each Lender, Agent or Lead Arranger, as the case may be, its share, if any, of such payments received by the Administrative Agent for the account of such Lender, Agent or Lead Arranger, as the case may be. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days (or, in the case of interest determined by reference to the Alternate Base Rate, 365 days or, if appropriate, 366 days). Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall (except as otherwise required by clause (i) of the definition of the term "Interest Period") be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment.

        SECTION 4.8    Sharing of Payments.    If any Lender shall obtain any payment or other recovery (whether voluntary, involuntary, by application of setoff or otherwise) on account of any Loan or Reimbursement Obligation (other than pursuant to the terms of Sections 4.3, 4.4 and 4.5) in excess of its pro rata share of payments then or therewith obtained by all Lenders entitled thereto, such Lender shall purchase from the other Lenders such participation in the Credit Extensions made by them as shall be necessary to cause such purchasing Lender to share the excess payment or other recovery ratably with each of them; provided that if all or any portion of the excess payment or other recovery is thereafter recovered from such purchasing Lender, the purchase shall be rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to the purchasing Lender the purchase price to the ratable extent of such recovery together with an amount equal to such selling Lender's ratable share (according to the proportion of (i) the amount of such selling Lender's required repayment to the purchasing Lender in respect of such recovery, to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section may, to the fullest extent permitted by

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law, exercise all its rights of payment (including pursuant to Section 4.9) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. If under any applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu of a setoff to which this Section applies, such Lender shall, to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights of the Lenders entitled under this Section to share in the benefits of any recovery on such secured claim.

        SECTION 4.9    Setoff.    Each Lender shall, upon the occurrence of any Event of Default described in clauses (b) through (d) of Section 8.1.9 with respect to any Obligor (other than a Subsidiary that is not a Material Subsidiary) or, with the consent of the Required Lenders, upon the occurrence of any other Event of Default, to the fullest extent permitted by law, have the right to appropriate and apply to the payment of the Obligations then due to it, and (as security for such Obligations) the Borrower hereby grants to each Lender a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of the Borrower then or thereafter maintained with or otherwise held by such Lender; provided that any such appropriation and application shall be subject to the provisions of Section 4.8. Each Lender agrees promptly to notify the Borrower and the Administrative Agent after any such setoff and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Lender may have.

        SECTION 4.10    Mitigation.    Each Lender agrees that if it makes any demand for payment under Sections 4.3, 4.4, 4.5, or 4.6, or if any adoption or change of the type described in Section 4.1 shall occur with respect to it, it will use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions and so long as such efforts would not be disadvantageous to it, as determined in its sole discretion) to designate a different lending office if the making of such a designation would reduce or obviate the need for the Borrower to make payments under Section 4.3, 4.4, 4.5, or 4.6, or would eliminate or reduce the effect of any adoption or change described in Section 4.1.

        SECTION 4.11    Replacement of Lenders; Defaulting Lenders.    (a) Each Lender hereby severally agrees as set forth in this Section. If any Lender (a "Subject Lender") (i) makes demand upon the Borrower for (or if the Borrower is otherwise required to pay) amounts pursuant to Section 4.3, 4.5 or 4.6, (ii) gives notice pursuant to Section 4.1 requiring a conversion of such Subject Lender's LIBO Rate Loans to Base Rate Loans or any change in the basis upon which interest is to accrue in respect of such Subject Lender's LIBO Rate Loans or suspending such Lender's obligation to make Loans as, or to convert Loans into, LIBO Rate Loans, or (iii) becomes a Non-Funding Lender or a Defaulting Lender, the Borrower may, within 180 days of receipt by the Borrower of such demand or notice (or the occurrence of such other event causing the Borrower to be required to pay such compensation) or within 180 days of such Lender becoming a Non-Funding Lender or a Defaulting Lender, as the case may be, give notice (a "Replacement Notice") in writing to the Administrative Agent and such Subject Lender of its intention to replace such Subject Lender with a financial institution (a "Replacement Lender") designated in such Replacement Notice. If the Administrative Agent shall, in the exercise of its reasonable discretion and within 30 days of its receipt of such Replacement Notice, notify the

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Borrower and such Subject Lender in writing that the designated financial institution is satisfactory to the Administrative Agent (such consent not being required where the Replacement Lender is already a Lender), then such Subject Lender shall, subject to the payment of any amounts due pursuant to Section 4.4, assign, in accordance with Section 10.11, all of its Commitments, Loans, and other rights and obligations under this Agreement and all other Loan Documents (including, without limitation, Reimbursement Obligations) to such designated financial institution; provided that (i) such assignment shall be without recourse, representation or warranty and shall be on terms and conditions reasonably satisfactory to such Subject Lender and such designated financial institution and (ii) the purchase price paid by such designated financial institution shall be in the amount of such Subject Lender's Loans and its Percentage in respect of the Revolving Loan Commitment of any outstanding Reimbursement Obligations, together with all accrued and unpaid interest and fees in respect thereof, plus all other amounts (including the amounts demanded and unreimbursed under Sections 4.3, 4.5 and 4.6), owing to such Subject Lender hereunder. Upon the effective date of an assignment described above, the designated financial institution or Replacement Lender shall become a "Lender" for all purposes under this Agreement and the other Loan Documents.

        (b)   Each Lender grants (x) to the Administrative Agent the right to purchase all (but not less than all) of such Lender's Commitments and Loans owing to it and the Notes held by it and all of its rights and obligations hereunder and under the other Loan Documents, and (y) to the Borrower the right to cause an assignment of all (but not less than all) of such Lender's Commitments and Loans owing to it, its participations in the Notes held by it and all of its rights and obligations hereunder and the other Loan Documents to Eligible Assignees, which right may be exercised by the Administrative Agent or the Borrower, as the case may be, if such Lender becomes a Non-Consenting Lender; provided that such Non-Consenting Lender shall receive, in connection with such assignments, payment equal to the aggregate amount of outstanding Loans owed to such Lender and its Percentage in respect of the Revolving Loan Commitment of any outstanding Reimbursement Obligation (together with all accrued and unpaid interest, fees and other amounts (other than indemnities) owed to such Lender). Each Lender agrees that if the Administrative Agent or the Borrower, as the case may be, exercises its option hereunder, it shall promptly execute and deliver all agreements and documentation necessary to effectuate such assignment as set forth in Section 10.11. The Borrower shall be entitled (but not obligated) to execute and deliver such agreement and documentation on behalf of such Non-Consenting Lender and any such agreement and/or documentation so executed by the Borrower shall be effective for purposes of documenting an assignment pursuant to Section 10.11.

        (c)   The parties hereto agree that upon any Lender becoming a Defaulting Lender, all amounts received by the Administrative Agent in respect of principal, interest and fees otherwise owing to such Defaulting Lender shall instead be applied (pro rata) to the reimbursement of any amounts owing by the Defaulting Lender to the Issuers due to the failure of such Defaulting Lender to satisfy any obligation, under Section 2.6.1, to reimburse drawings under any Letter of Credit; provided that notwithstanding any such diversion of any such funds, as between the Borrower and such Defaulting Lender, such funds shall be deemed to have been applied in payment of the principal, interest and fees to which they would otherwise have been applied in the absence of such diversion.

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ARTICLE V

CONDITIONS TO CREDIT EXTENSIONS

        SECTION 5.1    Initial Credit Extension.    The obligations of the Lenders and, if applicable, the Issuer(s) to fund the initial Credit Extension shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 5.1.

        SECTION 5.1.1    Resolutions, etc.    The Bookrunners and the Administrative Agent shall have received from each Obligor (a) a certificate, dated the Effective Date, of its Secretary or Assistant Secretary as to (i) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of each Loan Document to be executed by it, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to each Loan Document executed by it, upon which certificate the Agents and each Lender may conclusively rely until it shall have received a further certificate of the Secretary or Assistant Secretary of such Obligor canceling or amending such prior certificate and (b) a copy of the certificate or articles of incorporation or other formation documents, including all amendments thereto, of each Obligor, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to the good standing of each Obligor as of a recent date, from such Secretary of State.

        SECTION 5.1.2    Effective Date Certificate.    The Bookrunners and the Administrative Agent shall have received, with counterparts for each Lender, the Effective Date Certificate, substantially in the form of Exhibit D hereto, dated the Effective Date and duly executed and delivered by an Authorized Officer that is the president, the chief executive officer or the chief financial officer of the Borrower, in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be deemed to be true and correct representations and warranties of the Borrower made as of such date under this Agreement, and, at the time such certificate is delivered, such statements shall in fact be true and correct.

        SECTION 5.1.3    Delivery of Notes.    The Bookrunners and the Administrative Agent shall have received for the account of each Lender that has submitted, at least two Business Days prior to the Effective Date, a written request pursuant to clause (b)(ii) of Section 2.7, a Note of the applicable Tranche duly executed and delivered by the Borrower.

        SECTION 5.1.4    Guaranty.    The Bookrunners and the Collateral Agent shall have received the Guaranty, dated the Effective Date, duly executed and delivered by an Authorized Officer of Holdings and each U.S. Subsidiary of Holdings that is a Restricted Subsidiary and that is in existence on the Effective Date.

        SECTION 5.1.5    Pledge and Security Agreement, etc.    The Collateral Agent shall have received executed counterparts of the Pledge and Security Agreement, dated as of the Effective Date, duly executed and delivered by an Authorized Officer of the Borrower, Holdings and each Restricted Subsidiary that is a U.S. Subsidiary, together with, in each case to the extent not previously delivered under the Existing Credit Agreements:

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        (a)   the certificates evidencing all of the issued and outstanding shares of Capital Stock of the Borrower or any Restricted Subsidiary that constitute certificated securities and that are pledged pursuant to the Pledge and Security Agreement, which certificates shall in each case be accompanied by undated powers of transfer duly executed in blank, and such other instruments and documents as the Collateral Agent shall deem necessary or in the reasonable opinion of the Collateral Agent desirable under applicable U.S. law to perfect the security interest of the Collateral Agent in such shares of Capital Stock; provided, however, that notwithstanding the foregoing, no Foreign Subsidiary shall be required to execute the Pledge and Security Agreement, nor will Holdings, the Borrower or any Restricted Subsidiary be required to deliver in pledge pursuant to the Pledge and Security Agreement in excess of 65% of the total combined voting power of all classes of Capital Stock of a Foreign Subsidiary entitled to vote;

        (b)   all promissory notes evidencing intercompany Indebtedness payable to the Borrower or any Subsidiary Guarantor duly endorsed to the order of the Collateral Agent;

        (c)   UCC financing statements naming each Obligor as the debtor and the Collateral Agent as the secured party; and

        (d)   certified copies of UCC Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party acceptable to the Collateral Agent, dated a date reasonably near to the Effective Date, listing all effective financing statements which name such Obligor as the debtor and which are filed in the jurisdictions acceptable to the Collateral Agent, together with copies of such financing statements.

        SECTION 5.1.6    Financial Information    The Bookrunners and the Administrative Agent shall have received an unaudited consolidated balance sheet and related consolidated statements of income of Holdings and its Subsidiaries for each fiscal month ended after October 31, 2005 at least 30 days before the Effective Date, certified by an Authorized Officer that is the treasurer, controller or chief financial or accounting officer of the Borrower.

        SECTION 5.1.7    Opinions of Counsel.    The Administrative Agent shall have received opinions, dated the Effective Date and addressed to the Administrative Agent and all Lenders from (a) Davis, Polk and Wardwell, special New York counsel to each of the Obligors, in substantially the form of Exhibit I-1, (b) Oppenheimer Wolff & Donnelly LLP, special Minnesota counsel to the Borrower, in substantially the form of Exhibit I-2 hereto, (c) Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Borrower, in substantially the form of Exhibit I-3 hereto and (d) Steven Machov, General Counsel of the Borrower, in substantially the form of Exhibit I-4 hereto.

        SECTION 5.1.8    Insurance.    The Administrative Agent shall have received satisfactory evidence of the existence of insurance in compliance with Section 7.1.4 in respect of Holdings and its Subsidiaries (including all endorsements included therein), and the Administrative Agent shall be named additional insured or loss payee, on behalf of the Secured Parties, pursuant to documentation reasonably satisfactory to the Administrative Agent.

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        SECTION 5.1.9    Closing Fees, Expenses, etc.    Each of the Agents and the Administrative Agent shall have received, for its own respective account, or for the account of each Lender, as the case may be, all fees, costs and expenses due and payable pursuant to Sections 3.3 and 10.3, if then invoiced.

        SECTION 5.1.10    Interest and Fees Under Existing Credit Agreements.    The Administrative Agent (as defined in each Existing Credit Agreement) shall have received, for its own account or for the account of each Existing Lender thereunder, as the case may be, all interest and fees accrued under the Existing Credit Agreements through the Effective Date.

        SECTION 5.1.11    Repayment of Senior Subordinated Notes.    Contemporaneously with the application of the proceeds of the Loans to be made on the Effective Date, sufficient funds shall have been irrevocably deposited with the trustee in respect of the outstanding Senior Subordinated Notes to fund the redemption thereof in full, together with the payment of all accrued interest thereon, and there shall be no Indebtedness of Holdings, the Borrower or the Restricted Subsidiaries outstanding after consummation of the Effective Date transactions other than Indebtedness permitted under Section 7.2.2.

        SECTION 5.1.12    Money Laundering and PATRIOT Act.    The Lenders shall have received from the Borrower all documentation and other information requested by them at least two Business Days prior to the Effective Date that is required by bank regulatory authorities to be obtained from the Borrower under applicable "know your customer" and anti-money laundering rules and regulations, including without limitation the U.S.A. PATRIOT Act.

        SECTION 5.2    All Credit Extensions.    The obligation of each Lender and, if applicable, the Issuer(s), to make any Credit Extension (including its initial Credit Extension) shall be subject to the satisfaction of each of the conditions precedent set forth in this Section 5.2.

        SECTION 5.2.1    Compliance with Warranties, No Default, etc.    Both before and after giving effect to any Credit Extension the following statements shall be true and correct:

        (a)   the representations and warranties set forth in Article VI and in each other Loan Document (other than, in the case of the Credit Extensions to be made or deemed made on the Effective Date or the Delayed Draw Term Loan Credit Date, the representations contained in Sections 6.6 and 6.7, any representation or warranty that is not true and correct in all material respects due to an act, event or circumstance that is not a volitional act of Holdings or any of its Subsidiaries) shall, in each case, be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date);

        (b)   no Default (other than, in the case of the Credit Extensions to be made or deemed made on the Effective Date or the Delayed Draw Term Loan Credit Date, any Default (other than a Default under Section 8.1.9) arising from any act, event or circumstance that is not a volitional act of Holdings or any of its Subsidiaries) shall have then occurred and be continuing.

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        SECTION 5.2.2    Credit Extension Request.    The Administrative Agent shall have received a Borrowing Request if Loans are being requested, or an Issuance Request if a Letter of Credit is being requested or extended. Each of the delivery of a Borrowing Request or Issuance Request and the acceptance by the Borrower of proceeds of any Credit Extension shall constitute a representation and warranty by the Borrower that on the date of such Credit Extension (both immediately before and after giving effect thereto and the application of the proceeds thereof) the statements made in Section 5.2.1 are true and correct.

        SECTION 5.3    Delayed Draw Term Loan Credit Date.    The Obligations of the Lenders with a Percentage greater than zero of the Delayed Draw Term Loan Commitments to fund their Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 5.3.

        SECTION 5.3.1    Merger.    (a) The aggregate cash consideration paid to the sellers in connection with the Acquisition shall not exceed $160,000,000 and (b) the Acquisition shall have been consummated in accordance with the terms of the Merger Agreement.

        SECTION 5.3.2    Resolutions, etc.    The Bookrunners and the Administrative Agent shall have received from WordWave and each U.S. Subsidiary of WordWave that is a Restricted Subsidiary (a) a certificate, dated the Delayed Draw Term Loan Credit Date, of its Secretary or Assistant Secretary as to (i) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of each Loan Document to be executed by it, and (ii) the incumbency and signatures of those of its officers authorized to act with respect to each Loan Document executed by it, upon which certificate the Agents and each Lender may conclusively rely until it shall have received a further certificate of the Secretary or Assistant Secretary of WordWave and each U.S. Subsidiary of WordWave that is a Restricted Subsidiary canceling or amending such prior certificate and (b) a copy of its certificate or articles of incorporation or other formation documents, including all amendments thereto, certified as of a recent date by the Secretary of State of the state of its organization, and a certificate as to its good standing as of a recent date, from such Secretary of State.

        SECTION 5.3.3    Financial Information; Compliance Certificate.    The Bookrunners and the Administrative Agent shall have received (a) an unaudited consolidated balance sheet and related consolidated statements of income of WordWave and its Subsidiaries for each fiscal month ended after October 31, 2005 and at least 30 days before the Delayed Draw Term Loan Credit Date, certified by an Authorized Officer that is the treasurer, controller or chief financial or accounting officer of WordWave and (b) an initial Compliance Certificate on a pro forma basis as if, in the case of balance sheet items, the Transaction had been consummated on October 31, 2005 and, in the case of statement of operations items, the Transaction had been consummated on November 1, 2004, demonstrating a Leverage Ratio of no greater than 3.9 to 1.0 for the most recent full Fiscal Quarter immediately preceding the Delayed Draw Term Loan Credit Date, in each case certified by an Authorized Officer that is the treasurer, controller or chief financial or accounting officer of the Borrower, as giving effect to the consummation of the Transaction and reflecting the proposed legal and capital structure of the Borrower, which legal and capital structure shall be as disclosed to the Lenders prior to the Delayed Draw Term Loan Credit Date or otherwise reasonably satisfactory in all respects to the Lead Arrangers and the Administrative Agent.

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        SECTION 5.3.4    Guaranty.    The Bookrunners and the Collateral Agent shall have received a supplement to the Guaranty, dated the Delayed Draw Term Loan Credit Date, duly executed and delivered by an Authorized Officer of WordWave and each U.S. Subsidiary of WordWave that is a Restricted Subsidiary and that is in existence on the Delayed Draw Term Loan Credit Date.

        SECTION 5.3.5    Pledge and Security Agreement, etc.    The Collateral Agent shall have received executed counterparts of a supplement to the Pledge and Security Agreement, dated as of the Delayed Draw Term Loan Credit Date, duly executed and delivered by an Authorized Officer of WordWave and each Restricted Subsidiary of WordWave that is a U.S. Subsidiary, together with:

        (a)   the certificates evidencing all of the issued and outstanding shares of Capital Stock of WordWave or any Restricted Subsidiary that constitute certificated securities and that are pledged pursuant to the Pledge and Security Agreement, which certificates shall in each case be accompanied by undated powers of transfer duly executed in blank, and such other instruments and documents as the Collateral Agent shall deem necessary or in the reasonable opinion of the Collateral Agent desirable under applicable U.S. law to perfect the security interest of the Collateral Agent in such shares of Capital Stock; provided, however, that notwithstanding the foregoing, no Foreign Subsidiary shall be required to execute the Pledge and Security Agreement, nor will WordWave or any Restricted Subsidiary of WordWave be required to deliver in pledge pursuant to the Pledge and Security Agreement in excess of 65% of the total combined voting power of all classes of Capital Stock of a Foreign Subsidiary entitled to vote;

        (b)   all promissory notes evidencing intercompany Indebtedness payable to the WordWave or any of its Subsidiaries that is a Subsidiary Guarantor duly endorsed to the order of the Collateral Agent;

        (c)   UCC financing statements naming each of WordWave and each Restricted Subsidiary of WordWave that is a U.S. Subsidiary as the debtor and the Collateral Agent as the secured party;

        (d)   copies of proper UCC termination statements (Form UCC-3), if any, necessary to release all Liens and other rights of any Person (other than Liens permitted under Section 7.2.3)

        (i)    in any collateral described in the Pledge and Security Agreement previously granted by any Person, and

        (ii)   securing any of the Indebtedness to be repaid in connection with the Transaction on or prior to the Delayed Draw Term Loan Credit Date, together with such other UCC termination statements (Form UCC-3) as the Collateral Agent may reasonably request from such Obligor; and, certified copies of UCC Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party acceptable to the Collateral Agent, dated a date reasonably near to the Delayed Draw Term Loan Credit Date, listing all effective financing

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statements which name such Obligor as the debtor and which are filed in the jurisdictions acceptable to the Collateral Agent, together with copies of such financing statements.

        SECTION 5.3.6    Opinions of Counsel.    The Administrative Agent shall have received opinions, dated the Delayed Draw Term Loan Credit Date and addressed to the Administrative Agent and all Lenders from (a) Davis, Polk and Wardwell, special New York, counsel to each of the Obligors, in substantially the form of Exhibit I-1, (b) Morris, Nichols, Arsht & Tunnell, special Delaware counsel to the Obligors, in substantially the form of Exhibit I-3 hereto and (c) Steven Machov, General Counsel of the Borrower, in substantially the form of Exhibit I-4 hereto.

        SECTION 5.3.7    Insurance.    The Administrative Agent shall have received satisfactory evidence of the existence of insurance in compliance with Section 7.1.4 (including all endorsements included therein) in respect of WordWave and its Subsidiaries, and the Administrative Agent shall be named additional insured or loss payee, on behalf of the Secured Parties, pursuant to documentation reasonably satisfactory to the Administrative Agent.

        SECTION 5.3.8    Repayment of Existing Debt.    Contemporaneously with the application of the proceeds of the Delayed Draw Term Loans to be made on the Delayed Draw Term Loan Credit Date, (a) Holdings and the Borrower shall have repaid in full the aggregate principal amount outstanding under the Existing WordWave Credit Agreement plus accrued and unpaid interest thereon and accrued and unpaid fees and other amounts payable under the Existing WordWave Credit Agreement and (b) Holdings, the Borrower and the Restricted Subsidiaries shall have terminated any commitments to lend or make other extensions of credit under the Existing WordWave Credit Agreement, or arrangements satisfactory to the Agents and the Administrative Agent for the repayment of such amounts outstanding under the Existing WordWave Credit Agreement and the termination of such commitments shall have been made. There shall be no Indebtedness of WordWave or its Restricted Subsidiaries outstanding after consummation of the Delayed Draw Term Loan Credit Date transactions other than Indebtedness permitted under Section 7.2.2.

        SECTION 5.3.9    No WordWave Material Adverse Effect.    During the period from December 31, 2004 through the earlier of the Delayed Draw Term Loan Credit Date and December 31, 2005, there shall have occurred no event, circumstance or condition that constitutes a WordWave Material Adverse Effect.

        SECTION 5.3.10    No Material Litigation.    On the earlier of (i) December 31, 2005 and (ii) the Delayed Draw Term Loan Credit Date, there shall be no civil, criminal or administrative suits, actions or proceedings (including arbitration proceedings) pending or, to the knowledge of Holdings or the Borrower, within the 24 months preceding the date of the Merger Agreement, threatened against or affecting WordWave or any of its Subsidiaries before any governmental body, which if adversely determined, (a) would have a WordWave Material Adverse Effect or (b) would result in an effective injunction, writ or preliminary restraining order or any order of any nature issued by a court of governmental authority of competent jurisdiction to the effect that the transactions contemplated by the Merger Agreement and the other documents contemplated therein may not be consummated as here and/or therein provided. On the earlier of (i) December

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31, 2005 and (ii) the Delayed Draw Term Loan Credit Date, neither WordWave nor any Subsidiary shall be subject to any order of any governmental body except to the extent the same would not reasonably be expected to have a WordWave Material Adverse Effect.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

        In order to induce the Lenders, the Issuers and the Agents to enter into this Agreement and to make Credit Extensions hereunder, each of Holdings and the Borrower represents and warrants unto the Agents, the Issuers and each Lender as set forth in this Article VI.

        SECTION 6.1    Organization, etc.    Holdings, the Borrower and each of the Restricted Subsidiaries (a) is validly organized and existing and in good standing to the extent required under the laws of the jurisdiction of its incorporation, except to the extent that the failure to be in good standing would not reasonably be expected to have a Material Adverse Effect, (b) is duly qualified to do business and is in good standing to the extent required under the laws of each jurisdiction where the nature of its business requires such qualification, except to the extent that the failure to qualify would not reasonably be expected to result in a Material Adverse Effect, and (c) has full power and authority and holds all requisite governmental licenses, permits and other approvals to (i) enter into and perform its obligations in connection with the Transaction and its Obligations under this Agreement and each other Loan Document to which it is a party and (ii) own and hold under lease its property and to conduct its business substantially as currently conducted by it except, in the case of this clause (c)(ii), where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

        SECTION 6.2    Due Authorization, Non-Contravention, etc.    The execution, delivery and performance by each of Holdings and the Borrower of this Agreement and each other Loan Document executed or to be executed by it, and the execution, delivery and performance by each other Obligor of each Loan Document executed or to be executed by it and Holdings', the Borrower's and, where applicable, each such other Obligor's participation in the consummation of the Transaction are within Holdings', the Borrower's and each such Obligor's company powers, have been duly authorized by all necessary company action, and do not (i) contravene Holdings', the Borrower's or any such Obligor's Charter Documents, (ii) contravene any contractual restriction (other than any such contractual restriction that shall have been waived on or prior to the Effective Date), law or governmental regulation or court decree or order binding on or affecting Holdings, the Borrower or any such Obligor, where such contravention, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (iii) result in, or require the creation or imposition of, any Lien on any of Holdings', the Borrower's or any other Obligor's properties, except pursuant to the terms of a Loan Document.

        SECTION 6.3    Government Approval, Regulation, etc.    No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person, is required for the due execution, delivery or performance by Holdings, the Borrower or any other Obligor of this Agreement or any other Loan Document to which it is a party, except as have been duly obtained or made and are in full force and effect or those which the failure to obtain or make could not reasonably be expected to have a Material Adverse Effect.

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None of Holdings, the Borrower or any other Obligor is required to register as an "investment company" under the Investment Company Act of 1940, as amended, or is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", within the meaning of the Public Utility Holding Company Act of 1935, as amended.

        SECTION 6.4    Validity, etc.    This Agreement constitutes, and each other Loan Document executed by Holdings or the Borrower will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of each of Holdings and the Borrower as is a party thereto enforceable against Holdings or the Borrower, as the case may be, in accordance with their respective terms; and each Loan Document executed pursuant hereto by each other Obligor will, on the due execution and delivery thereof by such Obligor, be the legal, valid and binding obligation of such Obligor enforceable in accordance with its terms, in each case with respect to this Section 6.4 subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

        SECTION 6.5    Financial Information.    The Pro Forma Financial Statements have been prepared on a basis substantially consistent with GAAP and include appropriate pro forma adjustments to give pro forma effect to the Transaction as if, in the case of the balance sheet contained therein, the Transaction was consummated on October 31, 2005 and, in the case of the statements of operations contained therein, the Transaction was consummated on November 1, 2004.

        SECTION 6.6    No Material Adverse Change.    Since January 31, 2005, there shall have occurred no event, circumstance or condition that constitutes a Material Adverse Effect.

        SECTION 6.7    Litigation, etc.    There is no pending or, to the knowledge of Holdings or the Borrower, threatened litigation, action, proceeding, arbitration or governmental investigation affecting any Obligor, or any of their respective properties, businesses, assets or revenues, which could reasonably be expected to result in a Material Adverse Effect except as disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule. No development has occurred in any litigation, action or governmental investigation or other proceeding disclosed in Item 6.7 ("Litigation") of the Disclosure Schedule which could reasonably be expected to have a Material Adverse Effect.

        SECTION 6.8    Subsidiaries.    The Borrower has only those Subsidiaries (i) which are identified in Item 6.8 ("Existing Subsidiaries") of the Disclosure Schedule, or (ii) which are permitted to have been acquired or formed in accordance with Section 7.2.5 or 7.2.8.

        SECTION 6.9    Ownership of Properties.    Except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect, Holdings, the Borrower and each of the Restricted Subsidiaries owns good title to, or leasehold interests in, all of its properties and assets (other than insignificant properties and assets), real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens or material claims (including material

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infringement claims with respect to patents, trademarks, copyrights and the like), except as permitted pursuant to Section 7.2.3.

        SECTION 6.10    Taxes.    Each of Holdings, the Borrower and each of their respective Subsidiaries has filed all Federal, State and other material tax returns required by law to have been filed by it and has paid all material taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.

        SECTION 6.11    Pension and Welfare Plans.    During the twelve-consecutive-month period prior to the Effective Date, no steps have been taken to terminate any Pension Plan, and no contribution failure has occurred with respect to any Pension Plan sufficient to give rise to a Lien under section 302(f) of ERISA, which, in either case, is reasonably expected to lead to a liability of Holdings or any member of the Controlled Group to such Pension Plan in excess of $10,000,000. No condition exists or event or transaction has occurred with respect to any Pension Plan which could reasonably be expected to result in the incurrence by Holdings, the Borrower or any member of the Controlled Group of any material liability, fine or penalty other than such condition, event or transaction which would not reasonably be expected to have a Material Adverse Effect. Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the Disclosure Schedule or otherwise approved by the Administrative Agent, since the date of the financial statements most recently delivered pursuant to clause (a) or (b) of Section 7.1.1, the Borrower has not increased any contingent liability with respect to any post-retirement benefit under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA, except as would not have a Material Adverse Effect.

        SECTION 6.12    Environmental Matters.    Except as set forth in Item 6.12 ("Environmental Matters") of the Disclosure Schedule or as, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect:

        (a)   all facilities and property owned or leased by Holdings, the Borrower or any of their respective Subsidiaries are in compliance with all Environmental Laws;

        (b)   there are no pending or threatened (i) written claims, complaints, notices or requests for information received by Holdings, the Borrower or any of their respective Subsidiaries with respect to any alleged violation of any Environmental Law, or (ii) written complaints, notices or inquiries to Holdings, the Borrower or any of their respective Subsidiaries regarding potential liability under any Environmental Law;

        (c)   Holdings, the Borrower and their respective Subsidiaries have been issued and are in compliance with all permits, certificates, approvals, licenses and other authorizations relating to environmental matters and necessary or desirable for their businesses;

        (d)   no property now or, to the best knowledge of Holdings and the Borrower, previously owned or leased by Holdings or any of its Subsidiaries is listed or, to the knowledge of Holdings and the Borrower, proposed for listing (with respect to owned

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property only) on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up;

        (e)   to the knowledge of Holdings and the Borrower, Holdings, the Borrower and their respective Subsidiaries have not directly transported or directly arranged for the transportation of any Hazardous Material to any location (i) which is listed or, to the knowledge of the Borrower, proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list, or (ii) which is the subject of federal, state or local enforcement actions or other investigations in respect of any Environmental Law; and

        (f)    to the best knowledge of Holdings and the Borrower, no conditions exist at, on or under any property now or previously owned or leased by Holdings, the Borrower or any of their respective Subsidiaries which, with the passage of time, or the giving of notice or both, would give rise to liability to Holdings, the Borrower or any of their respective Subsidiaries under any Environmental Law.

        SECTION 6.13    Regulations U and X.    No proceeds of any Credit Extension will be used in violation of F.R.S. Board Regulation U or X.

        SECTION 6.14    Accuracy of Information.    All material factual information concerning the financial condition, operations or prospects of the Borrower, Holdings and their respective Subsidiaries heretofore or contemporaneously furnished by or on behalf of the Borrower in writing to the Administrative Agent, the Issuers or any Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby or with respect to the Transaction is, and all other such factual information hereafter furnished by or on behalf of the Borrower, Holdings or any of their respective Subsidiaries to the Administrative Agent, the Issuers or any Lender will be, taken as a whole, true and accurate in every material respect on the date as of which such information is dated or certified and such information is not, or shall not be, taken as a whole, as the case may be, incomplete by omitting to state any fact necessary to make such information not materially misleading. Any term or provision of this Section to the contrary notwithstanding, insofar as any of the factual information described above includes assumptions, estimates, projections or opinions, no representation or warranty is made herein with respect thereto; provided, however, that to the extent any such assumptions, estimates, projections or opinions are based on factual matters, the Borrower has reviewed such factual matters and nothing has come to its attention in the context of such review which would lead it to believe that such factual matters were not or are not true and correct in all material respects or that such factual matters omit to state any material fact necessary to make such assumptions, estimates, projections or opinions not misleading in any material respect.

        SECTION 6.15    Solvency.    The incurrence by the Borrower of the Term Loans and the Revolving Loans borrowed on the Effective Date and the Delayed Draw Term Loans borrowed on the Delayed Draw Term Loan Credit Date and the application of the proceeds thereof, will not involve or result in any fraudulent transfer or fraudulent conveyance under the provisions of Section 548 of the Bankruptcy Code (11 U.S.C. §101 et seq., as from time to time hereafter amended, and any successor or similar statute) or any applicable state law respecting fraudulent

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transfers or fraudulent conveyances. On the Effective Date and the Delayed Draw Term Loan Credit Date, after giving effect to such incurrence and application, the Borrower is Solvent.

ARTICLE VII

COVENANTS

        SECTION 7.1    Affirmative Covenants.    Holdings and the Borrower agree with the Administrative Agent, the Issuers and each Lender that, until the Termination Date has occurred, the Borrower will perform the obligations set forth in this Section 7.1.

        SECTION 7.1.1    Financial Information, Reports, Notices, etc.    The Borrower will furnish, or will cause to be furnished, to each Lender and the Administrative Agent copies of the following financial statements, reports, notices and information:

        (a)   as soon as available and in any event within 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Holdings (or, if Holdings is required to file such information on a Form 10-Q with the Securities and Exchange Commission, promptly following such filing), a consolidated balance sheet of Holdings and its Subsidiaries as of the end of such Fiscal Quarter, together with the related consolidated statements of operations for such Fiscal Quarter and the related consolidated statements of operations and cash flows for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter (it being understood that the foregoing requirement may be satisfied by delivery of the Borrower's report to the Securities and Exchange Commission on Form 10-Q, if any or a report complying with the requirements of such Form 10-Q), together with (unless a report on, or complying with the requirements of, Form 10-Q has been delivered as described above or similar or more extensive information is provided pursuant to clause (f) below) a comparison, in reasonable detail, of the consolidated financial performance of Holdings and its Subsidiaries for such Fiscal Quarter and period to the financial performance thereof for the corresponding Fiscal Quarter and period of the prior Fiscal Year, certified by an Authorized Officer that is the president, chief executive officer, treasurer, assistant treasurer or chief financial or accounting officer of Holdings;

        (b)   as soon as available and in any event within 105 days after the end of each Fiscal Year of Holdings ending after January 31, 2005 (or, if Holdings is required to file such information on a Form 10-K with the Securities and Exchange Commission, promptly following such filing), a copy of the annual audit report for such Fiscal Year of Holdings and its Subsidiaries, including therein a consolidated balance sheet for Holdings and its Subsidiaries as of the end of such Fiscal Year, together with the related consolidated statements of operations and cash flows for such Fiscal Year (it being understood that the foregoing requirement may be satisfied by delivery of Holdings' report to the Securities and Exchange Commission on Form 10-K, if any, or a report complying with the requirements of such Form 10-K), in each case certified (without any Impermissible Qualification) by PricewaterhouseCoopers or another "Big Four' firm of independent public accountants or any other firm of independent public accountants consented to by the Administrative Agent, together with a certificate from such

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accountants as to whether, in making the examination necessary for the signing of their report on such financial statements, they have become aware of any Default in respect of any term, covenant, condition or other provision of this Agreement (including any Default in respect of any of the financial covenants contained in Section 7.2.4) that relates to accounting matters that has occurred and is continuing or, if in the opinion of such accounting firm such a Default has occurred and is continuing, a statement as to the nature thereof, together with (unless a report on, or complying with the requirements of, Form 10-K has been delivered as described above or similar or more extensive information is provided pursuant to clause (f) below) a comparison, in reasonable detail, of the consolidated financial performance of Holdings and its Subsidiaries for such Fiscal Year to the financial performance thereof for the prior Fiscal Year;

        (c)   together with the delivery of the financial information required pursuant to clauses (a) and (b), a Compliance Certificate, in substantially the form of Exhibit E, executed by an Authorized Officer that is the president, the chief executive officer, the treasurer or the chief financial or accounting officer of the Borrower, showing (in reasonable detail and with appropriate calculations and computations in all respects satisfactory to the Administrative Agent) compliance with the financial covenants set forth in Section 7.2.4;

        (d)   promptly and in any event within seven Business Days after obtaining knowledge of the occurrence of any Default, if such Default is then continuing, a statement of an Authorized Officer that is the president, chief executive officer, treasurer, assistant treasurer or chief financial or accounting officer of the Borrower setting forth details of such Default and the action which the Borrower has taken or proposes to take with respect thereto;

        (e)   promptly and in any event within five Business Days after (x) the occurrence of any development with respect to any litigation, action, proceeding or labor controversy described in Section 6.7 which could reasonably be expected to have a Material Adverse Effect, (y) the commencement of any labor controversy, litigation, action or proceeding of the type described in Section 6.7, notice thereof and of the action which Holdings, the Borrower has taken or proposes to take with respect thereto or (z) any development that has resulted in, or could reasonably be expected to result in, a Material Adverse Effect;

        (f)    promptly after the sending or filing thereof, copies of all reports and registration statements (other than exhibits thereto and any registration statement on Form S-8 or its equivalent) which Holdings, the Borrower or any of their respective Subsidiaries files with the Securities and Exchange Commission or any national securities exchange;

        (g)   as soon as practicable after the controller, chief financial or accounting officer or the chief executive officer of the Borrower or a member of the Borrower's Controlled Group becomes aware of (i) formal steps in writing to terminate any Pension Plan or (ii) the occurrence of any event with respect to a Pension Plan which, in the case of clause (i) or (ii), could reasonably be expected to result in a contribution to such Pension Plan by (or a liability of) the Borrower or a member of the Borrower's Controlled Group

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in excess of $10,000,000, (iii) the failure to make a required contribution to any Pension Plan if such failure is sufficient to give rise to a Lien under section 302(f) of ERISA in an amount in excess of $10,000,000, (iv) the taking of any action with respect to a Pension Plan which could reasonably be expected to result in the requirement that either Holdings or the Borrower furnish a bond to the PBGC or such Pension Plan in an amount in excess of $10,000,000 or (v) any material increase in the contingent liability of either Holdings or the Borrower with respect to any post-retirement Welfare Plan benefit as a result of a change in the level or scope of benefits thereunder, notice thereof and copies of all documentation relating thereto;

        (h)   as soon as practicable and in any event no later than 90 days after the beginning of each Fiscal Year, a consolidated plan and financial forecast of Holdings for such Fiscal Year prepared in a manner consistent with the annual forecasts presented to the Board of Directors of Holdings; and

        (i)    such other information respecting the condition or operations, financial or otherwise, of Holdings, the Borrower or any of the Restricted Subsidiaries as any Lender through the Administrative Agent may from time to time reasonably request.

        (j)    The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Lead Arrangers will make available to the Lenders and the Issuers materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, "Borrower Materials") by posting the Borrower Materials on IntraLinks or another similar electronic system (the "Platform") and (b) certain of the Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a "Public Lender"). The Borrower hereby agrees that (w) all Borrower Materials, if any, that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," the Borrower shall be deemed to have authorized the Administrative Agent, the Lead Arrangers, the Bookrunners, the Issuers and the Lenders to treat such Borrower Materials as either publicly available information or not material information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States Federal and state securities laws; (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor;" and (z) the Administrative Agent and the Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not designated "Public Investor."

        SECTION 7.1.2    Compliance with Laws, etc.    Each of Holdings and the Borrower will, and will cause each Restricted Subsidiary to, comply in all material respects with all applicable laws, rules, regulations and orders, such compliance to include (without limitation) (i) except as permitted under Section 7.2.8, the maintenance and preservation of its existence and qualification as a foreign business entity, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect, (ii) the payment, before the same become delinquent, of all material taxes, assessments and governmental charges imposed upon it

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or upon its property, except to the extent being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books.

        SECTION 7.1.3    Maintenance of Properties.    Except to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect, each of Holdings and the Borrower will, and will cause each of the Restricted Subsidiaries to, maintain, preserve, protect and keep its properties (other than insignificant properties) in good repair, working order and condition (ordinary wear and tear excepted), and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times unless Holdings or the Borrower determines in good faith that the continued maintenance of any of its properties is no longer economically desirable.

        SECTION 7.1.4    Insurance.    Each of Holdings and the Borrower will, and will cause each of the Restricted Subsidiaries to, maintain or cause to be maintained with responsible insurance companies insurance with respect to its properties and business against such casualties and contingencies and of such types and in such amounts as is customary in the case of similar businesses and with such provisions and endorsements as the Administrative Agent may reasonably request and will, upon request of the Administrative Agent, furnish to the Administrative Agent and each Lender a certificate of an Authorized Officer of the Borrower setting forth the nature and extent of all insurance maintained by Holdings, the Borrower and the Restricted Subsidiaries in accordance with this Section.

        SECTION 7.1.5    Books and Records.    Each of Holdings and the Borrower will, and will cause each of the Restricted Subsidiaries to, keep books and records which accurately reflect in all material respects all of its business affairs and transactions and permit the Administrative Agent, the Issuers and each Lender or any of their respective representatives, at reasonable times and intervals, and upon reasonable notice, but, in the case of any Lender, unless an Event of Default shall have occurred and be continuing, not more frequently than once in each Fiscal Year, to visit its business offices, to discuss its financial matters with its officers and, after notice to the Borrower and provision of an opportunity for the Borrower to participate in such discussion, its independent public accountants (and the Borrower hereby authorizes such independent public accountants to discuss the Borrower's financial matters with each Issuer and each Lender or its representatives, whether or not any representative of the Borrower is present so long as the Borrower has been afforded a reasonable opportunity to be present) and to examine, and to photocopy extracts from, any of its books or other financial records. Unless an Event of Default shall have occurred and be continuing, the cost and expense of each such visit shall be borne by the Administrative Agent or Lender.

        SECTION 7.1.6    Environmental Covenant.    Each of Holdings and the Borrower will and will cause each of its Subsidiaries to,

        (a)   use and operate all of its facilities and properties in compliance with all Environmental Laws, keep all necessary permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable

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Environmental Laws, in each case except where the failure to comply with the terms of this clause would not reasonably be expected to have a Material Adverse Effect;

        (b)   promptly notify the Administrative Agent and provide copies of all written claims, complaints, notices or inquiries relating to the condition of its facilities and properties which relate to environmental matters or compliance with Environmental Laws which would have, or would reasonably be expected to have, a Material Adverse Effect, and promptly cure and have dismissed with prejudice any material actions and proceedings relating to compliance with Environmental Laws, except to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on its books; and

        (c)   provide such information and certifications which the Administrative Agent may reasonably request from time to time to evidence compliance with this Section 7.1.6.

        SECTION 7.1.7    Future Subsidiaries.    Upon any Person becoming, after the Effective Date, a U.S. Subsidiary of Holdings or the Borrower that is a Restricted Subsidiary, or (in the case of clause (b) below only) upon Holdings, the Borrower or any such Subsidiary acquiring additional Capital Stock of any existing Subsidiary that is a Restricted Subsidiary, in each case other than pursuant to the Acquisition, the Borrower shall so notify the Administrative Agent, and

        (a)   Holdings or the Borrower shall promptly cause such U.S. Subsidiary to execute and deliver to the Collateral Agent, with counterparts for each Lender, a supplement to the Guaranty and a supplement to the Pledge and Security Agreement (and, if such U.S. Subsidiary owns any real property, to the extent required by clause (b) of Section 7.1.8, a Mortgage), together with UCC financing statements (form UCC-1) delivered by such U.S. Subsidiary naming such U.S. Subsidiary as the debtor and the Collateral Agent as the secured party, or other similar instruments or documents, in appropriate form for filing under the UCC and any other applicable recording statutes, in the case of real property, of all jurisdictions as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable to perfect the security interest of the Collateral Agent pursuant to the Pledge and Security Agreement or a Mortgage, as the case may be (other than the perfection of security interests in motor vehicles, foreign intellectual property or inventory and equipment located at document service centers maintained by Holdings, the Borrower or any of the Restricted Subsidiaries at sites owned or leased by clients of Holdings, the Borrower or any such Restricted Subsidiary); and

        (b)   Holdings or the Borrower shall promptly deliver, or cause to be delivered, to the Administrative Agent under the Pledge and Security Agreement certificates (if any) representing all of the issued and outstanding shares of Capital Stock of such Subsidiary that are certificated securities and are owned by Holdings, the Borrower or any Restricted Subsidiary of Holdings or the Borrower that is a U.S. Subsidiary, as the case may be, along with undated powers of transfer for such certificates, executed in blank;

together, in each case, with such opinions, in form and substance and from counsel satisfactory to the Collateral Agent, as the Administrative Agent may reasonably require; provided that

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notwithstanding the foregoing, no Foreign Subsidiary shall be required to execute and deliver a Mortgage or a supplement to the Guaranty or a supplement to the Pledge and Security Agreement, nor will Holdings, the Borrower or any U.S. Subsidiary of the Borrower be required to grant a security interest in Voting Stock of a Foreign Subsidiary in excess of 65% of the Voting Stock of such Foreign Subsidiary.

        SECTION 7.1.8    Future Leased Property and Future Acquisitions of Real Property; Future Acquisition of Other Property.

        (a)   Prior to entering into any new lease of real property or renewing any existing lease of real property following the Effective Date, other than pursuant to the Acquisition, Holdings and the Borrower shall, and shall cause each of their U.S. Subsidiaries that are Restricted Subsidiaries to, use its (and their) commercially reasonable efforts (which shall not require the expenditure of cash or the making of any material concessions under the relevant lease) to deliver to the Collateral Agent a Waiver executed by the lessor of any real property that is to be leased by Holdings, the Borrower or such U.S. Subsidiary for a term in excess of one year in any state which by statute grants such lessor a "landlord's" (or similar) Lien which is superior to the Collateral Agent's, to the extent the value of any personal property of Holdings, the Borrower or its U.S. Subsidiaries that are Restricted Subsidiaries to be held at such leased property exceeds (or it is anticipated that the value of such personal property will, at any point in time during the term of such leasehold term, exceed) $6,000,000, excluding inventory and equipment located at document service centers maintained by Holdings, the Borrower or any of the Restricted Subsidiaries at sites owned or leased by clients of Holdings, the Borrower or any such Restricted Subsidiary.

        (b)   In the event that Holdings, the Borrower or any of their U.S. Subsidiaries that are Restricted Subsidiaries shall acquire any fee interest in real property having a value as determined in good faith by the Collateral Agent in excess of $3,000,000 in the aggregate other than pursuant to the Acquisition, Holdings, the Borrower or the applicable U.S. Subsidiary shall, promptly after such acquisition, execute a Mortgage in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Lenders, and provide the Collateral Agent with (i) evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of such Mortgage as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable effectively to create a valid, perfected, first priority Lien, subject to Liens permitted by Section 7.2.3, against the properties purported to be covered thereby, (ii) mortgagee's title insurance policies in favor of the Collateral Agent, as mortgagee for the ratable benefit of the Lenders, in amounts and in form and substance and issued by insurers, in each case reasonably satisfactory to the Collateral Agent, with respect to the property purported to be covered by such Mortgage, insuring that title to such property is indefeasible and that the interests created by the Mortgage constitute valid first Liens thereon free and clear of all defects and encumbrances other than as permitted by Section 7.2.3 or as approved by the Collateral Agent, and such policies shall also include, to the extent available on commercially reasonable terms, a revolving credit endorsement and such other endorsements as the Collateral Agent shall reasonably request and shall be accompanied

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by evidence of the payment in full of all premiums thereon, and (iii) such other approvals, opinions, or documents as the Collateral Agent may reasonably request.

        (c)   In accordance with the terms and provisions of the Pledge and Security Agreement, Holdings, the Borrower and each U.S. Subsidiary that is a Restricted Subsidiary shall provide the Collateral Agent with evidence of all recordings and filings as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable to create a valid, perfected first priority Lien, subject to the Liens permitted by Section 7.2.3, against all property acquired (other than pursuant to the Acquisition) after the Effective Date (excluding motor vehicles, foreign intellectual property, leases of real property, inventory and equipment located at document service centers maintained by Holdings, the Borrower or any of the Restricted Subsidiaries at sites owned or leased by clients of Holdings, the Borrower or any such Restricted Subsidiary and (except to the extent required under clause (b) of this Section 7.1.8) fee interests in real property) and not otherwise subject to Section 7.1.12 or 7.1.13.

        SECTION 7.1.9    Use of Proceeds, etc.    The Borrower shall

        (a)   apply the proceeds of the Loans

        (i)    in the case of the Initial Term Loans, to consummate the Refinancing (other than the refinancing of WordWave's Existing Credit Agreement) and to make certain Expense Payments related thereto;

        (ii)   in the case of the Delayed Draw Term Loans, to consummate the Acquisition, the Refinancing of WordWave's Existing Credit Agreement and to make certain Expense Payments;

        (iii)  in the case of Additional Term Loans and Revolving Loans, for working capital and general corporate purposes of Holdings, the Borrower and the Restricted Subsidiaries; provided that the aggregate outstanding amount of Revolving Loans borrowed on the Effective Date shall not exceed $5,000,000; and

        (b)   use Letters of Credit only for purposes of supporting working capital and general corporate purposes of Holdings, the Borrower and the Restricted Subsidiaries.

        SECTION 7.1.10    Hedging Obligations.    Within six months following the Effective Date, the Lead Arrangers shall have received evidence satisfactory to them that the Borrower has entered into interest rate swap, cap, collar or similar arrangements (including without limitation such Indebtedness accruing interest at a fixed rate by its terms) designed to protect it against fluctuations in interest rates with respect to at least 40% of the aggregate principal amount of Term Loans for a period of at least two years from the Effective Date with terms reasonably satisfactory to the Borrower and the Lead Arrangers.

        SECTION 7.1.11    Rating of Loans.    The Borrower will, and will cause each of its Subsidiaries to, use commercially reasonable efforts to ensure that the Loans continue to be rated

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by S&P and Moody's or, in either case, another rating agency reasonably acceptable to the Administrative Agent.

        SECTION 7.1.12    Undertaking.    (a) Holdings and the Borrower will deliver to the Collateral Agent no later than 60 days after the Effective Date instruments or documents, in appropriate form for filing with the United States Patent and Trademark Office, sufficient to create and perfect a security interest in all U.S. intellectual property owned (i) as of the Effective Date by Holdings, the Borrower and their U.S. Subsidiaries that are Restricted Subsidiaries and that is identified on Schedule III to the Pledge and Security Agreement and not covered by one or more Existing Intellectual Property Filings and (ii) as of the Delayed Draw Term Loan Credit Date by WordWave and its U.S. Subsidiaries that are Restricted Subsidiaries and that is identified in Schedule III to the Pledge and Security Agreement (after giving effect to the supplement required to have been delivered pursuant to Section 5.3.5 hereof).

        (b)   Holdings and the Borrower will deliver to the Collateral Agent, no later than 60 days after the Effective Date, deposit account control agreements (or amendments to the deposit account control agreements executed in connection with the Existing Credit Agreements), in form reasonably satisfactory to the Collateral Agent, with respect to each Controlled Deposit Account of Holdings, the Borrower or any of their U.S. Subsidiaries that are Restricted Subsidiaries (including after the Delayed Draw Term Loan Credit Date, the Controlled Deposit Accounts added to Schedule IV of the Pledge and Security Agreement (after giving effect to the supplement required to have been delivered pursuant to Section 5.3.5 hereof)), in each case executed by Holdings, the Borrower or such U.S. Subsidiary, as the case may be, and the depository bank in respect of such deposit account and sufficient to provide the Collateral Agent with "control" (within the meaning of Section 9-104 of the UCC) with respect to such deposit account.

        SECTION 7.1.13    Mortgages.    Within 60 days after the Effective Date, Holdings and the Borrower shall deliver to the Collateral Agent, relating to each fee property listed on Item 7.1.13 ("Mortgaged Properties") of the Disclosure Schedule, either (x) with respect to each property other than the property located at One Merrill Circle in St. Paul, Minnesota (the "New Mortgaged Property"), a modification to the Mortgage delivered pursuant to the Existing Credit Agreements or (y) with respect to the New Mortgaged Property, a Mortgage, each dated as of the date of such delivery, duly executed by Holdings, the Borrower or the applicable U.S. Subsidiary, together with

        (a)   evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of such mortgage modification or Mortgage as may be necessary or, in the reasonable opinion of the Collateral Agent, desirable effectively to confirm or create a valid, perfected, first priority Lien, subject to Liens permitted by Section 7.2.3, against the properties purported to be covered thereby;

        (b)   "bring-down" or "modification" endorsements to the mortgagee's title insurance policies delivered pursuant to the Existing Credit Agreements, and with respect to the New Mortgaged Property, mortgagee's title insurance policies in favor of the Collateral Agent for the benefit of the Secured Parties in amounts and in form and substance and issued by insurers, reasonably satisfactory to the Collateral Agent, with

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respect to the property purported to be covered by such Mortgage, insuring that title to such property is indefeasible and that the interests created by the Mortgage constitute valid first Liens thereon free and clear of all defects and encumbrances other than as permitted by Section 7.2.3 or as approved by the Lead Arrangers and the Collateral Agent, and such policies shall also include, to the extent available on commercially reasonable terms, a revolving credit endorsement and such other endorsements as the Collateral Agent shall reasonably request and shall be accompanied by evidence of the payment in full of all premiums thereon; and

        (c)   such other approvals, opinions or documents as the Lead Arrangers and the Collateral Agent may reasonably request.

        SECTION 7.2    Negative Covenants.    Holdings and the Borrower agree with the Administrative Agent and each Lender that, until the Termination Date has occurred, Holdings and the Borrower will perform the obligations set forth in this Section 7.2.

        SECTION 7.2.1    Business Activities.    Each of Holdings and the Borrower will not, and will not permit any other Restricted Subsidiary to, engage in any business activity, except the document services and communications business and any businesses reasonably ancillary, related or incidental thereto (the "Merrill Business"). From and after the Effective Date, Holdings shall not engage in any business or other operations other than entering into and performing its obligations under and in accordance with the Loan Documents, the Material Documents, and the Retained Interests to which it is a party and Holdings shall not own any assets other than the Capital Stock of the Borrower, the Retained Interests, assets acquired pursuant to the Retained Interests (provided that promptly upon the acquisition of such assets, such assets (other than any assets that it may not, pursuant to binding contractual obligations, transfer without the consent of any third party) will be contributed to the Borrower) and cash and Cash Equivalent Investments which cash and Cash Equivalent Investments are being held by Holdings pending application to meeting Holdings' current liabilities under the Retained Interests, the Material Documents, or to make other payments permitted to be made by Holdings under Section 7.2.6 in an amount which does not exceed by more than $1,000,000 the amount required to meet such liabilities or to make such payments. Notwithstanding the permissive nature of Section 7.2.2, 7.2.3, 7.2.5, 7.2.6 and 7.2.7 or anything else contained herein to the contrary, Holdings shall not create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, make, incur, assume or suffer to exist any Investment in any other Person, declare, pay or make any Restricted Payment, make or commit to make any Capital Expenditure or otherwise engage in any business or other operations except as explicitly permitted thereby and as shall be necessary to enable Holdings to enter into and perform its obligations under and in accordance with the Loan Documents, the Material Documents, and the Retained Interests and only for so long as Holdings retains rights and obligations under the Loan Documents, the Material Documents, and the Retained Interests. Holdings will use its best efforts to transfer the Retained Interests (other than Preferred Stock and the Warrants), and to transfer any assets acquired in the exercise of any of its rights under the Retained Interests (other than cash and Cash Equivalent Investments permitted to be held by it pursuant to the second sentence of this Section 7.2.1 and any assets that it may not, pursuant to binding contractual obligations, transfer without the consent of any third party),

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to the Borrower promptly after their acquisition, including upon any renewal or extension of any contracts or agreements included in the Retained Interests; provided, however, that nothing herein contained shall be deemed to require Holdings to obtain, or seek to obtain, any consents to transfer such Retained Interests to the Borrower.

        SECTION 7.2.2    Indebtedness.    Each of Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following:

        (a)   Indebtedness outstanding on the Effective Date and identified in Item 7.2.2(a) ("Ongoing Indebtedness") of the Disclosure Schedule, and refinancings and replacements thereof in a principal amount not exceeding the principal amount of the Indebtedness so refinanced or replaced and with an average life to maturity of not less than the then average life to maturity of the Indebtedness so refinanced or replaced;

        (b)   Indebtedness in respect of the Credit Extensions and other Obligations;

        (c)   Indebtedness incurred by the Borrower or any of the Restricted Subsidiaries that is represented by Capitalized Lease Liabilities, mortgage financings or purchase money obligations (but only to the extent otherwise permitted by Section 7.2.7); provided, that the maximum aggregate amount of all Indebtedness permitted under this clause (c) shall not at any time exceed $25,000,000;

        (d)   the Intercompany Loan and intercompany Indebtedness of (i) (x) any U.S. Subsidiary that is a Restricted Subsidiary owing to the Borrower or any of the Restricted Subsidiaries, (y) the Borrower owing to any of the Restricted Subsidiaries or (z) Holdings owing to the Borrower or any Restricted Subsidiary the proceeds of which Indebtedness is or was applied by Holdings to make payments referred to in clause (c) of Section 7.2.6 or permitted to be made by Holdings pursuant to clause (f) of Section 7.2.6, and (ii) any Foreign Subsidiary that is a Restricted Subsidiary of the Borrower owing to the Borrower or any U.S. Subsidiary that is a Restricted Subsidiary; provided that in respect of (A) any such Indebtedness described in this clause (d)(ii), such Indebtedness (other than any such intercompany Indebtedness incurred to finance any acquisition permitted hereunder), shall not exceed, when taken together with the aggregate amount at such time of all outstanding Investments made pursuant to clause (l)(iii) of Section 7.2.5 (other than any such Investments made as part of, or to finance, any acquisition permitted hereunder), $25,000,000 at any time outstanding, and (B) any such Indebtedness described in this clause (d) which is owing to the Borrower or any of its U.S. Subsidiaries that are Restricted Subsidiaries, (1) to the extent requested by the Administrative Agent, such Indebtedness shall be evidenced by one or more promissory notes in form and substance satisfactory to the Administrative Agent which shall be duly executed and delivered to (and indorsed to the order of) the Administrative Agent in pledge pursuant to a Pledge Agreement and (2) in the case of any such Indebtedness owed by a Person other than Holdings, the Borrower or a Subsidiary Guarantor, such Indebtedness shall not be forgiven or otherwise discharged for any consideration other than payment (Dollar for Dollar) in cash unless the Administrative Agent otherwise consents;

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        (e)   Assumed Indebtedness of the Borrower and the Restricted Subsidiaries in an aggregate principal amount not to exceed $20,000,000 at any time outstanding;

        (f)    Hedging Obligations of Holdings, the Borrower or any of the Restricted Subsidiaries in respect of the Credit Extensions or otherwise entered into by Holdings, the Borrower or any Restricted Subsidiary to hedge against interest rate, currency exchange rate or commodity price risk, in each case arising in the ordinary course of business of Holdings, the Borrower and the Restricted Subsidiaries and not for speculative purposes;

        (g)   Indebtedness of Foreign Subsidiaries of the Borrower (other than Indebtedness owing to Holdings or any U.S. Subsidiary of Holdings) in an aggregate principal amount not to exceed $20,000,000 at any time outstanding;

        (h)   other Indebtedness of Holdings, the Borrower and the Restricted Subsidiaries in an aggregate principal amount outstanding not to exceed at any time the sum of (x) $15,000,000 plus (y) the difference between (A) the maximum amount of additional Commitments that have been or could be provided under Section 2.2.2 hereof and (B) the then outstanding amount of additional Loans made pursuant to Section 2.2.2 hereof; provided that unless such Indebtedness is Indebtedness of a Foreign Subsidiary such Indebtedness is unsecured;

        (i)    Indebtedness of any Foreign Subsidiary owing to any other Foreign Subsidiary;

        (j)    Earn-Out Payment Obligations; and

        (k)   Permitted Subordinated Debt, the proceeds of which are used to (i) repay, redeem or repurchase, in whole or in part, Term Loans or any Permitted Subordinated Debt, and to pay related premiums, interest, fees, costs and expenses or (ii) fund Investments permitted under Section 7.2.5(l); provided that after giving effect to the incurrence of such Permitted Subordinated Debt, the Borrower shall be in pro forma compliance with the covenants set forth in clauses (a) and (b) of Section 7.2.4 for the most recent full Fiscal Quarter immediately preceding the date of the incurrence of such Permitted Subordinated Debt for which the relevant financial information has been delivered pursuant to clause (a) or clause (b) of Section 7.1.1,

provided that (i) no Indebtedness otherwise permitted by clause (c), (d) (as such clause (d) relates to loans made by Holdings, the Borrower or any Subsidiary Guarantor to Restricted Subsidiaries which are not Subsidiary Guarantors), (g), or (h) may be incurred if, immediately before or after giving effect to the incurrence thereof, any Default shall have occurred and be continuing, and (ii) all such Indebtedness of the type described in clause (d)(i)(y) above that is owed to Subsidiaries that are not Subsidiary Guarantors shall be subordinated, in writing, to the Obligations upon terms satisfactory to the Administrative Agent.

        SECTION 7.2.3    Liens.    Each of Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except:

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        (a)   Liens existing on the Effective Date and identified in Item 7.2.3(a) ("Ongoing Liens") of the Disclosure Schedule and extensions and renewals thereof; provided that no such extension or renewal shall increase the obligations secured by such Lien, extend such Lien to additional assets or otherwise result in a Default hereunder;

        (b)   Liens securing payment of the Obligations or any obligation under any Rate Protection Agreement or Cash Management Services Agreement granted pursuant to any Loan Document;

        (c)   Liens granted to secure payment of Indebtedness of the type permitted and described in clause (c) of Section 7.2.2;

        (d)   Liens for taxes, assessments or other governmental charges or levies, including Liens pursuant to Section 107(l) of CERCLA or other similar law, not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

        (e)   Liens of carriers, warehousemen, mechanics, repairmen, materialmen, contractors, laborers and landlords or other like Liens incurred in the ordinary course of business for sums not overdue for a period of more than 30 days or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books;

        (f)    Liens incurred in the ordinary course of business in connection with workmen's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, bids, statutory or regulatory obligations, insurance obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds;

        (g)   judgment Liens securing judgments that do not constitute an Event of Default under Section 8.1.6;

        (h)   (i) Liens with respect to minor imperfections of title and easements, rights-of-way, restrictions, reservations, permits, servitudes and other similar encumbrances on real property and fixtures which do not materially detract from the value or materially impair the use by the Borrower or any such Restricted Subsidiary in the ordinary course of their business of the property subject thereto; (ii) in the case of any property covered by a Mortgage, encumbrances disclosed in the title insurance policy issued to, and reasonably approved by, the Collateral Agent insuring the Mortgage; and (iii) in the case of any property covered by a Mortgage, upon certification by the Borrower that an easement, right-of-way, restriction, reservation, permit, servitude or other similar encumbrance granted or to be granted by the Borrower or any such Restricted Subsidiary does not materially detract from the value of or materially impair the use by the Borrower or such Restricted Subsidiary in the ordinary course of its business of the property subject to or to

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be subject to such encumbrance, the Administrative Agent shall execute such documents as are reasonably requested to subordinate its Mortgage to such encumbrance;

        (i)    licenses, leases or subleases granted by Holdings, the Borrower or any of the Restricted Subsidiaries to any other Person in the ordinary course of business;

        (j)    Liens in the nature of trustees' Liens granted pursuant to any indenture governing any Indebtedness permitted by Section 7.2.2, in each case in favor of the trustee under such indenture and securing only obligations to pay compensation to such trustee, to reimburse its expenses and to indemnify it under the terms thereof;

        (k)   Liens of sellers of goods to Holdings, the Borrower and the Restricted Subsidiaries arising under Article 2 of the UCC or similar provisions of applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses;

        (l)    Liens securing Assumed Indebtedness of the Borrower and the Restricted Subsidiaries permitted pursuant to clause (e) of Section 7.2.2; provided that (i) any such Liens attach only to the property of the Subsidiary acquired, or the property acquired, and proceeds thereof in connection with such Assumed Indebtedness and shall not attach to any assets of Holdings, the Borrower or any of the Restricted Subsidiaries theretofore existing or (except for any such proceeds) which arise after the date thereof and (ii) the Assumed Indebtedness and other secured Indebtedness of the Borrower and the Restricted Subsidiaries secured by any such Lien shall not exceed 100% of the fair market value of the assets being acquired in connection with such Assumed Indebtedness;

        (m)  Liens on assets of Foreign Subsidiaries of the Borrower securing Indebtedness of such Foreign Subsidiaries permitted pursuant to clause (g), (h) or (i) of Section 7.2.2;

        (n)   Liens on the Capital Stock of Unrestricted Subsidiaries securing Debt incurred by such Unrestricted Subsidiaries; and

        (o)   other Liens securing obligations in an aggregate amount not to exceed $5,000,000 at any time outstanding.

        SECTION 7.2.4    Financial Covenants.

        (a)    Leverage Ratio.    Holdings and the Borrower will not permit the Leverage Ratio as of the end of any Fiscal Quarter occurring during any period set forth below to be greater than the ratio set forth opposite such period:

Period	Leverage Ratio
Fourth Fiscal Quarter 2006	4.50:1.00
First Fiscal Quarter 2007	4.75:1.00

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Second Fiscal Quarter 2007	4.50:1.00
Third Fiscal Quarter 2007	4.00:1.00
Fourth Fiscal Quarter 2007	4.00:1.00
First Fiscal Quarter 2008	4.25:1.00
Second Fiscal Quarter 2008	4.00:1.00
Third Fiscal Quarter 2008	4.00:1.00
Fourth Fiscal Quarter 2008	3.75:1.00
First Fiscal Quarter 2009	3.50:1.00
Second Fiscal Quarter 2009	3.25:1.00
Third Fiscal Quarter 2009 and at all times thereafter	3.00:1.00

        (b)    Interest Coverage Ratio.    Holdings and the Borrower will not permit the Interest Coverage Ratio as of the end of any Fiscal Quarter ending after the Effective Date and occurring during any period set forth below to be less than the ratio set forth opposite such period:

Period	Interest Coverage Ratio
Fourth Fiscal Quarter 2006 through Fourth Fiscal Quarter 2008	3.00:1.00
First Fiscal Quarter 2009 through Fourth Fiscal Quarter 2009	3.25:1.00
First Fiscal Quarter 2010 and at all times thereafter	3.50:1.00

        SECTION 7.2.5    Investments.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, make, incur, assume or suffer to exist any Investment in any other Person, except:

        (a)   Investments existing on the Effective Date and identified in Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule and extensions or renewals thereof, provided that no such extension or renewal shall be permitted if it would (x) increase the amount of such Investment at the time of such extension or renewal or (y) result in a Default hereunder;

        (b)   Cash Equivalent Investments;

        (c)   without duplication, Investments permitted as Indebtedness pursuant to Section 7.2.2;

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        (d)   without duplication, Investments permitted as Capital Expenditures pursuant to Section 7.2.7 (including any such Investments which would otherwise constitute Capital Expenditures but for the operation of clause (i) of the proviso to the definition of "Capital Expenditures");

        (e)   Investments made by the Borrower or any of the Restricted Subsidiaries, solely with (i) proceeds which have been contributed, directly or indirectly after the Effective Date, to the Borrower or such Restricted Subsidiary as cash equity from holders of Holdings' Capital Stock or (ii) proceeds of sales after the Effective Date by Holdings of its Capital Stock, in each case for the purpose of making an Investment identified in a notice to the Administrative Agent on or prior to the date that such capital contribution or sale is made, which Investments shall result in the Borrower or such Restricted Subsidiary acquiring a majority controlling interest in the Person in which such Investment was made or increasing any such controlling interest already maintained by it;

        (f)    Investments to the extent the consideration received pursuant to clause (c)(i) of Section 7.2.9 is not all cash;

        (g)   Investments in the form of loans by Holdings or the Borrower to officers, directors, employees and Independent Contractors of Holdings, the Borrower and the Restricted Subsidiaries for the sole purpose of purchasing Holdings Capital Stock (or purchases of such loans made by others) so long as Holdings makes a capital contribution of the proceeds of any such purchase to the Borrower;

        (h)   Investments by the Borrower or any U.S. Subsidiary that is a Restricted Subsidiary consisting of the transfer of Capital Stock of a Foreign Subsidiary to another Foreign Subsidiary that is a Restricted Subsidiary;

        (i)    letters of credit issued in support of, and guarantees by Holdings, the Borrower or any Restricted Subsidiary of, Indebtedness permitted under clauses (b), (c), (f) and (h) of Section 7.2.2;

        (j)    Investments made or held by any Foreign Subsidiary of Holdings that is a Restricted Subsidiary in any other Foreign Subsidiary of Holdings that is a Restricted Subsidiary;

        (k)   Investments of Holdings, the Borrower or any U.S. Subsidiary of Holdings or the Borrower that is a Restricted Subsidiary in Holdings, the Borrower or any Subsidiary of Holdings or the Borrower that is a Restricted Subsidiary; provided that (i) the proceeds of any such Investments in Holdings shall be applied by Holdings to make payments permitted to be made by Holdings pursuant to clauses (c) or (d) of Section 7.2.6 and (ii) the amount of Investments made by Holdings, the Borrower or any of their U.S. Subsidiaries that are Restricted Subsidiaries in any of their Foreign Subsidiaries that are Restricted Subsidiaries pursuant to this clause (k) (exclusive of any such Investments made as part of, or to finance, any acquisition permitted hereunder), shall not exceed $25,000,000 in the aggregate;

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        (l)    Investments made by the Borrower or any of the Restricted Subsidiaries, and Investments made by Holdings pursuant to the Retained Interests as long as such Investments are promptly transferred to the Borrower upon consummation (unless Holdings may not, pursuant to binding contractual obligations, transfer such Investments without the consent of a third party), in an aggregate amount not to exceed $100,000,000 (other than the Investments permitted by clause (s) of this Section 7.2.5); provided that after giving effect to the making of such Investment, the Borrower shall be in pro forma compliance with the covenants set forth in Section 7.2.4 for the most recent Fiscal Quarter immediately preceding the date of the making of such Investment for which the relevant financial information has been delivered pursuant to clause (a) or clause (b) of Section 7.1.1.l; provided further that (i) such Investments (x) result in the Borrower or the relevant Restricted Subsidiary acquiring (subject to Section 7.2.1) a majority controlling interest in the Person (or its assets and businesses) in which such Investment was made, or increasing any such controlling interest maintained by it in such Person or (y) result in the Person in which such Investment was made becoming an Acquired Controlled Person with respect to the Borrower; (ii) to the extent any Assumed Indebtedness permitted pursuant to clause (e) of Section 7.2.2 would be incurred in connection with any such Investment to be made pursuant to this clause (l), the permitted amounts set forth in this clause shall be reduced, Dollar for Dollar, by the outstanding principal amount of any such Assumed Indebtedness to be assumed; and (iii) the amount of Investments made pursuant to this clause (l) by the Borrower or any of its U.S. Subsidiaries that are Restricted Subsidiaries in any of its Foreign Subsidiaries that are Restricted Subsidiaries, when taken together with the outstanding aggregate principal amount of Indebtedness incurred by such Foreign Subsidiaries from the Borrower and such U.S. Subsidiaries pursuant to clause (d)(ii) of Section 7.2.2, shall not exceed $35,000,000 in the aggregate;

        (m)  extensions of trade credit in the ordinary course of business;

        (n)   Investments in Hedging Obligations permitted hereunder;

        (o)   Investments (including debt obligations and Capital Stock) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of and other disputes with customers and suppliers arising in the ordinary course of business;

        (p)   Investments consisting of Indebtedness held by the Borrower or any Restricted Subsidiary arising on account of the accrual of interest on such Investments;

        (q)   Investments of the Borrower or any Restricted Subsidiary in Unrestricted Subsidiaries of the Borrower in an aggregate amount at any time outstanding not to exceed $10,000,000;

        (r)   Investments made by the Borrower or any other Restricted Subsidiary, and Investments made by Holdings pursuant to the Retained Interests so long as such Investments are promptly transferred to the Borrower upon consummation (unless Holdings may not, pursuant to binding contractual obligations, transfer such Investments without the consent of a third party), in Persons engaged in the Merrill Business that are

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not permitted under clauses (a) through (q) above in an aggregate principal amount at any one time outstanding not to exceed $20,000,000;

        (s)   (i) the Acquisition (so long as the requirements of Section 5.3 have been satisfied or waived in accordance with the terms thereof, regardless of whether the Delayed Draw Term Loans are used as part of the consideration therefor) and (ii) the acquisition by Merrill Corporation, Canada, directly or through one or more intervening Persons (substantially all of whose assets consist of direct or indirect Investments in Quebecor Merrill Canada Inc.) of all equity interests in Quebecor Merrill Canada Inc. not held on the Effective Date by Merrill Corporation Canada; and

        (t)    Investments of the Borrower or any other Restricted Subsidiary in the form of equity interests in Merrill Office Tiger (i) obtained pursuant to arrangements with Merrill Office Tiger and/or the other equity owners thereof based upon the level of business engaged in by the Borrower and its Subsidiaries on the one hand, and Merrill Office Tiger on the other and for no additional consideration from the Borrower or its Restricted Subsidiaries (either in cash or in the form of assets of the Borrower or its Restricted Subsidiaries) or (ii) obtained for cash consideration or consideration in the form of assets of the Borrower or its Restricted Subsidiaries, in an aggregate amount at any time outstanding not to exceed $5,000,000;

provided that

        (u)   any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; and

        (v)   no Investment otherwise permitted by clause (c) (except to the extent permitted under Section 7.2.2), (g), (i) (to the extent that the applicable Letter of Credit relates to Indebtedness permitted under clause (c) or (h) of Section 7.2.2), (k), (l), (q) or (r) of this Section 7.2.5 shall be permitted to be made if, immediately before or after giving effect thereto, any Default shall have occurred and be continuing.

        SECTION 7.2.6    Restricted Payments, etc.    On and at all times after the Effective Date:

        (a)   Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, declare, pay or make any payment, dividend, distribution or exchange (in cash, property or obligations) on or in respect of any shares of any class of Capital Stock (now or hereafter outstanding) of Holdings or the Borrower or on any warrants, options or other rights with respect to any shares of any class of Capital Stock (now or hereafter outstanding) of Holdings or the Borrower (other than (i) dividends or distributions payable in its Capital Stock or warrants to purchase its Capital Stock and (ii) splits or reclassifications of its Capital Stock into additional or other shares of its Capital Stock) or apply, or permit any of the Restricted Subsidiaries to apply, any of its funds, property or assets to the purchase, redemption, exchange, sinking fund or other retirement of, or agree or permit any of the Restricted Subsidiaries to purchase, redeem or exchange, any

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shares of any class of Capital Stock (now or hereafter outstanding) of Holdings or the Borrower or warrants, options or other rights with respect to any shares of any class of Capital Stock (now or hereafter outstanding) of Holdings, or the Borrower

        (b)   Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, except with the proceeds of (x) any Permitted Subordinated Debt, or (y) any issuance or sale by Holdings or the Borrower of any Capital Stock of Holdings or the Borrower or any capital contribution to Holdings or the Borrower, (A) directly or indirectly make any payment or prepayment of principal of, or make any payment of interest on, any Permitted Subordinated Debt, on any day other than the stated, scheduled date for such payment or prepayment set forth in the Permitted Subordinated Debt Documents, or which would violate the subordination provisions of the Permitted Subordinated Debt Documents, or (B) redeem, purchase or defease any Permitted Subordinated Debt;

(the foregoing prohibited acts referred to in clauses (a) and (b) above are herein collectively referred to as "Restricted Payments"); provided that

        (c)   notwithstanding the provisions of clause (a) above, the Borrower shall be permitted to make Restricted Payments to Holdings (x) pursuant to the Administrative Services Agreement which payments shall, to the extent applicable, be promptly applied by Holdings to meet its obligations under the Retained Interests and (y) to the extent necessary to enable Holdings to

        (i)    pay its overhead expenses;

        (ii)   pay taxes;

        (iii)  so long as (A) no Default shall have occurred and be continuing on the date such Restricted Payment is declared or to be made, nor would a Default result from the making of such Restricted Payment, (B) after giving effect to the making of such Restricted Payment, the Borrower shall be in pro forma compliance with the covenant set forth in clause (a) of Section 7.2.4 for the most recent full Fiscal Quarter immediately preceding the date of the making of such Restricted Payment for which the relevant financial information has been delivered pursuant to clause (a) or clause (b) of Section 7.1.1, and (C) an Authorized Officer of the Borrower shall have delivered a certificate to the Administrative Agent in form and substance satisfactory to the Administrative Agent (including a calculation of the Borrower's pro forma compliance with the covenant set forth in clause (a) of Section 7.2.4 in reasonable detail) certifying as to the accuracy of clauses (b)(iii)(A) and (b)(iii)(B) above, repurchase, redeem or otherwise acquire or retire for value any Capital Stock of Holdings, or any warrant, option or other right to acquire any such Capital Stock of Holdings, held by any director, any member of management or an employee or Independent Contractor of Holdings, the Borrower or any of the Restricted Subsidiaries pursuant to any employment agreement, management equity subscription agreement, restricted stock plan, stock option agreement or other similar

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arrangement so long as the total amount of the net cash consideration paid by Holdings, the Borrower and its Subsidiaries in respect of such repurchases, redemptions, acquisitions, retirements and payments shall not exceed (I) $7,500,000 in any calendar year (with unused amounts in any calendar year being carried forward to succeeding calendar years subject to a maximum (without giving effect to the following clause (II)) of $12,500,000 in any calendar year) plus (II) the aggregate cash proceeds received by the Borrower during such calendar year from any reissuance of Capital Stock of Holdings, and warrants, options and other rights to acquire Capital Stock of Holdings, by Holdings or the Borrower to directors, members of management and employees of the Borrower and the Restricted Subsidiaries (to the extent such proceeds are not otherwise required to be applied pursuant to clause (d) of Section 3.1.1);

        (iv)  make payments in respect of expenses, fees and other costs in connection with litigation;

        (v)   make payments in respect of employee benefit plans or other similar arrangements;

        (vi)  pay fees and expenses in connection with the Transaction; and

        (vii) pay cash dividends permitted under clause (f) below;

        (d)   notwithstanding the provisions of clause (a) above, the Borrower may pay a non-cash dividend to Holdings consisting solely of the transfer of all or a portion of the Intercompany Loan;

        (e)   notwithstanding the provisions of clause (a) above, Holdings may make the payments referred to in clause (c)(iii) above; and

        (f)    notwithstanding the provisions of clause (a) above, Holdings may pay a cash dividend to the holders of its common Capital Stock in an amount not to exceed $10,000,000 in any Fiscal Year so long as no Event of Default shall have occurred and be continuing on the date such Restricted Payment is declared nor, on a pro forma basis as of such date, would an Event of Default result from the making of such Restricted Payment; provided that such amount may be increased by an amount equal to the portion of Excess Cash Flow for the preceding Fiscal Year that was not required to be applied to a mandatory prepayment of the Term Loans pursuant to Section 3.1.1(b) (or in respect of Fiscal Years ending prior to January 31, 2007, would have been required if not for the operation of the first parenthetical to Section 3.1.1(b)) so long as (A) no Default shall have occurred and be continuing on the date such Restricted Payment is declared nor, on a pro forma basis as of such date, would a Default result from the making of such Restricted Payment, (B) after giving pro forma effect to the making of such Restricted Payment, as of such date the Borrower shall be in pro forma compliance with the covenant set forth in clause (a) of Section 7.2.4 for the most recent full Fiscal Quarter immediately preceding the date of the making of such Restricted Payment for which the relevant financial information has been delivered pursuant to clause (a) or clause (b) of

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Section 7.1.1, (C) after giving pro forma effect to the making of such Restricted Payment as of such date, the Borrower shall have demonstrated a Leverage Ratio no greater than 2.50:1.00 for the most recent full Fiscal Quarter immediately preceding the date of the making of such Restricted Payment for which the relevant financial information has been delivered pursuant to clause (a) or clause (b) of Section 7.1.1, and (D) an Authorized Officer of the Borrower shall have delivered a certificate to the Administrative Agent in form and substance satisfactory to the Administrative Agent (including a calculation of the Borrower's pro forma compliance with the covenant set forth in clause (a) of Section 7.2.4 in reasonable detail) certifying as to the accuracy of clauses (f)(i)(A), (f)(i)(B) and (f)(i)(C) above.

        SECTION 7.2.7    Capital Expenditures, etc.    With respect to Capital Expenditures, the parties covenant and agree as follows:

        (a)   Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, make or commit to make Capital Expenditures in any Fiscal Year, except Capital Expenditures of Holdings, the Borrower and the Restricted Subsidiaries, not to exceed an amount (the "Base Amount") equal to (i) (A) in respect of Fiscal Year 2006, $27,000,000, (B) in respect of Fiscal Year 2007, $30,000,000 and (C) thereafter, $35,000,000; plus (ii) an aggregate amount in addition to the Base Amount over the term of this Agreement equal to $10,000,000; provided that, to the extent the Base Amount exceeds the aggregate amount of Capital Expenditures (other than amounts permitted to be made pursuant to clause (a)(ii) above or clause (b) below) actually made during such Fiscal Year, such excess amount (up to an aggregate of 50% of the amount of the Base Amount for such Fiscal Year) may be carried forward to (but only to) the next succeeding Fiscal Year (any such amount to be certified by the Borrower to the Administrative Agent in the Compliance Certificate delivered for the last Fiscal Quarter of such Fiscal Year, and any such amount carried forward to a succeeding Fiscal Year shall be deemed to be used prior to Holdings, the Borrower and the Restricted Subsidiaries using the Base Amount for such succeeding Fiscal Year, without giving effect to such carry-forward).

        (b)   The parties acknowledge and agree that the permitted Capital Expenditure level set forth in clause (a) above shall be exclusive of (i) the amount of Capital Expenditures actually made with cash capital contributions (including the proceeds of issuances of equity securities) made to Holdings, the Borrower or any of the Restricted Subsidiaries, directly or indirectly, by any Person other than Holdings, the Borrower and the Restricted Subsidiaries, after the Effective Date and specifically identified in a certificate delivered by an Authorized Officer of the Borrower to the Administrative Agent on or about the time such capital contribution or equity issuance is made (but in any event prior to the time of the Capital Expenditure made with such capital contribution or equity issuance) (provided that, to the extent such cash capital contributions or any proceeds from such equity issuance constitute Net Equity Proceeds arising from the issuance by Holdings or the Borrower of their respective Capital Stock, only that portion of such Net Equity Proceeds which is not required to be applied as a prepayment pursuant to clause (d) of Section 3.1.1 may be used for Capital Expenditures pursuant to this clause (b)) and (ii) any portion of any acquisition that is permitted under Section 7.2.5 (other than pursuant to clause (d) thereof) that is accounted for as a Capital Expenditure.

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        SECTION 7.2.8    Consolidation, Merger, etc.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, liquidate or dissolve, consolidate with, or merge into or with, any other corporation, or purchase or otherwise acquire all or substantially all of the assets of any Person (or of any division thereof) except

        (a)   any such Restricted Subsidiary may liquidate or dissolve voluntarily into, and may merge with and into, the Borrower (so long as the Borrower is the surviving corporation of such combination or merger) or any other Restricted Subsidiary, and the assets or Capital Stock of any Restricted Subsidiary may be purchased or otherwise acquired by the Borrower or any other Restricted Subsidiary; provided that notwithstanding the above, a Restricted Subsidiary may only liquidate or dissolve into, or merge with and into, another Restricted Subsidiary if, after giving effect to such combination or merger, the Borrower continues to own (directly or indirectly), and the Administrative Agent continues to have pledged to it pursuant to the Pledge and Security Agreement, a percentage of the issued and outstanding shares of Capital Stock (on a fully diluted basis) of the Restricted Subsidiary surviving such combination or merger that is equal to or in excess of the percentage of the issued and outstanding shares of Capital Stock (on a fully diluted basis) of the Restricted Subsidiary that does not survive such combination or merger that was (immediately prior to the combination or merger) owned by the Borrower or pledged to the Administrative Agent;

        (b)   so long as no Default has occurred and is continuing or would occur after giving effect thereto, the Borrower or any of the Restricted Subsidiaries may purchase all or substantially all of the assets of any Person (or any division thereof) not then a Restricted Subsidiary, or acquire such Person by merger, if permitted (without duplication) pursuant to Section 7.2.7 or clause (e), (f), (l), (o), (q) or (r) of Section 7.2.5; and

        (c)   Holdings and the Borrower may each merge into a newly-formed corporation incorporated under the laws of the United States or any State for the purpose of reincorporating in such State so long as (i) the shareholders of the surviving corporation immediately after such merger are the same as the shareholders of Holdings or the Borrower, as the case may be, immediately prior to such merger, (ii) immediately before and after such merger, no Default shall have occurred and be continuing and (iii) the corporation surviving such merger shall assume, pursuant to documentation reasonably satisfactory to the Administrative Agent, all of the obligations of Holdings or the Borrower, as the case may be, under the Loan Documents.

        SECTION 7.2.9    Asset Dispositions, etc.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, sell, transfer, license, lease, contribute or otherwise convey, or grant options, warrants or other rights with respect to, all or any part of its assets, whether now owned or hereafter acquired (including accounts receivable and Capital Stock of Restricted Subsidiaries) to any Person, unless:

        (a)   such sale, transfer, lease, license, contribution or conveyance of such assets is (i) in the ordinary course of its business (and does not constitute a sale, transfer, lease, license, contribution or other conveyance of all or a substantial part of Holdings', the

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Borrower's and the Restricted Subsidiaries' assets, taken as a whole) or is of obsolete or worn out property, (ii) permitted by Section 7.2.8 or (iii) from Holdings, the Borrower or one of the Restricted Subsidiaries to the Borrower or any Restricted Subsidiary;

        (b)   such sale, transfer, lease, license, contribution or conveyance constitutes (i) an Investment permitted under Section 7.2.5, (ii) a Lien permitted under Section 7.2.3, (iii) a Restricted Payment permitted under Section 7.2.6 or (iv) is pursuant to the Administrative Services Agreement;

        (c)   (i) such sale, transfer, lease, license, contribution or conveyance of such assets is for fair market value and the consideration consists of no less than 75% in cash or is a Lien permitted under clause (h)(iii) of Section 7.2.3, (ii) the Net Disposition Proceeds received from such assets does not exceed (individually or in the aggregate) $40,000,000 per Fiscal Year and (iii) an amount equal to the Net Disposition Proceeds generated from such sale, transfer, lease (except leases or subleases pursuant to clause (i) of Section 7.2.3), contribution or conveyance, is reinvested in the Merrill Business or, to the extent required thereunder, is applied to prepay the Loans pursuant to the terms of clause (c) of Section 3.1.1;

        (d)   such sale, transfer, lease, contribution or conveyance results from a casualty or condemnation in respect of such property or assets; or

        (e)   such sale, transfer or conveyance consists of the sale or discount of overdue accounts receivable in the ordinary course of business, but only in connection with the compromise or collection thereof.

        SECTION 7.2.10    Modification of Certain Agreements.    Without the prior written consent of the Required Lenders, Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, consent to any amendment, supplement, amendment and restatement, waiver or other modification of any of the terms or provisions contained in, or applicable to, the Preferred Stock or any Material Document or any schedules, exhibits or agreements related thereto (the "Restricted Agreements"), in each case which would (a) materially adversely affect the rights or remedies of the Lenders, or the Borrower's or any other Obligor's ability to perform hereunder or under any Loan Document or materially increase the obligations of Holdings, the Borrower or any other Restricted Subsidiary thereunder or confer any additional rights in the holders of any Permitted Subordinated Debt (or a trustee or other representative on their behalf) which would be adverse to any Obligor or Lender to the detriment of the Lenders, or (b) increase the principal amount of, or increase the interest rate on, or add or increase any fee with respect to, any Permitted Subordinated Debt or any such Restricted Agreement, advance any dates upon which payments of principal or interest are due thereon or change any of the covenants with respect thereto in a manner which is more restrictive to the Borrower or any of the Restricted Subsidiaries or (c) in the case of any Permitted Subordinated Debt Document, change the subordination provisions thereof (including any default or conditions to an event of default relating thereto), or change any collateral therefor (other than to release such collateral), if (in the case of this clause (c)), the effect of such amendment or change, individually or together with all other amendments or changes made, is to

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increase the obligations of the obligor thereunder or to confer any additional rights on the holders of such Permitted Subordinated Debt (or a trustee or other representative on their behalf).

        SECTION 7.2.11    Transactions with Affiliates.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into, or cause, suffer or permit to exist any arrangement or contract with any of its other Affiliates (other than any Obligor or any other Restricted Subsidiary) unless such arrangement or contract is fair and equitable to Holdings, the Borrower or such Restricted Subsidiary and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of the Borrower or such Restricted Subsidiary with a Person which is not one of its Affiliates; provided that Holdings, the Borrower and the Restricted Subsidiaries shall be permitted to (i) enter into and perform their obligations, or take any actions contemplated or permitted, under the Loan Documents, (ii) make any Restricted Payment permitted under Section 7.2.6, (iii) enter into and perform their obligations under arrangements with Credit Suisse and its Affiliates for underwriting, investment banking and advisory services on usual and customary terms, (iv) make payment of reasonable and customary fees and reimbursement of expenses payable to directors of Holdings, (v) enter into employment arrangements with respect to the procurement of services of directors, officers and employees in the ordinary course of business and pay reasonable fees in connection therewith and (vi) consummate the Transaction.

        SECTION 7.2.12    Negative Pledges, Restrictive Agreements, etc.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into any agreement (other than the Loan Documents or any Permitted Subordinated Debt Documents) prohibiting:

        (a)   the (i) creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, securing any Obligations or any senior refinancing thereof (other than (x) in the case of any assets acquired with the proceeds of any Indebtedness permitted under clause (c) of Section 7.2.2, customary limitations and prohibitions contained in such Indebtedness or (y) in the case of any Indebtedness permitted under clauses (g), (h) and (i) of Section 7.2.2, customary limitations in respect of the Foreign Subsidiaries of the Borrower that are Restricted Subsidiaries that shall have incurred such Indebtedness and its assets), or (ii) ability of Holdings, the Borrower or any other Obligor to amend or otherwise modify this Agreement or any other Loan Document; or

        (b)   any Restricted Subsidiary from making any payments, directly or indirectly, to the Borrower by way of dividends, advances, repayments of loans or advances, reimbursements of management and other intercompany charges, expenses and accruals or other returns on investments, or any other agreement or arrangement which restricts the ability of any such Restricted Subsidiary to make any payment, directly or indirectly, to the Borrower (other than customary limitations and prohibitions in any Indebtedness permitted under clauses (b), (e), (g), (h),(i) and (j) of Section 7.2.2 that are applicable to the Restricted Subsidiary of the Borrower that has incurred such Indebtedness (and its Subsidiaries) and its (and their) assets; provided that such limitations shall be limited solely to such Restricted Subsidiary (and any of its Subsidiaries) and its (and their) assets).

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        SECTION 7.2.13    Securities of Subsidiaries.    Holdings and the Borrower will not permit any Restricted Subsidiary to issue any Capital Stock (whether for value or otherwise) to any Person other than the Borrower or another Subsidiary of the Borrower that is a Restricted Subsidiary.

        SECTION 7.2.14    Sale and Leaseback.    Holdings and the Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into any agreement or arrangement with any other Person providing for the leasing by Holdings, the Borrower or any of the Restricted Subsidiaries of real or personal property which has been or is to be sold or transferred by Holdings, the Borrower or any of the Restricted Subsidiaries to such other Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of Holdings, the Borrower or any of the Restricted Subsidiaries to the extent that the cash proceeds received by Holdings, the Borrower or such Restricted Subsidiary in connection with such agreements or arrangements exceeds $25,000,000; provided, for the avoidance of doubt, that the proceeds of such agreement or arrangement are applied, to the extent required therein, to prepay the Loans in accordance with clause (c) of Section 3.1.1.

ARTICLE VIII

EVENTS OF DEFAULT

        SECTION 8.1    Listing of Events of Default.    Each of the following events or occurrences described in this Section 8.1 shall constitute an "Event of Default".

        SECTION 8.1.1    Non-Payment of Obligations.    (a) The Borrower shall default in the payment or prepayment of any principal of any Loan when due or any Reimbursement Obligations or any deposit of cash for collateral purposes pursuant to Section 2.6.4, as the case may be, or (b) any Obligor (including the Borrower) shall default (and such default shall continue unremedied for a period of three Business Days) in the payment when due of any interest or commitment fee with respect to the Loans or Commitments or of any other monetary Obligation.

        SECTION 8.1.2    Breach of Warranty.    Any representation or warranty of Holdings, the Borrower or any other Obligor made or deemed to be made hereunder or in any other Loan Document executed by it or any other writing or certificate (including the Effective Date Certificate) furnished by or on behalf of the Borrower or any other Obligor to the Administrative Agent, the Issuer or any Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to this Agreement) is or shall be incorrect when made in any material respect.

        SECTION 8.1.3    Non-Performance of Certain Covenants and Obligations.    Holdings or the Borrower shall default in the due performance and observance of any of its obligations under clause (d) of Section 7.1.1 or Sections 7.1.9, 7.1.10 or 7.2 (other than Section 7.2.1).

        SECTION 8.1.4    Non-Performance of Other Covenants and Obligations.    Any Obligor shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document executed by it, and such default shall continue unremedied for a

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period of 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent at the direction of the Required Lenders.

        SECTION 8.1.5    Default on Other Indebtedness.    A default shall occur (i) in the payment when due (subject to any applicable grace period), whether by acceleration or otherwise, of any Indebtedness, other than Indebtedness described in Section 8.1.1, of Holdings, the Borrower or any of the Restricted Subsidiaries having a principal amount, individually or in the aggregate for Holdings, the Borrower and the Restricted Subsidiaries, in excess of $10,000,000, or (ii) a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness having a principal amount, individually or in the aggregate, in excess of $10,000,000 if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity.

        SECTION 8.1.6    Judgments.    Any judgment or order for the payment of money in excess of $10,000,000 in the aggregate for Holdings, the Borrower and the Restricted Subsidiaries (not covered by insurance from a responsible insurance company that is not denying its liability with respect thereto) shall be rendered against Holdings, the Borrower or any of the Restricted Subsidiaries and remain unvacated and unpaid and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order, or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

        SECTION 8.1.7    Pension Plans.    Any of the following events shall occur with respect to any Pension Plan (i) the termination of any Pension Plan if, as a result of such termination, Holdings or the Borrower would be required to make a contribution to such Pension Plan, or would reasonably expect to incur a liability or obligation to such Pension Plan, in excess of $10,000,000, or (ii) a contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA in an amount in excess of $10,000,000.

        SECTION 8.1.8    Change in Control.    Any Change in Control shall occur.

        SECTION 8.1.9    Bankruptcy, Insolvency, etc.    The Borrower or any of the Restricted Subsidiaries (other than Restricted Subsidiaries that are not Material Subsidiaries) or Holdings shall

        (a)   become insolvent or generally fail to pay, or admit in writing its inability to pay, debts as they become due;

        (b)   apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for Holdings, the Borrower or any of the Restricted Subsidiaries (other than Restricted Subsidiaries that are not Material Subsidiaries) or any material property of any thereof, or make a general assignment for the benefit of creditors;

        (c)   in the absence of such application, consent, acquiescence or assignment, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other

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custodian for Holdings, the Borrower or any of the Restricted Subsidiaries (other than Restricted Subsidiaries that are not Material Subsidiaries) or for a substantial part of the property of any thereof, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days, provided that Holdings and the Borrower hereby expressly authorize the Administrative Agent, the Issuers and each Lender to appear in any court conducting any relevant proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents;

        (d)   permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of Holdings, the Borrower or any of the Restricted Subsidiaries (other than Restricted Subsidiaries that are not Material Subsidiaries) and, if any such case or proceeding is not commenced by Holdings, the Borrower or such Restricted Subsidiary, such case or proceeding shall be consented to or acquiesced in by Holdings, the Borrower or such Restricted Subsidiary or shall result in the entry of an order for relief or shall remain for 60 days undismissed, provided that Holdings and the Borrower hereby expressly authorize the Administrative Agent, the Issuers and each Lender to appear in any court conducting any such case or proceeding during such 60-day period to preserve, protect and defend their rights under the Loan Documents; or

        (e)   take any action (corporate or otherwise) authorizing, or in furtherance of, any of the foregoing.

        SECTION 8.1.10    Impairment of Security, etc.    Any Loan Document, or any Lien granted thereunder, shall (except in accordance with its terms or pursuant to an agreement of the parties thereto), in whole or in part, terminate, cease to be in full force and effect or cease to be the legally valid, binding and enforceable obligation of any Obligor party thereto; the Borrower or any other Obligor shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability thereof; or any Lien securing any Obligation shall, in whole or in part, cease to be a perfected first priority Lien, subject only to those exceptions expressly permitted by the Loan Documents, except to the extent any event referred to above (a) relates to assets of Holdings, the Borrower or any of the Restricted Subsidiaries which are immaterial, (b) results from the failure of the Administrative Agent to maintain possession of certificates representing securities pledged under any Pledge Agreement or to file continuation statements under the UCC of any applicable jurisdiction or (c) is covered by a lender's title insurance policy and the relevant insurer promptly after the occurrence thereof shall have acknowledged in writing that the same is covered by such title insurance policy.

        SECTION 8.1.11    Permitted Subordinated Debt.    The subordination provisions relating to any Permitted Subordinated Debt (the "Subordination Provisions") shall fail to be enforceable by the Lenders (which have not effectively waived the benefits thereof) in accordance with the terms thereof, or the principal or interest on any Loan, Reimbursement Obligation or other Obligations shall fail to constitute "designated senior debt" (or any other similar term) under any document, instrument or agreement evidencing such Permitted Subordinated Debt; or Holdings, the Borrower or any of their respective Subsidiaries shall, directly or indirectly, disavow or contest in any manner (i) the effectiveness, validity or enforceability of any of the Subordination

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Provisions, or (ii) that any of such Subordination Provisions exist for the benefit of the holders of the Obligations.

        SECTION 8.2    Action if Bankruptcy, etc.    If any Event of Default described in clauses (b), (c) and (d) of Section 8.1.9 shall occur with respect to any Obligor (other than Subsidiaries that are not Material Subsidiaries), the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations (including Reimbursement Obligations) shall automatically be and become immediately due and payable, without notice or demand and the Borrower shall automatically and immediately be obligated to deposit with the Administrative Agent cash collateral in an amount equal to all Letter of Credit Outstandings.

        SECTION 8.3    Action if Other Event of Default.    If any Event of Default (other than an Event of Default described in clauses (b), (c) and (d) of Section 8.1.9 with respect to any Obligor (other than Subsidiaries that are not Material Subsidiaries)) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Administrative Agent, upon the direction of the Required Lenders, shall by notice to the Borrower declare all or any portion of the outstanding principal amount of the Loans and other Obligations (including Reimbursement Obligations) to be due and payable, require the Borrower to provide cash collateral to be deposited with the Administrative Agent in an amount equal to the undrawn amount of all Letters of Credit outstanding and/or declare the Commitments (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitments shall terminate and the Borrower shall deposit with the Administrative Agent cash collateral in an amount equal to all Letters of Credit Outstandings.

ARTICLE IX

THE ADMINISTRATIVE AGENT; OTHER AGENTS

        SECTION 9.1    Actions.    Each Lender and Issuer hereby irrevocably appoints BANA as its Administrative Agent under and for purposes of this Agreement and each other Loan Document. Each Lender authorizes the Administrative Agent to act on behalf of such Lender under this Agreement and each other Loan Document and, in the absence of other written instructions from the Required Lenders received from time to time by the Administrative Agent (with respect to which the Administrative Agent agrees that it will comply, except as otherwise provided in this Section or as otherwise advised by counsel), to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto. Each Lender hereby indemnifies (which indemnity shall survive any termination of this Agreement) the Administrative Agent, ratably in accordance with their respective Term Loans outstanding and Commitments (or, if no Term Loans or Commitments are at the time outstanding and in effect, then ratably in accordance with the principal amount of Term Loans held by such Lender, and their respective Commitments as in effect in each case on the date of the termination of this Agreement), from and against any and all liabilities, obligations, losses, damages, claims, costs or expenses of any kind or nature whatsoever which may at any time be

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imposed on, incurred by, or asserted against, the Administrative Agent in any way relating to or arising out of this Agreement and any other Loan Document, including reasonable attorneys' fees, and as to which the Administrative Agent is not reimbursed by the Borrower or any other Obligor (and without limiting the obligation of the Borrower or any other Obligor to do so); provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, claims, costs or expenses which are determined by a court of competent jurisdiction in a final order to have resulted from the Administrative Agent's gross negligence or willful misconduct. The Administrative Agent shall not be required to take any action hereunder or under any other Loan Document, or to prosecute or defend any suit in respect of this Agreement or any other Loan Document, unless it is indemnified hereunder to its satisfaction. If any indemnity in favor of the Administrative Agent shall be or become, in the Administrative Agent's determination, inadequate, the Administrative Agent may call for additional indemnification from the Lenders and cease to do the acts indemnified against hereunder until such additional indemnity is given. The Borrower and the Lenders agree that the Administrative Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate's directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Administrative Agent is entitled under Articles IX and X.

        SECTION 9.2    Funding Reliance, etc.    Unless the Administrative Agent shall have been notified by telephone, confirmed in writing, by any Lender (x) in respect of Base Rate Loans, by 1:00 p.m., New York time on the day of a Borrowing any (y) in respect of LIBOR Loans by 4:00 p.m., New York time, on the day prior to a Borrowing or disbursement with respect to a Letter of Credit pursuant to Section 2.6.2, in each case that such Lender will not make available the amount which would constitute its Percentage of such Borrowing on the date specified therefor, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent and, in reliance upon such assumption, make available to the Borrower a corresponding amount. If and to the extent that such Lender shall not have made such amount available to the Administrative Agent, such Lender severally agrees, and the Borrower agrees, to repay the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date the Administrative Agent made such amount available to the Borrower to the date such amount is repaid to the Administrative Agent, at the interest rate applicable at the time to Loans comprising such Borrowing. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or an Issuer hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable Issuer, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the applicable Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

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        SECTION 9.3    Exculpation; Notice of Default.    (a) Neither the Administrative Agent or any Issuer nor any of their respective directors, officers, employees or agents, shall be liable to any Lender for any action taken or omitted to be taken by it under this Agreement or any other Loan Document, or in connection herewith or therewith, except for its own willful misconduct or gross negligence, nor responsible for any recitals or warranties herein or therein, nor for the effectiveness, enforceability, validity or due execution of this Agreement or any other Loan Document, nor for the creation, perfection or priority of any Liens purported to be created by any of the Loan Documents, or the validity, genuineness, enforceability, existence, value or sufficiency of any collateral security, nor to make any inquiry respecting the performance by the Borrower of its obligations hereunder or under any other Loan Document. Any such inquiry which may be made by the Administrative Agent or any Issuer shall not obligate it to make any further inquiry or to take any action. The Administrative Agent and each Issuer shall be entitled to rely upon advice of counsel concerning legal matters and upon any notice, consent, certificate, statement or writing which the Administrative Agent or such Issuer, as applicable, believes to be genuine and to have been presented by a proper Person.

        (b)   The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received written notice from a Lender, an Issuer or the Borrower referring to this Agreement describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders.

        SECTION 9.4    Successor.    The Administrative Agent may resign as such at any time upon at least 30 days' prior notice to the Borrower and all Lenders hereunder. If the Administrative Agent at any time shall resign, the Required Lenders may, with the prior consent of the Borrower so long as there is no Event of Default (which consent shall not be unreasonably withheld), appoint another Lender as a successor Administrative Agent, which shall thereupon become the Administrative Agent hereunder; provided that, unless there shall exist another Issuer hereunder, such institution is also appointed as an Issuer hereunder. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent's giving notice of resignation, then the retiring Administrative Agent, on behalf of the Lenders and with the Borrower's consent so long as there is no Event of Default (such consent not to be unreasonably withheld or delayed), may appoint a successor Administrative Agent, which shall be one of the Lenders or a commercial banking institution organized under the laws of the United States or a United States branch or agency of a commercial banking institution, and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall be entitled to receive from the retiring Administrative Agent such documents of transfer and assignment as such successor Administrative Agent may reasonably request, and shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation hereunder as the Administrative Agent, the provisions of (i) this Article IX shall inure to the benefit of the retiring Administrative Agent, its sub-agents and their respective related parties as to any actions taken or omitted to be taken by them while

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BANA was the Administrative Agent under this Agreement, and (ii) Section 10.3 and Section 10.4 shall continue to inure to their benefit.

        SECTION 9.5    Credit Extensions by the Administrative Agent and Issuers.    The Administrative Agent and each Issuer shall have the same rights and powers with respect to (x)(i) in the case of the Administrative Agent, the Credit Extensions made by it or any of its affiliates and (ii) in the case of an Issuer, the Loans made by it or any of its affiliates, and (y) the Notes held by it or any of its affiliates as any other Lender and may exercise the same as if it were not the Administrative Agent or an Issuer. The Administrative Agent, each Issuer and each of their respective affiliates may accept deposits from, lend money to, and generally engage in any kind of business with the Borrower or any Subsidiary or affiliate of the Borrower as if such Agent or Issuer were not the Administrative Agent or Issuer hereunder and without any duty to account for it to the Lenders.

        SECTION 9.6    Credit Decisions.    Each Lender acknowledges that it has, independently of the Administrative Agent, each Issuer and each other Lender, and based on such Lender's review of the financial information of Holdings and the Borrower, this Agreement, the other Loan Documents (the terms and provisions of which being satisfactory to such Lender) and such other documents, information and investigations as such Lender has deemed appropriate, made its own credit decision to extend its Commitments. Each Lender also acknowledges that it will, independently of the Administrative Agent, each Issuer and each other Lender, and based on such other documents, information and investigations as it shall deem appropriate at any time, continue to make its own credit decisions as to exercising or not exercising from time to time any rights and privileges available to it under this Agreement or any other Loan Document.

        SECTION 9.7    Copies, etc.    The Administrative Agent shall give prompt notice to each Lender of each notice or request required or permitted to be given to the Administrative Agent by the Borrower pursuant to the terms of this Agreement (unless concurrently delivered to the Lenders by the Borrower). The Administrative Agent will distribute to each Lender each document or instrument received for such Lender's account and copies of all other communications received by the Administrative Agent from the Borrower for distribution to the Lenders by the Administrative Agent in accordance with the terms of this Agreement.

        SECTION 9.8    The Administrative Agent.    Notwithstanding anything else to the contrary contained in this Agreement or any other Loan Document, the Administrative Agent, in its capacity as such, shall have no duties or responsibilities under this Agreement or any other Loan Document nor any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Administrative Agent, in such capacity, except as are explicitly set forth herein or in the other Loan Documents.

        SECTION 9.9    Syndication Agent; Co-Documentation Agents; Lead Arrangers; Bookrunners.    None of the Syndication Agent, the Co-Documentation Agents, the Lead Arrangers or the Bookrunners shall have any right, power, obligation, liability, responsibility or duty under this Agreement (or any other Loan Document) other than (i) those applicable to all Lenders as such and (ii) in the case of the Lead Arrangers and the Bookrunners, as are explicitly set forth herein or in the other Loan Documents. Without limiting the foregoing, none of the

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Syndication Agent, the Co-Documentation Agents, the Lead Arrangers or the Bookrunners shall have or be deemed to have any fiduciary relationship with any other Lender.

        SECTION 9.10    Collateral Agent.    Each Lender hereby further authorizes BANA to act as Collateral Agent on behalf of and for the benefit of the Secured Parties, to be the agent for and representative of the Secured Parties with all of the rights as apply under this Article 9 in respect of the Administrative Agent.

        SECTION 9.11    Collateral and Guaranty Matters.    The Lenders and the Issuers irrevocably authorize the Collateral Agent to, and the Collateral Agent hereby agrees to,

        (a)   release any Lien on any property granted to or held by the Collateral Agent under any Loan Document (i) upon termination of the Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 10.1, if approved, authorized or ratified in writing by the Required Lenders;

        (b)   subordinate any Lien on any property granted to or held by the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (c), (j) or (n) of Section 7.2.3 or the holder of any license on such property that is permitted hereunder; and

        (c)   release any Obligor from its obligations under the Guaranty if such Person ceases to be a Restricted Subsidiary of the Borrower or Holdings as a result of a transaction permitted hereunder.

Upon request by the Collateral Agent at any time, the Required Lenders will confirm in writing the Collateral Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.11.

        SECTION 9.12    Reliance by Administrative Agent.    The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for

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any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

ARTICLE X

MISCELLANEOUS PROVISIONS

        SECTION 10.1    Waivers, Amendments, etc.    The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by Holdings, the Borrower and each Obligor party thereto and by the Required Lenders (and the Administrative Agent has been given notice thereof and a reasonable opportunity to consult with the Borrower in respect thereof); provided, however, that (i) any such amendment, modification or waiver required to give effect to any Additional Term Loan Commitment shall not require the consent of any Lender other than, and shall require the consent of, any Lender that has agreed to provide any such Additional Term Loan Commitment and (ii) any such amendment, modification or waiver of the type set forth below shall require the consent of the Person or Persons described below for such amendment, modification or waiver:

        (a)   Unless consented to by each Lender no such amendment, modification or waiver shall be effective if it would modify any requirement hereunder that any particular action be taken by all the Lenders or by the Required Lenders, release Holdings from its obligations under the Guaranty or the Pledge and Security Agreement, release any Subsidiary Guarantor that is a Material Subsidiary from its obligations under the Guaranty (except as otherwise provided in the Guaranty), or release all or substantially all of the collateral security (except in each case as otherwise specifically provided in this Agreement, the Guaranty or the Pledge and Security Agreement or Mortgage).

        (b)   Unless consented to by each Lender with respect to any Tranche of Loans or Commitments, modify any requirement hereunder that any particular action be taken by all Lenders with respect to such Tranche of Loans or Commitments; provided that the foregoing shall not apply to the combination of the Initial Term Loans and Delayed Draw Term Loans into a single tranche of term loans at any time after the funding of the Delayed Draw Term Loans.

        (c)   Unless consented to by each Lender adversely affected thereby, no such amendment, modification or waiver shall be effective if it would modify this Section 10.1, or clause (i) of Section 10.10, change the definition of "Required Lenders", increase any Commitment Amount or the Percentage of any Lender (other than pursuant Section 2.2.2), reduce any fees described in Section 3.3 (other than the administration fee referred to in Section 3.3.2) or extend any Commitment Termination Date; provided that the foregoing shall not apply to the combination of the Initial Term Loans and Delayed Draw Term Loans into a single tranche of term loans at any time after the funding of the Delayed Draw Term Loans.

        (d)   No such amendment, modification or waiver shall be effective if it would extend the Stated Maturity Date of any Loan or reduce the principal amount of or rate of

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interest on or fees payable in respect of any Loan or any Reimbursement Obligations (which shall in each case include the conversion of all or any part of the Obligations into equity of any Obligor), unless such amendment, modification or waiver shall have been consented to by the Lender which has made such Loan or, in the case of a Reimbursement Obligation, the Issuer owed, and those Lenders participating in, such Reimbursement Obligation.

        (e)   No such amendment, modification or waiver shall be effective if it would affect adversely the interests, rights or obligations of any Agent, Issuer or Lead Arranger (in its capacity as Agent, Issuer or Lead Arranger), unless such amendment, modification or waiver shall have been consented to by such Agent, Issuer or Lead Arrangers, as the case may be.

        (f)    No such amendment, modification or waiver shall be effective if it would amend, modify or waive the provisions of clause (a)(A) of Section 3.1.1 or clause (b) of Section 3.1.2 or effect any amendment, modification or waiver that by its terms adversely affects the rights of Lenders participating in any Tranche differently from those of Lenders participating in other Tranches, unless such amendment, modification or waiver shall have been consented to by the holders of at least a majority of the aggregate amount of Loans outstanding under the Tranche or Tranches so affected by such modification, or, in the case of a modification affecting the Revolving Loan Commitments, the Lenders holding more than 50% of the Revolving Loan Commitments; provided that the foregoing shall not apply to the combination of the Initial Term Loans and Delayed Draw Term Loans into a single tranche of term loans at any time after the funding of the Delayed Draw Term Loans.

        No failure or delay on the part of the Administrative Agent, any Issuer, any Lender or any other Secured Party in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Administrative Agent, any Issuer or any Lender under this Agreement or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. The Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender.

        If the Borrower fails to consummate the Acquisition on or prior to the Delayed Draw Term Loan Commitment Termination Date or the Merger Agreement is terminated prior to consummation of the Acquisition, the Administrative Agent may notify the Borrower that the Bookrunners and the Required Lenders wish to amend Section 7.2.4 or Section 7.2.7 of this Agreement in order to provide for the failure of WordWave and its Subsidiaries to become Subsidiaries of the Borrower and the Borrower shall promptly cooperate with the Bookrunners to amend such covenant in a manner satisfactory to the Borrower and the Required Lenders.

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        SECTION 10.2    Notices; Time.    All notices and other communications provided under any Loan Document shall be in writing or by facsimile and addressed, delivered or transmitted, if to Holdings, the Borrower, the Administrative Agent, the Collateral Agent, a Lead Arranger, a Lender or an Issuer, to the applicable Person at its address or facsimile number set forth on Schedule II hereto or set forth in the applicable Lender Assignment Agreement, or at such other address or facsimile number as may be designated by such party in a notice to the other parties. Any notice, if mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any notice, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter. The parties hereto agree that delivery of an executed counterpart of a signature page to this Agreement and any other Loan Document by facsimile (or electronic transmission) shall be effective as delivery of an original executed counterpart of this Agreement or such other Loan Document. Unless otherwise indicated, all references to the time of a day in a Loan Document shall refer to New York time. Notices and other communications to the Lenders and the Issuers hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or Issuer pursuant to Articles II, III, and IV if such Lender or Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

        SECTION 10.3    Payment of Costs and Expenses.    The Borrower agrees to pay on demand all reasonable expenses of the Lead Arrangers and the Administrative Agent and Collateral Agent (including the reasonable fees and out-of-pocket expenses of a single firm of counsel to Credit Suisse and of local or foreign counsel, if any, who may be retained by counsel to Credit Suisse) in connection with

        (a)   the syndication by the Lead Arrangers of the Loans, the negotiation, preparation, execution and delivery of this Agreement and of each other Loan Document, including schedules and exhibits, and any amendments, waivers, consents, supplements or other modifications to this Agreement or any other Loan Document as may from time to time hereafter be required, whether or not the transactions contemplated hereby are consummated;

        (b)   the filing, recording, refiling or rerecording of each Mortgage (or amendments thereto) and the Pledge and Security Agreement and/or any UCC financing statements relating thereto and all amendments, supplements and modifications to any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms hereof or of such Mortgage or Pledge and Security Agreement; and

        (c)   the preparation and review of the form of any document or instrument relevant to this Agreement or any other Loan Document.

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The Borrower further agrees to pay, and to save the Administrative Agent, the Collateral Agent, the Lead Arrangers, the Bookrunners, the Issuers and the Lenders harmless from all liability for, any stamp or other similar taxes which may be payable in connection with the execution or delivery of this Agreement, the Credit Extensions made hereunder or the issuance of any Notes or Letters of Credit or any other Loan Documents. The Borrower also agrees to reimburse the Administrative Agent, the Collateral Agent, each Lead Arranger, each Bookrunner, each Issuer and each Lender upon demand for all reasonable out-of-pocket expenses (including reasonable attorneys' fees and legal expenses) incurred by the Administrative Agent, the Collateral Agent, such Lead Arranger, such Bookrunner, such Issuer or such Lender in connection with (x) the negotiation of any restructuring or "work-out", whether or not consummated, of any Obligations and (y) the enforcement of any Obligations.

        SECTION 10.4    Indemnification.    In consideration of the execution and delivery of this Agreement by each Lender and the extension of the Commitments, the Borrower hereby, to the fullest extent permitted under applicable law, indemnifies, exonerates and holds the Administrative Agent, the Collateral Agent, each Issuer, the Lead Arrangers, the Bookrunners and each Lender and each of their respective Affiliates, and each of their respective partners, members, officers, directors, employees and agents, advisors, successors and assigns, and each other Person controlling any of the foregoing within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively, the "Indemnified Parties"), free and harmless from and against any and all actions, causes of action, suits, losses, costs, liabilities and damages, and expenses actually incurred in connection therewith (irrespective of whether any such Indemnified Party is a party to the action for which indemnification hereunder is sought), including reasonable attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"), incurred by the Indemnified Parties or any of them as a result of, or arising out of, or relating to

        (a)   any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Credit Extension;

        (b)   the entering into and performance of this Agreement and any other Loan Document by any of the Indemnified Parties (excluding any successful action brought by or on behalf of the Borrower as the result of any failure by any Lender or Issuer to make any Credit Extension hereunder);

        (c)   any investigation, litigation or proceeding related to any acquisition or proposed acquisition by the Borrower or any of its Subsidiaries of all or any portion of the Capital Stock or assets of any Person, whether or not the Administrative Agent, such Issuer, such Lead Arranger, such Bookrunner or such Lender is party thereto;

        (d)   any alleged or actual litigation or proceeding related to any environmental cleanup or noncompliance with or liability under any Environmental Law relating to the use, ownership or operation by Holdings, the Borrower or any of their respective Subsidiaries of any real property; or

        (e)   the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission or release from, any real property owned or operated by Holdings, the Borrower

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or any Subsidiary thereof of any Hazardous Material present on or under such property in a manner giving rise to liability under any Environmental Law at or prior to the time Holdings, the Borrower or such Subsidiary owned or operated such property (including any losses, liabilities, damages, injuries, costs, expenses or claims asserted or arising under any Environmental Law), regardless of whether caused by, or within the control of, Holdings, the Borrower or such Subsidiary,

except for any such Indemnified Liabilities arising for the account of a particular Indemnified Party) (i) by reason of the relevant Indemnified Party's gross negligence or willful misconduct or (ii) by reason of any Hazardous Materials that are first manufactured, emitted, generated, treated, released, stored or disposed of on any real property of Holdings, the Borrower or any of their respective Subsidiaries or any violation of Environmental Law that occurs on or with respect to any real property of the Borrower or any of its Subsidiaries to the extent occurring after such real property is transferred to any Indemnified Person or its successor by foreclosure sale, deed in lieu of foreclosure, or similar transfer, except to the extent such manufacture, emission, release, generation, treatment, storage or disposal or violation is actually caused by Holdings, the Borrower or any of their respective Subsidiaries. Holdings, the Borrower and their permitted successors and assigns hereby waive, release and agree not to make any claim, or bring any cost recovery action against, the Administrative Agent, the Collateral Agent, any Issuer, the Lead Arrangers or any Lender under CERCLA or any state equivalent, or any similar law now existing or hereafter enacted, except to the extent arising out of the gross negligence or willful misconduct of any Indemnified Party or arising out of any Hazardous Materials that are manufactured, emitted, generated, treated, released, stored or disposed of on any real property of Holdings, the Borrower or any of their respective Subsidiaries or any violation of Environmental Law that occurs on or with respect to any real property of Holdings, the Borrower or any of their respective Subsidiaries to the extent occurring after such real property is transferred to any Indemnified Person or its successor by foreclosure sale, deed in lieu of foreclosure, or similar transfer. It is expressly understood and agreed that to the extent that any Indemnified Party is strictly liable under any Environmental Laws, the Borrower's obligation to such Indemnified Party under this indemnity shall likewise be without regard to fault on the part of the Borrower, to the extent permitted under applicable law, with respect to the violation or condition which results in liability of such Indemnified Party. Notwithstanding anything to the contrary herein, the Administrative Agent, the Collateral Agent, each Issuer, the Lead Arrangers, the Bookrunners, and each Lender shall be responsible with respect to any Hazardous Materials that are manufactured, emitted, generated, treated, released, stored or disposed of on any real property of Holdings, the Borrower or any of their respective Subsidiaries or any violation of Environmental Law that occurs on or with respect to any such real property to the extent it occurs after such real property is transferred to the Administrative Agent, the Collateral Agent, any Issuer, any Lead Arranger, any Bookrunner or any Lender or its successor by foreclosure sale, deed in lieu of foreclosure, or similar transfer, except to the extent such manufacture, emission, release, generation, treatment, storage or disposal or violation is actually caused by Holdings, the Borrower or any of their respective Subsidiaries. If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

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        SECTION 10.5    Survival.    The obligations of the Borrower under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under Sections 4.8 and 9.1, shall in each case survive any termination of this Agreement, the payment in full of all Obligations and the termination of all Commitments. The representations and warranties made by the Borrower and each other Obligor in this Agreement and in each other Loan Document shall survive the execution and delivery of this Agreement and each such other Loan Document.

        SECTION 10.6    Severability.    Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction.

        SECTION 10.7    Headings.    The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof.

        SECTION 10.8    Execution in Counterparts Effectiveness, etc.    This Agreement may be executed by the parties hereto in several counterparts, each of which shall be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower, the Administrative Agent and each Lender (or notice thereof satisfactory to the Administrative Agent), shall have been received by the Administrative Agent.

        SECTION 10.9    Governing Law; Entire Agreement.    THIS AGREEMENT, ANY NOTES AND, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED THEREIN, EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement and the other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.

        SECTION 10.10    Successors and Assigns.    This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that (i) the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent and all Lenders, and (ii) the rights of sale, assignment and transfer of the Lenders are subject to Section 10.11.

        SECTION 10.11    Sale and Transfer of Loans, Notes and Commitments; Participations in Loans, Notes and Commitments.    Each Lender may assign, or sell participations in, its Loans and Commitments to one or more other Persons in accordance with the terms set forth below (each Person described in clauses (a) and (b) below as being the Person to whom such assignment and delegation is to be made, being hereinafter referred to as a "Assignee Lender").

        (a)   Any Lender may, with the consent of (x) the Administrative Agent, (y) unless an Event of Default has occurred and is continuing, the Borrower and (z) in the case of

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any assignment of Revolving Loan Commitments or participations in Letter of Credit Obligations, the Issuers (each such consent not to be unreasonably withheld or delayed), assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it); provided that:

        (i)    except in the case of (A) an assignment of the entire remaining amount of the assigning Lender's Commitments and the Loans at the time owing to it or (B) an assignment to a Lender or an affiliate of a Lender (under common control with such Lender) or an Approved Fund of any Lender, the aggregate amount of the Commitments (which for this purpose includes Loans outstanding thereunder) or principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Lender Assignment Agreement with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 (treating contemporaneous assignments by or to Related Funds as one assignment for such purposes), unless the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed);

        (ii)   each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans and/or the Commitments assigned, except that this clause (ii) shall not prohibit any Lender from assigning all or a portion of its rights and obligations in respect of Term Loans and its rights and obligations in respect of Revolving Loans or Revolving Loan Commitments on a non-pro rata basis;

        (iii)  the parties to each assignment shall execute and deliver to the Administrative Agent and the Borrower a Lender Assignment Agreement, together with a processing and recordation fee of $3,500 (other than in respect of (x) assignments made by the Lead Arrangers and the Bookrunners, (y) assignments by a Lender to one of its Affiliates and (z) contemporaneous assignments by or to Related Funds) and if the Eligible Assignee is not a Lender, administrative details information with respect to such Eligible Assignee and applicable tax forms;

        (iv)  notwithstanding the foregoing, the consent of the Borrower and the Administrative Agent shall not be required in the case of assignments of Term Loans or Additional Term Loans from a Lender to a Related Fund, a Lender or an Affiliate or Related Fund of a Lender;

        (v)   the Borrower shall have been given notice of any such assignment as to which its consent is not required; and

        (vi)  the words "execution," "signed," "signature," and words of like import in any Lender Assignment Agreement shall be deemed to include

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electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

        (b)   Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c), from and after the effective date specified in each Lender Assignment Agreement, (i) the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Lender Assignment Agreement, have the rights and obligations of a Lender under this Agreement, and (ii) the assigning Lender thereunder shall, to the extent of the interest assigned by such Lender Assignment Agreement, subject to Section 10.5, be released from its obligations under this Agreement (and, in the case of a Lender Assignment Agreement covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto, but shall continue to be entitled to the benefits of any provisions of this Agreement which by their terms survive the termination of this Agreement). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with clauses (a) and (b) shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (d).

        (c)   The Administrative Agent shall record each assignment made in accordance with this Section in the Register pursuant to clause (b) of Section 2.7. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

        (d)   Any Lender may, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitments and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver with respect to any of the items set forth in clauses (a), (c) or (d) of Section 10.1, in each case except as otherwise specifically provided in a Loan Document. Subject to clause (e), the Borrower agrees, to the fullest extent permitted under applicable law, that each Participant shall be entitled to the benefits of Sections 4.3, 4.4, 4.5, 4.6, 7.1.1, 10.3 and 10.4 to the same

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extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 4.9 as if it were a Lender, provided such Participant agrees to be subject to Section 4.8 as if it were a Lender.

        (e)   A Participant shall not be entitled to receive any greater payment under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 4.6 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with the requirements set forth in Section 4.6 as if it were a Lender. In addition, if at the time of the sale of such participation, any greater Taxes subject to payment under Section 4.6 would apply to the Participant than applied to the applicable Lender, then such Participant shall not be entitled to any payment under Section 4.6 with respect to the portion of such Taxes as exceeds the Taxes applicable to the Lender at the time of the sale of the participation unless the Participant's request for the Borrower's prior written consent for the Participation described in the first sentence of this clause states that such greater Taxes would be applicable to such Participant.

        (f)    Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

        (g)   Notwithstanding anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special purpose funding vehicle (a "SPC"), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i)  nothing herein shall constitute a commitment by any SPC to make any Loan and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of an Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding

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anything to the contrary contained in this clause, any SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Administrative Agent, paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and the Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This section may not be amended without the written consent of the SPC. The Borrower acknowledges and agrees, subject to the next sentence, that, to the fullest extent permitted under applicable law, each SPC, for purposes of Sections 4.3, 4.4, 4.5, 4.6, 4.8, 4.9, 10.3 and 10.4, shall be considered a Lender. The Borrower shall not be required to pay any amount under Sections 4.3, 4.4, 4.5, 4.6, 10.3 and 10.4 that is greater than the amount which it would have been required to pay had no grant been made by a Granting Lender to an SPC.

        (h)   Notwithstanding anything to the contrary contained herein, if at any time BANA assigns all of its Commitment and Loans pursuant to this Section 10.11, BANA may upon 30 days' notice to the Borrower and the Lenders, resign as Issuer. In the event of any such resignation as Issuer, the Borrower shall be entitled to appoint from among the Lenders a successor Issuer hereunder; provided, however, that if BANA has resigned as Administrative Agent, no failure by the Borrower to appoint any such successor shall affect the resignation of BANA as Issuer. If BANA resigns as Issuer, it shall retain all the rights and obligations of the Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as Issuer and all Letter of Credit Obligations with respect thereto (including the right to require the Lenders to make Base Rate Loans).

        SECTION 10.12    Other Transactions.    Nothing contained herein shall preclude the Administrative Agent or any Lender from engaging in any transaction, in addition to those contemplated by this Agreement or any other Loan Document, with Holdings, the Borrower or any of their Affiliates in which Holdings, the Borrower or such Affiliate is not restricted hereby from engaging with any other Person.

        SECTION 10.13    Forum Selection and Consent to Jurisdiction.    ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LEAD ARRANGERS, THE BOOKRUNNERS, THE LENDERS, THE ISSUERS, HOLDINGS OR THE BORROWER RELATING THERETO MAY BE BROUGHT AND MAINTAINED (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.

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THE BORROWER AND HOLDINGS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY, AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH OF HOLDINGS AND THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF HOLDINGS AND THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

        SECTION 10.14    Waiver of Jury Trial.    THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LEAD ARRANGERS, THE BOOKRUNNERS, THE ISSUERS, THE LENDERS, HOLDINGS AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LEAD ARRANGERS, THE BOOKRUNNERS, THE ISSUERS, THE LENDERS, HOLDINGS OR THE BORROWER RELATING THERETO. EACH OF HOLDINGS AND THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE ADMINISTRATIVE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.

        SECTION 10.15    Confidentiality.    The Administrative Agent, the Collateral Agent, the Syndication Agent, the Lead Arrangers, the Bookrunners, the Issuers and the Lenders shall hold all non-public information obtained pursuant to or in connection with this Agreement or obtained by them based on a review of the books and records of Holdings, the Borrower or any of their respective Subsidiaries in accordance with their customary procedures for handling confidential information of this nature, but may make disclosure to any of their examiners, affiliates, Related Funds, investment advisors or affiliates thereof, outside auditors, counsel and other professional advisors in connection with this Agreement or as reasonably required by any potential bona fide transferee, participant or assignee, or to any direct or indirect contractual counterparties in swap agreements or such contractual counterparties' professional advisors, or in connection with the exercise of remedies under a Loan Document, or as requested by any governmental or regulatory agency, any rating agency or the National Association of Insurance Commissioners, or representative of any thereof or pursuant to legal process; provided that

112

        (a)   unless specifically prohibited by applicable law or court order, the Administrative Agent, the Syndication Agent, each Issuer, each Lead Arranger and each Lender shall promptly notify the Borrower of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of the Administrative Agent, the Syndication Agent, such Issuer, each Lead Arranger or such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information;

        (b)   prior to any such disclosure pursuant to this Section 10.15, the Administrative Agent, the Syndication Agent, each Issuer, each Lead Arranger and each Lender shall require any such bona fide transferee, participant and assignee receiving a disclosure of non-public information to agree in writing

        (i)    to be bound by this Section 10.15; and

        (ii)   to require such Person to require any other Person to whom such Person discloses such non-public information to be similarly bound by this Section 10.15; and

        (c)   except as may be required by an order of a court of competent jurisdiction and to the extent set forth therein, no Lender shall be obligated or required to return any materials furnished by the Borrower or any Subsidiary.

        SECTION 10.16    USA PATRIOT Act Notice.    Each Lender and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender or the Administrative Agent as applicable, to identify the Borrower in accordance with the Patriot Act.

        SECTION 10.17    Amendment and Restatement.    It is the intention of each of the parties hereto that the Existing Credit Agreements be amended and restated so as to preserve the perfection and priority of all security interests securing indebtedness and obligations under the Existing Credit Agreements and that all Indebtedness and Obligations of Holdings and its Subsidiaries hereunder and under the Guaranty shall be secured by the Pledge and Security Agreement and that this Agreement does not constitute a novation of the obligations and liabilities existing under the Existing Credit Agreements. The parties hereto further acknowledge and agree that this Agreement constitutes an amendment of the Existing Credit Agreements made under and in accordance with the terms of Section 10.1 of each Existing Credit Agreement.

[Signature Pages To Follow]

113

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written.

MERRILL COMMUNICATIONS LLC
By:	/s/  ROBERT H. NAZARIAN
Name: Robert H. Nazarian Title: Executive Vice President and Chief Financial Officer

MERRILL CORPORATION
By:	/s/  RICK R. ATTERBURY
Name: Rick R. Atterbury Title: President and Chief Operating Officer

CREDIT SUISSE, as a Joint Lead Arranger, as a Joint Bookrunner, as a Lender and as a Continuing Lender
By:	/s/  BRIAN T. CALDWELL
Name: Brian T. Caldwell Title: Director
By:	/s/  CASSANDRA DROOGAN
Name: Cassandra Droogan Title: Associate

BANC OF AMERICA SECURITIES LLC, as a Joint Bookrunner and a Joint Lead Arranger
By:	/s/  MARK M. ANDREW
Name: Mark M. Andrew Title: Principal

BANK OF AMERICA, N.A., as the Administrative Agent and the Collateral Agent, as the Administrative Agent and the Collateral Agent under the Existing Credit Agreements on behalf of the Continuing Consenting Lenders, as a Continuing Lender, as the Issuer, as an Existing Issuer and as a Lender
By:	/s/  ROBERT KLAWINSKI
Name: Robert Klawinski Title: Senior Vice President

DEUTSCHE BANK TRUST COMPANY, AMERICAS as Lender
By:	/s/  SUSAN L. LEFEVRE
Name: Susan L. LeFevre Title: Director
By:	/s/  EVELYN THIERRY
Name: Evelyn Thierry Title: Vice President
DEUTSCHE BANK SECURITIES, INC., as Joint Bookrunner and Syndication Agent
By:	/s/
Name: Title:
By:	/s/
Name: Title:

CALYON NEW YORK BRANCH, as a Co-Documentation Agent, as a Continuing Lender and as a Lender
By:	/s/  ALEXANDER AVERBUKH
Name: Alexander Averbukh Title: Director
By:	/s/  MICHAEL REGAN
Name: Michael Regan Title: Director

LASALLE BANK, N.A., as Co-Documentation Agent, a Continuing Lender and a Lender
By:	/s/
Name: Title:

NATIONAL CITY BANK, as a Co-Documentation Agent and a Lender
By:	/s/  TOM GURBACH
Name: Tom Gurbach Title: Vice President

LENDERS:
U.S. BANK NATIONAL ASSOCIATION, as an Existing Issuer
By:	/s/  MICHAEL J. REYMANN
Name: Michael J. Reymann Title: Senior Vice President

RAYMOND JAMES BANK, FSB, as a Lender
By:	/s/  THOMAS F. MACINA
Name: Thomas F. Macina Title: Senior Vice President

SCHEDULE I

DISCLOSURE SCHEDULE TO CREDIT AGREEMENT

ITEM 6.7. Litigation.

ITEM 6.8. Existing Subsidiaries.

ITEM 6.11. Employee Benefit Plans.

ITEM 6.12. Environmental Matters.

ITEM 7.1.13 Mortgaged Properties.

ITEM 7.2.2(a) Ongoing Indebtedness.

ITEM 7.2.3(a) Ongoing Liens.

ITEM 7.2.5(a) Ongoing Investments.

SCHEDULE II

PERCENTAGES;
LIBOR OFFICE;
DOMESTIC OFFICE

Notice information for Borrower:

Merrill Communications LLC
One Merrill Circle
St. Paul, MN 55108
Attention: Robert Nazarian
Facsimile: 651.632.1348

Notice information for Administrative Agent:

Administrative Agent's Office (for payments and Requests for Credit Extensions):
Bank of America, N.A.
Credit Services
Mail Code: NC1-001-04-39
101 North Tryon St.
Charlotte, NC 28255
Attention: Libby Garver
Telephone: 704.386.8451
Telecopier: 704.409.0004
Electronic Mail: Elizabeth.Garver@bankofamerica.com

Bank of America, N. A., Wiring Instructions:
Bank of America, N.A.
New York NY.
ABA #: 026009593
Acct #: 1366212250600
Attn: Credit Services
Reference: MERRILL

Other Notices as Administrative Agent:
Bank of America, N.A.
Agency Management
Mail Code: CA5-701-05-19
1455 Market St.
San Francisco, CA 94103-1399
Attention: Charles Graber
Telephone: 415.436.3495
Telecopier: 415.503.5006
Electronic Mail: Charles.Graber@bankofamerica.com

And

Bank of America, N.A.
Mail Code: NC1-007-13-06
100 North Tryon St.
Charlotte, NC 28255
Attention: Robert Klawinski
Telephone: 704.387.0467
Telecopier: 704.409.0185
Electronic Mail: Robert.A.Klawinski@bankofamerica.com

ISSUER:

Bank of America, N.A.
Trade Operations-Los Angeles #22621
1000 W. Temple St.
Mail Code: CA9-705-07-05
Los Angeles, CA 90012-1514
Attention: Sandra Leon
Telephone: 213.580.8369
Telecopier: 213.580.8440
Electronic Mail: Sandra.Leon@bankofamerica.com

2

Credit Suisse
11 Madison Avenue
New York, NY 10010
Attention: Julia Kingsbury
Facsimile: (212) 325-8304

Notice information for Lenders:

Deutsche Bank Trust Company Americas
60 Wall Street, MS NYC 60-4305
New York, NY 10005
Attention: Omayra Laucella
Facsimile: (212) 797-5690

National City Bank
1900 East 9th Street
Cleveland, OH 44114
Attention: Tom Gurbach
Facsimile: (216) 222-0003

LaSalle Bank NA
50 South Sixth Street
Suite 1400
Minneapolis, MN 55402
Attention: Philip Krump
Facsimile: (612) 752-9895

Calyon New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Anne Le Goulven
Facsimile: (212) 261-3375

3

Raymond James Bank, FSB
710 Carillon Parkway
St. Petersburg, FL 33716
Attention: Larry Schaad
Facsimile: (727) 567-8830

4

NAME AND NOTICE ADDRESS OF LENDER	LIBOR OFFICE	DOMESTIC OFFICE	REVOLVING LOAN COMMITMENT		INITIAL TERM LOAN COMMITMENT		DELAYED DRAW TERM LOAN COMMITMENT
BANK OF AMERICA, N.A.		Bank of America, N.A. Trade Operations-Los Angeles #22621 333 S. Beaudry Avenue, 19th Floor Mail Code: CA9-703-19-23 Los Angeles, CA 90017-1466 Attention: Sandra Leon	$	10,000,000	$	169,845,509.33	$	155,000,000
CREDIT SUISSE	Eleven Madison Avenue New York, NY 10010 Attention: Julia Kingsbury	Eleven Madison Avenue New York, NY 10010 Attention: Julia Kingsbury	$	10,000,000	$	0	$	0
DEUTSCHE BANK TRUST COMPANY AMERICAS		60 Wall Street, MS NYC 60-4305 New York, NY 10005 Attention: Omayra Laucella Facsimile: (212) 797-5690	$	8,000,000	$	0	$	0
NATIONAL CITY BANK		1900 East 9th Street Cleveland, OH 44114 Attention: Tom Gurbach Facsimile: (216) 222-0003	$	7,500,000	$	0	$	0
LASALLE BANK NA		50 South Sixth Street Suite 1400 Minneapolis, MN 55402 Attention: Philip Krump Facsimile: (612) 752-9895	$	9,000,000	$	0	$	0
RAYMOND JAMES BANK, FSB		710 Carillon Parkway St. Petersburg, FL 33716 Attention: Larry Schaad Facsimile: (727) 567-8830	$	8,000,000	$	0	$	0
ALADDIN CAPITAL MANAGEMENT RELATED FUNDS		Three Landmark Square 3rd Floor Stamford, CT 06901 Attention: Joe Moroney Facsimile: (203) 487-0907	$	0	$	987,734.37

5

CALYON NEW YORK BRANCH	1301 Avenue of the Americas New York, NY 10019 Attention: Anne Le Goulven Facsimile: (212) 261-3375	$	7,500,000	$	7,408,007.83	$	0
CYPRESS TREE		$	0	$	2,469,335.95	$	0
EATON VANCE RELATED FUNDS		$	0	$	41,999,999.65	$	0
FLAGSHIP RELATED FUNDS		$	0	$	1,975,468.74	$	0
GENERAL ELECTRIC CAPITAL CORPORATION		$	0	$	29,138,164.06	$	0
GUGGENHEIM RELATED FUNDS		$	0	$	4,933,666.43	$	0
ING INVESTMENT MGMT — PILGRIM RELATED FUNDS		$	0	$	9,879,926.17	$	0
MJX RELATED FUNDS		$	0	$	2,963,203.12	$	0
MORGAN STANLEY DEAN WITTER		$	0	$	6,914,140.62	$	0
OAK HILL ADVISORS RELATED FUNDS		$	0	$	2,963,203.12	$	0
PRUDENTIAL RELATED FUNDS		$	0	$	9,877,343.74	$	0
STONE TOWER RELATED FUNDS		$	0	$	2,963,203.12	$	0
VAN KAMPEN RELATED FUNDS		$	0	$	16,791,484.39	$	0
WEST GATE HORIZONS		$	0	$	8,889,609.36	$	0

6

TOTAL
$
60,000,000
$
320,000,000
$
155,000,000

7

SCHEDULE III

EXISTING LETTERS OF CREDIT

On and after the Effective Date:

	Account Party	Beneficiary	LC Number	Amount		Expiry
1	Merrill Communications LLC	Crown Two Penn Center Assoc.	SP03219 US BANK	$	100,000.00	6/01/2006
2	Merrill Communications LLC	TRC 2000 Market Associates	SP03197 US BANK	$	15,000.00	6/01/2006
3	Merrill Corporation	Employers Insurance Company	SP76620 US BANK	$	2,080,000.00	1/31/2006
4	Merrill Corporation	Hartford Fire Insurance Company	SP76291 US BANK	$	200,000.00	1/31/2006
5	Merrill Corporation	Parish of Trinity Church	SP00447 US BANK	$	99,520.96	12/31/2006
6	Merrill Corporation	Parish of Trinity Church	SP00529 US BANK	$	99,520.97	12/31/2006
7	Merrill Corporation	Santa Clara County	SP02754 US BANK	$	250,000.00	6/30/2006
8	Merrill Corporation	GLL Fremont Street Partners	SP01024 US BANK	$	100,000.00	5/10/2006
9	Merrill Corporation	75-101 Federal St. LLC	SP02815 US BANK	$	78,785.00	10/10/2006
10	Merrill Communications LLC	Paul H. Brink Seller	SP03564 US BANK	$	2,500,000.00	6/06/2006
11	Merrill Communications LLC	200 West Jackson Owner LLC	SP03771 US BANK	$	200,000.00	7/19/2006
			TOTAL	$	5,722,826.93

        On and after the Delayed Draw Term Loan Credit Date:

	Account Party	Beneficiary	LC Number	Amount		Expiry
1	WordWave	555-575 Market Street	T00000068006850 BANA	$	66,594.00	6/30/2006
			TOTAL	$	66,594.00

SCHEDULE 2.1

Existing Lenders	Existing Base Credit Agreement		Existing Refinancing Credit Agreement		Existing Loans
ARCHIMEDES FUNDING III LTD	$	972,070.30	$	2,485,000.00	$	3,457,070.30
ARCHIMEDES FUNDING IV (CAYMAN) LTD	$	277,734.37	$	710,000.00	$	987,734.37
CALYON NEW YORK	$	2,083,007.83	$	5,325,000.00	$	7,408,007.83
COSTANTINUS EATON VANCE CDO V, LTD	$	249,960.95	$	639,000.00	$	888,960.95
DRYDEN III — LEVERAGED LOAN	$	833,203.12	$	2,130,000.00	$	2,963,203.12
DRYDEN VII LEVERAGED LOAN CDO 2004	$	1,388,671.87	$	3,550,000.00	$	4,938,671.87
EATON VANCE CDO III LTD	$	277,850.08	$	710,288.12	$	988,138.20
EATON VANCE CDO VI LTD	$	319,510.25	$	816,788.11	$	1,136,298.36
EATON VANCE FLOATING RATE INCOME	$	1,541,425.79	$	3,940,500.00	$	5,481,925.79
EATON VANCE INSTITUTIONAL SENIOR	$	972,186.03	$	2,485,288.12	$	3,457,474.15
EATON VANCE LIMITED DURATION INCOME	$	416,601.55	$	1,065,000.00	$	1,481,601.55
EATON VANCE SENIOR FLOATING-RATE	$	369,386.71	$	944,300.00	$	1,313,686.71
EATON VANCE SENIOR INCOME TRUST	$	194,414.05	$	497,000.00	$	691,414.05
EATON VANCE VARIABLE LEVERAGE FUND	$	281,183.27	$	718,816.73	$	1,000,000.00
EATON VANCE VT FLOATING-RATE	$	55,546.87	$	142,000.00	$	197,546.87
ENDURANCE CLO I LTD	$	277,734.37	$	710,000.00	$	987,734.37
FLAGSHIP CLO 2001-1	$	277,734.37	$	710,000.00	$	987,734.37
FLAGSHIP CLO III	$	277,734.37	$	710,000.00	$	987,734.37
GENERAL ELECTRIC CAPITAL CORP	$	2,590,172.42	$	6,622,192.28	$	9,212,364.70
GRAYSON & CO	$	4,684,221.67	$	11,974,726.22	$	16,658,947.89
GREEN LANE CLO LTD	$	972,070.30	$	2,485,000.00	$	3,457,070.30
HEWETTS ISLAND CLO II LTD	$	694,335.95	$	1,775,000.00	$	2,469,335.95
ING PRIME RATE TRUST	$	832,508.80	$	2,128,271.30	$	2,960,780.10
ING SENIOR INCOME FUND	$	1,388,671.87	$	3,550,000.00	$	4,938,671.87
LANDMARK IV CDO LIMITED	$	277,734.37	$	710,000.00	$	987,734.37
LFC2 LOAN FUNDING LLC	$	415,194.12	$	1,061,402.00	$	1,476,596.12
LOAN FUNDING V LLC	$	555,468.75	$	1,420,000.00	$	1,975,468.75
MORGAN STANLEY PRIME INCOME TRUST	$	1,944,140.62	$	4,970,000.00	$	6,914,140.62
NEMEAN CLO LTD	$	694,335.95	$	1,775,000.00	$	2,469,335.95
NORINCHUKIN BANK (NEW YORK BRANCH)	$	555,468.78	$	701,183.27	$	1,256,652.05
ORINCHUKIN BANK THE	$	274,285.48	$	1,420,000.00	$	1,694,285.48
OAK HILL CREDIT PARTNERS III LTD	$	833,203.12	$	2,130,000.00	$	2,963,203.12

2

SENIOR DEBT PORTFOLIO	$	1,751,231.00	$	4,476,838.12	$	6,228,069.12
SEQUILS ING I (HBDGM) LTD	$	277,734.37	$	710,000.00	$	987,734.37
STONE TOWER CLO II LTD	$	833,203.12	$	2,130,000.00	$	2,963,203.12
VAN KAMPEN SENIOR INCOME TRUST	$	2,557,097.52	$	6,536,962.63	$	9,094,060.15
VAN KAMPEN SENIOR LOAN FUND	$	2,164,386.87	$	5,533,037.37	$	7,697,424.24
VENTURE IV CDO LTD	$	833,203.12	$	2,130,000.00	$	2,963,203.12
BANK OF AMERICA N.A.	$	7,685,999.44	$	19,647,807.74	$	27,333,807.18
ING INTERNATIONAL	$	556,876.21	$	1,423,597.99	$	1,980,474.20
TOTAL	$	44,437,500.00	$	113,600,000.00	$	158,037,500.00

3

EXHIBIT A-1

REVOLVING NOTE

$ ,

        FOR VALUE RECEIVED, MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Borrower"), promises to pay to the order of                          (the "Lender") on the Stated Maturity Date the principal sum of                          DOLLARS ($                        ) or, if less, the aggregate unpaid principal amount of all Revolving Loans made (or continued) by the Lender pursuant to that certain $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Merrill Corporation, a Minnesota corporation, as Holdings, the various financial institutions and other Persons (including the Lender) from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A. as Co-Documentation Agents. Terms used in this Revolving Note that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement.

        Payments of both principal and interest are to be made in Dollars in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement.

        This Revolving Note is one of the Revolving Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Revolving Note and for a statement of the terms and conditions on which the Borrower is permitted or required to make prepayments and repayments of principal of the Indebtedness evidenced by this Revolving Note and on which such Indebtedness may be declared to be immediately due and payable.

        All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

THIS REVOLVING NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND GOVERNED BY THE INTERNAL LAWS OF, THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

MERRILL COMMUNICATIONS LLC
By:
	Name: Title:

REVOLVING LOANS AND PRINCIPAL PAYMENTS

	Amount of Revolving Loan Made			Amount of Principal Repaid		Unpaid Principal Balance
Date	Alternate Base Rate	LIBO Rate	Interest Period	Alternate Base Rate	LIBO Rate	Alternate Base Rate	LIBO Rate	Total	Notation Made By

EXHIBIT A-2

TERM NOTE

$ ,

        FOR VALUE RECEIVED, MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Borrower"), promises to pay to the order of                        (the "Lender") the principal sum of                        DOLLARS ($                        ) or, if less, the aggregate unpaid principal amount of all [Term Loans] [Delayed Draw Term Loans] made (or continued) by the Lender pursuant to that certain $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Merrill Corporation, a Minnesota corporation, as Holdings, the various financial institutions and other Persons (including the Lender) from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A. as Co-Documentation Agents, payable in installments as set forth in the Credit Agreement, with a final installment (in the amount necessary to pay in full this Note) due and payable on the Stated Maturity Date. Terms used in this Term Note that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates per annum and on the dates specified in the Credit Agreement.

        Payments of both principal and interest are to be made in Dollars in same day or immediately available funds to the account designated by the Administrative Agent pursuant to the Credit Agreement.

        This Term Note is one of the Term Notes referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a description of the security for this Term Note and for a statement of the terms and conditions on which the Borrower is permitted or required to make prepayments and repayments of principal of the Indebtedness evidenced by this Term Note and on which such Indebtedness may be declared to be immediately due and payable.

        All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor.

THIS TERM NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL BE DEEMED TO BE A CONTRACT MADE UNDER, AND GOVERNED BY THE INTERNAL LAWS OF, THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

MERRILL COMMUNICATIONS LLC
By:
	Name: Title:

TERM LOANS AND PRINCIPAL PAYMENTS

	Amount of Term Loan Made			Amount of Principal Repaid		Unpaid Principal Balance
Date	Alternate Base Rate	LIBO Rate	Interest Period	Alternate Base Rate	LIBO Rate	Alternate Base Rate	LIBO Rate	Total	Notation Made By

EXHIBIT B-1

BORROWING REQUEST

BANK OF AMERICA, N.A.,
as Administrative Agent
101 North Tryon St.
Charlotte, NC 28255

Attention:
Fax:

MERRILL COMMUNICATIONS LLC

        [Date]

Ladies and Gentlemen:

        This Borrowing Request is delivered to you pursuant to Section 2.3.1 of the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation, as Holdings, the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A. as Co-Documentation Agents. Terms used herein that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower hereby requests that a Borrowing of [Revolving Loans] [Term Loans] be made in the aggregate principal amount of $                         on                             ,          as [Base Rate Loans] [LIBO Rate Loans having an Interest Period [of              months] [ending the last Business Day of [December] 2005(1)].(2)

(1)

For Loans made on the Effective Date.

(2)

Pursuant to the definition of "Interest Period".

        The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit Agreement, each of the delivery of this Borrowing Request and the acceptance by the Borrower of the proceeds of the Loans requested hereby constitutes a representation and warranty by the Borrower that, on the date of the making of such Loans, (both before and after giving effect thereto and to the application of the proceeds therefrom), all statements set forth in Section 5.2.1 of the Credit Agreement are true and correct in all material respects (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

        The Borrower agrees that if prior to the time of the Borrowing requested hereby any matter certified to herein by it will not be true and correct in all material respects at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the time of the Borrowing requested hereby the Administrative Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed once again to be certified as true and correct in all material respects at the date of such Borrowing as if then made.

        IN WITNESS WHEREOF, the undersigned, a duly Authorized Officer of the Borrower, has caused this Borrowing Request to be executed and delivered, and has caused the Borrower to make the certification and warranties contained herein, as of the date first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name: Title:

EXHIBIT B-2

ISSUANCE REQUEST

BANK OF AMERICA, N.A.,
  as Administrative Agent
101 North Tryon St.
Charlotte, NC 28255

Attention:
Fax:

MERRILL COMMUNICATIONS LLC

        [            ,            ]

Ladies and Gentlemen:

        This Issuance Request is delivered to you pursuant to Section 2.6 of the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation, as Holdings, the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A. as Co-Documentation Agents. Terms used herein that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower hereby requests that on                             ,          (the "Date of Issuance") [                        ] (the "Issuer")* [issue a Letter of Credit in the initial Stated Amount of $                         with a Stated Expiry Date (as defined therein) of                             ,         ] [extend the Stated Expiry Date (as defined under Letter of Credit No.     , issued on                             ,         , in the initial Stated Amount of $                        ) to a revised Stated Expiry Date (as defined therein) of                             ,         ].

*

Insert and complete as appropriate.

        The beneficiary of the requested Letter of Credit will be                         , and such Letter of Credit will be in support of                         .

        The Borrower hereby acknowledges that, pursuant to Section 5.2.2 of the Credit Agreement, each of the delivery of this Issuance Request and the [issuance] [extension] of the Letter of Credit requested hereby constitutes a representation and warranty by the Borrower that, on the date of the [issuance] [extension], (both before and after giving effect thereto and to the application of the proceeds or benefits of the Letter of Credit [issued] [extended] in accordance herewith), all statements set forth in Section 5.2.1 of the Credit Agreement are true and correct in all material respects (unless stated to relate solely to an earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date).

        The Borrower agrees that if, prior to the time of the [issuance] [extension] of the Letter of Credit requested hereby, any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Administrative Agent. Except to the extent, if any, that prior to the time of the [issuance] [extension] of the Letter of Credit requested hereby the Administrative Agent shall receive written notice to the contrary from the Borrower, each matter certified to herein shall be deemed to be certified at the date of such [issuance] [extension].

        IN WITNESS WHEREOF, the undersigned has caused this Issuance Request to be executed and delivered, and the certification and warranties contained herein to be made, by its duly Authorized Officer as of the date first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name: Title:

EXHIBIT C

CONTINUATION/CONVERSION NOTICE

BANK OF AMERICA, N.A.,
  as Administrative Agent
101 North Tryon St.
Charlotte, NC 28255

Attention:
Fax:

MERRILL COMMUNICATIONS LLC

[            ,            ]

Ladies and Gentlemen:

        This Continuation/Conversion Notice is delivered to you pursuant to Section 2.4 of the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation, as Holdings, the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A as Co-Documentation Agents. Terms used herein that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower hereby requests that on                             ,             ,

        (1)   $                         of the presently outstanding principal amount of the [Revolving Loans] [Term Loans] presently being maintained as [Base Rate Loans] [LIBO Rate Loans having an Interest Period ending on                             ,             ],

        (2)   be [converted into] [continued as],

        (3)   *[LIBO Rate Loans having an Interest Period of              months] [Base Rate Loans].

*

Insert appropriate interest rate option and, if applicable, the number of months with respect to LIBO Rate Loans.

        [The Borrower hereby:

        (a)   certifies and warrants as of the date hereof that no Default has occurred and is continuing; and

        (b)   agrees that if prior to the time of such continuation or conversion any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify the Administrative Agent.

Except to the extent, if any, that prior to the time of the continuation or conversion requested hereby the Administrative Agent shall receive written notice to the contrary from the undersigned, each matter certified to herein shall be deemed to be certified at the date of such continuation or conversion as if then made.]**

**

To be included only for continuations of, or conversions of Base Rate Loans into, LIBO Rate Loans.

        IN WITNESS WHEREOF, the undersigned has caused this Continuation/Conversion Notice to be executed and delivered, and the certification and warranties contained herein to be made, by its duly Authorized Officer as of the day first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:

EXHIBIT D

EFFECTIVE DATE CERTIFICATE

MERRILL COMMUNICATIONS LLC

December 22, 2005

        This certificate is delivered pursuant to Section 5.1.2 of the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation ("Holdings"), the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A. ("BANA"), as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse ("Credit Suisse"), as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC ("BAS"), as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A as Co-Documentation Agents. Unless otherwise defined herein or the context otherwise requires, each capitalized term used herein has the meaning provided for in the Credit Agreement. Any term or provision hereof to the contrary notwithstanding, the undersigned is executing this certificate in his capacity as an officer of, and solely on behalf of Holdings, the Borrower and the Restricted Subsidiaries, and not in his individual capacity.

        The undersigned hereby certifies, represents and warrants that, as of the Effective Date attached hereto as Annex I are true and complete copies of the Pro Forma Financial Statements.

        IN WITNESS WHEREOF, the undersigned has caused this Effective Date Certificate to be executed and delivered, and the certification, representations and warranties contained herein to be made, by its Authorized Officer as of the date first written above.

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:

EXHIBIT E

COMPLIANCE CERTIFICATE

MERRILL COMMUNICATIONS LLC

        This Compliance Certificate is delivered pursuant to clause (c) of Section 7.1.1 of the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Borrower"), Merrill Corporation, a Minnesota corporation ("Holdings"), the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A. ("BANA"), as Administrative Agent and Collateral Agent for the Lenders, Credit Suisse ("Credit Suisse"), as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC ("BAS"), as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A as Co-Documentation Agents. Terms used herein that are defined in the Credit Agreement, unless otherwise defined herein, have the meanings provided (or incorporated by reference) in the Credit Agreement.

        The Borrower hereby certifies, represents and warrants as follows in respect of the period (the "Computation Period") commencing on                         , and ending on                        (such latter date being the "Computation Date") and with respect to the Computation Date:

        (a)   As of the Computation Date, no Default had occurred and was continuing.

        (b)   The Leverage Ratio on the Computation Date was            , as computed on Attachment 1 hereto. The maximum Leverage Ratio permitted pursuant to clause (a) of Section 7.2.4 of the Credit Agreement on the Computation Date was            .

        (c)   The Interest Coverage Ratio for the Computation Period was            , as computed on Attachment 2 hereto. The minimum Interest Coverage Ratio permitted pursuant to clause (b) of Section 7.2.4 of the Credit Agreement for the Computation Period was            .

        (d)   Capital Expenditures for the Computation Period were                        . The maximum Capital Expenditures permitted pursuant to clause (a) of Section 7.2.7 of the Credit Agreement for the Computation Period were $            , as computed on Attachment 3 hereto.

        IN WITNESS WHEREOF, the Borrower has caused this Compliance Certificate to be executed and delivered, and the certification and warranties contained herein to be made, by its [president][chief executive officer][chief financial officer][chief accounting officer][treasurer] on                        .

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:

Attachment 1
(to    /    /    Compliance
Certificate

(3)LEVERAGE RATIO
ON                       
(THE "COMPUTATION DATE")

(3)

At the close of any Fiscal Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters; provided that if, during any such period, Holdings, the Borrower or any of the Restricted Subsidiaries shall have made one or more acquisitions or dispositions, the Leverage Ratio for such period shall be calculated on a pro forma basis, in accordance with Section 1.4(b) of the Credit Agreement, as if each such acquisition or disposition had been made, and all Indebtedness incurred to finance each such acquisition had been incurred, on the first day of such period.

Leverage Ratio:

1.	total Debt less cash and Cash Equivalent Investments of Holdings, the Borrower and the Restricted Subsidiaries on a consolidated basis outstanding on the Computation Date	$
2.	Net Income (the net income of Holdings, the Borrower and the Restricted Subsidiaries for the Computation Period on a consolidated basis, excluding (a) net losses or gains realized in connection with any sale, lease, conveyance or other disposition of any asset (other than in the ordinary course of business) and (b) extraordinary or nonrecurring income (or expense), any restructuring costs, or costs reasonably determined by the Borrower to be associated with facility or product line closures, consolidation or rationalization, together with any related provision for taxes and any compensation charge incurred in connection with the Transaction; provided that the Net Income or loss of any Person that is not Holdings, the Borrower or a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid to Holdings, the Borrower or a Restricted Subsidiary in cash)	$
3.	the amount deducted in determining Net Income representing (i) net periodic post-retirement benefits paid in cash and (ii) depreciation, amortization and all other non-cash charges or expenses (excluding any non-cash charges representing an accrual of or reserve for cash charges to be paid within the next twelve months and any non-cash charges representing reversals of items increasing Net Income in any prior period)	$

4.	the amount deducted in determining Net Income representing income taxes (whether paid or deferred)	$
5.	the amount deducted in determining Net Income representing (i) Interest Expense for the Computation Period, and (ii) fees, expenses and management bonuses for the Computation Period (to the extent, in the case of management bonuses, paid at or prior to the Effective Date)	$
6.	any non-capitalized transaction fees and costs incurred during the Computation Period in connection with the Transaction	$
7.	any amounts deducted in determining Net Income during the Computation Period representing mark-to-market losses that must be recognized currently in net income under Financial Accounting Standards Board Statement 133	$
8.	any amounts deducted in determining Net Income during the Computation Period representing payments made pursuant to the Financial Advisory Agreement	$
9.	any amounts deducted in determining net losses during the Computation Period in connection with the Borrower's employee loan forgiveness program	$
10.	any amounts added in determining Net Income during the Computation Period representing mark-to-market gains that must be recognized currently in net income under Financial Accounting Standards Board Statement 133	$
11.	EBITDA: The sum of Items 2 through 9 minus Item 10	$
12.	LEVERAGE RATIO: ratio of Item 1 to Item 11		:1

Attachment 2
(to    /    /    Compliance
Certificate)

(5)INTEREST COVERAGE RATIO
on          
(the "Computation Date")

(5)

At the close of any Fiscal Quarter, the ratio computed for the period consisting of such Fiscal Quarter and each of the three immediately prior Fiscal Quarters; provided that for the first three Fiscal Quarters ending after the Effective Date, Interest Expense shall be determined on an Annualized basis; provided further that if, during any such period, Holdings, the Borrower or any of the Restricted Subsidiaries shall have made one or more acquisitions or dispositions, the Interest Coverage Ratio for such period shall be calculated on a pro forma basis, in accordance with Section 1.4(b) of the Credit Agreement, as if each such acquisition or disposition had been made, and all Indebtedness incurred to finance each such acquisition had been incurred, on the first day of such period.

Interest Coverage Ratio:

1.	EBITDA (see Item 11 of Attachment 1)	$
2.	the cash portion of Interest Expense (net of interest income and excluding any mark-to-market gains or losses that must be recognized currently in computing interest expense under Financial Accounting Standards Board Statement 133) for all such Fiscal Quarters	$
3.	INTEREST COVERAGE RATIO: ratio of Item 1 to Item 2		:1

Attachment 3
(to    /    /    Compliance
Certificate)

MAXIMUM CAPITAL EXPENDITURES
on                      
(the "Computation Date")

Maximum Capital Expenditures:(5)(6)

(5)

Included only for Compliance Certificates in respect of the Fiscal Year-end.

(6)

Capital Expenditures shall not exceed an amount (the "Base Amount") equal to (i) (A) in respect of Fiscal Year 2006, $27,000,000, (B) in respect of Fiscal Year 2007, $30,000,000, and (C) thereafter, $[$35,000,000]; plus (ii) an aggregate amount in addition to the Base Amount over the term of this Agreement equal to $[10,000,000]; provided that, to the extent the Base Amount exceeds the aggregate amount of Capital Expenditures (other than amounts permitted to be made pursuant to clause (a)(ii) or clause (b) of Section 7.2.7 of the Credit Agreement) actually made during such Fiscal Year, such excess amount (up to an aggregate of 50% of the amount of the Base Amount for such Fiscal Year) may be carried forward to (but only to) the next succeeding Fiscal Year.

1.	Base Amount	$
2.	Carry over from prior Fiscal Year (if any)	$
3.	Unused portion of $10,000,000 permitted by clause (a)(ii) of Section 7.2.7 of the Credit Agreements as of beginning of Computation Period	$
4.	Maximum permitted Capital Expenditures for Computation Period: The sum of Items 1, 2 and 3	$
5.	Capital Expenditures made or committed to be made in Computation Period	$
6.	Carry forward for next Fiscal Year: The lesser of (x) Item 1 minus the excess of Item 5 over Item 2 and (y) 50% of Item 1	$

EXHIBIT F

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

        This AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this "Security Agreement"), dated as of December 22, 2005, is made by MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Company"), MERRILL CORPORATION, a Minnesota Corporation ("Holdings"), EACH SUBSIDIARY (such capitalized term and other terms used in this Security Agreement to have the meanings set forth in (or incorporated by reference in) Article I) OF THE COMPANY (each a "Subsidiary Grantor," and collectively, the "Subsidiary Grantors"; the Company, Holdings, and the Subsidiary Grantors are each individually a "Grantor," and collectively, the "Grantors"), in favor of BANK OF AMERICA, N.A. ("BANA"), as Collateral Agent (together with any successor(s) thereto in such capacity, the "Collateral Agent") for each of the Secured Parties.

W I T N E S S E T H:

        WHEREAS, Company, Holdings, the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), BANA, as administrative agent and collateral agent for the Lenders, Credit Suisse ("Credit Suisse"), as joint lead arranger and joint bookrunner, BAS, as a joint lead arranger and a joint bookrunner and Calyon New York Branch, National City Bank, and LaSalle Bank, N.A. as the co-documentation agents are entering into that certain $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of the date hereof (as it may be amended, restated, supplemented or otherwise modified, the "Credit Agreement") in order to amend, restate and combine the Existing Credit Agreements (as defined in the Credit Agreement) to provide (i) for the continuation of the Existing Loans and the continuation of certain letters of credit outstanding under the Existing Base Agreement Credit, in each case subject to the amendment of the terms thereof as provided in this Agreement, (ii) that on the Effective Date, the aggregate commitments available under the Existing Credit Agreements will be increased to $535,000,000, (iii) that the new Loans in excess of the Existing Loans shall be made by the Lenders to Borrower (x) on the Effective Date, as Initial Term Loans, (y) on the Effective Date and from time to time thereafter, as Revolving Loans and Revolving Loan Commitments and (z) on a date on or after the Effective Date and on or prior to January 31, 2006, as Delayed Draw Term Loans, and (iv) for certain other amendments to the Existing Credit Agreements and related documents on the terms set forth herein;

        WHEREAS, in conjunction with the Existing Credit Agreements, the Pledge and Security Agreement dated as of July 30, 2004 (the "Existing Security Agreement") was entered into among the Grantors party thereto (together with each Subsidiary of the Company that became a "Grantor" thereunder prior to the date hereof, the "Existing Grantors") and the Collateral Agent pursuant to which such Grantors granted a security interest in substantially all of their personal property collateral to secure the payment and performance in full when due of all obligations described therein; and

        WHEREAS, in conjunction with the Credit Agreement, the parties to the Existing Security Agreement intend to amend and restate the Existing Security Agreement and to confirm the grant of the security interest in favor of the Collateral Agent under the Existing Security Agreement to secure the payment and performance when due of all Secured Obligations;

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Lenders and the Issuer to make Credit Extensions to the Company pursuant to the Credit Agreement and to induce the Secured Parties to maintain and enter into Rate Protection Agreements and Cash Management Services Agreements, each Grantor and the Collateral Agent agree, for the benefit of each Secured Party that the Existing Security Agreement is hereby amended and restated to read in its entirety, as follows.

ARTICLE I
DEFINITIONS

        SECTION 1.1    Certain Terms.    The following terms (whether or not underscored) when used in this Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

        "BANA" is defined in the preamble.

        "BAS" is defined in the preamble.

        "Collateral" is defined in Section 2.2.

        "Collateral Account" is defined in clause (c) of Section 4.4.

        "Collateral Agent" is defined in the preamble.

        "Company" is defined in the recitals.

        "Computer Hardware and Software Collateral" means:

        (a)   all computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware;

        (b)   all software programs (including both source code, object code and all related applications and data files), whether now owned, licensed or leased or hereafter acquired by any Grantor, designed for use on the computers and electronic data processing hardware described in clause (a) above;

        (c)   all firmware associated therewith;

        (d)   all documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such hardware, software and firmware described in the preceding clauses (a) through (c); and

        (e)   all rights with respect to all of the foregoing, including any and all copyrights, licenses, options, warranties, service contracts, program services, test rights, maintenance

rights, support rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing.

        "Control Agreement" means an agreement in form and substance satisfactory to the Collateral Agent which provides for the Collateral Agent to have "control" (as defined in Section 9-104 of the UCC) with respect to a Deposit Account.

"Controlled Deposit Accounts" means each of the Deposit Accounts identified on Schedule IV hereto.

        "Copyright Collateral" means all copyrights of any Grantor, whether statutory or common law, registered or unregistered and whether published or unpublished, now or hereafter in force throughout the world including all of such Grantor's right, title and interest in and to all copyrights registered in the United States Copyright Office or anywhere else in the world, and registrations and recordings thereof and all applications for registration thereof, whether pending or in preparation, all copyright licenses, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.

        "Credit Agreement" is defined in the recitals.

        "Deposit Accounts" means any and all demand, time, savings, passbook or other accounts with a bank or other financial institution, including general deposit and cash concentration accounts, in which any cash, payments or receipts of or for the benefit of any Grantor are or are to be deposited, and all deposits therein and investments thereof, whether now or at any time hereafter existing.

        "Distributions" means all non-cash dividends paid on Capital Stock constituting Collateral, liquidating dividends paid on Capital Stock constituting Collateral, shares of Capital Stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, mergers, consolidations, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Capital Stock constituting Collateral, but excluding Dividends.

        "Dividends" means cash dividends and cash distributions with respect to any Capital Stock constituting Collateral that are not a liquidating dividend.

        "Equipment" is defined in clause (c) of Section 2.2.

        "Existing Grantors" is defined in the recitals.

        "Existing Security Agreement" is defined in the recitals.

        "Grantor" is defined in the preamble.

        "Holdings" is defined in the preamble.

        "Intellectual Property Collateral" means, collectively, the Computer Hardware and Software Collateral, the Copyright Collateral, the Patent Collateral, the Trademark Collateral and the Trade Secrets Collateral.

        "Intercompany Note" means a promissory note payable to any Grantor substantially in the form of Exhibit A hereto (with such modifications as agreed to by the Collateral Agent), as amended, modified or supplemented from time to time in accordance with Section 4.2.3, together with any notes delivered in extension or renewal thereof or substitution therefor.

        "Inventory" is defined in clause (d) of Section 2.2.

        "Lenders" is defined in the recitals.

        "Patent Collateral" means:

        (a)   all letters patent and applications for letters patent throughout the world, including all patent applications in preparation for filing anywhere in the world;

        (b)   all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a);

        (c)   all patent licenses and other agreements providing any Grantor with the right to use any items of the type referred to in clauses (a) and (b);

        (d)   the right to sue third parties for past, present or future infringements of any Patent Collateral described in clauses (a) and (b) and, to the extent applicable, clause (c); and

        (e)   all proceeds of, and rights associated with, the foregoing (including license royalties and proceeds of infringement suits), and all rights corresponding thereto throughout the world.

        "Receivables" is defined in clause (e) of Section 2.2.

        "Related Contracts" is defined in clause (e) of Section 2.2.

        "Securities Act" is defined in clause (a) of Section 6.2.

        "Security Agreement" is defined in the preamble.

        "Specified Event" means the occurrence and continuance of a Default under clause (b), (c) or (d) of Section 8.1.9 of the Credit Agreement or any other Event of Default (as defined in the Credit Agreement).

        "Specified Deposit Account" means (i) a Controlled Deposit Account and (ii) any other Deposit Account other than (a) a payroll account, (b) a Deposit Account which has not had, and is not anticipated to have, a balance of at least $100,000 for at least five consecutive Business

Days or (c) a Deposit Account subject to a Lien permitted under clause (a), (c), (f), (j), (l) or (o) of Section 7.2.3 of the Credit Agreement.

        "Subsidiary Grantors" is defined in the preamble.

        "Trademark Collateral" means:

        (a)   (i) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of a like nature, now existing anywhere in the world or hereafter adopted or acquired, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof or any other country or political subdivision thereof or otherwise, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the "Trademark");

        (b)   all Trademark licenses for the grant by or to any Grantor of any right to use any Trademark;

        (c)   all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable, clause (b);

        (d)   the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b) ; and

        (e)   all proceeds of, and rights associated with, the foregoing, including any claim by any Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

        "Trade Secrets Collateral" means all common law and statutory trade secrets and all other confidential or proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of any Grantor (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, and including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

        SECTION 1.2    Credit Agreement Definitions.    Unless otherwise defined herein or the context otherwise requires, each capitalized term used in this Security Agreement and not otherwise defined herein has the meaning provided in the Credit Agreement.

        SECTION 1.3    UCC Definitions.    Unless otherwise defined herein or in the Credit Agreement or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement (whether or not capitalized herein), including its preamble and recitals, with such meanings.

ARTICLE II
SECURITY INTEREST

        SECTION 2.1    Continuing Grant of Security.    Notwithstanding the amendment, restatement and combination of the Existing Credit Agreements, each Existing Grantor hereby confirms that the Existing Security Agreement and all Collateral (as defined therein) encumbered thereby will continue to secure to the fullest extent permitted under applicable laws the payment and performance of its Secured Obligations whether now or hereafter existing under or in respect of the Credit Agreement. The parties also hereby amend and restate the grant of security interest in its entirety as set forth in Section 2.2 below.

        SECTION 2.2    Grant of Security Interest.    Each Grantor hereby assigns, grants, pledges, delivers, and transfers to the Collateral Agent, for its benefit and the ratable benefit of each of the Secured Parties, a continuing security interest in all of the following property of such Grantor, whether now owned or existing or hereafter arising or acquired, and wherever located (the "Collateral"):

        (a)   all Intercompany Notes in which such Grantor has an interest (including each Intercompany Note described in Item A of Schedule I attached hereto (including the right to receive payment of the principal of and accrued interest on such Intercompany Note, and other rights of such Grantor arising in its capacity as the payee of such Intercompany Note));

        (b)   (i) all investment property in which such Grantor has an interest (including the Capital Stock of each corporate issuer described in Item B of Schedule I attached hereto and the Capital Stock of other Subsidiaries of such Grantor (other than Subsidiaries of such Grantor of the types described in clause (ii) below) formed or acquired after the Effective Date and pledged to the Collateral Agent pursuant to Section 7.1.7 of the Credit Agreement) and (ii) all other Capital Stock which represents interests in limited liability companies or partnerships in which such Grantor has an interest (including the Capital Stock of each limited liability company or partnership described in Item B of Schedule I attached hereto and the Capital Stock of other partnership or limited liability company Subsidiaries of such Grantor formed or acquired after the Effective Date and pledged to the Collateral Agent pursuant to Section 7.1.7 of the Credit Agreement), in each case together with Dividends and Distributions payable in respect of the Collateral described in the foregoing clauses (b)(i) and (b)(ii);

        (c)   all equipment of such Grantor, including all parts thereof and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor and all accessories related thereto (collectively referred to as the "Equipment");

        (d)   all inventory in all of its forms of such Grantor, including (i) all raw materials and work in process therefor, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee), and (iii) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefor (all of the foregoing collectively referred to as the "Inventory");

        (e)   all accounts, contracts, contract rights, chattel paper, documents, instruments, and general intangibles (including tax refunds and all payment intangibles) of such Grantor, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services, and all rights of such Grantor now or hereafter existing in and to all security agreements, guaranties, leases and other contracts securing or otherwise relating to any such accounts, contracts, contract rights, chattel paper, documents, instruments, general intangibles and payment intangibles (all of the foregoing collectively referred to as the "Receivables", and any and all such security agreements, guaranties, leases and other contracts collectively referred to as the "Related Contracts");

        (f)    all Intellectual Property Collateral of such Grantor;

        (g)   all Deposit Accounts of such Grantor (including the Collateral Account), all cash, checks, drafts, notes, bills of exchange, money orders, other like instruments and all investment property held in any of the foregoing (or in sub-accounts thereof) and all interest, earnings and proceeds in respect thereof;

        (h)   all books, records, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.2;

        (i)    all of such Grantor's other property and rights of every kind and description and interests therein; and

        (j)    all products, offspring, rents, issues, profits, returns, income, supporting obligations and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in clauses (a) through (j), and, to the extent not otherwise included, all payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral).

Notwithstanding the foregoing, "Collateral" shall not include (i) any Grantor's real property leaseholds and (ii) any general intangibles or other rights arising under any contracts, instruments, licenses or other documents as to which the grant of a security interest would constitute a violation of a valid and enforceable restriction in favor of a third party on such grant

(other than to the extent that any such restriction would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) of any relevant jurisdiction), unless and until any required consents shall have been obtained, (iii) Capital Stock of an issuer that is a Foreign Subsidiary (other than a Foreign Subsidiary that (i) is treated as a partnership under the Code or (ii) is not treated as an entity that is separate from (A) such Grantor, (B) any Person that is treated as a partnership under the Code or (C) any "United States person" (as defined in Section 7701(a)(30) of the Code)) of such Grantor, in excess of 65% of the total combined voting power of all Capital Stock of each such Foreign Subsidiary, (iv) motor vehicles the perfection of a security interest in which is excluded from the Uniform Commercial Code in the relevant jurisdiction, (v) as-extracted collateral, (vi) farm products and (vii) consumer goods.

        SECTION 2.3    Security for Obligations.    This Security Agreement and the Collateral in which the Collateral Agent for the benefit of the Secured Parties is granted a security interest hereunder by any Grantor secures the payment of all Secured Obligations of such Grantor now or hereafter existing.

        SECTION 2.4    Grantor Remains Liable.    Anything herein to the contrary notwithstanding

        (a)   each Grantor will remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Security Agreement had not been executed;

        (b)   the exercise by the Collateral Agent of any of its rights hereunder will not release any Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and

        (c)   neither the Collateral Agent nor any other Secured Party will have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Security Agreement, nor will the Collateral Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

        SECTION 3.1    Representations and Warranties.    In order to induce the Agents and the other parties thereto to enter into the Credit Agreement and to induce the Secured Parties to maintain and continue to make Credit Extensions thereunder, and to induce Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, each Grantor represents and warrants to each Secured Party as set forth below.

        SECTION 3.2    As to Capital Stock of Subsidiaries.    With respect to any Subsidiary of such Grantor that is

        (a)   a corporation, business trust, joint stock company or similar Person, all Capital Stock issued by such Subsidiary is duly authorized and validly issued, fully paid

and non-assessable, and (except in the case of certain Foreign Subsidiaries), as of the Effective Date, represented by a certificate; and

        (b)   a partnership or limited liability company, no Capital Stock issued by such Subsidiary (i) is dealt in or traded on securities exchanges or in securities markets, (ii) expressly provides that such Capital Stock is a security governed by Article 8 of the UCC or (iii) is held in a securities account.

The percentage of the issued and outstanding Capital Stock of each such Subsidiary pledged by such Grantor hereunder as of the Effective Date is as set forth on Schedule I attached hereto.

        SECTION 3.3    Intercompany Notes.    All Intercompany Notes of such Grantor have been duly authorized, executed, endorsed, issued and delivered, and are the legal, valid and binding obligation of the issuers thereof, and are not in default.

        SECTION 3.4    Jurisdiction of Organization, Location of Collateral, etc.    The jurisdiction in which each Grantor is located within the meaning of Section 9-307 of the UCC is set forth in Item A of Schedule II attached hereto. During the four months preceding the date hereof, such Grantor has not been known by any legal name different from the one set forth on the signature page hereto, nor has such Grantor been the subject of any merger or other corporate reorganization, except as set forth in Item B of Schedule II attached hereto. All Receivables evidenced by a promissory note or other instrument, negotiable document or chattel paper have, to the extent that the aggregate principal amount thereof exceeds $1,000,000, been duly endorsed or accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent and delivered and pledged to the Collateral Agent pursuant to Section 4.8. Such Grantor's federal taxpayer identification number and organizational identification number, if any, are (and, during the four months preceding the date hereof, such Grantor has not had a federal taxpayer identification number or organizational identification number, if any, different from that) set forth in Item C of Schedule II hereto.

        SECTION 3.5    Ownership, No Liens, etc.    Such Grantor owns its Collateral free and clear of any Lien, except for Liens (i) created by this Security Agreement, or (ii) permitted by Section 7.2.3 of the Credit Agreement. No effective financing statement or other filing similar in effect covering any Collateral is on file in any recording office, except those filed in favor of the Collateral Agent relating to this Security Agreement or those filed in connection with Liens permitted pursuant to Section 7.2.3 of the Credit Agreement.

        SECTION 3.6    Negotiable Documents, Instruments and Chattel Paper.    Such Grantor has delivered to the Collateral Agent possession of all originals of all negotiable documents, instruments and tangible chattel paper owned or held by such Grantor, to the extent that the aggregate principal amount exceeds $1,000,000 on the Effective Date and agrees that it will, promptly following receipt, deliver to the Collateral Agent possession of all originals of negotiable documents, instruments and tangible chattel paper that it acquires following the Effective Date, to the extent that the aggregate principal amount exceeds $1,000,000. Such Grantor does not own, as of the Effective Date, any electronic chattel paper in a principal amount exceeding $1,000,000 and agrees that it will, promptly following its acquisition thereof, take such action as shall be necessary to provide the Collateral Agent with "control" of any electronic

chattel paper that it acquires following the Effective Date, to the extent that the aggregate principal amount thereof exceeds $1,000,000.

        SECTION 3.7    Intellectual Property Collateral.    With respect to any Intellectual Property Collateral of such Grantor the loss, impairment or infringement of which could reasonably be expected to have a Material Adverse Effect:

        (a)   such Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable, in whole or in part;

        (b)   such Intellectual Property Collateral is valid and enforceable;

        (c)   such Grantor has made all necessary filings and recordations to protect its interest in the Intellectual Property Collateral described in Schedule III hereto, including recordations of all of its interests in the Patent Collateral and Trademark Collateral in the United States Patent and Trademark Office and (subject to the terms hereof and of the Credit Agreement) in corresponding offices throughout the world, and its claims to the Copyright Collateral in the United States Copyright Office and (subject to the terms of the Credit Agreement) in corresponding offices throughout the world (except, in the case of any filing or recordation outside the United States Patent and Trademark Office or the United States Copyright Office where the failure to make such recordation or filing would not have a Material Adverse Effect, it being understood that the Existing Intellectual Property Filings shall be deemed to satisfy the requirements hereunder to make such recordations with respect to the Intellectual Property Collateral covered thereby);

        (d)   such Grantor is the exclusive owner of the entire and unencumbered right, title and interest in and to such Intellectual Property Collateral (other than licenses thereof existing on the Effective Date or granted in the ordinary course of business or in connection with the sale, transfer or disposition of assets or businesses in accordance with the Credit Agreement) and no claim has been made that the use of such Intellectual Property Collateral does or may violate the asserted rights of any third party; and

        (e)   except as permitted by Section 4.6, such Grantor has performed and will continue to perform all acts and has paid and will continue to pay all required fees and taxes to maintain each and every such item of Intellectual Property Collateral in full force and effect throughout the world, as applicable (except where the failure to perform or pay would not have a Material Adverse Effect).

Such Grantor owns directly or is entitled to use by license or otherwise, all patents, Trademarks, Trade Secrets, copyrights, mask works, licenses, technology, know-how, processes and rights with respect to any of the foregoing used in or necessary for the conduct of such Grantor's business.

        SECTION 3.8    [INTENTIONALLY OMITTED].    

        SECTION 3.9    Validity, etc.    This Security Agreement creates a valid security interest in the Collateral of such Grantor (subject to Section 9-315 of the UCC and Liens permitted

pursuant to Section 7.2.3 of the Credit Agreement and excluding Collateral described only in clause (i) of Section 2.2) securing the payment of the Obligations of such Grantor. Such Grantor has filed or caused to be filed all statements in the appropriate offices therefor (or has executed (to the extent applicable) and delivered to the Collateral Agent originals thereof suitable for filing in such offices) (excluding in each case filings outside the United States in respect of Intellectual Property Collateral) and has taken all of the actions necessary (including (i) in the case of Collateral comprised of Capital Stock of any of its Subsidiaries that constitutes certificated securities or Intercompany Notes held by it or to the extent required under Section 3.6, instruments, delivery of the certificate evidencing such Collateral, or such instruments, to the Collateral Agent, duly endorsed in blank and (ii) in the case of Collateral comprised of Specified Deposit Accounts, causing the Collateral Agent to have "control" (as defined in Section 9-104 of the UCC)) to create perfected and (subject to Section 7.2.3 of the Credit Agreement) first-priority security interests in the applicable Collateral (other than electronic chattel paper having an aggregate principal amount of $1,000,000 or less, letter-of-credit rights that do not constitute supporting obligations, Deposit Accounts that do not constitute Specified Deposit Accounts, Intellectual Property the perfection of a security interest in which requires a filing outside the United States and Collateral described only in clause (i) of Section 2.2); provided that (i) filings with the United States Patent and Trademark Office and the United States Copyright Office and the entry into Control Agreements with respect to Specified Deposit Accounts may be deferred to the extent permitted under Section 7.1.11 of the Credit Agreement and the security interest created hereunder in certain Intellectual Property Collateral and Specified Deposit Accounts may, to the extent that perfection thereof requires any such filing or Control Agreement, remain unperfected pending such filings or the execution of such Control Agreements and (ii) the Existing Intellectual Property Filings shall be deemed to satisfy the perfection requirements hereunder with respect to the Collateral covered thereby.

        SECTION 3.10    Authorization, Approval, etc.    With respect to such Grantor, except as have been obtained or made and are in full force and effect, no authorization, approval or other action by, and except, in the case of clause (b) below, for (i) the filing of Uniform Commercial Code financing statements in the Uniform Commercial Code filing office in the jurisdiction indicated in Item A of Schedule II hereto or such other jurisdiction as shall have been notified to the Collateral Agent pursuant to Section 4.8(d) hereof, (ii) in respect of certain Intellectual Property Collateral of such Grantor, the filing of Trademark Security Agreements and Patent Security Agreements with the United States Patent and Trademark Office and the filing of Copyright Security Agreements with the United States Copyright Office and (iii) in the case of certain Intellectual Property Collateral, certain filings outside the United States, no notice to or filing with, any Governmental Authority or regulatory body is required (except in the case of Receivables owing from any Governmental Authority or certain Intellectual Property Collateral registered with any Governmental Authority outside the U.S.), either

        (a)   for the grant by such Grantor of the security interest granted hereby, the pledge by such Grantor of any Collateral pursuant hereto or for the execution, delivery and performance of this Security Agreement by such Grantor;

        (b)   for the perfection of or the exercise by the Collateral Agent of its rights and remedies hereunder; or

        (c)   for the exercise by the Collateral Agent of the voting or other rights provided for in this Security Agreement, or (except as may be required in connection with a disposition of any Collateral consisting of securities by laws affecting the offering and sale of securities generally) the remedies in respect of the Collateral pursuant to this Security Agreement.

ARTICLE IV
COVENANTS

        SECTION 4.1    Certain Covenants.    Each Grantor covenants and agrees that, at all times prior to the Termination Date, such Grantor will perform, comply with and be bound by the obligations set forth below.

        SECTION 4.2    As to Investment Property and Intercompany Notes, Etc.

        SECTION 4.2.1[INTENTIONALLY OMITTED]    

        SECTION 4.2.2    Stock Powers, etc.    Such Grantor agrees that all certificated securities delivered by such Grantor pursuant to this Security Agreement will be accompanied by duly executed undated blank stock powers, or other equivalent instruments of transfer acceptable to the Collateral Agent.

        SECTION 4.2.3    Continuous Pledge.    Such Grantor will, at all times (subject to the terms of the Credit Agreement), deliver and keep pledged to the Collateral Agent (i) all certificated securities in respect of Capital Stock of any of its Subsidiaries constituting Collateral of such Grantor and (ii) all Intercompany Notes of such Grantor (duly endorsed by such Grantor to the order of the Collateral Agent).

        SECTION 4.2.4    Voting Rights; Dividends, etc.    Such Grantor agrees:

        (a)   promptly upon the occurrence and during the continuance of a Specified Event and the giving of notice by the Collateral Agent of its intent to exercise its remedies (in the case of an Event of Default), to deliver (properly endorsed where required hereby or requested by the Collateral Agent) to the Collateral Agent all Dividends and Distributions on shares of Capital Stock of any Subsidiary constituting Collateral, all interest, principal, other cash payments on Intercompany Notes, and all proceeds of any such Collateral, all of which shall be held by the Collateral Agent as additional Collateral; and

        (b)   after any Event of Default shall have occurred and be continuing and the Collateral Agent has notified such Grantor of the Collateral Agent's intention to exercise its voting power under this clause, such Grantor agrees, to the extent permitted by applicable law and, in the case of such Capital Stock that is not issued by a Subsidiary, such issuer's organizational documents, (i) that the Collateral Agent may exercise (to the exclusion of such Grantor) the voting power and all other incidental rights of ownership with respect to any shares of Capital Stock of any Subsidiary constituting Collateral and such Grantor hereby grants the Collateral Agent an irrevocable proxy, exercisable under such circumstances, to vote such shares of Capital Stock; and (ii) promptly to deliver to

the Collateral Agent such additional proxies and other documents as may be necessary to allow the Collateral Agent to exercise such voting power.

All Dividends, Distributions, interest, principal, cash payments, and proceeds which may at any time and from time to time be held by any Grantor but which such Grantor is then obligated to deliver to the Collateral Agent, shall, until delivery to the Collateral Agent, be held by such Grantor separate and apart from its other property in trust for the Collateral Agent. The Collateral Agent agrees that unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the notice referred to in clause (b), such Grantor will have the exclusive voting power with respect to any shares of Capital Stock of any Subsidiary constituting Collateral of such Grantor and the Collateral Agent will, upon the written request of such Grantor, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Grantor which are necessary to allow such Grantor to exercise that voting power; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or action taken by such Grantor that would impair any such Collateral or be inconsistent with or violate any provision of any Loan Document (including this Security Agreement).

        SECTION 4.3    As to Equipment and Inventory.    Such Grantor hereby agrees that it will cause the Equipment to be maintained and preserved in accordance with Section 7.1.3 of the Credit Agreement. Such Grantor will keep all of its Equipment and Inventory in the United States (other than any such Equipment and Inventory (i) that is leased or transferred to a Foreign Subsidiary in a transaction not prohibited by the Credit Agreement, (ii) that is not of material economic value or (iii) that is transferred in the ordinary course of business), or provide the Collateral Agent with 30 days' prior written notice of its intent to move any such Collateral outside the United States.

        SECTION 4.4    As to Receivables.    (a) [INTENTIONALLY OMITTED]

        (b)   If at any time any Grantor shall open a Deposit Account that is a Specified Deposit Account, or any Deposit Account of any Grantor not previously a Specified Deposit Account shall become a Specified Deposit Account, such Grantor, the depository bank in respect of such Specified Deposit Account and the Collateral Agent shall enter a Control Agreement in respect of such Specified Deposit Account. The Collateral Agent will not give any notice of exclusive control or instructions pursuant to any Control Agreement with respect to any Specified Deposit Accounts unless it has given, or is contemporaneously giving, notice pursuant to clause (c) of this Section.

        (c)   Upon written notice by the Collateral Agent to such Grantor pursuant to this clause, all proceeds of Collateral received by such Grantor, which proceeds are Collateral, shall be delivered in kind to the Collateral Agent for deposit to a deposit account (the "Collateral Account") of such Grantor maintained with the Collateral Agent, and such Grantor shall not commingle any such proceeds, and shall hold separate and apart from all other property, all such proceeds in express trust for the benefit of the Collateral Agent until delivery thereof is made to the Collateral Agent. The Collateral Agent will not give the notice referred to in the preceding sentence unless there shall have occurred and be continuing a Specified Event. No funds, other than proceeds of Collateral, will be deposited in the Collateral Account.

        (d)   The Collateral Agent shall have the right to apply any amount in the Collateral Account to the payment of any Obligations of such Grantor which are due and payable or payable upon demand. The Collateral Agent may at any time transfer to such Grantor's general demand deposit account at the Collateral Agent any or all of the collected funds in the Collateral Account; provided, however, that any such transfer shall not be deemed to be a waiver or modification of any of the Collateral Agent's rights under this clause.

        SECTION 4.5    As to Collateral.    (a) Until such time as the Collateral Agent shall notify such Grantor of the revocation of such power and authority (which notice may not be given unless a Specified Event shall have occurred and be continuing), such Grantor may, in accordance with the Credit Agreement, at its own expense, refine, process, store, transport, sell, lease or furnish under the contracts of service any of the Inventory, and use and consume, in accordance with the Credit Agreement, any raw materials, including work in process or materials. The Collateral Agent, however, may, at any time after such revocation of such power and authority, notify any parties obligated on any of the Collateral to make payment to the Collateral Agent of any amounts due or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. Upon request of the Collateral Agent (which request may not be made unless a Specified Event shall have occurred and be continuing), such Grantor will, at its own expense, notify any parties obligated on any of the Collateral to make payment to the Collateral Agent of any amounts due or to become due thereunder.

        (b)   Following the occurrence and during the continuation of a Specified Event, the Collateral Agent is authorized to endorse, in the name of such Grantor, any item, howsoever received by the Collateral Agent, representing any payment on or other proceeds of any of the Collateral.

        SECTION 4.6    As to Intellectual Property Collateral.    Such Grantor covenants and agrees to comply with the following provisions as such provisions relate to any Intellectual Property Collateral of such Grantor material to the operations or business of such Grantor:

        (a)   such Grantor will not (i) do or fail to perform any act whereby any of the Patent Collateral may lapse or become abandoned or dedicated to the public or unenforceable, (ii) permit any of its licensees to (A) fail to continue to use any of the Trademark Collateral in order to maintain all of its Trademark Collateral in full force free from any claim of abandonment for non-use, (B) fail to maintain as in the past the quality of products and services offered under all of its Trademark Collateral, (C) fail to use a notice of registration as appropriate in connection with goods using any such Trademark Collateral registered with the United States Patent and Trademark Office, or (D) do or permit any act or knowingly omit to do any act whereby any of such Grantor's Trademark Collateral may lapse or become invalid or unenforceable or (iii) do or permit any act or knowingly omit to do any act whereby any of such Grantor's Copyright Collateral or any of such Grantor's Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof, unless, in any such case, such Grantor shall

either (x) determine that to do otherwise could not reasonably be expected to have a Material Adverse Effect, or (y) have a valid business purpose to do otherwise;

        (b)   such Grantor shall notify the Collateral Agent upon each delivery of a Compliance Certificate as required pursuant to the Credit Agreement, if it knows, or has reason to know, that any application or registration relating to any material item of such Grantor's Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office, the United States Copyright Office or any court) regarding such Grantor's ownership of any of its Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same;

        (c)   such Grantor shall notify the Collateral Agent upon each delivery of a Compliance Certificate as required pursuant to the Credit Agreement, of the prior filing of any application for the registration of any of such Grantor's Intellectual Property Collateral with the United States Patent and Trademark Office or the United States Copyright Office, and upon request of the Collateral Agent, execute and deliver all agreements, instruments and documents as the Collateral Agent may reasonably request to evidence the Collateral Agent's security interest in such Intellectual Property Collateral;

        (d)   such Grantor will take all necessary steps, including in any proceeding before the United States Patent and Trademark Office or the United States Copyright Office, to maintain and pursue any application (and to obtain the relevant registration) filed with respect to, and to maintain any registration of, the Intellectual Property Collateral, including the filing of applications for renewal, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and the payment of fees and taxes (except to the extent that dedication, abandonment or invalidation is permitted under the foregoing clauses (a), (b) or (c)); and

        (e)   if such Grantor shall own any Intellectual Property Collateral, such Grantor will promptly (but no less than quarterly) execute and deliver to the Collateral Agent (as applicable) a Patent Security Agreement, Trademark Security Agreement and Copyright Security Agreement in the forms of Exhibit B, Exhibit C and Exhibit D hereto, respectively, following its obtaining an interest in Intellectual Property, and shall execute and deliver to the Collateral Agent any other document required to acknowledge or register or perfect the Collateral Agent's interest in the U.S. in any part of the Intellectual Property Collateral.

        SECTION 4.7    [INTENTIONALLY OMITTED].

        SECTION 4.8    Further Assurances, etc.    Such Grantor agrees that, from time to time at its own expense, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect, preserve and protect any security interest granted or

purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor (other than Collateral described only in clause (i) of Section 2.2); provided that, so long as no Event of Default has occurred and is continuing, no Grantor shall (i) be required to make any filings in any jurisdiction outside the United States in respect of Intellectual Property Collateral, (ii) be required to enter into a Control Agreement with respect to Investment Property, (iii) except as expressly provided in clause (b) of Section 4.4, be required to enter into a Control Agreement in respect of any Deposit Account, (iv) except as provided in Section 4.2.3 or clause (a) below, be required to deliver or endorse any instrument, negotiable document or tangible chattel paper, (v) except as provided in Section 4.2.3, be required to deliver or endorse any certificated securities, (vi) except as provided in Section 3.6, be required to take any action to provide the Collateral Agent with "control" in respect of any electronic chattel paper or (vii) be required to take any action to perfect any security interest in Collateral of the type described in clause (b) of Section 2.2 under the laws of any jurisdiction outside the United States. Without limiting the generality of the foregoing, such Grantor will, subject to the proviso to the foregoing sentence

        (a)   if any Receivable owing to such Grantor shall be evidenced by an instrument, negotiable document or tangible chattel paper, if the aggregate principal amount of all such instruments, negotiable documents and tangible chattel paper exceeds $1,000,000, deliver and pledge to the Collateral Agent hereunder such instrument, negotiable document or tangible chattel paper duly endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent;

        (b)   file (or cause to be filed) or authorize the filing of such Filing Statements or continuation statements, or amendments thereto, and execute and file (or cause to be filed) such other instruments or notices (including, at the request of the Collateral Agent, any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Collateral Agent hereby;

        (c)   furnish to the Collateral Agent, from time to time at the Collateral Agent's reasonable request, statements and schedules further identifying and describing such Grantor's Collateral and such other reports in connection with its Collateral as the Collateral Agent may reasonably request, all in reasonable detail; and

        (d)   not change its name or place of incorporation or organization or federal taxpayer identification number except upon 30 days' prior written notice (or such shorter notice as may be agreed by the Collateral Agent) to the Collateral Agent; if such Grantor is organized outside of the United States, it will not change its "location" as determined in accordance with Section 9-307 of the UCC and as set forth in Section 3.4 except upon 30 days' prior written notice to the Collateral Agent.

With respect to the foregoing and the grant of the security interest hereunder, each Grantor hereby acknowledges that the Collateral Agent may file one or more financing or continuation statements, and amendments thereto, relative to all or any part of such Grantor's Collateral. Each Grantor agrees that a carbon, photographic or other reproduction of this Security Agreement or any financing statement covering such Grantor's Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Each Grantor hereby authorizes the Collateral Agent to file financing statements describing as the collateral covered thereby "all of the debtor's personal property or assets" or words to that effect, notwithstanding that such wording may be broader in scope than the Collateral described in this Agreement.

ARTICLE V
THE COLLATERAL AGENT

        SECTION 5.1     Collateral Agent Appointed Attorney-in-Fact.    Each Grantor hereby irrevocably appoints the Collateral Agent such Grantor's attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent's discretion, following the occurrence and during the continuance of an Event of Default and notice to such Grantor, to take any action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Security Agreement, including:

        (a)   to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral;

        (b)   to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) above;

        (c)   to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of such Grantor's Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of such Collateral; and

        (d)   to perform the affirmative obligations of such Grantor hereunder (including all obligations of such Grantor pursuant to Section 4.8).

Such Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.

        SECTION 5.2    Collateral Agent May Perform.    If any Grantor fails to perform any agreement contained herein within 30 days after written notice from the Collateral Agent, the Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by such Grantor pursuant to Section 6.4.

        SECTION 5.3    Collateral Agent Has No Duty.    In addition to, and not in limitation of, Section 2.3, the powers conferred on the Collateral Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Collateral and shall not impose any duty on it to

exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or responsibility for

        (a)   ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any investment property, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or

        (b)   taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

        SECTION 5.4    Reasonable Care.    The Collateral Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, however, that the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral, if it takes such action for that purpose as any Grantor reasonably requests in writing at times other than upon the occurrence and during the continuance of any Event of Default, but failure of the Collateral Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

ARTICLE VI

REMEDIES

        SECTION 6.1    Certain Remedies.    If any Event of Default shall have occurred and be continuing:

        (a)   The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the affected Collateral) and also may

          (i)  require the Grantor to, and such Grantor hereby agrees that it will, at its expense and upon request of the Collateral Agent forthwith, assemble all or part of such Grantor's Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient to both parties, and

         (ii)  without notice except as specified below, sell such Grantor's Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days prior notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may,

without further notice, be made at the time and place to which it was so adjourned.

        (b)   All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied by the Collateral Agent against all or any part of the Grantor's Obligations as follows:

          (i)  first, to the payment of any amounts payable to the Collateral Agent pursuant to Section 10.3 of the Credit Agreement and Section 6.4 of this Security Agreement;

         (ii)  second, subject to clause (c) of Section 4.11 of the Credit Agreement, to the equal and ratable payment of such Grantor's Secured Obligations, in accordance with each Secured Party's Secured Obligations owing to it under or pursuant to any Loan Document, or under or pursuant to any Rate Protection Agreement or Cash Management Services Agreement included in the Secured Obligations as to each Secured Party, applied

        (A)  first to fees and expense reimbursements then due to such Secured Party,

        (B)  then to interest due to such Secured Party,

        (C)  then to pay or prepay principal of the Loans owing to, or to reduce the "credit exposure" of, such Secured Party under such Rate Protection Agreement or Cash Management Services Agreement, as the case may be, and

        (D)  then to pay the remaining outstanding Secured Obligations and Cash Collateralize all Letter of Credit Outstanding;

        (iii)  third, without duplication of any amounts paid pursuant to clause (b)(i) or (ii) above, to the Indemnified Parties to the extent of any amounts owing pursuant to Section 10.4 of the Credit Agreement; and

        (iv)  fourth, to such Grantor or to whomsoever may be lawfully entitled to receive such surplus.

For purposes of this Security Agreement, the "credit exposure" at any time of any Secured Party with respect to a Rate Protection Agreement to which such Secured Party is a party shall be determined at such time in accordance with the customary methods of calculating credit exposure under similar arrangements by the counterparty to such arrangements, taking into account potential interest rate movements and the respective termination provisions and notional principal amount and term of such Rate Protection Agreement.

        (c)   In the case of Collateral consisting of investment property or other Capital Stock, the Collateral Agent may

          (i)  transfer all or any part of such Collateral into the name of the Collateral Agent or its nominee, with or without disclosing that such Collateral is subject to the lien and security interest hereunder,

         (ii)  notify the parties obligated on any of such Collateral to make payment to the Collateral Agent of any amount due or to become due thereunder,

        (iii)  enforce collection of any of such Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto,

        (iv)  endorse any checks, drafts, or other writings in such Grantor's name to allow collection of the Collateral,

         (v)  take control of any proceeds of the Collateral, and

        (vi)  execute (in the name, place and stead of the applicable Grantor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral.

        SECTION 6.2    Securities Laws.    If the Collateral Agent shall determine to exercise its right to sell all or any of any Grantor's Collateral consisting of Capital Stock or other securities of any Subsidiary pursuant to Section 6.1, such Grantor agrees that, upon request of the Collateral Agent, such Grantor will, at its own expense:

        (a)   execute and deliver, and cause each issuer of such Collateral contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Collateral Agent, advisable to register such Collateral under the provisions of the Securities Act of 1933, as from time to time amended (the "Securities Act"), and to use its best efforts to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto;

        (b)   use its best efforts to qualify such Collateral under the state securities or "Blue Sky" laws and to obtain all necessary governmental approvals for the sale of such Collateral, as requested by the Collateral Agent;

        (c)   cause each such issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and

        (d)   do or cause to be done all such other acts and things as may be necessary to make such sale of such Collateral or any part thereof valid and binding and in compliance with applicable law.

Each Grantor further acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Collateral Agent or the Secured Parties by reason of the failure by any Grantor to perform any of the covenants contained in this Section and consequently, to the extent permitted under applicable law, agrees that, if such Grantor shall fail to perform any of such covenants, it shall pay, as liquidated damages and not as a penalty, an amount equal to the value (as determined by the Collateral Agent) of such Collateral on the date the Collateral Agent shall demand compliance with this Section.

        SECTION 6.3    Compliance with Restrictions.    Each Grantor agrees that in any sale of any of its Collateral consisting of Capital Stock or other securities of any Subsidiary whenever an Event of Default shall have occurred and be continuing, the Collateral Agent 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 compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and 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 Authority or official, and such Grantor 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 the Collateral Agent be liable nor accountable to such Grantor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction.

        SECTION 6.4    Indemnity and Expenses.

        (a)   Each Grantor jointly and severally agrees to indemnify the Collateral Agent from and against any and all claims, losses and liabilities arising out of or resulting from this Security Agreement or any Control Agreement (including enforcement of this Security Agreement), except claims, losses or liabilities resulting from the Collateral Agent's gross negligence or willful misconduct.

        (b)   Each Grantor will, upon demand, pay to the Collateral Agent the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Collateral Agent may incur in connection with (i) the administration of each Loan Document, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of such Grantor's Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent or the Secured Parties hereunder, and (iv) the failure by any Grantor to perform or observe any of the provisions hereof.

        SECTION 6.5    Rights of Certain Account Debtors.    Anything in this Security Agreement to the contrary notwithstanding, the rights and remedies of the Collateral Agent and the other

Secured Parties hereunder with respect to promissory notes and general intangibles may, to the extent applicable, be limited by the rights of the account debtors with respect thereto under Section 9-408(c) of the Uniform Commercial Code, and nothing contained herein is intended to violate or otherwise derogate from such rights.

ARTICLE VII
MISCELLANEOUS PROVISIONS

        SECTION 7.1    Loan Document.    This Security Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof, including Article X thereof.

        SECTION 7.2    Binding on Successors, Transferees and Assigns; Assignment.    This Security Agreement shall be binding upon each Grantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and its respective successors, transferees and assigns; provided, however, that no Grantor may (unless otherwise permitted under the terms of the Credit Agreement) assign any of its obligations hereunder without the prior written consent of all Lenders.

        SECTION 7.3    Amendments, etc.    No amendment to or waiver of any provision of this Security Agreement, nor consent to any departure by any Grantor from its obligations under this Security Agreement, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent (on behalf of the Lenders or the Required Lenders, as the case may be, pursuant to Section 10.1 of the Credit Agreement) and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

        SECTION 7.4    Addresses for Notices.    All notices and other communications provided for hereunder shall be in writing (including facsimile communication) and mailed, telecopied or delivered to the appropriate party at the address or facsimile number of such party set forth in or specified pursuant to the Guaranty. All such notices and other communications, when mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or communication, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter.

        SECTION 7.5    Additional Grantors.    Upon the execution and delivery by any other Person of a supplement in the form of Annex I hereto, such Person shall become a "Grantor" hereunder with the same force and effect as if it were originally a party to this Security Agreement and named as a "Grantor" hereunder. The execution and delivery of such supplement shall not require the consent of any other Grantor hereunder, and the rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.

        SECTION 7.6    No Waiver; Remedies.    No failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise

thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

        SECTION 7.7    Section Captions.    Section captions used in this Security Agreement are for convenience of reference only, and shall not affect the construction of this Security Agreement.

        SECTION 7.8    Severability.    Wherever possible each provision of this Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Security Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Security Agreement.

        SECTION 7.9    Governing Law, Entire Agreement, etc.    THIS SECURITY AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS GRANTED HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS AND OTHER AGREEMENTS RELATING TO ANY SECURED OBLIGATION CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

        SECTION 7.10    Counterparts.    This Security Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        SECTION 7.11    Release of Liens.    Upon (i) the sale, transfer or other disposition of Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement), (ii) any Grantor ceasing to be a Restricted Subsidiary of the Company in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement, or (iii) the occurrence of the Termination Date, the security interests granted herein shall automatically terminate with respect to (A) such Collateral (in the case of clause (i)), (B) the Collateral of such Grantor (in the case of clause (ii)) or (C) all Collateral (in the case of clause (iii)). Upon any license of any Intellectual Property Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement) the security interests granted hereunder in such Intellectual Property Collateral shall be subordinated to such license. Upon any such disposition, termination or subordination, the Collateral Agent will, at the applicable Grantor's sole expense, (x) in the case of any such termination or disposition, deliver to the Company, without any representations, warranties or recourse of any kind whatsoever, all Collateral (in the case of a termination) or the Collateral so disposed of (in the case of a disposition) held by the

Collateral Agent hereunder, and (y) in the case of any such termination, disposition or subordination, execute and deliver to the Company such documents as any such Grantor shall reasonably request to evidence such termination, disposition or subordination.

        IN WITNESS WHEREOF, each of the parties hereto has caused this Security Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:
MERRILL CORPORATION
By:
	Name:
	Title:
INVENTIVE MARKETING SERVICES, INC. FMC RESOURCE MANAGEMENT CORPORATION MERRILL/GLOBAL, INC. MERRILL REAL ESTATE COMPANY MERRILL VENTURES, INC. MERRILL FINE ARTS ENGRAVING, INC. MERRILL BRINK INTERNATIONAL CORPORATION CAPTURE MERGER CORP.
By:
	Name:
	Title:

BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name:
	Title:
By:
	Name:
	Title:

SCHEDULE I
to Amended and Restated
Pledge and Security Agreement

Item A.    Intercompany Notes

Grantor Maker Date

Item B.    Capital Stock

	Common Stock
Grantor	Issuer (corporate)	Authorized Shares	Outstanding Shares	% of Shares Pledged

	Limited Liability Company Interests
Grantor	Issuer (limited liability company)	% of Limited Liability Company Interests Pledged	Type of Limited Liability Company Interests Pledged

	Partnership Interests
Grantor	Issuer (partnership)	% of Partnership Interests Pledged	Type of Partnership Interests Pledged

SCHEDULE II
to Amended and Restated
Pledge and Security Agreement

Item A.    Jurisdiction of Incorporation

Item B.    Merger or Other Corporate Reorganization

Item C.    Federal Taxpayer Identification Number/Organizational Identification Number

SCHEDULE III
to Amended and Restated
Pledge and Security Agreement

        Intellectual Property

SCHEDULE IV
to Amended and Restated
Pledge and Security Agreement

        Controlled Deposit Accounts

EXHIBIT A
to Amended and Restated
Pledge and Security Agreement

DEMAND NOTE

$ ,

        FOR VALUE RECEIVED, the undersigned,                         , a                          (the "Maker"), promises to pay to the order of                         , a                          (the "Payee"), on demand, the aggregate unpaid principal amount of all intercompany loans made by the Payee to the Maker.

        The unpaid principal amount of this promissory note (this "Note") from time to time outstanding shall bear interest at a rate of interest equal to such rate per annum as shall be agreed upon from time to time by the Payee and the Maker payable at such times as shall be agreed upon by the Payee and the Maker, and all payments of principal of and interest on this Note shall be payable in such currency as shall be agreed upon from time to time by the Payee and the Maker. All such payments shall be recorded on the books and records of the Maker and the Payee. Upon notice from the Collateral Agent (as defined in the Credit Agreement hereinafter defined) that an Event of Default (as defined in the Credit Agreement) has occurred and is continuing under the Credit Agreement, the Maker shall make such payments to such account as the Collateral Agent shall direct in such notice.

        This Note is one of the Pledged Notes referred to in, and evidences Indebtedness permitted under clause (d) of Section 7.2.2 of the Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified, from time to time, the "Credit Agreement"), among Merrill Communications LLC (the "Company"), Merrill Corporation ("Holdings"), the various financial institutions as are, or may from time to time become, parties thereto as Lenders and the Agents named therein. Upon the occurrence and during the continuance of an Event of Default under the Credit Agreement, and notice thereof by the Collateral Agent to the Maker, the Collateral Agent shall have all rights of the Payee to collect and accelerate, and enforce all rights with respect to, the Indebtedness evidenced by this Note. Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement.

        Reference is made to the Credit Agreement for a description of the Security Agreement pursuant to which this Note has been pledged to the Collateral Agent as security for the Obligations (as defined in the Credit Agreement) of the Payee outstanding from time to time under the Credit Agreement and each other Loan Document.

        In addition to, but not in limitation of, the foregoing, the Maker further agrees to pay all expenses, including reasonable attorneys' fees and legal expenses, incurred by the holder (including the Collateral Agent as pledgee) of this Note in endeavoring to collect any amounts payable hereunder which are not paid when due, whether by acceleration or otherwise.

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

THE MAKER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS NOTE. THE MAKER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PAYEE TO ACCEPT THIS NOTE.

[NAME OF MAKER]
By:
	Name: Title:
Pay to the order of BANK OF AMERICA, N.A., as Collateral Agent
[NAME OF PAYEE]
By:
	Name: Title:

EXHIBIT B
to Amended and Restated
Pledge and Security Agreement

PATENT SECURITY AGREEMENT

        This PATENT SECURITY AGREEMENT (this "Agreement"), dated as of                             ,         , is made between                         , a                          (the "Grantor"), and BANK OF AMERICA, N.A. ("BANA"), as administrative agent (together with its successor(s) thereto in such capacity, the "Collateral Agent") for each of the Secured Parties;

W I T N E S S E T H:

        WHEREAS, pursuant to an Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Company"), Merrill Corporation, a Minnesota corporation ("Holdings"), the various financial institutions and other Persons from time to time parties thereto as lenders, BANA, as administrative agent and collateral agent for the Lenders, Credit Suisse, as joint lead arranger and joint bookrunner, Banc of America Securities LLC ("BAS"), as joint lead arranger and joint bookrunner, Deutsche Bank Securities Inc., as joint bookrunner and syndication agent, Calyon New York Branch, National City Bank, and LaSalle Bank, N.A. as the co-documentation agents and the Issuers have extended Commitments to make Credit Extensions to the Grantor;

        WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Amended and Restated Pledge and Security Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

        WHEREAS, pursuant to clause (e) of Section 4.6 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Collateral Agent a continuing security interest in all of the Patent Collateral (as defined below) to secure all of its Secured Obligations;

        WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce (i) the Lenders and the Issuers to make Credit Extensions to the Company pursuant to the Credit Agreements, and (ii) the Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, the Grantor agrees, for the benefit of each Secured Party, as follows:

        SECTION 1.    Definitions.    Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided (or incorporated by reference) in the Security Agreement.

        SECTION 2.    Grant of Security Interest.    For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, to secure all of its Secured Obligations, the Grantor does hereby mortgage, pledge and hypothecate to the Collateral Agent, and grant to the Collateral Agent a security interest in, for its benefit and the benefit of each Secured Party, all of the following property (the "Patent Collateral"), whether now owned or hereafter acquired or existing by it:

        (a)   all of its letters patent and applications for letters patent in the United States, including all patent applications in preparation for filing anywhere in the United States and including each patent and each patent application referred to in Item A of Schedule I attached hereto;

        (b)   all reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the items described in clause (a);

        (c)   all of its patent licenses, including each patent license referred to in Item B of Schedule I attached hereto; and

        (d)   all proceeds of, and rights associated with, the foregoing (including license royalties and proceeds of infringement suits), the right to sue third parties for past, present or future infringements of any patent or patent application, and for breach or enforcement of any patent license.

        Notwithstanding the foregoing, "Patent Collateral" shall not include any licenses as to which the grant of a security interest would constitute a violation of a valid and enforceable restriction in favor of a third party on such grant (other than to the extent that any such restriction would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) of any relevant jurisdiction), unless and until any required consents shall have been obtained.

        SECTION 3.    Security Agreement.    This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Collateral Agent in the Patent Collateral with the United States Patent and Trademark Office. The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Collateral Agent for its benefit and the benefit of each Secured Party under the Security Agreement. The Security Agreement (and all rights and remedies of the Collateral Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

        SECTION 4.    Release of Security Interest.    Upon (i) the sale, transfer or other disposition of any Patent Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement) or (ii) the Termination Date, the Collateral Agent shall, at the Grantor's expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to release the lien on and security interest in the Patent Collateral (or the Patent Collateral so sold, transferred or otherwise disposed of, as the case may be) which has been granted hereunder. Upon any license of any Patent Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement), the Collateral Agent shall, at the Grantor's request and expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to subordinate the lien on and security interest in the Patent Collateral so licensed which has been granted hereunder.

        SECTION 5.    Acknowledgment.    The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Patent Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

        SECTION 6.    Loan Document, etc.    This Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.

        SECTION 7.    Counterparts.    This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name: Title:
BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name: Title:
By:
	Name: Title:

SCHEDULE I
to Patent Security Agreement

Item A.    Patents

Issued Patents

Patent No.
Issue Date Inventor(s) Title

Pending Patent Applications

Serial No.
Filing Date Inventor(s) Title

Patent Applications in Preparation

Docket No.
Expected Filing Date Inventor(s) Title

Item B.    Patent Licenses

Licensor
Licensee Effective Date Expiration Date Subject Matter

EXHIBIT C
to Amended and Restated
Pledge and Security Agreement

TRADEMARK SECURITY AGREEMENT

        This TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of                            ,            , dated as of                            ,             , is made between                        , a                        (the "Grantor"), and BANK OF AMERICA, N.A., as administrative agent (together with its successor(s) thereto in such capacity, the "Collateral Agent") for each of the Secured Parties;

W I T N E S S E T H:

        WHEREAS, pursuant to an Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Company"), Merrill Corporation, a Minnesota corporation ("Holdings"), the various financial institutions and other Persons from time to time parties thereto as lenders, BANA, as administrative agent and collateral agent for the Lenders, Credit Suisse, as joint lead arranger and joint bookrunner, Banc of America Securities LLC ("BAS"), as joint lead arranger and joint bookrunner, Deutsche Bank Securities Inc., as joint bookrunner and syndication agent, Calyon New York Branch, National City Bank, and LaSalle Bank, N.A. as the co-documentation agents and the Issuers have extended Commitments to make Credit Extensions to the Grantor;

        WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Amended and Restated Pledge and Security Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

        WHEREAS, pursuant to clause (e) of Section 4.6 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Collateral Agent a continuing security interest in all of the Trademark Collateral (as defined below) to secure all of its Secured Obligations;

        WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce (i) the Lenders and the Issuers to make Credit Extensions to the Company pursuant to the Credit Agreements, and (ii) the Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, the Grantor agrees, for the benefit of each Secured Party, as follows:

        SECTION 1.    Definitions.    Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided (or incorporated by reference) in the Security Agreement.

        SECTION 2.    Grant of Security Interest.    For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, to secure all of its Secured Obligations, the Grantor does hereby mortgage, pledge and hypothecate to the Collateral Agent, and grant to the Collateral Agent a security interest in, for its benefit and the benefit of each Secured Party, all of the following property (the "Trademark Collateral"), whether now owned or hereafter acquired or existing by it:

        (a)   (i) all of its trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, certification marks, collective marks, logos and other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of a like nature, now existing or hereafter adopted or acquired in the United States, including those referred to in Item A of Schedule I attached hereto, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office or in any office or agency of the United States of America or any State thereof, and all common-law rights relating to the foregoing, and (ii) the right to obtain all reissues, extensions or renewals of the foregoing (collectively referred to as the "Trademark");

        (b)   all Trademark licenses for the grant by or to the Grantor of any right to use any Trademark, including each Trademark license referred to in Item B of Schedule I attached hereto; and

        (c)   all of the goodwill of the business connected with the use of, and symbolized by the items described in, clause (a), and to the extent applicable, clause (b);

        (d)   the right to sue third parties for past, present and future infringements of any Trademark Collateral described in clause (a) and, to the extent applicable, clause (b) ; and

        (e)   all proceeds of, and rights associated with, the foregoing, including any claim by the Grantor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license and all rights corresponding thereto throughout the world.

        Notwithstanding the foregoing, "Trademark Collateral" shall not include any licenses as to which the grant of a security interest would constitute a violation of a valid and enforceable restriction in favor of a third party on such grant (other than to the extent that any such restriction would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or any successor provision or provisions) of any relevant jurisdiction), unless and until any required consents shall have been obtained.

        SECTION 3.    Security Agreement.    This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Collateral Agent in the Trademark Collateral with the United States Patent and Trademark Office. The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Collateral Agent for its benefit and the benefit of each Secured Party under the Security Agreement. The Security Agreement (and all rights and remedies of the Collateral

Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

        SECTION 4.    Release of Security Interest.    Upon (i) the sale, transfer or other disposition of any Trademark Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement) or (ii) the Termination Date, the Collateral Agent shall, at the Grantor's expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to release the lien on and security interest in the Trademark Collateral (or the Trademark Collateral so sold, transferred or otherwise disposed of, as the case may be) which has been granted hereunder. Upon any license of any Trademark Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement), the Collateral Agent shall, at the Grantor's request and expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to subordinate the lien on and security interest in the Trademark Collateral so licensed which has been granted hereunder.

        SECTION 5.    Acknowledgment.    The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Trademark Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

        SECTION 6.    Loan Document, etc.    This Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.

        SECTION 7.    Counterparts.    This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:
BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name:
	Title:
By:
	Name:
	Title:

SCHEDULE I
to Trademark Security Agreement

Item A. Trademarks
Registered Trademarks
Trademark	Registration No.	Registration Date
Pending Trademark Applications
Trademark	Serial No.	Filing Date
Trademark Applications in Preparation
Trademark	Docket No.	Expected Filing Date	Products/ Services
Item B. Trademark Licenses
Trademark	Licensor	Licensee	Effective Date	Expiration Date

EXHIBIT D
to Amended and Restated
Pledge and Security Agreement

COPYRIGHT SECURITY AGREEMENT

        This COPYRIGHT SECURITY AGREEMENT (this "Agreement"), dated as of                            ,            , dated as of                            ,             , is made between                        , a                        (the "Grantor"), and BANK OF AMERICA, N.A., as administrative agent (together with its successor(s) thereto in such capacity, the "Collateral Agent") for each of the Secured Parties;

W I T N E S S E T H:

        WHEREAS, pursuant to an Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among Merrill Communications LLC, a Delaware limited liability company (the "Company"), Merrill Corporation, a Minnesota corporation ("Holdings"), the various financial institutions and other Persons from time to time parties thereto as lenders, BANA, as administrative agent and collateral agent for the Lenders, Credit Suisse, as joint lead arranger and joint bookrunner, Banc of America Securities LLC ("BAS"), as joint lead arranger and joint bookrunner, Deutsche Bank Securities Inc., as joint bookrunner and syndication agent, Calyon New York Branch, National City Bank, and LaSalle Bank, N.A. as the co-documentation agents and the Issuers have extended Commitments to make Credit Extensions to the Grantor;

        WHEREAS, in connection with the Credit Agreement, the Grantor has executed and delivered a Amended and Restated Pledge and Security Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Security Agreement");

        WHEREAS, pursuant to clause (e) of Section 4.6 of the Security Agreement, the Grantor is required to execute and deliver this Agreement and to grant to the Collateral Agent a continuing security interest in all of the Copyright Collateral (as defined below) to secure all of its Secured Obligations;

        WHEREAS, the Grantor has duly authorized the execution, delivery and performance of this Agreement; and

        NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce (i) the Lenders and the Issuers to make Credit Extensions to the Company pursuant to the Credit Agreements, and (ii) the Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, the Grantor agrees, for the benefit of each Secured Party, as follows:

        SECTION 1.    Definitions.    Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided (or incorporated by reference) in the Security Agreement.

        SECTION 2.    Grant of Security Interest.    For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, to secure all of its Secured Obligations, the

Grantor does hereby mortgage, pledge and hypothecate to the Collateral Agent, and grant to the Collateral Agent a security interest in, for its benefit and the benefit of each Secured Party, all of the following property (the "Copyright Collateral") whether now owned or hereafter existing or acquired by it, all copyrights of the Grantor, whether statutory or common law, registered or unregistered and whether published or unpublished, now or hereafter in force in the United States, including all of the Grantor's right, title and interest in and to all copyrights registered in the United States Copyright Office, including the copyrights referred to in Item A of Schedule I attached hereto, and all applications for registration thereof, whether pending or in preparation, all copyright licenses, including each copyright license referred to in Item B of Schedule I attached hereto, the right to sue for past, present and future infringements of any of the foregoing, all rights corresponding thereto, all extensions and renewals of any thereof and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages and proceeds of suit.

        SECTION 3.    Security Agreement.    This Agreement has been executed and delivered by the Grantor for the purpose of registering the security interest of the Collateral Agent in the Copyright Collateral with the United States Copyright Office. The security interest granted hereby has been granted as a supplement to, and not in limitation of, the security interest granted to the Collateral Agent for its benefit and the benefit of each Secured Party under the Security Agreement. The Security Agreement (and all rights and remedies of the Collateral Agent and each Secured Party thereunder) shall remain in full force and effect in accordance with its terms.

        SECTION 4.    Release of Security Interest.    Upon (i) the sale, transfer or other disposition of any Copyright Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement) or (ii) the Termination Date, the Collateral Agent shall, at the Grantor's expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to release the lien on and security interest in the Copyright Collateral (or the Copyright Collateral so sold, transferred or otherwise disposed of, as the case may be) which has been granted hereunder. Upon any license of any Copyright Collateral in accordance with the Credit Agreement (or with the consent of the Required Lenders or all Lenders, in accordance with Section 10.1 of the Credit Agreement), the Collateral Agent shall, at the Grantor's request and expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to subordinate the lien on and security interest in the Copyright Collateral so licensed which has been granted hereunder.

        SECTION 5.    Acknowledgment.    The Grantor does hereby further acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyright Collateral granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which (including the remedies provided for therein) are incorporated by reference herein as if fully set forth herein.

        SECTION 6.    Loan Document, etc.    This Agreement is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions of the Credit Agreement.

        SECTION 7.    Counterparts.    This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written.

MERRILL COMMUNICATIONS LLC
By:
	Name:
	Title:
BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name:
	Title:
By:
	Name:
	Title:

SCHEDULE I
to Copyright Security Agreement

Item A. Copyrights/Mask Works
Registered Copyrights/Mask Works
Registration No.	Registration Date	Author(s)	Title
Copyright/Mask Work Pending Registration Applications
Serial No.	Filing Date	Author(s)	Title
Copyright/Mask Work Registration Applications in Preparation
Docket No.	Expected Filing Date	Author(s)	Title
Item B. Copyright/Mask Work Licenses
Licensor	Licensee	Effective Date	Expiration Date	Subject Matter

ANNEX I
TO THE AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT

PLEDGE AND SECURITY AGREEMENT SUPPLEMENT

        This PLEDGE AND SECURITY AGREEMENT SUPPLEMENT (this "Supplement"), dated [mm/dd/yy], between                        , a                        (the "Grantor"), and BANK OF AMERICA, N.A., as administrative agent (together with its successor(s) thereto in such capacity, the "Collateral Agent") for each of the Secured Parties is delivered pursuant to Section 7.5 of the Amended and Restated Pledge and Security Agreement, dated as of December 22, 2005 (as it may be from time to time amended, restated, modified or supplemented, the "Security Agreement"), among MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Company"), MERRILL CORPORATION, a Minnesota Corporation ("Holdings"), the grantors party thereto in favor of the Collateral Agent. Capitalized terms used herein not otherwise defined herein shall have the meanings ascribed thereto in the Security Agreement.

        Grantor hereby grants to the Collateral Agent a security interest in all of Grantor's right, title and interest in and to all Collateral to secure the Secured Obligations, in each case whether now or hereafter existing or in which Grantor now has or hereafter acquires an interest and wherever the same may be located. Grantor represents and warrants that the Supplements to Schedules to the Security Agreement attached as Schedule I hereto accurately and completely set forth all information required pursuant to the Security Agreement with respect to the Grantor and hereby agrees that such Supplements to Schedules shall constitute part of the Schedules to the Security Agreement.

        Upon delivering this Supplement to the Collateral Agent, the Grantor will become a party to the Security Agreement and will thereafter have all of the rights and obligations of a Subsidiary Grantor thereunder.

        Wherever possible each provision of this Pledge Supplement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Pledge Supplement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Supplement.

        THIS PLEDGE SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

        This Pledge Supplement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be duly executed and delivered by its duly authorized officer as of [mm/dd/yy].

[NAME OF GRANTOR]
By:
	Name:
	Title:

SCHEDULE I
to Pledge Supplement

Item A. Intercompany Notes
Grantor	Maker	Date
Item B. Capital Stock
Common Stock
Grantor	Issuer (corporate)	Authorized Shares	Outstanding Shares	% of Pledged Shares
Limited Liability Company Interests
Grantor	Issuer (limited liability company)	% of Limited Liability Company Interests Pledged	Type of Limited Liability Company Interests Pledged
Partnership Interests
Grantor	Issuer (partnership)	% of Partnership Interests Pledged	Type of Partnership Interests Pledged

SCHEDULE II
to Pledge Supplement

Item A. Jurisdiction of Incorporation

Item B. Merger or Other Corporate Reorganization

Item C. Federal Taxpayer Identification Number/Organizational Identification Number

EXHIBIT G

AMENDED AND RESTATED GUARANTY

        This AMENDED AND RESTATED GUARANTY (as amended, supplemented, amended and restated or otherwise modified from time to time, this "Guaranty"), dated as of December 22, 2005 is made by Merrill Corporation ("Holdings") and each Subsidiary (such capitalized term and other terms used in this Guaranty to have the meanings set forth in (or incorporated by reference in) Article I) of MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Borrower"), from time to time a party to this Guaranty (collectively referred to as the "Subsidiary Guarantors" and together with Holdings, the "Guarantors") in favor of each of the Secured Parties, including BANK OF AMERICA, N.A. ("BANA"), as the Collateral Agent under the Credit Agreement (defined below) (together with any successor(s) thereto, the "Collateral Agent").

W I T N E S S E T H:

        WHEREAS, in connection with the $535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Holdings, the various financial institutions and other Persons from time to time parties thereto as Lenders (the "Lenders"), BANA, as administrative agent and collateral agent for the Lenders, Credit Suisse ("Credit Suisse"), as joint lead arranger and joint bookrunner, Banc of America Securities LLC ("BAS"), as joint lead arranger and joint bookrunner, Deutsche Bank Securities Inc. ("DBSI"), as joint bookrunner and syndication agent and Calyon New York Branch, National City Bank, and LaSalle Bank, N.A. as co-documentation agents, each Guarantor is required to execute and deliver this Guaranty;

        NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders and the Issuers to make Credit Extensions to the Borrower, and to induce the Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, each Guarantor jointly and severally agrees, for the benefit of each Secured Party, as follows.

ARTICLE I
DEFINITIONS

        SECTION 1.1.    Certain Terms.    The following terms (whether or not underscored) when used in this Guaranty, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

        "Borrower" is defined in the preamble.

        "Collateral Agent" is defined in the preamble.

        "Credit Agreement" is defined in the recitals.

        "Guarantors" is defined in the preamble.

        "Guaranty" is defined in the preamble.

        "Holdings" is defined in preamble.

        "Lenders" is defined in recitals.

        SECTION 1.2.    Credit Agreement Definitions.    Unless otherwise defined herein or the context otherwise requires, each capitalized term used in this Guaranty and not otherwise defined herein has the meaning provided in the Credit Agreement.

ARTICLE II
GUARANTY PROVISIONS

        SECTION 2.1.    Guaranty.    Each Guarantor hereby jointly and severally absolutely, unconditionally and irrevocably

        (a)   guarantees the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Secured Obligations of the Borrower and each other Obligor now or hereafter existing, whether for principal, interest (including interest accruing at the then applicable rate provided in the Credit Agreement after the occurrence of any Default set forth in Section 8.1.9 of the Credit Agreement, whether or not a claim for post-filing or post-petition interest is allowed under applicable law following the institution of a proceeding under bankruptcy, insolvency or similar laws), fees, Reimbursement Obligations, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b)); and

        (b)   indemnifies and holds harmless each Secured Party for any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by such Secured Party in enforcing any rights under this Guaranty;

provided, however, that each Guarantor shall only be liable under this Guaranty for the maximum amount of such liability that can be hereby incurred without rendering this Guaranty, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and each Guarantor specifically agrees that it shall not be necessary or required that any Secured Party exercise any right, assert any claim or demand or enforce any remedy whatsoever against the Borrower, any other Obligor or any other Person before or as a condition to the obligations of such Guarantor hereunder.

        SECTION 2.2.    Reinstatement, etc.    Each Guarantor hereby jointly and severally agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations is invalidated, declared to be fraudulent or preferential, set aside, rescinded or must otherwise be restored by any Secured

2

Party, including upon the occurrence of any Default set forth in Section 8.1.9 of the Credit Agreement or otherwise, all as though such payment had not been made.

        SECTION 2.3.    Guaranty Absolute, etc.    This Guaranty shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until the Termination Date has occurred. Each Guarantor jointly and severally guarantees that the Secured Obligations of the Borrower and each other Obligor will be paid strictly in accordance with the terms of each Loan Document or other agreement under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto. The liability of each Guarantor under this Guaranty shall be joint and several, absolute, unconditional and irrevocable irrespective of:

        (a)   any lack of validity, legality or enforceability of the Credit Agreement or any other Loan Document or other agreement relating to any Secured Obligation;

        (b)   the failure of any Secured Party

          (i)  to assert any claim or demand or to enforce any right or remedy against any Obligor or any other Person (including any other guarantor) under the provisions of any Loan Document or other agreement relating to any Secured Obligation or otherwise, or

         (ii)  to exercise any right or remedy against any other guarantor (including any Guarantor) of, or collateral securing, any Secured Obligations;

        (c)   any change in the time, manner or place of payment of, or in any other term of, all or any part of the Secured Obligations, or any other extension, compromise or renewal of any Secured Obligation;

        (d)   any reduction, limitation, impairment or termination of any Secured Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Guarantor hereby waives any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations or otherwise;

        (e)   any amendment to, rescission, waiver, or other modification of, or any consent to or departure from, any of the terms of any Loan Document or other agreement relating to any Secured Obligation;

        (f)    any addition, exchange or release of any collateral or of any Person that is (or will become) a guarantor (including a Guarantor hereunder) of the Secured Obligations, or any surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition to, or consent to or departure from, any other guaranty held by any Secured Party securing any of the Secured Obligations; or

3

        (g)   any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrower, any other Obligor, any surety or any guarantor.

        SECTION 2.4.    Setoff.    Each Guarantor hereby irrevocably authorizes the Collateral Agent and each Lender, without the requirement that any notice be given to such Guarantor (such notice being expressly waived by each Guarantor), upon the occurrence and during the continuance of any Default described in Section 8.1.9 of the Credit Agreement or, with the consent of the Required Lenders, upon the occurrence and during the continuance of any other Event of Default, to the fullest extent permitted by law, have the right to appropriate and apply to the payment of the Secured Obligations then due to it, and (as security for such Secured Obligations) each Guarantor hereby grants to each Secured Party a continuing security interest in, any and all balances, claims, credits, deposits, accounts or money of such Guarantor then or thereafter maintained with such Secured Party; provided, however, that any such appropriation and application shall be subject to the provisions of Section 4.8 of the Credit Agreement. Each Secured Party agrees to notify the applicable Guarantor and the Collateral Agent after any such setoff and application made by such Secured Party; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of each Secured Party under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which such Secured Party may have.

        SECTION 2.5.    Waiver, etc.    Except as otherwise specifically provided herein, each Guarantor hereby waives promptness, diligence, notice of acceptance and any other notice with respect to any of the Secured Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien, or any property subject thereto, or exhaust any right or take any action against any Obligor or any other Person (including any other guarantor) or entity or any collateral securing the Secured Obligations, as the case may be.

        SECTION 2.6.    Postponement of Subrogation, etc.    Each Guarantor agrees that it will not exercise any rights which it may acquire by way of subrogation under this Guaranty or any other Loan Document or other agreement relating to any Secured Obligation to which it is a party, nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from any Obligor, in respect of any payment made hereunder, under any other Loan Document or other agreement relating to any Secured Obligation or otherwise, until following the Termination Date. Any amount paid to any Guarantor on account of any such subrogation rights prior to the Termination Date shall be held in trust for the benefit of the Secured Parties and shall immediately be paid and turned over to the Collateral Agent for the benefit of the Secured Parties in the exact form received by such Guarantor (duly endorsed in favor of the Collateral Agent, if required), to be credited and applied against the Secured Obligations, whether matured or unmatured, in accordance with Section 2.7; provided, however, that if any Guarantor has made payment to the Secured Parties of all or any part of the Secured Obligations and the Termination Date has occurred, then at such Guarantor's request, the Collateral Agent (on behalf of the Secured Parties) will, at the expense of such Guarantor, execute and deliver to such Guarantor appropriate documents (without recourse and without representation or warranty) necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Secured Obligations resulting from such payment. In furtherance of the foregoing, at all times prior to the Termination Date each Guarantor shall refrain from taking any action or commencing any

4

proceeding against the Borrower or any other Obligor (or its successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in respect of payments made under this Guaranty to any Secured Party.

        SECTION 2.7.    Payments; Application.    Each Guarantor hereby agrees with each Secured Party as follows:

        (a)   Each Guarantor hereby agrees to comply with and be bound by the provisions of Sections 4.6 and 4.7 of the Credit Agreement in respect of all payments made by it hereunder and the provisions of which Sections are hereby incorporated into and made a part of this Guaranty by this reference as if set forth herein; provided, that references to the "Borrower" in such Sections shall be deemed to be references to each Guarantor, and references to "this Agreement" in such Sections shall be deemed to be references to this Guaranty.

        (b)   All payments made hereunder shall be applied upon receipt (i) first, to the payment of all Secured Obligations owing to the Collateral Agent, in its capacity as the Collateral Agent (including the fees and expenses of counsel to the Collateral Agent), (ii) second, after payment in full of the amounts specified in clause (b)(i), to the ratable payment of all interest and fees owing with respect to the Credit Extensions and all costs and expenses owing to the Secured Parties pursuant to the terms of the Credit Agreement, until paid in full, (iii) third, after payment in full of the amounts specified in clauses (b)(i) and (b)(ii), to the ratable payment of the principal amount of the Loans then outstanding, amounts owing to Secured Parties under Rate Protection Agreements and Cash Management Services Agreements, the aggregate Reimbursement Obligations then owing and Cash Collateralization (on terms satisfactory to the Collateral Agent) for contingent liabilities under Letters of Credit outstanding, (iv) fourth, after payment in full of the amounts specified in clauses (b)(i) through (b)(iii), to the ratable payment of all other Secured Obligations owing to the Secured Parties, and (v) fifth, after payment in full of the amounts specified in clauses (b)(i) through (b)(iv), and following the Termination Date, to such Guarantor or any other Person lawfully entitled to receive such surplus.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

        SECTION 3.1.    Representations.    In order to induce the Secured Parties to enter into the Credit Agreement and make Credit Extensions thereunder, and to induce Secured Parties to enter into Rate Protection Agreements and Cash Management Services Agreements, each Guarantor represents and warrants to each Secured Party as set forth below.

        (a)   The representations and warranties contained in Article VI of the Credit Agreement, insofar as the representations and warranties contained therein are applicable to such Guarantor and its properties, are true and correct in all material respects, each such representation and warranty set forth in each such Article (insofar as applicable as aforesaid) and all other terms of the Credit Agreement to which reference is made

5

therein, together with all related ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Article.

        (b)   Each Guarantor has knowledge of the Borrower's and each other Obligor's financial condition and affairs and has adequate means to obtain from the Borrower and each other Obligor on an ongoing basis information relating thereto and to the Borrower's and such Obligor's ability to pay and perform the Secured Obligations, and agrees to assume the responsibility for keeping, and to keep, so informed for so long as this Guaranty is in effect. Each Guarantor acknowledges and agrees that the Secured Parties shall have no obligation to investigate the financial condition or affairs of any Obligor for the benefit of such Guarantor nor to advise such Guarantor of any fact respecting, or any change in, the financial condition or affairs of the Borrower or any other Obligor that might become known to any Secured Party at any time, whether or not such Secured Party knows or believes or has reason to know or believe that any such fact or change is unknown to such Guarantor, or might (or does) materially increase the risk of such Guarantor as guarantor, or might (or would) affect the willingness of such Guarantor to continue as a guarantor of the Secured Obligations.

        (c)   It is in the best interests of each Guarantor to execute this Guaranty inasmuch as such Guarantor will, as a result of being either the parent of or a Subsidiary of the Borrower, derive substantial direct and indirect benefits from the Credit Extensions made from time to time to the Borrower by the Lenders and the Issuers pursuant to the Credit Agreement and the execution and delivery of Rate Protection Agreements and Cash Management Services Agreements, between the Borrower, other Obligors and certain Secured Parties, and each Guarantor agrees that the Secured Parties are relying on this representation in agreeing to make Credit Extensions to the Borrower.

ARTICLE IV

COVENANTS, ETC.

        SECTION 4.1.    Covenants.    Each Guarantor covenants and agrees that, at all times prior to the Termination Date, it will perform, comply with and be bound by all of the agreements, covenants and obligations contained in the Credit Agreement (including Article VII and Section 8.1.9 of the Credit Agreement) which are applicable to such Guarantor or its properties, each such agreement, covenant and obligation contained in the Credit Agreement and all other terms of the Credit Agreement to which reference is made in this Article, together with all related ancillary provisions, being hereby incorporated into this Guaranty by this reference as though specifically set forth in this Article.

ARTICLE V

MISCELLANEOUS PROVISIONS

        SECTION 5.1.    Loan Document.    This Guaranty is a Loan Document executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed,

6

administered and applied in accordance with the terms and provisions thereof, including Article X of the Credit Agreement.

        SECTION 5.2.    Binding on Successors, Transferees and Assigns; Assignment.    This Guaranty shall be jointly and severally binding upon each Guarantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Secured Party and their respective successors, transferees and assigns; provided, however, that no Guarantor may (unless otherwise permitted under the terms of the Credit Agreement) assign any of its obligations hereunder without the prior written consent of all Lenders.

        SECTION 5.3.    Amendments, etc.    No amendment to or waiver of any provision of this Guaranty, nor consent to any departure by any Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent (on behalf of the Lenders or the Required Lenders, as the case may be, pursuant to Section 10.1 of the Credit Agreement) and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

        SECTION 5.4.    Notices.    All notices and other communications provided for hereunder shall be in writing (including facsimile communication) and mailed, telecopied or delivered to the applicable Guarantor, in care of the Borrower to the address or facsimile number of the Borrower specified in the Credit Agreement or to such other address or facsimile number specified by a Guarantor in writing to the Collateral Agent or, if such notice or communication is to the Collateral Agent, to the address for the Collateral Agent set forth in the Credit Agreement. All such notices and other communications, when mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or communication, if transmitted by facsimile, shall be deemed given when the confirmation of transmission thereof is received by the transmitter. Notices and other communications to the Secured Parties hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Collateral Agent. The Collateral Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

        SECTION 5.5.    Additional Subsidiary Guarantors.    Upon the execution and delivery by any other Person of a supplement in the form of Annex I hereto, such Person shall become a "Guarantor" hereunder with the same force and effect as if it were originally a party to this Guaranty and named as a "Guarantor" hereunder. The execution and delivery of such supplement shall not require the consent of any other party hereto, and the rights and obligations of each Guarantor hereunder shall remain in full force and effect notwithstanding the addition of any other new Guarantor as a party to this Guaranty.

        SECTION 5.6.    No Waiver; Remedies.    In addition to, and not in limitation of, Section 2.3and Section 2.5, no failure on the part of any Secured Party to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of

7

any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

        SECTION 5.7.    Captions.    Section captions used in this Guaranty are for convenience of reference only, and shall not affect the construction of this Guaranty.

        SECTION 5.8.    Severability.    Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty.

        SECTION 5.9.    Governing Law, Entire Agreement, etc.    THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS GUARANTY AND THE OTHER LOAN DOCUMENTS AND OTHER AGREEMENTS RELATING TO ANY SECURED OBLIGATION CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

        SECTION 5.10.    Forum Selection and Consent to Jurisdiction.    ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE SECURED PARTIES OR ANY GUARANTOR MAY BE BROUGHT AND MAINTAINED (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) IN THE COURTS OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY (TO THE EXTENT PERMITTED UNDER APPLICABLE LAW) BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. EACH GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT

8

REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

        SECTION 5.11.    Counterparts.    This Guaranty may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

        SECTION 5.12.    Waiver of Jury Trial.    EACH OF THE GUARANTORS AND THE COLLATERAL AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE SECURED PARTIES OR SUCH GUARANTOR. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED PARTIES ENTERING INTO THE CREDIT AGREEMENTS AND THE OTHER LOAN DOCUMENTS.

        SECTION 5.13.    Release of Guarantors.    In the event that (i) all of the Capital Stock of any Guarantor that is a party hereto (or one or more Persons that own, directly or indirectly, all of the Capital Stock of such Guarantor) is sold or otherwise disposed of (except to the Borrower and/or any Restricted Subsidiaries) or liquidated in compliance with the requirements of the Credit Agreement (or such sale or other disposition or liquidation has been approved in writing by the Requisite Lenders) and the proceeds of such sale, disposition or liquidation are applied in accordance with the provisions of the Credit Agreement, to the extent applicable or (ii) any Guarantor otherwise ceases to be a Restricted Subsidiary of the Borrower in compliance with the terms of the Credit Agreement such Guarantor shall be released from this Guaranty and this Guaranty shall, as to each such Guarantor, terminate, and have no further force or effect.

9

        IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed and delivered by its Authorized Officer as of the date first above written.

MERRILL CORPORATION
By:
	Name: Title:
INVENTIVE MARKETING SERVICES, INC. FMC RESOURCE MANAGEMENT CORPORATION MERRILL/GLOBAL, INC. MERRILL REAL ESTATE COMPANY MERRILL VENTURES, INC. MERRILL FINE ARTS ENGRAVING INC. MERRILL BRINK INTERNATIONAL CORPORATION CAPTURE MERGER CORP.
By:
	Name: Title:

10

ACCEPTED AND AGREED FOR ITSELF AND ON BEHALF OF THE SECURED PARTIES:
BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name: Title:
By:
	Name: Title:

11

ANNEX I to
the Amended and Restated Guaranty

        THIS SUPPLEMENT, dated as of                        , 200    (this "Supplement"), is to the Amended and Restated Guaranty, dated as of December 22, 2005 (as amended, supplemented, amended and restated or otherwise modified, the "Guaranty"), among the Guarantors (such capitalized term, and other terms used in this Supplement, to have the meanings set forth in (or incorporated by reference in) Article I of the Guaranty) from time to time party thereto, in favor of the Secured Parties.

W I T N E S S E T H:

        WHEREAS, pursuant to the provisions of Section 5.5 of the Guaranty, the undersigned is becoming a Guarantor under the Guaranty; and

        WHEREAS, the undersigned Guarantor desires to become a "Guarantor" under the Guaranty in order to induce the Secured Parties to continue to extend Credit Extensions under the Credit Agreement;

        NOW, THEREFORE, in consideration of the premises, and for other consideration (the receipt and sufficiency of which is hereby acknowledged), the undersigned agrees, for the benefit of each Secured Party, as follows.

        SECTION 1.    Party to Guaranty, etc.    In accordance with the terms of the Guaranty, by its signature below the undersigned hereby irrevocably agrees to become a Guarantor under the Guaranty with the same force and effect as if it were an original signatory thereto and the undersigned Guarantor hereby (a) agrees to be bound by and comply with all of the terms and provisions of the Guaranty applicable to it as a Guarantor and (b) represents and warrants that the representations and warranties made by it as a Guarantor thereunder are true and correct as of the date hereof, unless stated to relate solely to an earlier date, in which case, such representations and warranties shall be true and correct in all material respects as of such earlier date. In furtherance of the foregoing, each reference to a "Guarantor" in the Guaranty shall be deemed to include the undersigned Guarantor.

        SECTION 2.    Representations.    The undersigned Guarantor hereby represents and warrants that this Supplement has been duly authorized, executed and delivered by it and that this Supplement and the Guaranty constitute the legal, valid and binding obligation of the undersigned Guarantor, enforceable against it in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

        SECTION 3.    Full Force of Guaranty.    Except as expressly supplemented hereby, the Guaranty shall remain in full force and effect in accordance with its terms.

        SECTION 4.    Severability.    In the event any one or more of the provisions contained in this Supplement should be held invalid, illegal or unenforceable in any respect, the validity,

ANNEX-I-1

legality and enforceability of the remaining provisions contained herein and in the Guaranty shall not in any way be affected or impaired.

        SECTION 5.    Governing Law, Entire Agreement, etc.    THIS SUPPLEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). THIS SUPPLEMENT AND THE OTHER LOAN DOCUMENTS AND OTHER AGREEMENTS RELATING TO ANY SECURED OBLIGATION CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.

        SECTION 6.    Counterparts.    This Supplement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.

ANNEX-I-2

        IN WITNESS WHEREOF, the undersigned Guarantor has caused this Supplement to be duly executed and delivered by its Authorized Officer as of the date first above written.

[ADDITIONAL GUARANTOR]
By:
	Name: Title:
[ADDITIONAL GUARANTOR]
By:
	Name: Title:

ACCEPTED BY:
BANK OF AMERICA, N.A., as Collateral Agent
By:
	Name: Title:

ANNEX-I-3

EXHIBIT H

LENDER ASSIGNMENT AGREEMENT

,

To:

MERRILL COMMUNICATIONS LLC,
as Borrower
One Merrill Circle
St. Paul, MN 55108
Attention: Robert Nazarian
Facsimile: 651.632.1348

BANK OF AMERICA, N.A.,
as Administrative Agent
101 North Tryon St.
Charlotte, NC 28255

MERRILL COMMUNICATIONS LLC

Gentlemen and Ladies:

        This Lender Assignment Agreement (the "Assignment and Acceptance") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below, receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to be incorporated herein by reference and made a part of this Assignment.

        For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights, benefits, obligations, liabilities and indemnities in its capacity as a Lender under (and in connection with) the Credit Agreement and any other Loan Documents to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit and guarantees included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, the other Loan Documents or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to

clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Acceptance, without representation or warranty by the Assignor.

        This agreement shall be effective as of the Effective Date upon the written consent of the Administrative Agent, the Issuer in the case of Revolving Loan Commitments and unless an Event of Default shall have occurred and be continuing, the Borrower being subscribed in the space indicated below.

1.	Assignor:
2.	Assignee:
		[and is an Affiliate/Approved Fund of [identify Lender](1)]
3.	Borrower(s):	Merrill Communications LLC
4.	Administrative Agent:	Bank of America, N.A., as the administrative agent under the Credit Agreement (the "Administrative Agent")
5.	Credit Agreement:	$535,000,000 Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (the "Credit Agreement"), among the Borrower, Merrill Corporation, a Minnesota corporation, the various financial institutions and other Persons from time to time parties thereto as lenders (the "Lenders"), Bank of America, N.A., as administrative agent and collateral agent for the Lenders, Credit Suisse, as Joint Lead Arranger and Joint Bookrunner, Banc of America Securities LLC, as Joint Lead Arranger and Joint Bookrunner, Deutsche Bank Securities Inc., as Joint Bookrunner and Syndication Agent, and Calyon New York Branch, National City Bank and LaSalle Bank, N.A as Co-Documentation Agents.

(1)

Select as applicable.

6.
Assigned Interest:

Facility Assigned	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans
[Revolving Loan]	$	$		%
[Initial Term Loan]	$	$		%
[Delayed Draw Term Loan]	$	$		%
[Additional Term Loan]	$	$		%

Effective Date: [MONTH]    , 200            

        The terms set forth in this Assignment and Acceptance are hereby agreed to as of the Effective Date:

ASSIGNOR [NAME OF ASSIGNOR]
By:
	Name: Title:
ASSIGNEE [NAME OF ASSIGNEE]
By:
	Name: Title:

Consented to and Accepted:
BANK OF AMERICA, N.A., as Administrative Agent and Issuer(2)(3)
By:
	Name: Title:

(2)

In the case of Revolving Loans only.

(3)

Not required in the case of assignments of Initial Term Loans, Delayed Draw Term Loans or Additional Term Loans from a Lender to a Related Fund, a Lender or an Affiliate or Related Fund of a Lender.

MERRILL COMMUNICATIONS LLC(4)
By:
	Name: Title:

(4)

Not required in the case of assignments of Initial Term Loans, Delayed Draw Term Loans or Additional Term Loans from a Lender to a Related Fund, a Lender or an Affiliate or Related Fund of a Lender.

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ACCEPTANCE

        1.    Representations and Warranties.

        1.1    Assignor.    The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby; and (b) except as provided in clause (a) above, assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.

        1.2    Assignee.    The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1.6 or 7.1.1 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Non-U.S. Lender, attached to the Assignment and Acceptance is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.

        2.    Payments.    From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

        3.    General Provisions.    This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Acceptance may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance shall be deemed to be a contract made under, governed by, and construed in accordance with, the laws of the State of New York (including for such purposes Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York) without regard to conflicts of laws principles.

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Exhibit 10.28

LENDER CONSENT LETTER MERRILL CORPORATION

EXHIBIT A TO LENDER CONSENT LETTER

AMENDED, RESTATED AND COMBINED CREDIT AGREEMENT

SCHEDULE I

DISCLOSURE SCHEDULE TO CREDIT AGREEMENT

ITEM 6.7. Litigation.
ITEM 6.8. Existing Subsidiaries.
ITEM 6.11. Employee Benefit Plans.
ITEM 6.12. Environmental Matters.
ITEM 7.1.13 Mortgaged Properties.
ITEM 7.2.2(a) Ongoing Indebtedness.
ITEM 7.2.3(a) Ongoing Liens.
ITEM 7.2.5(a) Ongoing Investments.
SCHEDULE II

PERCENTAGES; LIBOR OFFICE; DOMESTIC OFFICE

SCHEDULE III

EXISTING LETTERS OF CREDIT

SCHEDULE 2.1

EXHIBIT A-1

REVOLVING NOTE
REVOLVING LOANS AND PRINCIPAL PAYMENTS

EXHIBIT A-2

TERM NOTE
TERM LOANS AND PRINCIPAL PAYMENTS

EXHIBIT B-1

BORROWING REQUEST

EXHIBIT B-2

ISSUANCE REQUEST

EXHIBIT C
EXHIBIT D
EXHIBIT E

Attachment 1 (to / / Compliance Certificate
Attachment 2 (to / / Compliance Certificate)
Attachment 3 (to / / Compliance Certificate)

EXHIBIT F

AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT

SCHEDULE I to Amended and Restated Pledge and Security Agreement
SCHEDULE II to Amended and Restated Pledge and Security Agreement
SCHEDULE III to Amended and Restated Pledge and Security Agreement
SCHEDULE IV to Amended and Restated Pledge and Security Agreement

EXHIBIT A to Amended and Restated Pledge and Security Agreement

DEMAND NOTE

EXHIBIT B to Amended and Restated Pledge and Security Agreement

PATENT SECURITY AGREEMENT

SCHEDULE I to Patent Security Agreement

Issued Patents
Pending Patent Applications
Patent Applications in Preparation

EXHIBIT C to Amended and Restated Pledge and Security Agreement

TRADEMARK SECURITY AGREEMENT

SCHEDULE I to Trademark Security Agreement

EXHIBIT D to Amended and Restated Pledge and Security Agreement

COPYRIGHT SECURITY AGREEMENT

SCHEDULE I to Copyright Security Agreement

PLEDGE AND SECURITY AGREEMENT SUPPLEMENT

SCHEDULE I to Pledge Supplement
SCHEDULE II to Pledge Supplement

EXHIBIT G

AMENDED AND RESTATED GUARANTY

ANNEX I to the Amended and Restated Guaranty

EXHIBIT H

LENDER ASSIGNMENT AGREEMENT
MERRILL COMMUNICATIONS LLC

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ACCEPTANCE

EX-10.29

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Exhibit 10.29
Execution Copy

MERRILL CORPORATION
FIRST AMENDMENT TO
CREDIT AGREEMENT

        This FIRST AMENDMENT, dated as of December 30, 2005 (this "First Amendment"), is entered into by and among MERRILL COMMUNICATIONS LLC, a Delaware limited liability company (the "Borrower"), MERRILL CORPORATION, a Minnesota corporation ("Holdings"), the Lenders party hereto, and BANK OF AMERICA, N.A. ("BANA"), as administrative agent for the Lenders (in such capacity, the "Administrative Agent") and as collateral agent (in such capacity, the "Collateral Agent"), and is made with reference to that certain Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005 (the "Credit Agreement") by and among the Borrower, Holdings, the banks, financial institutions and other entities party thereto, and BANA, as administrative agent and collateral agent for the Lenders. Capitalized terms used herein not otherwise defined herein or otherwise amended hereby shall have the meanings ascribed thereto in the Credit Agreement.

RECITALS:

        WHEREAS, the Administrative Agent desires to amend the Credit Agreement to combine the Initial Term Loans and the Delayed Draw Term Loans into a single tranche of term loans immediately following the time of funding of the Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date;

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

SECTION 1. AMENDMENTS TO CREDIT AGREEMENT

        A. Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions:

"Combined Term Loans" means, collectively, the Initial Term Loans and the Delayed Draw Term Loans.

"First Amendment" means the amendment to this Agreement dated as of December    , 2005.

        B. Section 1.1 of the Credit Agreement is hereby amended by deleting each of the following definitions and inserting the following in its place:

"Percentage" means, relative to any Lender, (i) at any time prior to the making of the Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date, the applicable percentage relating to Initial Term Loans, Delayed Draw Term Loans, Additional Term Loans, or Revolving Loans, as the case may be, as set forth in Schedule II hereto or (ii) at any time after the making of the Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date, the applicable percentage relating to Combined Term Loans, Additional Term Loans, or Revolving Loans, as the case may be, or, in any such case, (x) in an amendment to Schedule II reflecting any Additional Term Loan Commitments or (y) in a Lender Assignment Agreement(s) under the applicable column heading, as such percentage may be adjusted from time to time pursuant to Lender Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and delivered pursuant to Section 10.11. A Lender shall not have any Commitment to make Loans of any Tranche if its percentage under the respective column heading is zero.

"Term Loans" means (i) at any time prior to the making of the Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date, collectively, the Initial Term Loans, any Delayed Draw Term Loans and any Additional Term Loans and (ii) at any time after the making of the

Delayed Draw Term Loans on the Delayed Draw Term Loan Credit Date, collectively, the Combined Term Loans and any Additional Term Loans.

        C. Clause (b) of the definition of "Applicable Margin" shall be deleted and replaced with the following:

"(b) at all times, with respect to the unpaid principal amount of (i) at any time prior to the Delayed Draw Term Loan Credit Date, each Initial Term Loan and Delayed Draw Term Loan (if any) and (ii) on or after the Delayed Draw Term Loan Credit Date, the Combined Term Loans, the rate determined by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Initial Term Loan and Delayed Draw Term Loan (if any)/Combined Term Loan" in the column entitled "Applicable Margin for Base Rate Loans", in the case of Base Rate Loans, or by reference to the applicable Leverage Ratio and at the applicable percentage per annum set forth below under "Initial Term Loan and Delayed Draw Term Loan (if any)/Combined Term Loan" in the column entitled "Applicable Margin for LIBO Rate Loans", in the case of LIBO Rate Loans:

	Applicable Margin Initial Term Loan and Delayed Draw Term Loan (if any)/Combined Term Loan
Leverage Ratio	Applicable Margin For Base Rate Loans		Applicable Margin For LIBO Rate Loans
greater than or equal to 2.75:1.00	1.00	%	2.25	%
less than 2.75:1.00	0.75	%	2.00	%

        D. Clause (i) of the second proviso to the definition of "Interest Period" shall be deleted and replaced with the following:

"(i) with respect to the Borrowing of Initial Term Loans consisting of LIBO Rate Loans made (or deemed made) on the Effective Date and the Borrowing of Delayed Draw Term Loans consisting of LIBO Rate Loans made on the Delayed Draw Term Loan Credit Date, the initial Interest Period shall be the period commencing on (and including) the Business Day on which such Borrowing is made and ending on (and including) January 30"

        E. Clause (ii) of the definition of "Stated Maturity" shall be deleted and replaced with the following:

"(ii) in the case of (a) at any time prior to the Delayed Draw Term Loan Credit Date, any Initial Term Loan and Delayed Draw Term Loan (if any) and (b) on or after the Delayed Draw Term Loan Credit Date, the Combined Term Loans, the seventh anniversary of the Effective Date or, in the case of any such day that is not a Business Day, the first Business Day following such day, provided however that the Stated Maturity Date of such Term Loans shall be May 15, 2011 in the event that, on or prior to such date, the Preferred Stock has not been (1) amended to extend the mandatory redemption date in respect thereof to a date not earlier than seven years and six months after the Effective Date, (2) refinanced with the proceeds of common equity or new preferred stock with no mandatory redemption date prior to seven years and six months after the Effective Date or (3) otherwise redeemed pursuant to one or more transactions permitted hereunder, and"

        F. The following provision shall be inserted as Section 2.1.1(d) of the Credit Agreement:

"(d) On the Delayed Draw Term Loan Credit Date (immediately after the making of the Delayed Draw Term Loans on such date), the Initial Term Loans and the Delayed Draw Term Loans outstanding hereunder shall be combined into a single tranche of term loans and shall remain outstanding on and after the Delayed Draw Term Loan Credit Date as "Combined Term Loans" (it being understood that with respect to the period from the Effective Date to the Delayed Draw Term Loan Credit Date, interest shall accrue solely on the amount of the

Combined Term Loans attributable to the Initial Term Loans, in accordance with Section 3.2.1). The initial aggregate principal amount of each Lender's Combined Term Loans shall be the sum of the amount of such Lender's Initial Term Loans plus the amount of such Lender's Delayed Draw Term Loans, in each case immediately prior to the combination of such Loans into the Combined Term Loans."

        G. On the Delayed Draw Term Loan Credit Date (immediately after the making of the Delayed Draw Term Loans on such date), each occurrence of the phrases "Initial Term Loans and Delayed Draw Term Loans" and "Initial Term Loans and Delayed Draw Term Loans, if any," in Section 2.2.2 and clause (g) of Section 3.1.1 shall be deleted and replaced with the phrase "Combined Term Loans".

SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS

        The effectiveness of the amendments set forth in Section 1 hereof is subject to the satisfaction, or waiver, of the following condition: the Borrower, Holdings and Required Lenders shall have indicated their consent by the execution and delivery of the signature pages hereof to the Administrative Agent.

SECTION 3. REPRESENTATIONS AND WARRANTIES

        A. Organization.

        Each of Holdings and the Borrower has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its obligations in connection with this First Amendment.

        B. Due Authorization, Non-Contravention, etc.

        The execution, delivery and performance by Holdings and the Borrower of this First Amendment have been duly authorized by all necessary company action, and do not (i) contravene Holdings' or the Borrower's Charter Documents, or (ii) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting Holdings or the Borrower, where such contravention, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

        C. Validity, etc.

        This First Amendment constitutes the legal, valid and binding obligations of Holdings and the Borrower enforceable against Holdings or the Borrower, as the case may be, in accordance with its terms, in each case subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

SECTION 5. MISCELLANEOUS

        A. Binding Effect

        This First Amendment shall be binding upon and shall inure to the benefit of the parties hereto and each of the Lenders and their respective successors and assigns; provided that (i) the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Administrative Agent and all Lenders, and (ii) the rights of sale, assignment and transfer of the Lenders are subject to Section 10.11 of the Credit Agreement.

        B. Severability

        Any provision of this First Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this First Amendment or affecting the validity or enforceability of such provision in any other jurisdiction.

        C. Reference to Credit Agreement

        On and after the effective date of the First Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this First Amendment.

        D. Effect on Credit Agreement

        Except as specifically amended in this First Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

        E. Execution

        The execution, delivery and performance of this First Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Loan Documents.

        F. Headings

        The various headings of this First Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this First Amendment or any provisions hereof.

        G. APPLICABLE LAW

        THIS FIRST AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.

        H. Counterparts

        This First Amendment may be executed by the parties hereto in several counterparts, each of which shall be an original and all of which shall constitute together but one and the same agreement. This First Amendment shall become effective when counterparts hereof executed on behalf of the Borrower, the Administrative Agent and Required Lenders (or notice thereof satisfactory to the Administrative Agent) shall have been received by the Administrative Agent.

        [The remainder of this page is intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.

MERRILL COMMUNICATIONS LLC
By:	/s/  ROBERT H. NAZARIAN
Name: Robert H. Nazarian Title: Executive Vice President and Chief Financial Officer
MERRILL CORPORATION
By:	/s/  RICK R. ATTERBURY
Name: Rick R. Atterbury Title: President and Chief Operating Officer
BANK OF AMERICA, N.A., as Administrative Agent, Collateral Agent and a Lender
By:	/s/  ROBERT KLAWINSKI
Name: Robert Klawinski Title: Senior Vice President

[Signature Page to First Amendment]

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Exhibit 10.29 Execution Copy

MERRILL CORPORATION FIRST AMENDMENT TO CREDIT AGREEMENT
RECITALS

EX-10.30

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Exhibit 10.30

AGREEMENT AND PLAN OF MERGER

by and among

CAPTURE MERGER CORP.,

MERRILL COMMUNICATIONS LLC,

WORDWAVE, INC.

and

PERRY SOLOMON,

AS STOCKHOLDER REPRESENTATIVE

Dated as of November 18, 2005

TABLE OF CONTENTS

ARTICLE I    THE MERGER			1
	Section 1.01.	The Merger	1
	Section 1.02.	Effective Time	2
	Section 1.03.	Effects of the Merger	2
	Section 1.04.	Certificate of Incorporation and Bylaws	2
	Section 1.05.	Directors	2
	Section 1.06.	Officers	2
ARTICLE II    CONVERSION OF SECURITIES; MERGER CONSIDERATION			2
	Section 2.01.	Capital Stock	2
	Section 2.02.	Payment Procedures	9
	Section 2.03.	Dissenting Shares	12
	Section 2.04.	Earn-Out Payment	12
ARTICLE III    REPRESENTATIONS AND WARRANTIES OF THE COMPANY			15
	Section 3.01.	Organization; Good Standing	15
	Section 3.02.	Authorization of Agreement	15
	Section 3.03.	Conflicts; Consents of Third Parties	16
	Section 3.04.	Capitalization; Title to Shares	17
	Section 3.05.	Subsidiaries	18
	Section 3.06.	Financial Statements	18
	Section 3.07.	Absence of Undisclosed Liabilities	19
	Section 3.08.	Absence of Certain Changes or Events	19
	Section 3.09.	Taxes	20
	Section 3.10.	Real Property	22
Section 3.11.		Tangible Personal Property	23
Section 3.12.		Title to Assets	23
Section 3.13.		Intellectual Property	23
Section 3.14.		Material Contracts	25
Section 3.15.		Employee Benefits Plans	27
Section 3.16.		Labor	30
Section 3.17.		Litigation	32
Section 3.18.		Compliance with Laws; Permits	33
Section 3.19.		Environmental Matters	33
Section 3.20.		Financial Advisors	34
Section 3.21.		Insurance	34
Section 3.22.		Interested Party Transactions	34
Section 3.23.		Unlawful Payments and Contributions	34
Section 3.24.		Relationship with Significant Customers	34
Section 3.25.		Information Statement	35
Section 3.26.		State Takeover Statutes	35
Section 3.27.		Other Acquisitions	35
Section 3.28.		Data Protection	36
Section 3.29.		No Other Representations or Warranties; Schedules	36

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ARTICLE IV    REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB			37
	Section 4.01.	Organization; Good Standing	37
	Section 4.02.	Authority Relative to this Agreement	37
	Section 4.03.	Consents and Approvals; No Violations	37
	Section 4.04.	Litigation	38
	Section 4.05.	Brokers, Finders and Investment Bankers	38
	Section 4.06.	Funds	38
	Section 4.07.	Management Incentives	39
ARTICLE V    COVENANTS			39
	Section 5.01.	Access to Information	39
	Section 5.02.	Conduct of Business	39
	Section 5.03.	Certain Changes or Events	40
	Section 5.04.	Confidentiality	42
	Section 5.05.	Additional Agreements	42
	Section 5.06.	Filings	43
	Section 5.07.	Public Disclosure	43
	Section 5.08.	No Solicitation of Transactions	44
	Section 5.09.	Supplements to Schedules	44
	Section 5.10.	Director and Officer Indemnification	44
	Section 5.11.	Notification of Changes	45
	Section 5.12.	Stockholder Approval	45
	Section 5.13.	Efforts to Obtain Consents	46
	Section 5.14.	Preparation of Tax Returns; Tax Matters	46
	Section 5.15.	Financing	48
	Section 5.16.	Employment and Non-Competition Agreements	49
	Section 5.17.	Stockholders Agreement; Letters of Transmittal	49
	Section 5.18.	Release and Satisfaction of Indebtedness	49
	Section 5.19.	Termination of TriNet Agreement	49
ARTICLE VI    CONDITIONS TO CLOSING			49
	Section 6.01.	Conditions to Obligations of Parent and Merger Sub	49
	Section 6.02.	Conditions to Obligations of the Company	51
ARTICLE VII    CLOSING			52
	Section 7.01.	Closing Date	52
	Section 7.02.	Deliveries by the Company	52
	Section 7.03.	Deliveries by Parent and Merger Sub	53
	Section 7.04.	Further Assurances	53
ARTICLE VIII    SURVIVAL; INDEMNIFICATION			53
	Section 8.01.	Survival	53
	Section 8.02.	Indemnification by Stockholders	54
	Section 8.03.	Indemnification by Parent	54
	Section 8.04.	Indemnification Escrow	55
	Section 8.05.	Expiration of Claims	57
	Section 8.06.	Set-Off Right	57
	Section 8.07.	Procedures Relating to Indemnification	57
	Section 8.08.	Mitigation	58
	Section 8.09.	Exclusive Remedy; Exceptions	58
	Section 8.10.	Determination of Loss Amount	59
	Section 8.11.	Tax Benefits	59

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ARTICLE IX    TERMINATION OF AGREEMENT			59
	Section 9.01.	Events of Termination	59
	Section 9.02.	Effect of Termination	60
ARTICLE X    NOTICES			60
ARTICLE XI    MISCELLANEOUS			62
	Section 11.01.	Expenses	62
	Section 11.02.	Entire Agreement	62
	Section 11.03.	Amendments and Waivers	62
	Section 11.04.	Successors and Assigns	62
	Section 11.05.	Governing Law	62
	Section 11.06.	Severability	63
	Section 11.07.	No Third-Party Beneficiaries	63
	Section 11.08.	Remedies	63
	Section 11.09.	Captions	63
	Section 11.10.	Counterparts	63
	Section 11.11.	Certain References	63
	Section 11.12.	Guaranty by Parent	63
	Section 11.13.	Stockholder Representative	64
	Section 11.14.	Employee Benefit Matters	66
	Section 11.15.	Company Disclosure Schedule	66
	Section 11.16.	Defined Terms	66
	Section 11.17.	Interpretation	77

EXHIBITS AND SCHEDULES

EXHIBIT A — Amended and Restated Certificate of Incorporation

EXHIBIT B — Form of Working Capital Escrow Agreement

EXHIBIT C—Form of WGM Legal Opinion

EXHIBIT D — Form of Indemnification Escrow Agreement

EXHIBIT E — Form of Paying Agent Agreement

Schedule 2.01(h) — Working Capital Methodologies

Schedule 5.03 — Pre-Closing Actions

Schedule 5.14(h) — Transaction Expenses

Schedule 6.01(j) — Required Consents

Schedule 8.02(e) — Indemnification Matters

Schedule 8.02(f) — Indemnification Matters

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AGREEMENT AND PLAN OF MERGER

        AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of November 18, 2005, by and among Merrill Communications LLC, a Delaware limited liability company ("Parent"), Capture Merger Corp., a Delaware corporation ("Merger Sub"), a wholly owned subsidiary of Parent, and WordWave, Inc., a Delaware corporation (the "Company") and Perry Solomon, as Stockholder Representative.

W I T N E S S E T H:

        WHEREAS, the Company is engaged in the business (the "Business") of providing premium litigation support, digital recording and transcription, and captioning services;

        WHEREAS, Merger Sub desires to merge with and into the Company and the Company desires to merge with Merger Sub, upon the terms and subject to the conditions set forth herein;

        WHEREAS, the Boards of Directors of the Company, Merger Sub and Parent have each (i) determined that the Merger (as defined in Section 1.01) is advisable, fair and in the best interests of their respective stockholders and members and (ii) approved the Merger upon the terms and subject to the conditions set forth in this Agreement;

        WHEREAS, Parent, as the sole stockholder of Merger Sub, has adopted and approved this Agreement, the Merger and the transactions contemplated by this Agreement; and

        WHEREAS, the holders of more than two-thirds of each of the classes of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock have elected not to treat the transactions contemplated by the Merger as a Liquidation (as such term is defined in the Company's Certificate of Incorporation and related preferred stock designations) by delivering written notice thereof to the Company;

        NOW THEREFORE, in consideration of the promises and the mutual agreements, covenants, representations and warranties herein contained, the parties hereto agree as follows:

ARTICLE I

THE MERGER

        SECTION 1.01.    The Merger.    Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company at the Effective Time (as defined in Section 1.02) (the "Merger"). At the Effective Time, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation (in such capacity, the "Surviving Corporation") and shall succeed to and assume all the rights and obligations of Merger Sub in accordance with the DGCL.

        SECTION 1.02.    Effective Time.    The parties shall prepare, execute and deliver a certificate of merger (the "Certificate of Merger") upon the terms and subject to the conditions set forth in this Agreement and in accordance with the relevant provisions of the DGCL and file same with the Secretary of State of the State of Delaware. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such subsequent time or date as Parent and the Company shall agree and specify in the Certificate of Merger (the "Effective Time").

        SECTION 1.03.    Effects of the Merger.    The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL.

        SECTION 1.04.    Certificate of Incorporation and Bylaws.

        (a)   The Certificate of Incorporation of the Company amended and restated as of the Effective Time in substantially the form set forth in Exhibit A hereto shall be the Certificate of Incorporation of the Surviving Corporation until duly amended or repealed.

        (b)   The Bylaws of Merger Sub immediately prior to the Effective Time shall be the Bylaws of the Surviving Corporation until duly amended or repealed.

        SECTION 1.05.    Directors.    The directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or such time as their respective successors are duly elected and qualified.

        SECTION 1.06.    Officers.    The officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or such time as their respective successors are duly elected and qualified.

ARTICLE II

CONVERSION OF SECURITIES; MERGER CONSIDERATION

        Section 2.01.    Capital Stock.    At the Effective Time, by virtue of the Merger and without any action on the part of the holder of any shares of capital stock of the Company or Merger Sub or limited liability company interests of Parent:

        (a)    Capital Stock of Merger Sub.    Each issued and outstanding share of capital stock of Merger Sub immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation, which shall be a wholly owned subsidiary of Parent, and such shares shall constitute the only outstanding shares of capital stock of the Surviving Corporation as of the Effective Time.

        (b)    Cancellation of Treasury Stock, Etc.    Each share of Company Capital Stock that is owned by Parent or Merger Sub or by the Company as treasury stock immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

        (c)    Payment of Accrued Dividends.    As part of the Base Purchase Price to be paid hereunder, at or prior to the Effective Time, Parent shall deposit or cause to be deposited with the Company the amount necessary to make payment of the Accrued Dividends due the holders of Company Preferred Stock. The Company shall pay all Accrued Dividends in respect of shares of Company Preferred Stock (accrued through the date of conversion of such shares of Company Preferred Stock) at or immediately prior to the Effective Time.

        (d)    Payment of Merger Consideration.

          (i)  The total amount of consideration to be paid for all of the shares of Company Capital Stock and in respect of all Company Stock Options and Company Warrants shall be $155,000,000 (the "Base Purchase Price"), as adjusted pursuant to Sections 2.01(h), 2.01(i) and Article VIII below, plus the Earn-Out Payment, if any (in an amount not to exceed $5,000,000, as defined in and determined pursuant to Section 2.04), less Net Indebtedness for Borrowed Money, Accrued Dividends and Non-Trade Liabilities (collectively, the "Aggregate Merger Consideration"), which shall be paid in cash, without interest as follows:

        (A)  Subject to this Section 2.01, Section 2.02 and Article VIII, each issued and outstanding share of Series C Preferred Stock, shall be converted into the right to receive $6.50 in cash (the "Preferred Payment Amount").

        (B)  Subject to this Section 2.01, Section 2.02 and Article VIII, each issued and outstanding share of Company Common Stock issued and outstanding immediately before the Effective Time (other than Dissenting Shares and shares described in Section 2.01(b))

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shall be converted into the right to receive an amount in cash equal to X (the "Merger Consideration Per Common Share"), where

X = (AMC - PPA) + AEP CS + CSO + CW

and the abbreviations in the equation above have the following meanings:

AMC	=	Aggregate Merger Consideration
PPA	=	Preferred Payment Amount
AEP	=	Aggregate Exercise Price
CS	=	Number of Shares of Company Common Stock plus number of shares of Company Preferred Stock entitled to participate on an as-converted basis in amounts distributable to Company Common Stock in connection with Merger
CSO	=	Number of Company Stock Options with an exercise price per share immediately prior to the Effective Time less than the Closing Consideration Per Common Share
CW	=	Number of Company Warrants with an exercise price per share immediately prior to the Effective Time less than the Closing Consideration Per Common Share

        For purposes of this Agreement, "Aggregate Exercise Price" means the aggregate exercise price of all Company Stock Options and Company Warrants that have an exercise price immediately prior to the Effective Time that is less than the Closing Consideration Per Common Share; "Closing Consideration Per Common Share" means the amount of the Merger Consideration Per Common Share, excluding any Earn-Out Payment, reduced by the per share amount of the Stockholder Representative Expense Amount, Working Capital Escrow Amount and Indemnification Escrow Amount; "Closing Consideration Per Preferred C Share" means the amount of the Preferred Payment Amount, reduced by the per share amount of the Stockholder Representative Expense Amount, Working Capital Escrow Amount and Indemnification Escrow Amount; and "Closing Consideration" means the Closing Consideration Per Common Share or the Closing Consideration Per Preferred C Share, as applicable.

        (C)  Subject to this Section 2.01, Section 2.02 and Article VIII, each share of Series A Preferred Stock or Series B Preferred Stock issued and outstanding immediately before the Effective Time (other than Dissenting Shares) shall be converted into the right to receive a portion of the Aggregate Merger Consideration that such share would have been entitled to receive if such share had converted into a share of Company Common Stock immediately prior to the Effective Time.

        (D)  Each Company Stock Option outstanding at the Effective Time shall be converted into the right to receive an amount in cash as set forth in paragraph (e) below.

        (E)  Each outstanding Company Warrant shall become exercisable into the right to receive an amount in cash as set forth in paragraph (f) below.

         (ii)  The amount of the Aggregate Merger Consideration payable in respect of each share of Company Capital Stock, Company Stock Option and Company Warrant pursuant to this Section 2.01(d) is referred to as the "Merger Consideration" with respect to such share of Company Capital Stock, Company Stock Option or Company Warrant.

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        (iii)  As of the Effective Time, all shares of Company Capital Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of any shares of Company Capital Stock shall cease to have any rights with respect thereto, except the right to receive a portion of the Merger Consideration as provided in this Section 2.01(d), in accordance with Section 2.02.

        (e)    Stock Options.

          (i)  Not later than ten (10) days prior to the anticipated Effective Time, the Company will send a notice to all holders of outstanding Company Stock Options (A) specifying that such options will not be assumed in connection with the Merger, and (B) specifying that any outstanding Company Stock Options will terminate and be cancelled at such time and represent only the right to receive the consideration, if any, specified in this Section 2.01(e) in accordance with the terms of this Agreement.

         (ii)  At the Effective Time, (A) each Company Stock Option which is then outstanding shall, by virtue of the Merger and without any action on the part of the holder thereof, be canceled and (B) in consideration of such cancellation, (I) the Company shall pay to the holders of Company Stock Options ("Optionholders") an amount in respect of each Company Stock Option equal to the excess of (x) the product of the Closing Consideration Per Common Share multiplied by the number of shares of Company Common Stock which are issuable upon exercise of such Company Stock Option immediately prior to the Effective Time over (y) the aggregate exercise price of those shares of Company Common Stock underlying such Company Stock Option, and (II) the Escrow Agent shall pay to the Optionholders any other amounts paid to Stockholders from time to time pursuant to the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, or as a result of any Earn-Out Payment, and the Stockholder Representative shall pay to the Optionholders any remaining amount of the Stockholder Representative Expense Amount paid to Stockholders from time to time, in each case in an amount equal to the per share amount to be paid to Stockholders multiplied by the number of shares of Company Common Stock which are issuable upon exercise of such Company Option immediately prior to the Effective Time. No payment shall be made with respect to any Company Stock Option having an exercise price equal to or greater than the Closing Consideration Per Common Share. At or prior to the Effective Time, the Company shall cause to be cancelled any Company Stock Option that has an exercise price that is equal to or greater than the Closing Consideration Per Common Share.

        (iii)  As part of the Aggregate Merger Consideration to be paid hereunder, at or prior to the Effective Time, Parent shall deposit or cause to be deposited with the Company an amount necessary for the Company to make payment of the aggregate amounts due the Optionholders pursuant to this Section 2.01(e).

        (f)    Warrants.

          (i)  Not later than ten (10) days prior to the anticipated Effective Time, the Company will send a notice to all holders of outstanding Company Warrants (A) specifying that such warrants will not be assumed in connection with the Merger, and (B) specifying that any outstanding Company Warrants will terminate and be cancelled at such time and represent only the right to receive the consideration, if any, specified in this Section 2.01(f) in accordance with the terms of this Agreement.

         (ii)  At the Effective Time (A) each Company Warrant which is then outstanding shall by virtue of the Merger and without any action on the part of the holder thereof, be canceled and (B) in consideration of such cancellation, (I) the Company shall pay to the holders of

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Company Warrants an amount in respect of each Company Warrant equal to the excess of (x) the product of the Closing Consideration Per Common Share multiplied by the number of shares of Company Common Stock which are issuable upon exercise of such Company Warrant immediately prior to the Effective Time over (y) the aggregate exercise price of those shares of Company Common Stock subject to such Company Warrant, and (II) the Escrow Agent shall pay to the holders of Company Warrants any other amounts paid to Stockholders from time to time pursuant to Working Capital Escrow Agreement and the Indemnification Escrow Agreement, or as a result of any Earn-Out Payment, and the Stockholder Representative shall pay to the holders of Company Warrants any remaining amount of the Stockholder Representative Expense Amount paid to Stockholders from time to time, in each case, in an amount equal to the per share amount to be paid to Stockholders multiplied by the number of shares of Company Common Stock which are issuable upon exercise of such Company Warrant immediately prior to the Effective Time. No payment shall be made with respect to any Company Warrant having an exercise price equal to or greater than the Closing Consideration Per Common Share. At or prior to the Effective Time, the Company shall cause to be cancelled any Company Warrant that has an exercise price that is equal to or greater than the Closing Consideration Per Common Share.

        (iii)  As part of the Aggregate Merger Consideration to be paid hereunder, at or prior to the Effective Time, Parent shall deposit or cause to be deposited with the Company an amount necessary for the Company to make payment of the aggregate amounts due to the holders of the Company Warrants pursuant to this Section 2.01(f).

        (g)    Working Capital Escrow.    Parent shall deposit in escrow with the Escrow Agent identified in the form of the Working Capital Escrow Agreement attached hereto as Exhibit B (the "Working Capital Escrow Agreement"), $300,000 (the "Working Capital Escrow Amount") of the Aggregate Merger Consideration issuable to the holders of Company Common Stock in exchange for such shares of Company Common Stock, which amount shall be held and disbursed in accordance with the terms of such Working Capital Escrow Agreement following the determination of the Final Working Capital (as hereinafter defined).

        (h)    Working Capital Adjustment.

          (i)  The parties agree that the determination of the amount of Aggregate Merger Consideration was based on the Company's delivery of Working Capital at the Closing in the amount of $18,057,000 (the "Target Working Capital"). Accordingly, no less than six (6) business days prior to the anticipated Closing Date, the Company shall prepare and deliver to Parent an estimated balance sheet representing the Company's good faith estimate of the Working Capital of the Company as of the close of business on the Closing Date, based on the books and records of the Company and applied on a basis consistent with the audited balance sheet of the Company as of December 31, 2004. Parent shall have three (3) business days to review such good faith estimate, and the parties shall negotiate in good faith any disagreements concerning such estimate. The amount of such Working Capital estimate mutually agreed to by the Company and Parent prior to the Closing Date is herein referred to as the "Estimated Working Capital". "Working Capital" means an amount, as of any balance sheet date, computed using the procedures and methodologies set forth in Schedule 2.01(h) attached hereto, and finalized pursuant to this Section 2.01(h), equal to: (aa) the current assets of the Company (excluding Cash, deferred tax assets and any Transaction Tax Benefits, but including, for the avoidance of doubt, all pending Tax refunds applied for and previous year over-payments applied to 2005 by the Company or any of its Subsidiaries and any Tax payments made in 2005 in respect of 2005 taxes); (bb) less the current liabilities of the Company (excluding the current portion of Indebtedness, accrued interest thereon, liabilities for the payment of severance or similar benefits to employees of the Company or the

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Subsidiaries in connection with or by reason of the transactions contemplated by this Agreement, liability for income taxes (other than a liability reserve in the amount of $1,100,000 for income Taxes, which shall be included in current liabilities) and reserves for deferred Taxes established to reflect timing differences between book and taxable income pursuant to Statement of Financial Accounting Standard No. 109, but including, for the avoidance of doubt, any Transaction Expenses incurred for services provided prior to and through the Closing (to the extent not paid), due or to become due by the Company in connection with or by reason of the transactions contemplated by this Agreement, whether or not required by GAAP or otherwise to be accrued, any special bonus or noncompetition payments owing to employees, regular bonus and commission amounts for employees pro rated through the Closing Date, all paid time off through the Closing Date, and the items on Schedule 2.01(h) , all of which shall be accrued as of the Closing Date unless previously paid), calculated in accordance with GAAP applied on a basis consistent with the audited balance sheet of the Company as of December 31, 2004.

         (ii)  If the Estimated Working Capital is less than the Target Working Capital, then the Aggregate Merger Consideration will be decreased on a dollar-for-dollar basis by the amount of such deficiency. If the Estimated Working Capital is greater than the Target Working Capital, then the Aggregate Merger Consideration will be increased on a dollar-for-dollar basis by the amount of such excess. In each case, such decrease or increase in the Aggregate Merger Consideration shall be subject to further adjustment pursuant to subsection (vi) below.

        (iii)  As promptly as practicable following the Closing Date, but in any event within 45 calendar days after the Closing Date, Parent will prepare a working capital statement of the Company as of the close of business on the Closing Date in accordance with GAAP applied on a basis consistent with the audited balance sheet of the Company at December 31, 2004, (the "Parent Working Capital Statement"). Parent shall deliver the Parent Working Capital Statement to the Stockholder Representative within such 45-day period.

        (iv)  The Stockholder Representative shall have 45 calendar days following receipt of the Parent Working Capital Statement during which to notify Parent of any dispute of any item contained in the Parent Working Capital Statement, which notice shall set forth in reasonable detail the basis for such dispute and the Stockholder Representative's calculation of the final Working Capital as it differs from the calculation set forth in the Parent Working Capital Statement. If the Stockholder Representative does not notify Parent of any dispute within such 45 calendar day period, or within such time period notifies Parent that it agrees with the Parent Working Capital Statement, the Parent Working Capital Statement shall be deemed to be the Final Closing Date Working Capital Statement (as hereinafter defined). The parties hereto shall cooperate in good faith to resolve any dispute as promptly as possible, and upon such resolution, the Final Closing Date Working Capital Statement shall be prepared in accordance with the agreement of the parties hereto.

         (v)  If the parties are unable to resolve any dispute regarding the Parent Working Capital Statement within 15 calendar days (or such longer period as the parties shall mutually agree in writing) of notice of a dispute from the Stockholder Representative, the parties shall engage Ernst & Young LLP or another nationally-recognized accounting firm mutually acceptable to the parties (the "Arbitrator") to resolve the issues having a bearing on such dispute and such resolution shall be final and binding on the parties. The Arbitrator shall use commercially reasonable efforts to complete its work within 30 calendar days of its engagement. The fees, costs and expenses of the Arbitrator shall be allocated to and borne by Parent and the Company based on the inverse of the percentage that the Arbitrator's determination (before such allocation) bears to the total amount of the items in dispute as originally submitted to the Arbitrator. For example, should the items in dispute total $1,000 in amount and the

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Arbitrator awards $600 in favor of the Stockholder Representative's position, 60% of the costs of its review would be borne by Parent and 40% of the costs would be borne by the Stockholders. Any such expenses determined to be the Stockholders' responsibility shall be paid by the Stockholder Representative and deducted from the Stockholder Representative Expense Amount. The fees and disbursements of the advisors of each party incurred in connection with their preparation or review of any Parent Working Capital Statement shall be borne by such party. The Parent Working Capital Statement as finally determined pursuant to this Section 2.01(h) is referred to herein as the "Final Closing Date Working Capital Statement" and the Working Capital amount stated in the Final Closing Date Working Capital Statement is referred to herein as the "Final Working Capital."

        (vi)  Within ten days after the determination of the Final Closing Date Working Capital Statement in accordance with this Section 2.01(h), (A) if Final Working Capital is less than the Estimated Net Working Capital, then the Stockholders shall promptly pay to Parent an aggregate amount equal to the absolute difference between the Final Working Capital and the Estimated Working Capital, and (B) if the Final Working Capital is greater than the Estimated Working Capital, then Parent shall promptly pay to Stockholders in cash an aggregate amount equal to the absolute difference between the Final Working Capital and the Estimated Working Capital. Any payments required to be made pursuant to this Section 2.01(h) by the Stockholders shall initially be made from the Working Capital Escrow Amount in accordance with the terms of the Working Capital Escrow Agreement, and if the Working Capital Escrow Amount is insufficient, such payments shall be made from the Indemnification Escrow Amount, and if the Indemnification Escrow Amount is insufficient, the Stockholders shall pay such deficiency in proportion to their Proportional Amount, and shall be liable severally on such basis for such amounts or (b) if the Working Capital Escrow Amount is in excess of the aggregate amount owed to Parent, any remaining funds in the Working Capital Escrow Account shall be released promptly by the Escrow Agent pursuant to Section 2.02(d).

       (vii)  Nothing in this Section 2.01(h), including the preparation of the Final Working Capital Statement or the agreement by the parties on the Final Working Capital, shall impair the ability of Parent to rely on the representations and warranties of the Company or diminish the indemnification obligations of the Stockholders set forth in this Agreement.

        (i)    Stockholder Representative Account.    Parent shall pay to Stockholder Representative out of the Aggregate Merger Consideration and for the benefit of the Stockholders, to such account as shall be specified in writing by the Stockholder Representative, the amount of $200,000 (the "Stockholder Representative Expense Amount"), which shall be used by the Stockholder Representative in its sole discretion to (i) pay any Transaction Expenses which are not paid or accrued as of the Closing Date, and (ii) to defray, offset, settle or pay any Liabilities or expenses of the Company incurred in connection with the transactions contemplated by this Agreement and to pay out-of-pocket expenses, including reasonable fees and expenses of advisers, incurred by the Stockholder Representative in its capacity as such. The Stockholder Representative shall distribute any remaining amounts received under this Section 2.01(i) to the Stockholders in relation to each Stockholder's Proportional Amount, (a) from the Effective Time until such time as Parent has been reasonably assured that all of the Transaction Expenses were either accrued as of the Closing Date or have been paid after the Closing Date, upon the joint determination of Parent and the Stockholder Representative until, and (b) from and after the time that Parent has received such reasonable assurance, in the sole discretion of the Stockholder Representative. Parent and Merger Sub shall have no liability or responsibility to the Stockholders with respect to this Section 2.01(i).

        (j)    Indebtedness of the Company.    At or immediately prior to the Effective Time, and except as set forth in Section 5.18: (i) the Company shall use all of its Cash to either contribute to the

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payment of the Accrued Dividends or to contribute to paying off Indebtedness, as directed by Parent; and (ii) Parent shall directly pay (as part of the Base Purchase Price) or assume (through the Merger) the Net Indebtedness for Borrowed Money.

        SECTION 2.02.    Payment Procedures.

        (a)    Deposit of Funds.

          (i)  At the Effective Time, Parent shall deposit with the Paying Agent funds in an amount equal to the Aggregate Merger Consideration, excluding any Earn-Out Payment, which amount shall have been reduced as set forth in Section 2.01(d)(i), reduced by an amount equal to (A) the amount paid to the Company in respect of Company Stock Options pursuant to Section 2.01(e)(iii), (B) the amount paid by Parent to holders of Company Warrants pursuant to Section 2.01(f)(iii), (C) the Indemnification Escrow Amount, (D) the Working Capital Escrow Amount, and (E) the Stockholder Representative Expense Amount. Such funds shall be invested by the Paying Agent, in accordance with the provisions of the Paying Agent Agreement, pending payment therefor by the Paying Agent to the Stockholders. Earnings from such investments (other than amounts invested with respect to the Working Capital Escrow Amount, Indemnification Escrow Amount or Stockholder Representative Expense Amount) shall be the sole and exclusive property of Parent or the Surviving Corporation, as the case may be, and no part thereof shall accrue to the benefit of the Stockholders.

         (ii)  At or before the Effective Time, Parent will deposit with the Escrow Agent funds in an amount equal to the Indemnification Escrow Amount and the Working Capital Escrow Amount, which amounts will be held in separate accounts pursuant to the terms of the Indemnification Escrow Agreement and Working Capital Escrow Agreement.

        (iii)  At or before the Effective Time, Parent will deposit the Stockholder Representative Expense Amount into an account designated by the Stockholder Representative.

        (iv)  Parent shall bear the fees, costs and expenses of the Paying Agent and the Escrow Agent.

        (b)    Initial Payment Procedure.

          (i)  Prior to the Effective Time, Parent shall cause the Paying Agent to mail to each record holder of a certificate or certificates that immediately prior to the Effective Time represented Company Capital Stock (the "Certificates") a letter of transmittal which shall (A) specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon actual delivery of the Certificates to the Paying Agent, (B) contain instructions for use in effecting the surrender of the Certificates, (C) contain an acknowledgment that the holder is bound by the all of terms and conditions of this Agreement as a Stockholder, and that it will be, among other things, liable to Parent for such holder's Proportional Amount of any payments owed by the Stockholders pursuant to Sections 2.01(h) ("Working Capital Adjustment") and 8.02 ("Indemnification by Stockholders") hereof, and (D) contain the provisions specified in subsection (iv) below (the "Letter of Transmittal").

         (ii)  Prior to the Effective Time, the Company shall mail to each holder of a Company Warrant a Surrender and Cancellation Agreement, which shall contain instructions for use in effecting the surrender of the Company Warrants and the applicable provisions specified in subsection (iv) below (the "Surrender and Cancellation Agreement").

        (iii)  Prior to the Effective Time, the Company shall mail to each holder of a Company Stock Option an Options Acknowledgment, which shall contain the notice required by

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Section 2.01(e)(i) and the applicable provisions specified in subsection (iv) below (the "Options Acknowledgment").

        (iv)  Each of the Letter of Transmittal, the Surrender and Cancellation Agreement and the Options Acknowledgment shall be in customary form and shall specify that delivery of any documents required thereby shall be effected, and risk of loss and title to such documents shall pass, only upon proper delivery of such documents to the Paying Agent, Company or Parent, as applicable, and shall be in such form and have such other provisions as Parent, the Company and the Paying Agent shall reasonably specify, including, without limitation, provisions confirming the appointment of the Stockholder Representative pursuant to Section 11.13 and a representation by each such holder as to ownership, title, power and authority, and absence of liens and conflicts with respect to Certificates, Company Stock Options or Company Warrants as well as a release of Parent, the Company and each of their respective Affiliates by each Stockholder for any claims arising as a result of such Stockholder's status as a stockholder of the Company prior to and including the Effective Time and instructions for use in effecting the surrender of the Certificates, Company Stock Options or Company Warrants for the Merger Consideration Per Common Share payable thereon pursuant to this Agreement.

         (v)  Upon surrender for cancellation in accordance with this section of a Certificate, Company Stock Option or Company Warrant held by any such Stockholder, together with such Letter of Transmittal, Surrender and Cancellation Agreement or Options Acknowledgment, as the case may be, duly executed, the holder of such Certificate, Company Stock Option or Company Warrant shall be entitled to receive in exchange therefor such consideration to which the holder thereof may be entitled as of the Effective Time (i) in the case of Certificates, in respect of the Company Capital Stock represented by the Certificate, (ii) in the case of Company Warrants, as set forth in Section 2.01(f) and (iii) in the case of Company Stock Options, as set forth in Section 2.01(e). Any Certificate, Company Stock Option or Company Warrant so surrendered shall forthwith be canceled. Any portion of the Preferred Payment Amount or Merger Consideration Per Common Share shall be paid to holders of Company Capital Stock, Company Stock Options and Company Warrants by mailing a check to such address as the Company shall specify in writing to the paying party (or, in the case of a holder who receives at least One Hundred Thousand Dollars ($100,000) of Aggregate Merger Consideration, by wire transfer to such account as may be specified by the Company to the paying party within such time period).

        (c)    Payment of Indemnification Escrow Amount.    As soon as practicable following the release of any portion of the remaining Indemnification Escrow Amount to the Stockholders pursuant to the terms of the Indemnification Escrow Agreement, the Escrow Agent will remit to the Stockholders (other than holders of Dissenting Shares) an amount equal to the per share amount of the remaining Indemnification Escrow Amount distributed for each Outstanding Share; provided, however, that no such distributions will be made with respect to any Outstanding Share until such applicable Stockholder has complied with the procedures specified herein for receipt of the Closing Consideration payable with respect to such Outstanding Shares.

        (d)    Payment of Working Capital Amount.    As soon as practicable following the release of the remaining Working Capital Escrow Amount, if any, to the Stockholders pursuant to the terms of the Working Capital Escrow Agreement, the Escrow Agent will remit to the Stockholders (other than holders of Dissenting Shares) an amount equal to the remaining Working Capital Escrow Amount distributed for each Outstanding Share (in the Proportional Amount for each Stockholder); provided, however, that no such distributions will be made with respect to any Outstanding Share until such applicable Stockholder has complied with the procedures specified herein for receipt of the Closing Consideration payable with respect to such Outstanding Shares.

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        (e)    Payment for Dissenting Shares.    Notwithstanding the foregoing, no amounts shall be payable at any time other than as provided in Section 2.03 and the DGCL with respect to any Dissenting Shares. In the case of Dissenting Shares, payment shall be made in accordance with Section 2.03 and the DGCL. In the case of any shares of Company Capital Stock with respect to which dissenters' rights have not terminated as of the Effective Time, if such shares of Company Capital Stock become Dissenting Shares, payment shall be made in accordance with Section 2.03 and the DGCL, and if, instead, the dissenters' rights with respect to such shares irrevocably terminate after the Effective Time, such shares of Company Capital Stock shall be entitled to receive the Merger Consideration to which such shares are otherwise entitled in accordance with the provisions of Section 2.01(d).

        (f)    Unclaimed Property.    Promptly following (A) one year after the Effective Time with respect to the Merger Consideration deposited with the Paying Agent or Escrow Agent with respect to the Working Capital Escrow Amount or (B) the termination of the Indemnification Escrow Agreement with respect to the Indemnification Escrow Amount, Parent shall be entitled to require the Paying Agent or the Escrow Agent, as applicable, to deliver to it any portion of the Merger Consideration, Indemnification Escrow Amount or the Working Capital Escrow Amount (including any interest or other income received with respect thereto), as applicable, that had been made available to the Paying Agent or Escrow Agent, as applicable, and that has not been disbursed to holders of Certificates, Company Stock Options and Company Warrants, or any Certificates, Company Stock Options, Company Warrants or other documents relating to the Merger in its possession, and thereafter such Stockholders shall be entitled to look to Parent only as general creditors thereof with respect to any portion of the consideration payable upon due surrender of their Certificates, Company Stock Options or Company Warrants, without interest. Notwithstanding anything to the contrary in this Section 2.02(d), to the fullest extent permitted by applicable Law, none of the Paying Agent, the Escrow Agent, Parent or the Surviving Corporation shall be liable to any holder of a Certificate, Company Stock Option or Company Warrant for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

        (g)    No Further Ownership Rights in Company Capital Stock; Transfer Books.    The Aggregate Merger Consideration paid to the Paying Agent in accordance with the terms of this Section 2.02 upon conversion of any shares of Company Capital Stock shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Capital Stock and each Stockholder waives any other claim or right in respect thereto or otherwise in their capacity as a holder of Company Capital Stock, and after the Effective Time there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of shares of Company Capital Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason, they shall be canceled and exchanged as provided in this Section 2.02.

        (h)    Withholding Rights.    The party making payments to any holder of Company Capital Stock, Company Stock Options or Company Warrants shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of Company Capital Stock, Company Stock Options or Company Warrants pursuant to this Agreement, such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state, local or foreign Tax law. To the extent that amounts are so deducted and withheld by such party, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Capital Stock, Company Stock Options or Company Warrants in respect of which such deduction and withholding was made by such party. The Paying Agent and Escrow Agent shall be responsible for preparation, filing and provision of all Tax Returns and reports associated with the funds held pursuant to the Paying Agent Agreement, including, but not limited to, provision of Forms W-2 or 1099 (as applicable) to the applicable parties.

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        SECTION 2.03.    Dissenting Shares.

        (a)   Notwithstanding any provision of this Agreement to the contrary, shares of Company Capital Stock that are outstanding immediately prior to the Effective Time and held by holders who shall not have voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing appraisal for such shares in accordance with Section 262 of the DGCL (collectively, the "Dissenting Shares") shall not be converted into or represent the right to receive the consideration set forth in Section 2.01. Such holders shall be entitled to receive such consideration as is determined to be due with respect to such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL, except that all Dissenting Shares held by holders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares under Section 262 of the DGCL shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the consideration specified in Section 2.01 (as adjusted, if applicable), without any interest thereon, upon surrender, in the manner provided in Section 2.02, of the certificate or certificates that formerly evidenced such Dissenting Shares.

        (b)   The Company shall give Parent (i) prompt notice of any demands for appraisal received by the Company, withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

        SECTION 2.04.    Earn-Out Payment.

        (a)   In addition to the Base Purchase Price, Parent will pay to the Stockholders up to a maximum of Five Million Dollars ($5,000,000) in the event that both the EBITDA Target and the Net Sales Target (as such terms are defined below) have been achieved (the "Earn-Out Payment"). The Earn-Out Payment will be payable by Parent in an amount and as otherwise determined pursuant to the terms and conditions set forth in this Section 2.04.

        (b)   The Earn-Out Payment will be paid by Parent only if both of the following conditions have been satisfied:

          (i)  The EBITDA of the Company (as defined below) for the twelve months ending December 31, 2005 is equal to or greater than $16,924,000 (the "EBITDA Target"); and

         (ii)  The Net Sales of the Company (as defined below) for the twelve months ending January 31, 2007 are equal to or greater than $100,200,150 (the "Net Sales Target").

        (c)   Promptly after completion of the audit of the Company's financial statements for the year ending December 31, 2005, Parent shall calculate EBITDA of the Company for the twelve months ended December 31, 2005 and shall deliver to the Stockholder Representative financial statements and appropriate accompanying documentation showing the EBITDA of the Company. Parent shall provide the Stockholder Representative with access to information and personnel and representatives of the Company necessary for Stockholder Representative to verify such EBITDA calculation. Parent and the Stockholder Representative shall use commercially reasonable efforts to jointly agree, in good faith, on whether the EBITDA Target has been achieved. If the parties are unable to resolve any disagreement regarding the calculation of EBITDA of the Company within 5 business days from notice by the Stockholder Representative of a disagreement (or such longer period as Parent and the Stockholder Representative shall mutually agree in writing), then the parties shall engage the Arbitrator to resolve the issues having a bearing on such disagreement and such resolution shall be final and binding on the parties. One-half of the fees, cost and expenses of the Arbitrator shall be borne by each of Parent and the Stockholders. If the EBITDA Target is not

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achieved, Parent shall not be obligated to make any Earn-Out Payment, regardless (among other things) of whether the Net Sales Target is achieved.

        (d)   If EBITDA of the Company (as determined pursuant to the procedures set forth in subsection (c) above) is equal to or greater than the EBITDA Target, Parent shall, no later than March 15, 2007, calculate the Net Sales of the Company for the 12 months ended January 31, 2007 and shall deliver to the Stockholder Representative financial statements and appropriate accompanying documentation showing the amount of such Net Sales of the Company. Parent shall provide the Stockholder Representative with access to information and personnel and representatives of the Company necessary for the Stockholder Representative to verify such calculation of the Net Sales of the Company. Parent and the Stockholder Representative shall use commercially reasonable efforts to jointly agree, in good faith, on whether the Net Sales Target has been achieved. If the parties are unable to resolve any disagreement regarding the calculation of Net Sales of the Company within 5 business days from notice by the Stockholder Representative of a disagreement (or such longer period as Parent and the Stockholder Representative shall mutually agree in writing), then the parties shall engage the Arbitrator to resolve the issues having a bearing on such disagreement and such resolution shall be final and binding on the parties. One-half of the fees, cost and expenses of the Arbitrator shall be borne by each of Parent and the Stockholders (to be paid from the Stockholder Representative Expense Amount).

        (e)   If both the EBITDA Target and the Net Sales Target have been achieved (as determined pursuant to the procedures set forth in subsections (c) and (d) above), the amount of the Earn-Out Payment will be determined as follows (provided, however, that the Earn-Out Payment in no event will exceed $5,000,000):

          (i)  If the EBITDA Target has been achieved and Net Sales of the Company for the twelve months ending January 31, 2007 ("2007 Net Sales") are equal to or greater than $101,136,600, then the amount of the Earn-Out Payment will be Five Million Dollars ($5,000,000). If the EBITDA Target has been achieved and 2007 Net Sales are equal to the Net Sales Target, then the amount of the Earn-Out Payment will be One Million Dollars ($1,000,000). If the EBITDA Target has been achieved and 2007 Net Sales are less than the Net Sales Target, then the amount of the Earn-Out Payment will be $0.

         (ii)  If the EBITDA Target has been achieved and 2007 Net Sales are more than the Net Sales Target but less than $101,136,600, then the amount of the Earn-Out Payment will $1,000,000, plus an amount determined by multiplying $4,000,000 by a percentage derived from the following formula:

(2007 Net Sales - Net Sales Target) $936,450

        (f)    Any Earn-Out Payment payable pursuant to this Section 2.04 (which payment shall be made through the Escrow Agent) shall be paid no later than April 30, 2007 by Parent to the holders of Company Capital Stock (excluding the holders of Series C Preferred Stock), Company Stock Options or Company Warrants (other than holders of Dissenting Shares) in the Proportional Amount for each such Stockholder; provided, however, that no such distributions will be made with respect to any Outstanding Share until such applicable Stockholder has complied with the procedures specified herein for receipt of the Closing Consideration Per Common Share payable with respect to such Outstanding Shares.

        (g)   For the purposes of this Section 2.04, "EBITDA of the Company" for the twelve months ended December 31, 2005 shall mean an amount equal to the earnings of the Company and its subsidiaries during such period, before deductions for interest, income taxes, depreciation and amortization, determined in accordance with GAAP, applied on a basis consistent with the

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Company's accounting practices as reflected in its December 31, 2004 financial statements; provided, however, that such calculation shall not include any Transaction Expenses.

        (h)   For purposes of this Section 2.04, "Net Sales of the Company" shall mean the gross invoice price with respect to sales of the Company's LegalLink business unit, including court reporting services, TotalTranscript/WordIndex, new bundled features, realtime court reporting, videography services and trial presentation services offered by that business unit (but excluding, for the avoidance of doubt, document management and electronic data discovery services), less the sum of the following deductions where applicable: cash, trade or quantity discounts, sales, use, or other excise or similar taxes imposed upon particular sales, and allowances or credits to customers because of rejections or returns, as calculated in accordance with GAAP, applied on a basis consistent with the Company's accounting practices as reflected in its December 31, 2004 financial statements. For purposes of the calculation of the Net Sales of the Company, sales arising from businesses or assets acquired by Parent or the Company after the date hereof will be excluded.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as set forth in the disclosure schedule of the Company attached hereto (the "Company Disclosure Schedule"), the Company hereby represents and warrants, as of the date of this Agreement as follows:

        SECTION 3.01.    Organization; Good Standing.    The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted. The Company is duly qualified or authorized to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which it owns or leases real property and each other jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect. The Company has made available to Parent accurate and complete copies of its Certificate of Incorporation and bylaws as currently in full force and effect. The minute books of the Company have been made available for inspection by Parent prior to the date hereof and accurately reflect in all material respects all material actions of the Board of Directors of the Company and the Stockholders.

        SECTION 3.02.    Authorization of Agreement.

        (a)   The Company has all requisite power and authority to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by the Company in connection with the consummation of the transactions contemplated by this Agreement (the "Company Documents"), and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the Company Documents and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of the Company, and, subject to obtaining the approval of the Company's stockholders, no other corporate action on the part of the Company or any Subsidiary is necessary to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each of the Company Documents will be at or prior to the Closing, duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability,

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to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

        (b)   Without limiting the generality of the foregoing, on or prior to the date of this Agreement, the Board of Directors of the Company has unanimously (i) declared that the Merger is advisable and fair to and in the best interest of the Company and the holders of each class of the Company Capital Stock, and approved and adopted this Agreement in accordance with the DGCL, (ii) recommended approval and adoption of this Agreement and the transactions contemplated hereby by the Company's stockholders. The Board of Directors of the Company has not withdrawn or modified such approval or resolution to recommend.

        (c)   The only votes of the holders of any class or series of Company Capital Stock necessary to approve the transactions contemplated by this Agreement and the other Company Documents are (i) the election of the holders of two-thirds of the outstanding shares of Series A Preferred Stock to not treat the Merger as a liquidation, voting as a single class, (ii) the election of the holders of two-thirds of the outstanding shares of Series B Preferred Stock to not treat the Merger as a liquidation, voting as a single class, and (iii) the affirmative vote of the holders of a majority of the outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Company Common Stock, voting as a single class (assuming that each share of Series A Preferred Stock, each share of Series B Preferred Stock and each share of Series C Preferred Stock has been converted to shares of Company Common Stock in accordance with their respective terms), and no other vote of the holders of any class or series of the capital stock of the Company is required by law, the Company's Certificate of Incorporation or the bylaws of the Company or otherwise in order for the Company to consummate the transactions contemplated by this Agreement and the other Company Documents (the "Requisite Stockholder Consent").

        (d)   The Company has provided to Parent copies of the Company's Amended and Restated Stockholders Agreement, dated as of October 29, 1999, and all signature pages of Stockholders relating thereto. Each holder of Company Capital Stock that has executed such signature page is obligated by contract to vote (to the extent it is entitled to vote by law or by the Company's Certificate of Incorporation or otherwise) in favor of the Merger and the transactions contemplated by this Agreement. This Agreement will, as of the Closing, constitute the legal, valid and binding obligation of each holder of Company Capital Stock, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).

        SECTION 3.03.    Conflicts; Consents of Third Parties.

        (a)   Except for (i) applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act"), (ii) the filing of the Certificate of Merger in accordance with the DGCL, and (iii) such other consents, waivers, approvals, Orders, Permits or authorizations the failure of which to obtain would not have a Material Adverse Effect, no filing or registration with, and no permit, authorization, consent or approval of, any federal, state or local government, or any court, administrative or regulatory agency or commission or other governmental authority or agency, domestic or foreign, including courts of competent jurisdiction ("Governmental Body"), is necessary on the Company's part or on the part of any Subsidiary for the consummation by the Company of the transactions contemplated by this Agreement.

        (b)   None of the execution and delivery by the Company of this Agreement or the Company Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by the Company with any of the provisions hereof or thereof will conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a

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right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws, memorandum or articles of association or comparable organizational documents of the Company or any Subsidiary; (ii) any Contract or Permit to which the Company or any Subsidiary is a party or by which any of the properties or assets of the Company or any Subsidiary are bound; (iii) any Order of any Governmental Body applicable to the Company or any Subsidiary or by which any of the properties or assets of the Company or any Subsidiary are bound; or (iv) any applicable Law, other than, in the case of clauses (ii), (iii) and (iv), such conflicts, violations, defaults, terminations or cancellations, that would not have a Material Adverse Effect.

        (c)   Neither the Company nor any of the Subsidiaries is a party to or bound by any agreement which, upon the consummation of the transactions contemplated by this Agreement, will (either alone or upon the occurrence of any additional acts or events) result in any payment or benefits (whether of severance pay or otherwise) becoming due, or the acceleration or vesting of any rights to any payment or benefits, from Parent, the Company, the Surviving Corporation or any of their respective subsidiaries to any creditor, shareholder, director, officer, employee, consultant or independent contractor thereof.

        (d)   No Person has any rights of first offer, preemptive rights, rights of first refusal or other rights relating to the issuance of equity securities of the Company or the consummation of the Merger.

        SECTION 3.04.    Capitalization; Title to Shares.Section 3.04 of the Company Disclosure Schedule sets forth the issued and outstanding Company Capital Stock, Company Stock Options and Company Warrants as of the Closing Date. All of the outstanding shares of Company Capital Stock were validly issued and are fully paid and nonassessable, and were issued in compliance in all material respects with all applicable federal and state securities laws and regulations, and not in violation of any applicable preemptive rights. The Company does not have any other equity securities or securities containing any equity features authorized, issued or outstanding, and there are no agreements, options warrants or other rights or arrangements existing or outstanding which provide for the sale of issuance of any of the foregoing by the Company. There are no rights, subscriptions, warrants, options, conversion rights or agreements of any kind outstanding to purchase or otherwise acquire any shares of Company Capital Stock or other equity securities of the Company or any Subsidiary of any kind. There are no agreements or other obligations (contingent or otherwise) which require the Company or any Subsidiary to repurchase or otherwise acquire any shares of Company Capital Stock or other equity securities or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary or any other person. As of the date of this Agreement, each share of Series A Preferred Stock and Series B Preferred Stock is convertible into one share of Company Common Stock.

        SECTION 3.05.    Subsidiaries.

        (a)   Section 3.05 of the Company Disclosure Schedule sets forth the name of each subsidiary of the Company (each, a "Subsidiary, and collectively, the "Subsidiaries"), and, with respect to each Subsidiary, the jurisdiction in which it is incorporated or organized, its registered number (if applicable) and the address of its registered office, the United States jurisdictions, if any, in which it is qualified to do business, the nominal or par value and the number of shares of its authorized capital stock, the number and class of shares thereof duly issued and outstanding, the names of all stockholders or other equity owners and the number of shares of stock owned by each stockholder or the amount of equity owned by each equity owner. Each Subsidiary is a duly organized and validly existing corporation or other entity in good standing (except in jurisdictions where such concept does not apply) under the laws of the jurisdiction of its incorporation or organization and is duly qualified or authorized to do business as a foreign corporation or entity and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership

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of its properties requires such qualification or authorization, except where the failure to be so qualified, authorized or in good standing would not have a Material Adverse Effect. Each Subsidiary has all requisite corporate or entity power and authority to own, lease and operate its properties and carry on its business as now conducted.

        (b)   The outstanding shares of capital stock of each Subsidiary are validly issued, fully paid and non-assessable, and all such shares or other equity interests are owned both beneficially and of record 100% by the Company or a Subsidiary, free and clear of any and all Liens. No shares of capital stock are held by any Subsidiary as treasury stock. There is no existing option, warrant, call, right or Contract to which any Subsidiary is a party requiring, and there are no convertible securities of any Subsidiary outstanding which upon conversion would require, the issuance of any shares of capital stock or other equity interests of any Subsidiary or other securities convertible into shares of capital stock or other equity interests of any Subsidiary.

        (c)   Except to the extent disclosed in Section 3.05 of the Company Disclosure Schedule, neither the Company nor any Subsidiary, directly or indirectly, owns or controls or has any capital, equity, partnership, participation, or other ownership interest in any corporation, partnership, joint venture, or other business association or entity.

        SECTION 3.06.    Financial Statements.

        (a)   The Company has made available to Parent copies of (i) the audited consolidated balance sheets of the Company and the Subsidiaries as at December 31, 2003 and 2004 and the related audited consolidated statements of income statements of stockholders' equity and of cash flows of the Company and the Subsidiaries for the years then ended and (ii) the unaudited consolidated balance sheet of the Company and the Subsidiaries as at September 30, 2005 and the related consolidated statements of income statements of Stockholders' equity and cash flows of the Company and the Subsidiaries for the nine month period then ended (such audited and unaudited statements, including the related notes and schedules thereto, are referred to herein as the "Financial Statements"). Except as set forth in the notes thereto, each of the Financial Statements (a) has been based upon information contained in the Company's and its Subsidiaries' books and records, (b) present fairly in all material respects or, in the case of any Subsidiary incorporated in any part of the United Kingdom, a true and fair view of, the financial condition, cash flows Stockholders' equity and results of operations of the Company and the Subsidiaries (taken as a whole) as of the times and for the periods referred to therein in accordance with GAAP, consistently applied (subject in the case of the unaudited financial statements to (x) the absence of footnote disclosures and other presentation items and (y) changes resulting from normal year-end adjustments, none of which are material), (c) reflect and provide in accordance with GAAP adequate reserves in respect of all known liabilities of the Company, including all known contingent liabilities, which reserves are required to be reflected in the Financial Statements in accordance with GAAP and (d) do not contain any items of special or nonrecurring income or any other income not earned in the Ordinary Course of Business except as expressly specified therein.

For the purposes hereof, the audited consolidated balance sheet of the Company and the Subsidiaries as at December 31, 2004 is referred to as the "Balance Sheet" and December 31, 2004 is referred to as the "Balance Sheet Date".

        (b)   The Company keeps books, records and accounts that, in reasonable detail, accurately and fairly reflect in all material respects the transactions and balances reflected in the Financial Statements.

        SECTION 3.07.    Absence of Undisclosed Liabilities.    Except as disclosed in the Balance Sheet, neither the Company nor any Subsidiary has any material Liabilities required to be disclosed under

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GAAP other than (i) Liabilities incurred in the Ordinary Course of Business after the Balance Sheet Date, and (ii) Liabilities incurred in connection with the transactions contemplated hereby.

        SECTION 3.08.    Absence of Certain Changes or Events.    Except as contemplated by this Agreement, since the Balance Sheet Date, the Company and the Subsidiaries have operated only in the Ordinary Course of Business, there has not been any change, event or circumstance that has had, individually or in the aggregate, a Material Adverse Effect and there has not been any:

        (a)   transactions, commitments, contracts, capital expenditures or agreements entered into by the Company or any of the Subsidiaries or any relinquishment or waiver by the Company or any of the Subsidiaries of any contract or other right, in each case involving an aggregate financial obligation of the Company or such Subsidiary or involving aggregate payments by the Company or such Subsidiary, in excess of $250,000, other than in the Ordinary Course of Business;

        (b)   change in the authorized or issued capital stock or share capital of the Company or any Subsidiary; grant of any option, right to purchase or similar right regarding the capital stock of the Company or capital stock or shares of any Subsidiary; purchase, redemption, retirement, or other acquisition by the Company or any Subsidiary of any such capital stock or shares; or declaration or payment of any dividend or other distribution or payment in respect of the Company Capital Stock;

        (c)   amendment to the organizational or constitutional documents of the Company or any Subsidiary;

        (d)   failure to pay or perform, or delay in payment or performance of, any material obligation by the Company or any Subsidiary (other than an obligation being contested or which the Company or Subsidiary intends to contest in good faith by appropriate proceedings, in either event, for which the Company or any Subsidiary, as the case may be, has established adequate reserves which are reflected in the Financial Statements);

        (e)   payment of any bonuses, or material increase in salaries or other compensation, by the Company or any Subsidiary to any of their respective directors, officers, or employees, except for bonus awards and increases in salaries made in the Ordinary Course of Business;

        (f)    damage to or destruction or loss of any asset or property of the Company or any Subsidiary, whether or not covered by insurance, which has had a Material Adverse Effect;

        (g)   incurrence of indebtedness or guarantee of debt or other liability of any third party by the Company or any Subsidiary other than in the Ordinary Course of Business;

        (h)   sale, transfer, or other disposition of any assets or properties of the Company or any Subsidiary, except in the Ordinary Course of Business, or any mortgage, pledge or subjection to any Lien with respect to any material assets or properties of the Company or any Subsidiary;

        (i)    acquisition or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets;

        (j)    material change in the accounting methods, principles or practices used by the Company and the Subsidiaries, other than (A) write-downs or write-offs in the value of assets as required by GAAP, or (B) such adjustments as may be required by GAAP as a result of the transaction contemplated by this Agreement;

        (k)   making or revocation of any material Tax election or any settlement or compromise of any material Tax liability or application for any change in a material Tax accounting method; or

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        (l)    entering into any written agreement to do any of the actions described in clauses (a) through (k) above.

        SECTION 3.09.    Taxes.

        (a)   Each of the Company and the Subsidiaries has properly prepared in all material respects and timely filed (taking into account all applicable extensions) all material Federal, state and foreign Tax Returns and reports required to be filed by any of them, and all material Taxes (whether or not shown on any Tax Return) required to be paid by any of them have either been paid by them or are reflected in accordance with GAAP as a reserve for Taxes on the most recent Financial Statements (exclusive of any reserves for deferred Taxes established to reflect timing differences between book and taxable income pursuant to Statement of Financial Accounting Standards No. 109). No requests for waivers of the time to assess any material Taxes have been made that are still pending. No income Tax Return of the Company or the Subsidiaries is under current examination by the IRS, HM Revenue and Customs in the UK or by any other state or foreign tax authority and neither the Company nor any of its Subsidiaries is a party to a pending action, proceeding or investigation by any Governmental Body.

        (b)   Neither the Internal Revenue Service, HM Revenue and Customs nor any other taxing authority has asserted any written claim for material Taxes, or to the Knowledge of the Company, is threatening to assert any claims for Taxes from the Company or any Subsidiary. Neither the Internal Revenue Service, HM Revenue and Customs nor any other taxing authority has advised the Company or any Subsidiary in writing that it is or may be required to file a Tax Return where a Tax Return has not been filed. The Company and each Subsidiary have withheld or collected and paid over to appropriate governmental authorities (or are properly holding for such payment) all material Taxes required by law to be withheld or collected by them, and, in respect of the UK, the Company and each of the Subsidiaries has properly operated the PAYE system, deducting Taxes as required by Law from all payments and benefits made or provided to its directors, employees, former directors and employees and independent contractors.

        (c)   Neither the Company nor any Subsidiary is the beneficiary of any extension of time within which to file any Tax Return, or has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

        (d)   Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) "closing agreement" as described in Code § 7121 (or any comparable provision of state, local, or foreign law) entered into prior to the Closing Date; (iii) intercompany transactions (including deferred intercompany transactions) described in Treasury Regulations under Code § 1502 (or any comparable provision of state, local, or foreign law) occurring prior to the Closing Date; (iv) any excess loss account described in Treasury Regulations under Code § 1502 (or any comparable provision of state, local, or foreign law) existing immediately prior to the Effective Time (iv) installment sale or open transaction disposition made prior to the Closing Date; or (v) prepaid amount received prior to the Closing Date.

        (e)   Neither the Company nor any Subsidiary (i) is a party to or is bound by any Tax allocation, Tax sharing or Tax indemnity agreement that includes a party other than the Company or a Subsidiary, (ii) owns any interest in any entity or venture that is treated as a partnership for Tax purposes, (iii) has ever been a member of an affiliated group of corporations filing a consolidated federal income Tax Return (or any comparable Tax Return under state, local, or foreign law) other than the affiliated group of which the Company or any Subsidiary is the common parent. Neither the Company nor any Subsidiary has distributed stock or shares of

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another corporation, or had its stock or shares distributed by another corporation, in a transaction that was purported or intended to be governed in whole or in part by Code §§ 355 or 361. Neither the Company nor any Subsidiary is the subject of a private letter ruling from the Internal Revenue Service or other taxing authority that will have continuing effect after the Closing Date. The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

        (f)    None of the Subsidiaries incorporated in the United Kingdom or resident for tax purposes in the United Kingdom has incurred or become liable to incur, and there is no continuing obligation to pay, any amount that will not be wholly deductible in computing taxable profits, except for capital expenditure qualifying for capital allowances and expenditure on entertainment.

        (g)   Neither the Company nor any Subsidiary has engaged in a reportable transaction under Section 1.6011-4(b) of the U.S. Treasury Regulations, Part XVII of the Income and Corporation Taxes Act of 1988 of the United Kingdom ("ICTA") (or similar provision of any state law) or in a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service or HM Revenues and Customs has determined to be a tax avoidance transaction and identified by notice, regulation, assessment or other form of published guidance as a listed transaction, as set forth in Section 1.6011-4(b)(2) of the Treasury Regulations or Section 703(3) of ICTA (or similar provision of any state law).

        (h)   None of the Subsidiaries incorporated in the United Kingdom or resident for tax purposes in the United Kingdom has made a claim for group relief or claims for or agreements relating to the surrender of surplus advance corporation tax or repayments of Tax to which a Subsidiary is or was a party for accounting periods ending in the six years before the Closing Date other than a claim involving another Subsidiary and no Subsidiary has agreed to make any payment for group relief or surplus advance corporation tax or repayments of Tax surrendered to it to any company other than another Subsidiary.

        (i)    The Merger will not cause the Company or any Subsidiary to lose or no longer qualify for Tax incentives, Tax holidays, Tax rebates or special Tax rate relief (including, without limitation, an unemployment tax experience factor in any state or locality that is less than the factor applicable to new businesses of the type operated by the Company or its Subsidiaries) or other favorable Tax benefits specially authorized by any governmental authority to which the Company was entitled prior to the effectiveness of this Agreement. Parent is not required to provide any notice of the Merger to any Governmental Body to ensure that the statement made in the preceding sentence is correct.. There are no assets currently owned by any of the Subsidiaries incorporated in the United Kingdom in respect of which a charge may arise on a group company ceasing to be a member of the same group of companies as any other group company.

        SECTION 3.10.    Real Property.    Neither the Company nor the Subsidiaries owns or has fee or freehold title to any real property or ownership of heritable property. Section 3.10(a) of the Company Disclosure Schedule sets forth a complete list of all leases, licenses or tenancy agreement of real property by the Company or a Subsidiary (individually, a "Real Property Lease" and collectively, the "Real Property Leases"), as lessee or lessor. Neither the Company nor any Subsidiary is a tenant, licensee, assignee or guarantor of an lease, license or tenancy agreement other than in relation to the Real Property Leases or acquired, assigned or otherwise disposed of any leasehold property in such a way that it retains any residual liability in respect of it. The Real Property Leases are in full force and effect, and the Company or a Subsidiary holds a valid and existing leasehold interest under each such lease, subject to proper authorization and execution of such lease by the other party and the application of any bankruptcy or creditor's rights laws. The Company has delivered or made available to Parent complete and accurate copies of each of the leases described in Section 3.10(a) of the Company Disclosure Schedule, and none of such leases has been modified in any material respect, except to the extent that such modifications have been made in writing and made available to Parent. Neither the Company nor any Subsidiary is in breach or default under any of the Real Property Leases nor has any event occurred that with notice or lapse of time, or both, would constitute such a breach or default by the Company or any Subsidiary under any of the Real Property Leases.

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        SECTION 3.11.    Tangible Personal Property.Section 3.11 of the Company Disclosure Schedule sets forth all leases of personal property, hire purchase agreements, finance leases, rental agreements or other hire arrangements by the Company or a Subsidiary ("Personal Property Leases") involving annual payments in excess of $100,000. To the Knowledge of the Company, neither the Company nor any Subsidiary has received any written notice of any default or any event that with notice or lapse of time, or both, would constitute a default, by the Company or any Subsidiary under any of the Personal Property Leases.

        SECTION 3.12.    Title to Assets.

        (a)   Each of the Company and the Subsidiaries has good and marketable title to, or valid leasehold interests in, all its properties and other assets it purports to own. All such properties and other assets, other than properties and other assets in which the Company or the Subsidiaries has a leasehold interest, are free and clear of all Liens. The Company and the Subsidiaries hold all rights, properties and assets that are necessary to permit the Surviving Corporation to continue the business and operations of the Company and the Subsidiaries after the Effective Time in a manner consistent with past practice.

        (b)   Each of the Company and the Subsidiaries has materially complied with the terms of all leases, hire purchase agreements, finance leases, rental agreements or other hire arrangements to which it is a party and under which it is in occupancy or possession, and all such leases are in full force and effect.

        SECTION 3.13.    Intellectual Property.

        (a)   The Company and the Subsidiaries own, or license or otherwise possess legally enforceable rights to use all Intellectual Property used or necessary to conduct the business of the Company and the Subsidiaries in the Ordinary Course of Business, or that would be necessary as such business is currently planned to be conducted (in each case excluding generally commercially available, "off-the-shelf" software programs licensed pursuant to shrinkwrap or "click-and-accept" licenses), the absence of which individually or in the aggregate would be reasonably likely to have a Material Adverse Effect. For purposes of this Agreement, the term "Intellectual Property" means (i) patents, trademarks, service marks, trade names, domain names, trade dress, logos, registered designs, moral rights, copyrights and trade secrets, (ii) applications for and registrations of such patents, trademarks, service marks, trade names, domain names, trade dress, logos, registered designs, moral rights, corporate names, copyrights and designs, (iii) processes, formulae, methods, schematics, technology, know-how, inventions, computer software programs and applications, and (iv) other tangible or intangible proprietary or confidential information and materials.

        (b)   The execution and delivery of this Agreement and consummation of the Merger will not result in the breach of, or create on behalf of any third party the right to terminate or modify, any license, sublicense and other agreement as to which the Company or any Subsidiary is a party and pursuant to which the Company or any Subsidiary is authorized to use any third party Intellectual Property that is material to the business of the Company and the Subsidiaries, taken as a whole, including software that is incorporated in, or forms a material part of any material product or service sold by the Company or any Subsidiary (the "Third Party Intellectual Property"). Section 3.13(b)(i) of the Company Disclosure Schedule sets forth a list of the Intellectual Property owned by the Company that is material to the business of the Company and the Subsidiaries, taken as a whole, including software that is incorporated in, or forms a part of any product or service sold by the Company or any Subsidiary (the "Company Intellectual Property") that is registered or the subject of application for registration and Section 3.13(b)(ii) of the Company Disclosure Schedule sets forth a list of all written agreements (other than shrink-wrap or "click-and-accept" agreements) under which Third Party Intellectual Property is licensed.

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        (c)   To the Knowledge of the Company, all patents and registrations and applications for trademarks, service marks and copyrights that are held by the Company or any Subsidiary and that are material to the business of the Company and the Subsidiaries, taken as a whole, are valid and subsisting are held of record in the name of the Company or a Subsidiary free and clear of all Liens.

        (d)   The Business of the Company and the Subsidiaries as it currently is conducted, does not infringe, dilute, misappropriate, or otherwise violate the Intellectual Property of any third party, and, except as described in Section 3.14(d) of the Company Disclosure Schedule, no claim has been made, notice given, or, to the Knowledge of the Company, dispute arisen to that effect, except for any such infringement, dilution, misappropriation or violation that would not have a Material Adverse Effect. Neither the Company nor any Subsidiary has received any written or, to the Knowledge of the Company, oral claim or notice alleging any infringement, violation or misappropriation of any Intellectual Property of any third party.

        (e)   Except with respect to licenses of commercial off-the-shelf software, the Company and any Subsidiary are not required, obligated, or under any liability whatsoever, to make any payments by way of royalties, fees or otherwise to any owner, licensor of, or other claimant to any Intellectual Property, or other third party, with respect to the use thereof or in connection with the conduct of the business as currently conducted or proposed to be conducted.

        (f)    No trade secret or any other non-public, proprietary information material to the business of the Company or any Subsidiary as presently conducted has been authorized to be disclosed or, to the knowledge of the Company, has been actually disclosed to any employee or any third party other than pursuant to a non-disclosure agreement restricting the disclosure and use of the Intellectual Property. The Company and the Subsidiaries have taken adequate security measures to protect the secrecy, confidentiality and value of all of its trade secrets and any other confidential information, including invention disclosures, not covered by any patents owned or patent applications filed by the Company or the Subsidiaries, which measures are reasonable in the industry in which the Company operates.

        (g)   Neither the Company nor any of the Subsidiaries has any pending lawsuit, arbitration or other legal proceeding or claim asserted in writing that a third party has infringed, diluted, misappropriated or otherwise violated any Intellectual Property owned, used or held for use by the Company and/or any of the Subsidiaries, except for any such infringement, dilution, misappropriation or violation that would not have a Company Material Adverse Effect. To the Knowledge of the Company, no Person is infringing, violating, misusing or misappropriating any material Intellectual Property of the Company or the Subsidiaries, and no such claims have been made against any Person by the Company or the Subsidiaries.

        (h)   To the Knowledge of the Company, no employee, consultant or independent contractor of the Company or of the Subsidiaries is, as a result of or in the course of such employee's, consultant's or independent contractor's engagement by the Company or the Subsidiaries, in default or breach of any material term of any employment agreement, non-disclosure agreement, assignment of invention agreement or similar agreement.

        SECTION 3.14.    Material Contracts.

        (a)   Section 3.14(a) of the Company Disclosure Schedule sets forth all of the following Contracts to which the Company or any of the Subsidiaries is a party or by which it is bound (collectively, the "Material Contracts"):

          (i)  Contracts limiting or restraining the Company, any Subsidiary, any of the individuals named in Section 5.16 or any current officer of any business acquired by the Company or any

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Subsidiary since November 1, 2003, from engaging or competing in any lines of business, or in any geographic area, with any Person;

         (ii)  Contracts pertaining to any joint venture, partnership or similar arrangement;

        (iii)  any Contract that gives rise to a right of the other parties thereto to terminate such Contract or to a right of first refusal or similar right thereunder or requires the approval of the other parties thereto as a result of the execution and delivery of this Agreement or any of the other Company Documents and the consummation by the Company of the Merger and the other transactions contemplated hereby;

        (iv)  Contracts with any Stockholder or shareholder or any current officer or director of the Company or any of the Subsidiaries (other than Contracts made in the Ordinary Course of Business on terms generally available to similarly situated non-affiliated parties);

         (v)  Contracts with any labor union or association representing any employee of the Company or any of the Subsidiaries;

        (vi)  Contracts relating to any acquisition to be made by the Company or any of the Subsidiaries of any operating business or the capital stock of any other Person, in each case for consideration in excess of $100,000;

       (vii)  Contracts for the sale of any of the assets of the Company or any of the Subsidiaries other than in the Ordinary Course of Business, for consideration in excess of $100,000;

      (viii)  Contracts relating to the incurrence of Indebtedness, guaranteeing the obligations of any other Person or the making of any loans, in each case involving amounts in excess of $100,000;

        (ix)  Any Contract giving any party the right to renegotiate or require a reduction in price or refund of payments previously made in connection with the business of the Company and its Subsidiaries;

         (x)  Contracts which involve the expenditure of more than $250,000 in the aggregate or require performance by any party more than one year from the date hereof that, in either case, are not terminable by the Company or a Subsidiary without penalty on notice of 180 days or less;

        (xi)  Any Contract with any customer or client relating to the provision of court reporter services; and

       (xii)  Any voting trust agreements, investor rights agreement or stockholder agreements to which the Company or any of the Subsidiaries is a party.

        (b)   The Company has provided or made available to Parent a true and accurate copy of all of the Material Contracts. Each of the Material Contracts is in full force and effect and constitutes the legal, binding and enforceable obligation of the Company and each Subsidiary, and to the Company's Knowledge, the other parties thereto. There is no actual or, to the Company's Knowledge, threatened termination, cancellation or limitation of any Material Contract.

        (c)   Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any other party to such Material Contracts is in breach of or default under any obligation thereunder, and neither the Company nor any Subsidiary has received any written notice of any default or event that with notice or lapse of time, or both, would constitute a default by the Company and the Subsidiaries under any Material Contract, except for defaults that would not have a Material Adverse Effect.

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        SECTION 3.15.    Employee Benefits Plans.

        (a)   Section 3.15(a) of the Company Disclosure Schedule sets forth a list of all Employee Benefit Plans maintained, or contributed to, by the Company or any Subsidiary or with respect to which the Company or any Subsidiary has any liability of any nature, whether known or unknown, direct or indirect, fixed or contingent (together, the "Company Employee Plans"). For purposes of this Agreement, the following terms shall have the following meanings: (i) "Employee Benefit Plan" means any "employee pension benefit plan" (as defined in Section 3(2) of ERISA) ("Pension Plan"), any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA), any agreement or arrangement for the provision of any relevant benefits (as defined in Section 612(1) of ICTA, with the omission of the exception in that definition) for any person and any other written or oral plan, agreement or arrangement involving direct or indirect compensation, including insurance coverage, severance benefits, disability benefits, retention payments or benefits, paid time off, vacation pay, sick leave benefits, deferred compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other forms of incentive compensation or post-retirement compensation and all unexpired severance agreements, written or otherwise, for the benefit of, or relating to, any current or former employee of the Company or any Subsidiary or an ERISA Affiliate; (ii) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended; and (iii) "ERISA Affiliate" means any entity that is a member of (1) a controlled group of corporations (as defined in Section 414(b) of the Code), (2) a group of trades or businesses under common control (as defined in Section 414(c) of the Code), or (3) an affiliated service group (as defined under Section 414(m) of the Code or the regulations under Section 414(o) of the Code), any of which includes or included the Company or a Subsidiary. The Company does not have, and has not had within the past six years, an ERISA Affiliate other than the current Subsidiaries.

        (b)   With respect to each Company Employee Plan, the Company has made available to Parent, a copy of (i) the current plan document and all amendments, or a written description of any unwritten plan(ii) the three most recent annual report (Form 5500) filed with the IRS or, for Company Employee Plans subject to Tax in the United Kingdom, the most recent return made to HM Revenue and Customs pursuant to section 605 of ICTA, and all attachments and schedules, (iii) each trust agreement, group annuity contract or any other agreement evidencing any funding vehicle, (iii) summary plan description and summaries of material modification (if any), (v) the three most recent financial statements for each Company Employee Plan that is funded, (vii) all personnel, payroll and employment manuals and policies, (viii) all employee handbooks, (viii) the most recent determination letter (or, if applicable, opinion letter) with respect to each Pension Plan that is intended to qualify under Section 401(a) of the Code and (ix) all material documents relating to a voluntary correction submission (if any) with the IRS or Department of Labor.

        (c)   With respect to the Company Employee Plans, there are no benefit obligations for which contributions have not been made or properly accrued and there are no benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted in accordance with GAAP, on the financial statements of the Company. There will be no change on or before Closing Date in the operation of any Company Employee Plan or any documents with respect thereto which will result in a increase in the benefit liabilities under such Company Employee Plans, except as may be required by applicable Law. No insurance policy or contract requires or permits retroactive increase in premiums or payments due thereunder. None of the Company or any Subsidiary has established or contributed to, is required to contribute to or has or could have any liability of any nature, whether known or unknown, direct or indirect, fixed or contingent, with respect to any "voluntary employees' beneficiary association" within the meaning of Section 501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419 of the Code or "qualified asset account" within the meaning of Section 419A of the Code. For relevant Company Employee Plans subject to the laws of any part of the United Kingdom, the assets of the

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Pension Scheme are sufficient on the basis of the actuarial assumptions contained in the latest actuarial valuation reports relating to such plan, a copy of which is set forth in Section 3.16(c) of the Company Disclosure Schedule, to fund all liabilities of such plan (whether immediate, prospective or contingent), such calculation taking no account of benefits in respect of pensionable service after Closing or future contributions but making due allowance for prospective increases in salary and for discretionary increases in pensions having regards to the rate at which such discretionary increases (if any) have hitherto been made under the Pension Scheme.

        (d)   No Company Employee Plan is a "defined benefit plan" within the meaning of Section 414(j) of the Code and none of the Company or any Subsidiary has or could have any liability of any nature, whether known or unknown, direct or indirect, fixed or contingent, to any Pension Plan, the Pension Benefit Guaranty Corporation ("PBGC") or any other person, arising directly or indirectly under Title IV of ERISA. None of the Company, any Subsidiary and any ERISA Affiliate has ceased operations at any facility or withdrawn from any Pension Plan in a manner that could subject the Company, any Subsidiary or ERISA Affiliate to liability under Section 4062(e), 4063 or 4064 of ERISA. No Company Employee Plan that is a Pension Plan is a Multiemployer Plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA.

        (e)   All the Company Employee Plans that are intended to be qualified under Section 401(a) of the Code have received determination letters from the Internal Revenue Service to the effect that such Company Employee Plans are qualified and the plans and trusts related thereto are exempt from federal income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination letter has been revoked and revocation has not been threatened, and no such Company Employee Plan has been amended or operated since the date of its most recent determination letter or application therefor in any respect, and no act or omission has occurred, that would reasonably be expected to adversely affect its qualification or materially increase its cost. Each Company Employee Plan that is required to satisfy Section 401(k)(3) or Section 401(m)(2) of the Code has been tested for compliance with, and satisfies the requirements of Section 401(k)(3), Section 401(m)(2) and Section 410(b) of the Code, as the case may be, for each plan year ending prior to the Closing Date and, each such Company Employee Plan satisfies Section 410(b) of the Code and is not "top-heavy" (as defined under Section 416 of the Code). Each relevant Company Employee Plan subject to Tax in the United Kingdom is approved as an exempt approved scheme within the meaning of Section 592(1) of ICTA and there is in force, and has been in force in respect of all periods during which any employees have paid National Insurance contributions on a contracted-out basis, in respect of employments to which the plan relates, an appropriate contracting-out certificate (within the meaning of Section 7 of the Pension Schemes Act 1993) and nothing has been done or omitted to be done which will or may result in the plan ceasing to be approved as an exempt approved scheme or the contracting-out certificate in respect of the plan being cancelled, surrendered or varied.

        (f)    (1) Each Company Employee Plan has been maintained in material compliance with its terms and with the requirements of ERISA, the Code, the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 as codified in the Code and ERISA ("HIPAA") and corresponding regulations, including the HIPAA Portability Regulations and the HIPAA Privacy, Security and other Administrative Simplification Regulations and other applicable Laws; (2) the Company and each Subsidiary has timely complied in all material respects with all reporting and disclosure obligations with respect to the Company Employee Plans imposed by the Code, ERISA or other applicable Law; and (3) each Company Employee Plan that is a Pension Plan has complied with all requirements (including notice and consent) of Sections 401(a)(11) and 417 of the Code.

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        (g)   There are no pending or threatened actions, claims or lawsuits arising from or relating to the Company Employee Plans, (other than routine benefit claims), nor does the Company have any Knowledge of facts that could form the basis for any such claim or lawsuit.

        (h)   There are no facts or circumstances which could, directly or indirectly, subject the Company or any Subsidiary to any (1) excise tax or other liability under Chapters 43, 46 or 47 of Subtitle D of the Code, (2) penalty tax or other liability under Chapter 68 of Subtitle F of the Code with respect to any Company Employee Plan, or (3) civil penalty, damages or other liabilities arising under Section 502 of ERISA.

        (i)    None of the Company Employee Plans provide for post-employment life or health coverage for any participant or any dependent or beneficiary of a participant, except as may be required under Part 6 of the Subtitle B of Title I of ERISA and at the expense of the participant or the participant's dependent or beneficiary.

        (j)    Neither the Company nor any Subsidiary has made, or is obligated to make, or is party to an agreement, plan or arrangement that could reasonably be expected to obligate it to make any payment that will not be deductible to the Company or a Subsidiary or by the Surviving Corporation or its Affiliates by reason of Section 280G of the Code.

        (k)   Neither the execution and delivery of this Agreement nor the consummation of the Transactions will (i) result in any payment becoming due to any employee or former employee, (ii) increase any benefits otherwise payable under any Company Employee Plan, (iii) result in the acceleration of the time of payment or vesting of any such benefits under any such plan, or (iv) require any contributions or payments to fund any obligations under any Company Employee Plan.

        (l)    Section 3.15(l) of the Disclosure Schedule identifies each Company Employee Plan that is, in whole or in part, subject to Section 409A of the Code (a "Company Section 409A Plan"). Each Company Section 409A Plan complies in form with Section 409A of the Code, no service provider under any Company Section 409A Plan is subject to additional income tax under vSection 409A of the Code, no Company Employee Plan that is a "nonqualified deferred compensation plan" (as defined in Section 409A of the Code) has been materially modified (as defined in Section 409A of the Code) since October 3, 2004 as it relates to amounts that are not subject to the requirements of Code section 409A and all Company Section 409A Plans have been operated and administered in good faith compliance with Section 409A since January 1, 2005.

        (m)  No action or omission of the Company, any Subsidiary or any other ERISA Affiliate or any director, officer, employee, or agent thereof in any way restricts, impairs or prohibits Parent, the Company, the Surviving Corporation, any Subsidiary, any other ERISA Affiliate or any successor from amending, merging, or terminating any Company Employee Plan in accordance with the express terms of any such plan and applicable Law.

        (n)   No employer other than the Company or the Subsidiaries is permitted to participate or participates in any Company Employee Plan. No leased employees (as defined in Section 414(n) of the Code) or independent contractors are eligible for, or participate in, any Company Employee Plan.

        (o)   Neither the Company nor any Subsidiary is or ever has had any obligation to contribute to any personal pension scheme (as defined in Section 630 of ICTA) in respect of any employee or former employee.

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        SECTION 3.16.    Labor.

        (a)   None of the Company's or Subsidiaries' employees is covered by a collective bargaining agreement and, to the Knowledge of the Company, there is no union or other organization seeking or claiming to represent any such employees.

        (b)   There is no labor dispute, strike, work stoppage or lockout, or, to the Company's Knowledge, threat thereof, by or with respect to any employee.

        (c)   The Company and the Subsidiaries have not engaged in any unfair labor practice, and the Company is not aware of any pending or threatened labor board proceeding of any kind, including any such proceeding against the Company or the Subsidiaries.

        (d)   No grievance or arbitration demand or proceeding has been filed, or to the Company's Knowledge, is threatened against the Company or the Subsidiaries.

        (e)   No citation has been issued by "OSHA" against the Company or the Subsidiaries and no notice of contest, claim, complaint, charge, investigation or other administrative enforcement proceeding involving the Company or the Subsidiaries has been filed or is pending or, to the Company's Knowledge, threatened against the Company or the Subsidiaries under OSHA or any other applicable law relating to occupational safety and health.

        (f)    Neither the Company nor any Subsidiaries has taken any action that would constitute a "mass layoff," "mass termination" or "plant closing" within the meaning of the United States Worker Adjustment and Retraining Notification Act or otherwise trigger notice requirements or liability under any federal, local, state or foreign plant closing notice or collective dismissal law.

        (g)   The Company and the Subsidiaries are in material compliance with all applicable Laws, regulations and orders and all contracts or collective bargaining agreements governing or concerning labor relations, union and collective bargaining, conditions of employment, employment discrimination and harassment, wages, hours or occupational safety and health, including, without limitation, ERISA, the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, the National Labor Relations Act, the Civil Rights Acts of 1866 and 1964, the Equal Pay Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, FMLA, the Employment Rights Act of 1996 (UK), the Trade Union Labour Relations (Consolidation) Act of 1992 (UK), the Employment Act of 2002 (UK), the Working Time Regulations 1998 (UK), the National Minimum Wage Act 1998 (UK), the Worker Adjustment and Retraining Notification Act, the Occupational Safety and Health Act, the Davis-Bacon Act, the Walsh-Healy Act, the Service Contract Act, Executive Order 11246, FLSA and the Rehabilitation Act of 1973 and all regulations under such acts (collectively, the "Labor Laws") except where such non-compliance would have a Material Adverse Effect, and neither the Company nor each Subsidiary is liable for any liabilities, judgments, decrees, orders, arrearage of wages or Taxes, fines or penalties for failure to comply with any of the Labor Laws.

        (h)   To the Knowledge of the Company, no employee of the Company or any Subsidiary is bound by or in violation of any contract or commitment with a third party that restricts him or her from engaging in any activity related to the business of the Company and the Subsidiaries or competing with any Person.

        (i)    The Company has made available to Parent a complete and accurate list of the titles, current annual salary rates and all regular bonuses paid or payable or other bonuses paid or payable within 12 months ended September 30, 2005 to all present officers, senior management employees, consultants, contractors and other individuals who perform services for the Company or any Company Subsidiary whose annual (or annualized) rate of compensation exceeds $150,000.

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        (j)    The Company and the Subsidiaries are not a party to any contract of employment with any of their directors or employees that cannot be terminated by the Company without damages or compensation (other than that payable by statute) by giving at any time not more than three months' notice of termination of employment. No director or employee of the Company or any Subsidiary has given notice terminating his or her contract of employment or is under notice of dismissal.

        (k)   Within the year ending on the date of this Agreement, no Company or Subsidiary has:

          (i)  been obliged to give notice of redundancies to the relevant Secretary of State or started consolidations under Chapter II of Part IV of the Trade Union Labour Relations (Consolidation) Act of 1992; or

         (ii)  been a party to a relevant transfer, as defined in the Transfer of Undertakings (Protection of Employment) Regulations 1982, or any equivalent legislation in any jurisdiction.

        (l)    Since January 1, 2005, no change has been made in the emoluments or other terms of engagement of any director or employee of the Company or any Subsidiary in the United Kingdom, and no such change, and no formal negotiation for such a change, is due within six months from the date of this Agreement.

        (m)  The Company and each Subsidiary have reasonably classified for all purposes (including without limitation for all Tax purposes and for purposes of determining eligibility and benefits under any Employee Benefit Plan) all employees, leased employees, consultants and independent contractors, and has withheld and paid all applicable Taxes and made all required filings in connection with services provided by such persons. Each individual who renders services to the Company or any Subsidiary who is classified by the Company or such Subsidiary, as applicable, as having the status of an independent contractor or other non-employee status for any purpose (including for purposes of any Tax or Employee Benefit Plan) is reasonably so characterized. Each independent contractor under contract with the Company or a Subsidiary that has executed a written agreement has executed an agreement that is in all material respects substantially similar to the form of independent contractor agreement attached to Section 3.16(m) of the Company Disclosure Schedule. The Company and each Subsidiary and, to the Knowledge of the Company and the knowledge of those managers in the operating locations who have responsibility for insuring compliance with the independent contract agreements, each independent contractor has complied with the provisions of the independent contractor agreement executed by such independent contractor referred in the immediately preceding sentence in all material respects.

        (n)   None of the Company or any Subsidiary is or ever has had any obligation to contribute to any personal pension scheme (as defined in Section 630 of ICTA) in respect of any employee or former employee. None of the independent contractors of the Company and the Subsidiaries, their agents or their employees (collectively, the "IC Representatives") have the power or authority to act for, represent, or bind the Company or the Subsidiaries. None of the IC Representatives are entitled to participate in any of the group medical, dental, disability or life insurance plans of the Company or the Subsidiaries, or any retirement, bonus, profit sharing or thrift-incentive plans of the Company or the Subsidiaries, or to receive other benefits afforded to any regular employees of the Company or the Subsidiaries. None of the IC Representatives has made any claim or, to the Knowledge of the Company, has any basis to make a claim, against the Company or the Subsidiaries for any benefit or entitlement. Each IC Representative is solely responsible for the payment of all federal, state and local Taxes, income or otherwise, and any contributions imposed or required under any federal or state laws regarding unemployment or social security, for all its respective employees. To the Company's Knowledge, none of the IC Representatives has filed with the Internal Revenue Service or any governmental agency a claim questioning or contesting its classification as an independent contractor for Tax or benefit purposes.

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        SECTION 3.17.    Litigation.    There are no civil, criminal or administrative suits, actions or proceedings (including arbitration proceedings) pending or, to the Knowledge of the Company, within the preceding 24 months, threatened against or affecting the Company or any of the Subsidiaries before any Governmental Body, which, if adversely determined, (a) would have a Material Adverse Effect or (b) would result in an effective injunction, writ or preliminary restraining order or any order of any nature issued by a court or governmental authority of competent jurisdiction to the effect that the transactions contemplated by this Agreement and the other Company Documents may not be consummated as herein and/or therein provided. Neither the Company nor any Subsidiary is subject to any Order of any Governmental Body except to the extent the same would not reasonably be expected to have a Material Adverse Effect.

        SECTION 3.18.    Compliance with Laws; Permits.

        (a)   The Company and the Subsidiaries are in compliance with all Laws of any Governmental Body applicable to their respective businesses or operations. Neither the Company nor any Subsidiary has received any written notice of or been charged with the violation of any Laws.

        (b)   The Company and the Subsidiaries currently have all Permits which are required for the operation of their respective businesses as presently conducted, other than those the failure of which to possess would not have a Material Adverse Effect. All Permits are in full force and effect, no suspension or cancellation of any of the Permits is pending or, to the Knowledge of the Company, threatened, and neither the Company nor any of the Subsidiaries is in default or violation (and no event has occurred which, with notice or the lapse of time or both, would constitute a default or violation) of any term, condition or provision of any Permit to which it is a party, except where such suspension, cancellation, default or violation would not have a Material Adverse Effect.

        SECTION 3.19.    Environmental Matters.    Except in each case as would not have a Material Adverse Effect:

        (a)   the operations of the Company and each of the Subsidiaries are in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining and complying with any Permits required under all applicable Environmental Laws necessary to operate its business ("Environmental Permits");

        (b)   neither the Company nor any of the Subsidiaries is subject to any pending, or to the Knowledge of the Company, threatened claim alleging that the Company or any of the Subsidiaries may be in violation of any Environmental Law or any Environmental Permit or may have any liability under any Environmental Law;

        (c)   neither the Company nor any of the Subsidiaries has owned any property that is contaminated with any Hazardous Material which requires or may be expected to require investigation, remediation or other response action under any Environmental Law;

        (d)   neither the Company nor any of the Subsidiaries is subject to liability for any disposal or contamination (whether on-site or off-site) of any Hazardous Material or is subject to any other circumstances in connection with any Environmental Law that would have a Material Adverse Effect; and

        (e)   to the Knowledge of the Company, there are no pending or threatened investigations of the businesses of the Company or any of the Subsidiaries, or any currently or previously owned or leased property of the Company or any of the Subsidiaries under Environmental Laws, which would reasonably be expected to result in the Company or any Subsidiary incurring any material liability pursuant to any Environmental Law.

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        SECTION 3.20.    Financial Advisors.    Except for Harris Williams & Co. (the "Financial Advisor") and as provided in Section 11.01, no Person has acted, directly or indirectly, as a broker, finder or financial advisor for the Company in connection with the transactions contemplated by this Agreement and no such Person is entitled to any fee or commission or like payment from the Company or Parent in respect thereof.

        SECTION 3.21.    Insurance.Section 3.21 of the Company Disclosure Schedule hereto contains an accurate list of the insurance policies currently maintained by the Company and each of the Subsidiaries. There are currently no claims pending against the Company or any of the Subsidiaries under any insurance policies currently in effect and covering the property, business, directors, agents or employees of the Company or each of the Subsidiaries, and all premiums due and payable with respect to the policies maintained by the Company and each of the Subsidiaries have been paid to date. All such policies are in full force and effect and will be maintained in full force and effect as they apply to any matter, action or event occurring through the Effective Time and none requires or permits a retroactive increase in premiums or payments due thereunder. The Company and each of the Subsidiaries maintain insurance with reputable insurers for the business and assets of each such entity against all risks normally insured against, and in amounts normally carried, by corporations of similar size engaged in similar lines of business.

        SECTION 3.22.    Interested Party Transactions.    There are no existing contracts, agreements, business dealings, arrangements or other understandings (either oral or written) between (a) the Company or any Subsidiary, on the one hand, and (b) any officer, director or beneficial owner of more than 5% of the outstanding voting securities of the Company or any Subsidiary (or any immediate family member of such person or any entity of which such person is an officer, director or beneficial owner of more than 5% of such entity's outstanding voting securities) (each, an "Interested Party"), on the other hand.

        SECTION 3.23.    Unlawful Payments and Contributions.    Neither the Company nor any Subsidiary nor any of their respective directors, officers, employees, agents or other persons acting on behalf of the Company, has (a) used any corporate or other funds for any unlawful contribution, endorsement, gift, entertainment or other unlawful expense relating to political activity; (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee; (c) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any person or entity. To the Company's Knowledge, neither the Company nor any of the Subsidiaries nor any current director, officer, employee, agent or other person acting on behalf of the Company or any Subsidiary, has accepted or received any unlawful contributions, payments, gifts or expenditures.

        SECTION 3.24.    Relationship with Significant Customers.    Neither the Company nor any of the Subsidiaries has received any written or, to the Knowledge of the Company, oral communication by any Significant Customer with whom the Company or any Subsidiary has a Contract stating that such Significant Customer has ceased, or will cease (except in connection with the termination of outstanding engagements or jobs upon their completion in the ordinary course or the expiration of existing contracts in accordance with their terms), to use the products or services of the Company or any of the Company Subsidiaries, or has substantially reduced or will substantially reduce the use of such products or services during the next 12 months or will otherwise materially and adversely modify its business relationship with the Company or any of the Company Subsidiaries. "Significant Customer" means any customer, or group of affiliated customers, from whom the Company or any Company Subsidiary has made or is reasonably expected to generate revenue in excess of $250,000 in any rolling 12-month period.

        SECTION 3.25.    Information Statement.    The letter to stockholders, notice of meeting, Letter of Transmittal and information statement to be distributed to the Company's stockholders in connection

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with the Merger, together with any amendments or supplements thereto, are collectively referred to herein as the "Information Statement". None of the information supplied by the Company specifically for inclusion in the Information Statement will, at the time the Information Statement is mailed or at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company makes no representation or warranty as to any of the information relating to and supplied by or on behalf of Parent or the Merger Sub specifically for inclusion in the Information Statement. If, at any time prior to the Effective Time, any event relating to the Company or any of the Subsidiaries, or their officers or directors, is discovered by the Company or the Subsidiaries that should be set forth in a supplement to the Information Statement, the Company will promptly inform Parent and prepare and disseminate to the Company's stockholders such supplement.

        SECTION 3.26.    State Takeover Statutes.    No "fair price," "moratorium," "control share acquisition," "business combination," or other state takeover statute or similar statute or regulation applies or purports to apply to the Merger, the Company, any of the Subsidiaries, the Merger Sub or Parent and to this Agreement.

        SECTION 3.27.    Other Acquisitions.

        (a)   Neither the Company nor any of the Subsidiaries has any obligation to make payments, contingent or otherwise, arising out of any prior acquisition of the business, assets or stock of another Person (a "Prior Acquisition"). Neither the Company nor any of the Subsidiaries has (i) made any claim or, to the Knowledge of the Company, has any basis to make a claim against any Person as a result of any Prior Acquisition, or (ii) received any indemnification payment from any Person as a result of any damages or losses incurred or sustained as a result of any Prior Acquisition.

        (b)   Neither the Company nor any of the Subsidiaries is a party to or bound by any agreement which, as a result of or in connection with any Prior Acquisition (either alone or upon the occurrence of any additional acts or events), the Company or such Subsidiary is obligated to provide, or is providing, to any shareholder, director, officer, employee, consultant or independent contractor thereof any payment or benefits (whether of severance pay or otherwise) or under which any such payments or benefits are to become due, or under which the rights to any such payments or benefits are or may be accelerated or vested.

        SECTION 3.28.    Data Protection.

        (a)   The Company and the Subsidiaries have notified registrable particulars under the Data Protection Act of 1998 of the United Kingdom of (i) all categories of personal data held by them and have renewed such notifications and have notified any changes occurring in between such notifications as required by that Act; (ii) have paid all fees payable in respect of such notifications; and (iii) the contents of such notifications are contained in Section 3.28 of the Company Disclosure Schedule). The Company and the Subsidiaries have complied in all respects with the Data Protection Act 1998 of the United Kingdom and satisfied any requests for access to personal data held by the Company and the Subsidiaries which is subject to the Data Protection Act 1998.

        (b)   Neither the Company nor any of the Subsidiaries has received any (i) notice or complaint under the Data Protection Act 1998 alleging non-compliance with the Act (including any information or enforcement notice, or any transfer prohibition notice); or (ii) claim for compensation for loss or unauthorized disclosure of data; or (iii) notification of an application for rectification or erasure of personal data, and neither the Company nor any of its Subsidiaries is aware of any circumstances which may give rise to the giving of any such notice or the making of any such notification.

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        (c)   Neither the Company nor any of the Subsidiaries is relying on the transactional exemptions for manual data under Schedule 8 of the Data Protection Act of 1998.

        (d)   The Company and the Subsidiaries have complied with their obligations under the Privacy and Electronic Communications (EC Directive) Regulations 2003 of the United Kingdom in respect of the use of electronic communications (including e-mail, text messaging, fax machines, automated calling systems and non-automated telephone calls) for direct marketing purposes.

        SECTION 3.29.    No Other Representations or Warranties; Schedules.    Except for the representations and warranties contained in this Article III (as modified by the Company Disclosure Schedule), neither the Company nor any other Person makes any other express or implied representation or warranty with respect the Company, the Subsidiaries or the transactions contemplated by this Agreement, and the Company disclaims any other representations or warranties, whether made by the Company or any of its Affiliates, officers, directors, employees, agents or representatives. Except for the representations and warranties contained in Article III hereof (as modified by the Company Disclosure Schedule hereto as supplemented or amended), the Company hereby disclaims all liability and responsibility for any representation, warranty, projection, forecast, statement, or information made, communicated, or furnished (orally or in writing) to Parent or its Affiliates or representatives (including any opinion, information, projection, or advice that may have been or may be provided to Parent by any director, officer, employee, agent, consultant, or representative of the Company or any of its Affiliates). The Company makes no representations or warranties to Parent regarding the probable success or profitability of the Company. The disclosure of any matter or item in any schedule hereto shall not be deemed to constitute an acknowledgment that any such matter is required to be disclosed. The representations and warranties contained in this Article III or elsewhere in this Agreement or any document delivered pursuant hereto will not be affected or deemed waived by reason of the fact that Parent or the Merger Sub or their respective representatives knew (other than as a result of the Company Disclosure Schedule or other writing delivered to Parent on the Closing Date) or should have known that any such representation or warranty is or might be inaccurate in any respect.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB

        Except as provided in the attached disclosure schedule relating to Parent and Merger Sub (the "Parent Disclosure Schedule"), Parent and Merger Sub hereby represent and warrant as follows:

        SECTION 4.01.    Organization; Good Standing.    Each of Parent and Merger Sub is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of formation. Parent is a disregarded entity for US federal income tax purposes and is directly wholly owned by Merrill Corporation ("Merrill").

        SECTION 4.02.    Authority Relative to this Agreement.    Each of Parent and Merger Sub has all requisite corporate right and power and authority to enter into this Agreement and the documents and instruments to be executed and delivered by it pursuant hereto, and to perform its obligations hereunder and thereunder. The execution, delivery and performance by Parent or Merger Sub of this Agreement and the documents and instruments to be executed and delivered by them pursuant hereto have been duly authorized by all necessary corporate action. This Agreement and the documents and instruments to be executed and delivered pursuant hereto by Parent or Merger Sub are and will be the legal, valid and binding obligations of Parent and Merger Sub, respectively, enforceable against them in accordance with their terms, except that (a) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium (whether general or specific) or other similar laws now or hereinafter in effect relating to creditors' rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and the discretion of the court before which any proceeding therefor may be brought.

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        SECTION 4.03.    Consents and Approvals; No Violations.

        (a)   Except for applicable requirements of the HSR Act, and the filing of the Certificate of Merger in accordance with the DGCL, no filing or registration with, and no permit, authorization, consent or approval of, any Governmental Body is necessary for the consummation by Parent or Merger Sub of the transactions contemplated by this Agreement.

        (b)   Neither the execution and delivery of this Agreement or the documents and instruments to be executed and delivered pursuant hereto by Parent or Merger Sub nor the consummation by Parent or Merger Sub of the transactions contemplated hereby or thereby, nor compliance by Parent or Merger Sub with any of the provisions hereof or thereof, will (i) conflict with or result in any breach of any provision of the certificate of incorporation or bylaws of the Merger Sub or the certificate of formation or limited liability company agreement of Merrill (or other applicable charter documents); violate any provision of the certificate of incorporation or bylaws of Parent or Merger Sub or the certificate of formation or limited liability company agreement of Merrill (or other applicable charter documents); (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default or give rise to any right of termination, cancellation or acceleration of or loss of a material benefit under, or result in the creation of any Lien in or upon any of the properties or assets of Parent or Merger Sub under, or require any consent, approval or notice under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement, lease or other instrument or obligation to which either Parent or Merger Sub is a party or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or Merger Sub or any of their properties or assets, other than, in the case of clauses (ii) or (iii), such violations, breaches, defaults, terminations or cancellations that would have a Parent Material Adverse Effect.

        SECTION 4.04.    Litigation.    There is no legal action, suit, arbitration, or other legal or administrative proceeding or investigation before any Governmental Body pending or, to the knowledge of Parent and Merger Sub, threatened, that questions the validity of this Agreement or any other documents or instruments to be executed and delivered by Parent or Merger Sub pursuant hereto, or the right of Parent and Merger Sub to enter into this Agreement or any such other documents or instruments, or to consummate the transactions contemplated hereby or thereby.

        SECTION 4.05.    Brokers, Finders and Investment Bankers.    Other than pursuant to the engagement letter dated September 23, 2005 between Parent and Sagent Advisors, Inc., none of Parent, Merger Sub or any of its respective officers, directors, employees or Affiliates has employed any broker, finder or investment banker or incurred any liability for any investment banking fees, financial advisory fees, brokerage fees or finders' fees in connection with the transactions contemplated by this Agreement.

        SECTION 4.06.    Funds.    Parent has delivered to the Company true and complete copies of the commitment letter, dated as of November [18], 2005, among Credit Suisse, Banc of America Securities LLC, Bank of America, N.A., Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc. and Merrill (as may be amended or replaced in accordance with Section 5.15, the "Financing Commitments"), pursuant to which Credit Suisse, Bank of America, N.A. and Deutsche Bank Trust Company Americas have agreed to lend to Parent up to $535,000,000 in senior secured debt financings (any such financings under the Financing Commitments being collectively referred to herein as the "Debt Financing"). None of the Financing Commitments has been amended or modified prior to the date of this Agreement, and the respective commitments contained in the Financing Commitments have not been withdrawn or rescinded in any respect. The Financing Commitments are in full force and effect. There are no conditions precedent or other contingencies related to the funding of the full amount of the Financing, other than as set forth in or contemplated by the Financing Commitments. The aggregate proceeds to be disbursed pursuant to the agreements contemplated by the Financing

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Commitments will be sufficient for Parent to pay the Base Purchase Price and any other repayment or refinancing of debt contemplated in this Agreement or the Financing Commitments and to pay all related fees and expenses. As of the date of this Agreement, none of Merrill, Parent or Merger Sub has any reason to believe that any of the conditions to the Debt Financing will not be satisfied or that the Debt Financing will not be available to Parent on the Closing Date. Parent has provided the Company with drafts of such Financing Commitments and the opportunity to comment on such Financing Commitments.

        SECTION 4.07.    Management Incentives.    All necessary actions have been taken by Parent and Merrill Corporation to provide the members of Company management an aggregate pool of options to purchase 250,000 shares of common stock of Merrill Corporation pursuant to its 1999 Stock Option Plan, as amended, in accordance with the terms set forth in the letter agreement dated the date hereof between Merrill Corporation and the Company (the "Merrill Options").

ARTICLE V

COVENANTS

        SECTION 5.01.    Access to Information.    Prior to the Closing Date, upon reasonable notice to the Company, Parent shall be entitled, through its officers, employees and representatives (including its legal advisors and accountants), to make such investigation of the properties, businesses and operations of the Company and the Subsidiaries and such examination of the books and records of the Company and the Subsidiaries as it reasonably requests and, at Parent's cost and expense, to make extracts and copies of such books and records. Any such investigation and examination shall be conducted during regular business hours and under reasonable circumstances and shall be subject to restrictions under applicable Law. The Company shall cause the officers, employees, consultants, agents, accountants, attorneys and other representatives of the Company and the Subsidiaries to cooperate with Parent and Parent's representatives in connection with such investigation and examination, and Parent and its representatives shall cooperate with the Company and its representatives and shall use their reasonable efforts to minimize any disruption to the business. Notwithstanding anything herein to the contrary, no such investigation or examination shall be permitted to the extent that it would require the Company or any of its Subsidiaries to disclose information subject to attorney-client privilege or conflict with any confidentiality obligations to which the Company or any of its Subsidiaries is bound. Notwithstanding anything to the contrary contained herein, prior to the Closing, without the prior written consent of the Company, not to be unreasonably withheld, Parent shall not contact any suppliers to, or customers of, the Company in respect of this Agreement or the transactions contemplated hereby.

        SECTION 5.02.    Conduct of Business.    From the date hereof until the Closing, the Company and the Subsidiaries shall conduct the Business in accordance with past practice and in the Ordinary Course of Business, maintain the current business organization and goodwill, use all commercially reasonable efforts to continue to retain the services of the Company's and the Subsidiaries' present officers, employees and consultants, and preserve the Company's and the Subsidiaries' goodwill and relationship with vendors, suppliers, dealers, distributors, customers and others having business dealings with the Company and the Subsidiaries, and the Company and each of the Subsidiaries shall not enter into any transaction or perform any act which would constitute a breach of its representations, warranties, covenants and agreements contained herein. The Company shall notify Parent promptly, but in all cases within two business days after the Company gains knowledge, of (i) any event or circumstance which is reasonably likely to have a Material Adverse Effect; (ii) any change in the normal course of business or in the operation of the assets of the Company or the Subsidiaries taken as a whole, (iii) the resignation or written notice of resignation of any officer of the Company, or (iv) any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated) or any adjudicatory proceedings, directed at or involving the Company or the Subsidiaries or their employees in their capacities as such.

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        SECTION 5.03.    Certain Changes or Events.    Except as provided on Schedule 5.03, from the date hereof until the Closing, except with the prior written consent of Parent and Merger Sub (such consent not to be unreasonably withheld, delayed or conditioned), neither the Company nor the Subsidiaries shall:

        (a)   take any action to amend its Certificate of Incorporation or Bylaws or other governing instruments;

        (b)   issue, sell or otherwise dispose of any of the authorized but unissued Company Capital Stock, or issue any option to acquire Company Capital Stock, or any securities convertible into or exchangeable for Company Capital Stock or split, combine or reclassify any shares of Company Capital Stock, or issue, sell or otherwise dispose of any securities of the Subsidiaries;

        (c)   other than payment of the Accrued Dividends, declare or pay any dividend or make any other distribution in cash or property on any capital stock;

        (d)   merge or consolidate with or into any Person;

        (e)   sell or otherwise dispose of or encumber any of its properties or assets other than in sales or dispositions in the Ordinary Course of Business or in connection with normal repairs, renewals and replacements;

        (f)    alter the business organization of the Company or the Subsidiaries;

        (g)   make any material changes in the lines of business in which the Company or any of the Subsidiaries participates or is engaged;

        (h)   create any subsidiary, acquire any capital stock or other equity securities of any third party or acquire any equity or ownership interest in any business or entity;

        (i)    acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, limited liability company, partnership, association or other business organization or division thereof;

        (j)    sell, transfer, or otherwise dispose of any assets or properties of the Company or any Subsidiary, except in the Ordinary Course of Business, or any mortgage, pledge or subjection to any Lien with respect to any material assets or properties of the Company or any Subsidiary;

        (k)   pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, contingent or otherwise) other than such payment, discharge or satisfaction in the Ordinary Course of Business;

        (l)    (i) create, incur or assume any Indebtedness for borrowed money or secured by real or personal property, (ii) grant or incur any Liens on any real or personal property that did not exist on the date hereof, (iii) incur any liability or obligation (absolute, accrued or contingent) except in the Ordinary Course of Business, (iv) write-off any guaranteed checks, notes, accounts receivable or cancel any other debt or claim except in the Ordinary Course of Business, (v) write-down the value of any asset or investment on its books or records, except for depreciation and amortization in the Ordinary Course of Business, (vi) make any commitment for any capital expenditure in excess of $100,000 in the case of any single expenditure or $250,000 in the case of all capital expenditures or (vii) enter into any material contract or agreement, except those that are both, (x) entered into in the Ordinary Course of Business, and (y) cancelable without premium or penalty on not more than 30 days' notice.

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        (m)  increase in any manner the base compensation of (other than in the Ordinary Course of Business), or enter into any new, or modify existing, bonus, severance or incentive agreement or arrangement with, any of its employees, directors or consultants;

        (n)   adopt, amend, or terminate any Company Employee Plan, except as required by Law or increase the benefits provided under any Company Employee Plan, or promise or commit to undertake any of the foregoing in the future;

        (o)   fail to perform its material obligations under, or default or suffer to exist any event or condition which with notice or lapse of time or both would constitute a default under, any Company Agreement (except those being contested in good faith) or enter into, assume or amend any contract or commitment that is or would be a Company Agreement, except in the Ordinary Course of Business;

        (p)   pay, distribute or advance any amount to, or sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with any Interested Party, other than in the Ordinary Course of Business;

        (q)   amend or terminate any Material Contract other than in the Ordinary Course of Business;

        (r)   take any action or omit to take any action that will result in a violation of applicable Law or that would result in a breach or inaccuracy of any of the representations and warranties in any material respect at, or as of any time prior to, the Closing Date;

        (s)   take any action, other than reasonable and usual actions in the Ordinary Course of Business with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable);

        (t)    fail to maintain in full force and effect policies of insurance comparable in amount and scope to those currently maintained by the Company or the Subsidiaries;

        (u)   make or change any material tax election or settle any material Tax claim, if such election or settlement, would have the effect of increasing the Tax liability of Company or the Subsidiaries for any period ending after the Closing Date;

        (v)   make or revoke any Tax election or any settlement or compromise of any material Tax liability or application for any change in Tax accounting method; or

        (w)  enter into any contract, agreement or commitment with respect to, or propose or authorize, any of the actions described in the foregoing clauses (a) through (u).

        SECTION 5.04.    Confidentiality.    The parties acknowledge that the information provided to each of them in connection with this Agreement and the transactions contemplated hereby is subject to the terms of the nondisclosure agreement between Parent and Financial Advisor dated August 22, 2005 (the "Confidentiality Agreement"), the terms of which are incorporated herein by reference. In no event shall the negotiation, entering into or termination of this Agreement be deemed to waive or otherwise adversely affect the rights and obligations of the parties under the Confidentiality Agreement, which rights and obligations shall continue in full force and effect in accordance with their terms. Effective upon, and only upon, the Closing Date, the Confidentiality Agreement shall terminate.

        SECTION 5.05.    Additional Agreements.

        (a)   Subject to the terms and conditions herein provided, each of the parties hereto agrees to use its reasonable commercial efforts to take promptly, or cause to be taken, all actions and to do promptly, or cause to be done promptly, all things necessary, proper or advisable under applicable laws to consummate and make effective the transactions contemplated by this Agreement, and to

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satisfy all of the conditions to the Closing to be satisfied by such party, including using reasonable commercial efforts to obtain all necessary actions or non-actions, extensions, waivers, consents and approvals from all applicable Governmental Entities and third parties, and effecting all necessary registrations and filings.

        (b)   From and after the date hereof, the Company shall reasonably cooperate with and assist Parent with developing and executing an appropriate transition and communications plan in order to assure an orderly transition following Closing, including, but not limited to, using reasonable efforts to provide reasonable access to: (i) officers, employees, consultants, attorneys, accountants, vendors and independent contractors of the Company and the Subsidiaries; (ii) offices and other facilities owned or operated by the Company or the Subsidiaries; and (iii) books, records, reports, and files of the Company and the Subsidiaries From and after the date hereof, the parties shall cooperate in good faith to develop and implement a mutually acceptable communications plan for notifying certain parties associated with the Company and the Subsidiaries including, without limitation, employees, independent contractors, vendors, customers and applicable governmental agencies about the transactions contemplated by this Agreement. From and after the date hereof, the parties shall also use their reasonable commercial efforts to assist the other parties hereto with completing and filing all notices, applications and reports required to be filed with any applicable Governmental Body as a result of the Merger.

        (c)   From and after the date hereof, the Company shall reasonably cooperate with and assist Parent in securing the Debt Financing on the terms and conditions described in the Financing Commitments. In furtherance of and without limiting the foregoing, the Company shall, upon request, provide and deliver any documentation or information reasonably deemed appropriate or necessary by Parent in connection with securing the Debt Financing or any alternative financing, provided that the Company makes no representations or warranties with respect to the information provided to Parent under this Section 5.05(c).

        SECTION 5.06.    Filings.    Parent and Merger Sub will promptly make or cause to be made all such HSR Act filings (and any other such competition filings required by any other domestic or foreign jurisdiction) and submissions under laws and regulations applicable to Parent or Merger Sub, if any, as may be required of Parent or Merger Sub for the consummation of the Merger pursuant to this Agreement. The Company will use reasonable commercial efforts to promptly make or cause to be made all such HSR Act filings and other filings and submissions under laws and regulations applicable to the Company, if any, as may be required of the Company for the consummation of the Merger pursuant to this Agreement. The parties agree that they shall cooperate to ensure that any requisite filing under the HSR Act is made within five business days after execution of this Agreement. The parties hereto will coordinate and cooperate with one another in exchanging such information and providing reasonable assistance as may be requested in connection with all of the foregoing. The parties hereto will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto in connection with proceedings under or relating to the HSR Act or any other federal, state or foreign antitrust or fair trade law. In doing so, each party hereto shall promptly inform the other of any material communication between such party and the Federal Trade Commission, the Antitrust Division of the United States Department of Justice, or any other federal, foreign or state antitrust or competition Governmental Entity regarding the transactions contemplated herein. Notwithstanding the foregoing, (a) Parent shall be entitled to direct any such proceedings or negotiations related to any of the foregoing and (b) Parent shall not be required to commence or be a plaintiff in any litigation or to offer or to grant any material accommodation to any third party, including, without limitation, to offer for sale any part of the assets of the Company or any of the other business or assets of Parent. Parent will bear the expenses and costs incurred by the parties hereto in connection with any HSR Act filings

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or other such competition filings and submissions which may be required by such party for the consummation of the Merger pursuant to this Agreement.

        SECTION 5.07.    Public Disclosure.    Prior to the Closing, no party to this Agreement shall make or cause to be made any press release or similar public announcement or communication in any form with respect to this Agreement or the transactions contemplated hereby, without providing the other party the opportunity to review and comment upon, and using reasonable efforts to agree upon, any such press release or public announcement. Nothing in this Section 5.07 shall prohibit any party from making disclosure which its counsel deems necessary or advisable in order to satisfy such party's disclosure obligations imposed by law. Subject to the foregoing, the Company acknowledges that Parent shall issue a press release promptly upon the execution of this Agreement.

        SECTION 5.08.    No Solicitation of Transactions.    The Company will not, and shall cause its Affiliates not to, directly or indirectly, through any officer, director, partner, employee, investment banker, financial advisor, attorney, accountant or other representative of any of them or otherwise, initiate, solicit or encourage (including by way of furnishing information or assistance), or enter into or continue any negotiations of any type, directly or indirectly, or enter into a confidentiality agreement, letter of intent or purchase agreement, merger agreement or other similar agreement with any Person, firm or corporation other than Parent and will immediately cease and cause to be terminated any activities, discussions or negotiations existing on the date hereof, in each case with respect to a merger, consolidation, business combination, sale of all or any portion (other than in the ordinary course of business) of the assets or any shares of capital stock of the Company, or the liquidation or similar extraordinary transaction with respect to the Company. The Company will promptly notify Parent orally and in writing of the existence of any written or oral proposals by a third party to do any of the foregoing (and provide Parent with a copy of any written communications and a detailed summary of any oral communications) which the Company, any of its Affiliates or any of the Company's or its Affiliates' respective officers, directors, partners, employees, investment bankers, financial advisors, attorneys, accountants or other representatives may receive relating to any of such matters.

        SECTION 5.09.    Supplements to Schedules.    From time to time up to the Effective Time, the parties hereto will promptly supplement or amend the Company Disclosure Schedule and Parent Disclosure Schedule, as applicable, with respect to any matter first existing or occurring after the date hereof which, if existing or occurring at or prior to the date hereof, would have been required to be set forth or described in such schedules or which is necessary to correct any information in such schedules which has been rendered inaccurate thereby. Any such matter for which a schedule may be updated or amended shall nevertheless be considered for purposes of determining satisfaction of the conditions set forth in Section 6.01 or whether this Agreement may be terminated pursuant to Sections 9.01(d) or (e). In determining whether a breach of a representation or warranty has occurred for purposes of indemnification in Article VIII, the representations and warranties shall give effect to any such supplement or amendment unless the matter described in such supplement or amendment arose out of a breach of representation or warranty contained in this Agreement as of the date of its execution or gives rise to a breach of representation or warranty in this Agreement for which disclosure of the matter is not applicable or not called for by such representation or warranty.

        SECTION 5.10.    Director and Officer Indemnification.    For at least six years after the Closing Date, Parent and any successor in interest to all or substantially all of the assets of Parent shall provide the officers and directors of the Company immediately prior to the Effective Time indemnification provisions in its Certificate of Incorporation and Bylaws substantially similar to the indemnification provisions provided in the Company's Certificate of Incorporation and Bylaws immediately prior to the Effective Time with respect to matters occurring prior to the Effective Time, including without limitation the authorization of this Agreement. No later than the Effective Time, Parent shall cause the Surviving Corporation to purchase tail coverage for not less than six years from and after the Closing Date under the current officers' and directors' liability insurance policy maintained by the Company

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("D&O Insurance") in respect of acts or omissions occurring on or prior to the Closing Date covering each person currently covered by the Company's officers' and directors' liability insurance policy on terms and in amounts comparable to those of such policy in effect on the date of this Agreement; provided, however, that in no event shall Parent or the Surviving Corporation be required to expend for each covered year an amount in excess of 200% of the current annual premium for such insurance (the "Maximum Premium"). If such insurance coverage is terminated, is cancelled, cannot be obtained at all, or can only be obtained at an annual premium in excess of the Maximum Premium, Parent or the Surviving Corporation, as applicable, shall maintain as much D&O Insurance as can be obtained for the remainder of the six-year period for a premium not in excess of the Maximum Premium.

        SECTION 5.11.    Notification of Changes.    Each of the parties shall promptly notify the other parties hereto orally and in writing to the extent he, she or it has knowledge of (i) any representation or warranty made by him, her or it in this Agreement becoming untrue or inaccurate, (ii) the failure by him, her or it to comply in any material respect with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by him, her or it under this Agreement, and (iii) any change or event having, or that could reasonably and foreseeably be expected to have, a material adverse effect on such party or on the truth of such party's representations and warranties or the ability of the conditions set forth herein to be satisfied; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties (or remedies with respect thereto) or the conditions to the obligations of the parties under this Agreement.

        SECTION 5.12.    Stockholder Approval.

        (a)   As promptly as reasonably practicable after the date hereof, the Company will prepare the Information Statement for distribution to the Company's stockholders summarizing, among other things, (x) the Merger, this Agreement, the other Company Documents and the transactions contemplated hereby and thereby, and (y) the procedures stockholders must follow to submit any documentation required herein; it being understood that Parent will have the right to review, and provide comments to, the Information Statement prior to its distribution to the Company's stockholders;

        (b)   As promptly as reasonably practicable after the date hereof, the Company shall duly call, give notice of, convene and hold a stockholders meeting, or obtain written consent of the Stockholders in lieu thereof, to be held as soon as reasonably practicable after execution of this Agreement for the purpose of voting upon approval and adoption of this Agreement and such other related matters as Parent deems appropriate and shall through its Board of Directors, recommend to its stockholders the approval and adoption of this Agreement and the Merger. Neither the Board of Directors of the Company nor any committee thereof shall withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Parent, the approval of such Board of Directors or such committee of this Agreement or the Merger or the recommendation of such Board of Directors to the Company's stockholders that they approve this Agreement and the Merger; provided, that the Board of Directors of the Company shall be permitted to (i) not recommend to the Company's stockholders that they approve this Agreement or the Merger or (ii) withdraw, qualify or modify, or propose publicly to withdraw, qualify or modify, in a manner adverse to Parent, the recommendation of such Board of Directors to the Company's stockholders that they approve this Agreement and the Merger, only if the Board of Directors of the Company by a majority vote determines in its good faith judgment that it is necessary to do so to comply with its fiduciary duties to the Company's stockholders under applicable law, after receiving the advice of outside legal counsel; provided, further, that (a) the Board will still submit the matter to a vote of the stockholders and (b) nothing contained in this Section 5.12 shall permit the Company's Board of Directors or any committee thereof to rescind or amend the resolutions adopting this Agreement as of the date hereof.

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        (c)   The Company, will take all actions reasonably possible to enforce any and all "drag-along" or similar rights it has under the Company's Amended and Restated Stockholders Agreement, dated as of October 29, 1999 to compel holders of Company Capital Stock or Company Stock Options to vote in favor of the Merger and the other transactions contemplated hereby and to deliver their shares pursuant to the terms of this Agreement.

        (d)   As promptly as reasonably practicable after the date hereof, the Company will use its reasonable best efforts to obtain a Letter of Transmittal from each holder of Company Preferred Stock that, with respect to holders of Series A Preferred Stock and Series B Preferred Stock, will include a notice to the Company to convert all of such holder's shares of Company Preferred Stock to Company Common Stock immediately prior to the Effective Time. The Company shall use its commercially reasonable efforts to obtain any consent of the holders of Series C Preferred Stock that may be required as a result of the transactions contemplated by this Agreement.

        SECTION 5.13.    Efforts to Obtain Consents.    Promptly after execution hereof, the Company shall begin commercially reasonable efforts to obtain by the earliest date practicable following the date hereof all consents from governmental entities and third parties required for consummation of the transactions contemplated hereby. Parent shall provide reasonable cooperation and shall have the right to approve the form of any such consent, all of which consents obtained by the Company shall be provided to Parent. Also promptly following the date hereof, the Company shall provide all notices to governmental entities and third parties required for consummation of the transactions contemplated hereby in a manner so that any advance notice requirements shall be satisfied prior to the anticipated Closing Date. Parent shall provide reasonable cooperation and shall be given the right to approve the form of any such notice, and the Company shall copy Parent on all such notices made.

        SECTION 5.14.    Preparation of Tax Returns; Tax Matters.

        (a)    Pre-Closing Tax Returns.    The Company shall timely file at its expense all Tax Returns required to be filed by the Company or any Subsidiary on or before the Closing Date; provided, however, that, after the date hereof, the Company shall not file or allow any Subsidiary to file any such Tax Returns (other than federal, state or local sales, use, property, withholding or employment tax returns or statements) for any Tax period without obtaining the prior consent of Parent, which consent shall not be unreasonably withheld; provided further, however, it shall be conclusively presumed that the withholding of Parent's consent to any such Tax Return by reason of a tax position taken on such Tax Return which is consent with the prior practice of the Company or any Subsidiary is unreasonable.

        (b)    Post-Closing Tax Returns.    Parent will file (or cause to be filed) at its expense all Tax Returns of the Company or any Subsidiary required to be filed after the Closing Date, provided, however that all Tax Returns for Taxable Periods (or portions thereof) ending on or prior to the Closing Date or Straddle Periods (i) shall be prepared in accordance with past practice and (ii) shall be provided to the Stockholder Representative at least 20 days prior to the due date thereof for the Stockholder Representative's review and approval, which approval shall not be unreasonably withheld. Neither Parent nor its Affiliates or representatives shall take any action (i) inconsistent with the tax treatment of the Merger as a sale of stock by the Stockholders or (ii) which has the direct or indirect effect of treating the Merger as a purchase of assets by Parent or Merger Sub.

        (c)    Transfer Taxes.    All Transfer Taxes incurred in connection with this Agreement and the transactions contemplated hereby shall be borne by the party on which such taxes are imposed. The party on which such taxes are imposed will file, to the extent required by applicable law, all necessary Tax Returns and other documentation with respect to all such Transfer Taxes.

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        (d)    Assistance and Cooperation.    Each of Parent and the Stockholder Representative will provide the other with such assistance as may reasonably be requested by each of them in connection with the preparation of any Tax Return, any audit or other examination by any Governmental Body, or any judicial or administrative proceedings relating to liability for Taxes, and each will provide the other with any records or information which may be relevant to such Tax Return, audit or examination, proceedings or determination. Such assistance shall include making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and shall include providing copies of any relevant Tax Return and supporting work schedules. Parent and the Stockholder Representative further agree, upon request, to provide the other party with all information that either party may be required to report pursuant to Code Section 6043 and the Treasury Regulations promulgated thereunder.

        (e)    Straddle Period Tax Cutoff on Closing Date.    For federal income tax purposes, the taxable year of the Company shall end as of the close of the Closing Date and, with respect to all other Taxes of the Company or any Subsidiary, the Stockholder Representative and Parent will, unless prohibited by applicable law, close the taxable period of the Company or the Subsidiary as of the close of the Closing Date. No party hereto shall take (or cause to be taken) any position inconsistent with the preceding sentence on any Tax Return. In any case where applicable law does not permit the Company or any Subsidiary to close its taxable year on the Closing Date or in any case in which a Tax is assessed with respect to a taxable period which includes the Closing Date (but does not begin or end on that day) (a "Straddle Period"), then for purposes of computing Tax accruals in the Final Closing Date Working Capital Statement and for all other purposes of this Agreement, the amount of any Taxes based on or measured by income or receipts of the Company and its Subsidiaries for the pre-closing portion of such Straddle Period shall be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity in which the Company or any of its Subsidiaries holds a beneficial interest shall be deemed to terminate at such time and exemptions, allowances or deductions that are calculated on an annual basis (including, but not limited to, depreciation and amortization deductions) shall be allocated between the period ending on the Closing Date and the period after the Closing Date in proportion to the number of days in each such period) and the amount of other Taxes of the Company and its Subsidiaries for a Straddle Period that relates to the pre-closing portion of such Straddle Period shall be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period.

        (f)    Tax Refunds.    At any time prior to April 30, 2008, to the extent any determination of Tax liability of the Company or any Subsidiary, whether as the result of an audit or examination, a claim for refund, the filing of an amended return or otherwise, results in any refund of Taxes paid attributable to (i) any period which ends on or before the Closing Date or (ii) any Straddle Period, in either case other than any refund included within the definition of Working Capital or any other refund relating to income taxes for the taxable year beginning January 1, 2005, then any such refund shall belong to the Stockholder Representative for the benefit of the Stockholders, provided that in the case of any Tax refund described in clause (ii) above, the portion of such Tax refund which shall belong to the Stockholder Representative shall be that portion that is attributable to the portion of that period which ends on the Closing Date (determined on the basis of an interim closing of the books as of the Closing Date), and Parent shall promptly pay or cause to be paid any such refund, and the interest actually received thereon, to the Stockholder Representative upon receipt thereof by Parent or any of its Affiliates. At the request of the Stockholder Representative, Parent shall (or shall cause the Company or the Subsidiaries to) take all steps

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reasonably required to apply for and obtain any Tax refund described in the preceding sentence. Any and all other refunds shall belong to Parent.

        (g)    Amending Tax Returns.    At any time prior to April 30, 2008, notwithstanding any provision in this Agreement to the contrary, neither the Company nor the Subsidiaries shall, without the prior written consent of the Stockholder Representative, amend any Tax Return after the Closing Date that relates to taxable periods ending on or prior to the Closing Date or a Straddle Period.

        (h)    Transaction Expenses.    Notwithstanding anything in this Agreement to the contrary, for all purposes of this Agreement the expenses described on Schedule 5.14(h) shall be treated as being incurred on the day before the Closing Date.

        SECTION 5.15.    Financing.    Parent and Merger Sub shall use their respective commercially reasonable efforts to arrange the Debt Financing on the terms and conditions described in the Financing Commitments, including using their respective commercially reasonable efforts to (i) negotiate definitive agreements with respect thereto, (ii) to satisfy on a timely basis all conditions applicable to Parent and Merger Sub in such definitive agreements that are within its control and (iii) redeem Parent's outstanding Senior Subordinated Notes due 2009 to the extent required by the Financing Commitments. In the event any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Financing Commitments, Parent and Merger Sub shall use their respective commercially reasonable efforts to arrange to obtain alternative financing from alternative sources on comparable terms as promptly as practicable following the occurrence of such event.

        SECTION 5.16.    Employment and Non-Competition Agreements.    Concurrently with the execution of this Agreement: (a) Perry L. Solomon, Marianne Collins, Pat Prozzi, Sarah Andrews, Scot Rosenblum, Chuck Karlovits, Doug Karlovits, Joseph Karlovits, David Collins, Lisa Censullo and Kevin Reilley have entered into employment agreements with the Company; (b) Perry L. Solomon, Marianne Collins, Pat Prozzi, Sarah Andrews, Scot Rosenblum, Chuck Karlovits, Doug Karlovits, Joseph Karlovits, Lisa Censullo and Kevin Reilley have entered into non-competition agreements with the Company; and (c) Sarah Andrews has amended the Restricted Stock Agreement, dated July 20, 2004, with the Company to provide that 100% of any Unvested Shares (as defined therein) vest upon a Sales Event (as defined therein) prior to Closing. The Company has delivered copies of all of the agreements referenced above in this Section 5.16 to Parent.

        SECTION 5.17.    Stockholders Agreement; Letters of Transmittal.    The Company has delivered reasonable evidence to Parent relating to the execution by the holders of the outstanding shares of Capital Stock of the Company's Amended and Restated Stockholders Agreement, dated as of October 29, 1999. The Company shall use commercially reasonable efforts to obtain executed Letters of Transmittal from all Stockholders prior to Closing and provide copies to Parent.

        SECTION 5.18.    Release and Satisfaction of Indebtedness.    At or immediately prior to the Effective Time all Indebtedness of the Company that exists immediately before the Effective Time shall be paid-off, released or otherwise satisfied either through payment by Parent as part of the Base Purchase Price or through payment by the Company of Cash (and the Company shall use all of its Cash available immediately before the Effective Time either for this purpose or for the payment of Accrued Dividends); provided, however, that at the direction of Parent (and in its sole discretion) specific items of Indebtedness shall not be paid-off and instead, at the direction of Parent, the funds from the Base Purchase Price from Parent and/or the Cash from the Company that would otherwise have been used to pay-off such Indebtedness shall be placed in escrow or otherwise used as directed by Parent.

        SECTION 5.19.    Termination of TriNet Agreement.    The Company shall cooperate with the Parent to terminate that certain Subscriber Services Agreement dated November 4, 1996 by and between HCP Acquisition Co., Inc. and TriNet Employer Group, Inc., provided that Parent agrees to pay any fees or expenses relating to the termination of such agreement or any payments due under such agreement for services provided after December 31, 2005.

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ARTICLE VI

CONDITIONS TO CLOSING

        Section 6.01.    Conditions to Obligations of Parent and Merger Sub.    The obligations of Parent and Merger Sub to close the transactions contemplated by this Agreement are subject to the prior or concurrent fulfillment of each of the following conditions; provided, however, that Parent and Merger Sub may waive in writing any one or more of such conditions:

        (a)    Performance of Obligations.    The Company and the Stockholders shall have complied in all material respects with all the terms, covenants and conditions of this Agreement required to be complied with and performed by the Company and the Stockholders on or prior to the Closing Date, and shall have made all of the deliveries required to have been made hereunder by them on or prior to the Closing Date.

        (b)    Representations and Warranties.    All of the representations and warranties of the Company contained in this Agreement shall be true and correct in all respects on and as of the Effective Time (without regard to any dollar amount or qualifications or limitations regarding materiality or Material Adverse Effect contained therein), except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct on and as of such earlier date), and except for such breaches of representations and warranties that, in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

        (c)    Consents.    All governmental approvals and consents of third parties, or notices thereto, set forth on Schedule 6.01 shall have been obtained or made and the applicable waiting period with respect to the Merger under the HSR Act shall have expired or early termination shall have been granted.

        (d)    Resolutions.    The Stockholders shall have approved this Agreement, the consummation of the Merger and the appointment of the Stockholder Representative, and the Company shall have delivered to Parent and Merger Sub the resolutions of the Company's Board of Directors and the Stockholders authorizing the execution, delivery and performance of this Agreement and the documents and instruments to be executed and delivered by the Company pursuant hereto, and the transactions contemplated hereby and thereby, certified by an officer of the Company and dated the Closing Date.

        (e)    No Material Adverse Effect.    Between the date hereof and the Effective Time, there shall not have occurred any Material Adverse Effect.

        (f)    Termination of Affiliate Relationships.    Any relationships and loans between the Company and the Stockholders or their Affiliates shall have been terminated to the reasonable satisfaction of Parent.

        (g)    Financing.    Parent shall have received funds contemplated by the Financing Commitments in the amount contemplated by Section 4.06 hereof.

        (h)    Closing Certificates.    The Company shall have furnished Parent and Merger Sub with a certificate, dated as of the Closing Date and executed by the President of the Company, certifying that each of the conditions set forth in Section 6.01(a), (b) and (e) has been satisfied.

        (i)    No Injunction, Etc.    No action, proceeding or investigation shall have been instituted or threatened before any court or governmental agency to enjoin, restrain, prohibit or obtain substantial damages in respect of this Agreement or the consummation of the Merger.

        (j)    Legal Opinion.    The Company has furnished Parent with an opinion of Weil, Gotshal & Manges LLP, dated as of the Closing Date, substantially in the form attached hereto as Exhibit C.

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        (k)    Liquidation Election.    The Company shall have delivered to Parent and Merger Sub the written election from the holders of at least two-thirds of the outstanding shares of each of the Series A Preferred Stock and Series B Preferred Stock that the Merger and the transactions contemplated by this Agreement will not be treated as a Liquidation pursuant to the Company's Certificate of Incorporation.

        (l)    Payment of Accrued Dividends.    The Company shall have delivered written evidence, in a form satisfactory to Parent, that all accrued cumulative but unpaid dividends (whether or not declared) have been paid in full.

        (m)    Indebtedness of the Company.    The Company shall have provided payoff letters to Parent to satisfy in all respects the Indebtedness of the Company (other than as to Indebtedness that is not paid off pursuant to the direction of Parent pursuant to Section 5.18) effective as of the Closing Date, and related documentation regarding the termination as of the Closing Date of any agreements relating thereto and the release as of the Closing Date of any Liens relating thereto.

        (n)    Letters of Transmittal.    Stockholders holding at least seventy percent (70%) of the outstanding shares of Company Capital Stock shall have executed a Letter of Transmittal, copies of which shall have been delivered to Parent.

        (o)    Limited Dissenting Shares.    Dissenting Shares shall not represent 5% or more of the aggregate issued and outstanding Company Capital Stock as of the date hereof.

        SECTION 6.02.    Conditions to Obligations of the Company.    The obligations of the Company to close the transactions contemplated by this Agreement are subject to the prior fulfillment of each of the following conditions; provided, however, that the Company may waive in writing any one or more of such conditions:

        (a)    Performance of Obligations.    Parent and Merger Sub shall each have complied in all material respects with all the terms, covenants and conditions of this Agreement required to be complied with and performed by each on or prior to the Closing Date, and shall have made all of the deliveries required to have been made hereunder by them on or prior to the Closing Date.

        (b)    Representations and Warranties.    All of the representations and warranties of Parent and Merger Sub contained in this Agreement shall be true and correct on and as of the Effective Time (without regard to any dollar amount or qualifications or limitations regarding materiality or Material Adverse Effect contained therein), except to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties shall be true and correct only on and as of such earlier date), and except for such breaches of representations and warranties that, in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect.

        (c)    Resolutions; Officers.    Parent and Merger Sub shall have delivered to the Company the resolutions of their respective Boards of Directors authorizing the execution, delivery and performance by them of this Agreement and the documents and instruments to be executed and delivered by Parent and Merger Sub pursuant hereto, and the transactions contemplated hereby and thereby, each certified by an officer of Parent and Merger Sub, respectively, and dated the Closing Date.

        (d)    Closing Certificate.    Parent and Merger Sub shall have furnished the Company with a certificate, dated as of the Closing Date and executed by the Presidents of Parent and Merger Sub, respectively, certifying that each of the conditions set forth in Section 6.02(a) and (b) has been satisfied.

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        (e)    Legal Restraints, Proceedings.    The absence of any injunction, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition that has the effect of preventing the consummation of the transactions contemplated herein.

        (f)    Stockholder Approval.    The requisite number of Stockholders shall have adopted and approved this Agreement, the Merger and the transactions contemplated hereby.

        (g)    Merrill Options.    The Merrill Options shall have been granted.

ARTICLE VII

CLOSING

        SECTION 7.01.    Closing Date.    Upon the terms and subject to the conditions set forth in this Agreement, the closing of the Merger (the "Closing") shall take place at 10:00 a.m., Boston time, on the third business day after the satisfaction or waiver of the conditions set forth in Article VI (other than those that by their terms cannot be satisfied until the time of Closing), at the Boston offices of Weil, Gotshal & Manges LLP or at such other time, date or place agreed to in writing by Parent and the Company. The date on which the Closing actually occurs is referred to herein as the "Closing Date".

        SECTION 7.02.    Deliveries by the Company.    At the Closing, the Company shall deliver to Parent and Merger Sub:

        (a)   The Certificate of Merger, duly executed by the Company;

        (b)   Resignations of the directors (or equivalent positions) of each of the Company and the Subsidiaries in a form satisfactory to Parent;

        (c)   The Working Capital Escrow Agreement and the Indemnification Escrow Agreement, each duly executed by the Stockholder Representative and the Company;

        (d)   A duly executed FIRPTA certificate in accordance with Code Section 1445, which states that shares of Company Capital Stock do not constitute "United States real property interests" under Section 897(c) of the Code;

        (e)   The certificates required by Sections 6.01(d) and (h); and

        (f)    All other documents required pursuant to this Agreement, all in form and substance satisfactory to counsel for Parent and Merger Sub, as well as any further documentation or instruments as Parent, Merger Sub or their counsel may reasonably require to effectuate the terms of this Agreement.

        SECTION 7.03.    Deliveries by Parent and Merger Sub.    At the Closing, Parent and Merger Sub shall deliver:

        (a)   The cash consideration to which each Stockholder and holder of Company Stock Options and Company Warrants is entitled pursuant to Article II hereof, payable to: (i) in the case of the cash consideration payable to the holders of Company Stock Options and Company Warrants, the Company, or (ii) in the case of the cash consideration payable to the Stockholders, the Paying Agent;

        (b)   The Working Capital Escrow Agreement and Indemnification Escrow Agreement, each duly executed by the Escrow Agent and Parent;

        (c)   The legal opinion required by Section 6.01(j);

        (d)   The certificates required by Sections 6.02(c) and (d); and

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        (e)   All other documents required pursuant to this Agreement, all in form and substance satisfactory to counsel for the Company, as well as any further documentation or instruments as the Company or its counsel may reasonably request to effectuate the terms of this Agreement.

        SECTION 7.04.    Further Assurances.    The Company agrees that at any time or from time to time after the Closing Date, upon request of Parent or Merger Sub, the Company will make reasonable commercial efforts to have executed, acknowledged and delivered such other and further instruments and take such other action as Parent or Merger Sub may reasonably require to effectuate the terms of this Agreement.

ARTICLE VIII

SURVIVAL; INDEMNIFICATION

        SECTION 8.01.    Survival.    The representations and warranties contained in Articles III and IV and the covenants and agreements contained in Article V shall survive the Closing and shall terminate on April 30, 2007 (the "General Survival Date"); provided, however, that (a) the representations and warranties pursuant to Section 3.09 (Taxes), 3.15 (Employee Benefit Plans) and 3.27 ("Other Acquisitions") (collectively, the "Special Representations") shall survive the Closing and shall terminate on April 30, 2008 and (b) the representations and warranties pursuant to Sections 3.01 (Organization; Good Standing), 3.02 (Authorization of Agreement), 3.04 (Capitalization; Title to Shares) and 3.22 (Interested Party Transactions) (collectively, the "Excluded Company Representations") and Sections 4.01 (Organization; Good Standing) and 4.02 (Authority Relative to this Agreement), shall survive the Closing and shall terminate on the date that is 30 days after the expiration of the applicable statute of limitations.

        SECTION 8.02.    Indemnification by Stockholders.    From and after the Closing (but subject to the provisions of this Article VIII), each Stockholder, severally in proportion to its respective Proportional Amount and not jointly, shall indemnify Parent Indemnitees (as defined below) in respect of any loss, liability, damage or expense (hereinafter individually a "Loss" and collectively "Losses") suffered or incurred by Parent or any of its Affiliates, officers, directors, employees or agents (the "Parent Indemnitees") to the extent such Loss results from or arises out of:

        (a)   a breach of any representation or warranty made by the Company contained in this Agreement;

        (b)   the nonperformance of any covenant or obligation to be performed by the Company under this Agreement;

        (c)   any Transaction Expenses not included within Final Working Capital or paid by the Stockholders pursuant to Section 2.01(i);

        (d)   any Liability for Taxes of the Company, any Subsidiary or any predecessor in interest of any of them with respect to any Tax period or portion thereof ending on or before the Closing Date, regardless of whether such Liability for Taxes arises out of or constitutes a breach of any representation, warranty or covenant in this Agreement, other than Liability for income Taxes of the Company or any Subsidiary for the year beginning January 1, 2005; or

        (e)   any matter described in Schedule 8.02(e) attached hereto; or

        (f)    any matter described in Schedule 8.02(f) attached hereto.

        For purposes of determining the amount of a Loss resulting from a breach of any representation or warranty hereunder, the terms "material" or "Material Adverse Effect" or words of similar import contained in such representation or warranty shall in each case be disregarded and without effect (as if such terms were deleted from such representation or warranty). All payments under this Section 8.02

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shall be treated by the parties as an adjustment to the proceeds received by the Stockholders pursuant to Article II.

        SECTION 8.03.    Indemnification by Parent.    From and after the Closing (but subject to the provisions of this Article VIII), Parent shall indemnify each Stockholder and its Affiliates, officers, directors, employees and agents against and hold them harmless from any Losses suffered or incurred by any such indemnified party to the extent arising from any breach of any representation or warranty of Parent or Merger Sub contained in this Agreement, any breach of any covenant of Parent or Merger Sub contained in this Agreement requiring performance by Parent or Merger Sub prior to the Closing or by Parent or the Surviving Corporation after the Closing, and any claim or suit brought against any Stockholder or its Affiliates, officers, directors, employees and agents at any time on or after the Closing Date relating to actions taken by Parent or the Company on or after the Closing Date. For purposes of determining the amount of a Loss resulting from a breach of any representation or warranty of Parent or Merger Sub contained in this Agreement, the terms "material" or "Parent Material Adverse Effect" or words of similar import contained in such representation or warranty shall in each case be disregarded and without effect (as if such terms were deleted from such representation or warranty). All payments under this Section 8.03 shall be treated by the parties as an adjustment to the proceeds received by the Stockholders pursuant to Article II.

        SECTION 8.04.    Indemnification Escrow.

        (a)    Deposit of Escrow Amount.    At Closing, Parent shall deposit in escrow with the escrow agent identified in the form of the Indemnification Escrow Agreement attached hereto as Exhibit D (the "Indemnification Escrow Agreement") $8,000,000 (the "Indemnification Escrow Amount") of the Aggregate Merger Consideration, which amount shall be held and disbursed in accordance with the terms of such Indemnification Escrow Agreement.

        (b)    Parent's Receipt of Indemnity Escrow.    From and after the Closing (but subject to the provisions of the Indemnification Escrow Agreement), the Parent Indemnitees shall be entitled, in accordance with the terms of the Indemnification Escrow Agreement, to receive proceeds from the Indemnification Escrow Amount in respect of any Loss suffered or incurred by any Parent Indemnitee that is entitled to indemnification under Section 8.02.

        (c)    Limitations on Parent's Receipt of Indemnity Escrow.    Notwithstanding anything to the contrary contained in this Agreement, the rights of a Parent Indemnitee pursuant to Sections 8.04(b) and 8.06 shall be subject to the following limitations:

          (i)  a Parent Indemnitee shall not be entitled to receive proceeds from the Indemnification Escrow Amount pursuant to Section 8.04(b) or exercise its Set-Off Right pursuant to Section 8.06 (other than Losses suffered or incurred as a direct result of a breach of any Excluded Company Representations, any Special Representations or any Loss referred to in Section 8.02(b), (c), (d) or (e)) unless and until the aggregate amount of individual Losses that exceed the Mini-Basket and otherwise would be payable pursuant to Section 8.04(b) from the Indemnification Escrow Amount or pursuant to 8.06 as a result of the exercise of the Set-Off Right exceeds on a cumulative basis an amount equal to $1,000,000 (the "Basket"), provided that once the Basket amount is exceeded, Parent Indemnitees shall be entitled to recover back to the first dollar of any such Loss that exceeds the Mini-Basket;

         (ii)  a Parent Indemnitee shall not be entitled to receive proceeds from the Indemnification Escrow Amount pursuant to Section 8.04(b) or exercise its Set-Off Right pursuant to Section 8.06 (other than Losses suffered or incurred as a direct result of a breach of any Excluded Company Representations, any Special Representations or any Loss referred to in Section 8.02(b), (c), (d) or (e)) unless and until (A) the amount of the Loss that otherwise would be payable pursuant to Section 8.04(b) from the Indemnification Escrow Amount or pursuant to 8.06 as a result of the exercise of the Set-Off Right with respect to

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any such individual claim (and any claims involving items or matters arising out of substantially similar facts and circumstances) exceeds an amount equal to $5,000 (the "Mini-Basket") and (B) the Basket has been exceeded, and then from the first dollar of such Loss (it being understood that any such individual claims for Losses having amounts less than the Mini-Basket shall be ignored in determining whether the Basket has been exceeded and thereafter); and

        (iii)  the amount that a Parent Indemnitee is able to recover with respect to any Loss under Section 8.04(b) (other than Losses suffered or incurred as a direct result of a breach of any Excluded Company Representations) is limited to the amount, if any, then remaining in the Indemnification Escrow Amount or available pursuant to the Set-Off Right. For the avoidance of doubt, recovery against the Indemnification Escrow Amount pursuant to this Section 8.04 and the Set-Off Right pursuant to Section 8.06 constitute a Parent Indemnitee's sole and exclusive remedy for any and all Losses a Parent Indemnitee is entitled to indemnification under Section 8.02 (other than Losses suffered or incurred as a direct result of a breach of any Excluded Company Representations).

        (d)    Release of Indemnity Escrow Proceeds.

          (i)  Effective April 30, 2007, and as soon thereafter as practicable, the Escrow Agent shall pay to the Stockholders, pursuant to the terms of the Indemnification Escrow Agreement, fifty percent (50%) of an amount equal to (x) the Indemnification Escrow Amount less (y) a reserve equivalent to the aggregate amount of any good faith claims made by Parent pursuant to this Article VIII and (z) less any claims previously paid out of the Escrow Amount. With respect to any then pending good faith claims referred to in the preceding sentence, promptly following resolution of any such claims, the amount, if any, of such claim which has not been paid to Parent in connection with such resolution, and which would have been paid to the Stockholders if the claim had been resolved prior to the date set forth in the first sentence of this paragraph, shall be paid by the Escrow Agent to the Stockholders pursuant to the terms of the Indemnification Escrow Agreement. All payments paid by the Escrow Agent to the Stockholders pursuant to this Section 8.04(d)(i) shall be distributed to the Stockholders in their respective Proportional Amounts.

         (ii)  Effective April 30, 2008, and as soon thereafter as practicable, the Escrow Agent shall pay to the Stockholders, pursuant to the terms of the Indemnification Escrow Agreement: the amount by which (x) the remaining Indemnification Escrow Amount exceeds (y) the aggregate amount of any good faith claims made by Parent pursuant to this Article VIII. With respect to any then pending good faith claims referred to in the preceding sentence, promptly following resolution of any such claims, the amount, if any, of such claim which has not been paid to Parent in connection with such resolution, and which would have been paid to the Stockholders if the claim had been resolved prior to the date set forth in the first sentence of this paragraph, shall be paid by the Escrow Agent to the Stockholders pursuant to the terms of the Indemnification Escrow Agreement. All payments paid by the Escrow Agent to the Stockholders pursuant to this Section 8.04(d)(ii) shall be distributed to the Stockholders in their respective Proportional Amounts.

        (iii)  If the Indemnification Escrow Amount or Set-Off Right are insufficient or unavailable to satisfy the obligations of the Stockholders under this Article VIII or if the Indemnification Escrow Agreement has terminated, then those Stockholders shall pay to Parent in cash an amount equal to the excess of such Losses over the Indemnification Escrow Amount, multiplied by their Proportional Amount.

        (e)    Several Liability of the Stockholders.    Notwithstanding anything contained herein to the contrary, for obligations pursuant to this Article VIII when the Indemnification Escrow Amount or

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Set-Off Right is insufficient or unavailable, the Stockholders shall only be severally (individually) liable (based on their Proportional Amount) for such additional payment; provided that, in no event shall such Stockholder's liability under this Article VIII exceed the net proceeds such Stockholder actually receives pursuant to Article II.

        SECTION 8.05.    Expiration of Claims.    The ability of any Person to receive indemnification under Section 8.02 or 8.03, and the ability of the Parent Indemnitees to receive proceeds from the Indemnification Escrow Amount pursuant to Section 8.04(b) or exercise the Set-Off Right pursuant to Section 8.06, shall terminate on the applicable survival termination date (as set forth in Section 8.01), unless such Person or a Parent Indemnitee, as applicable, shall have incurred a Loss and made either a claim for indemnification pursuant to Sections 8.02 or 8.03, a claim for receipt of proceeds from the Indemnification Escrow Amount pursuant to Section 8.04 or a claimed exercise of the Set-Off Right pursuant to Section 8.06, prior to such termination date, as applicable. If a Person or a Parent Indemnitee has made either a claim for indemnification pursuant to Section 8.02 or 8.03, a claim for receipt of proceeds from the Indemnification Escrow Amount pursuant to Section 8.04 or an exercise of the Set-Off Right prior to such termination date, such claim, if then unresolved, shall not be extinguished by the passage of the deadlines set forth in Section 8.01.

        SECTION 8.06.    Set-Off Right.    Subject to the conditions specified in this Section 8.06 and satisfaction of the procedures for indemnification in Section 8.07, a Parent Indemnitee may set off (the "Set-Off Right") any amount to which it is entitled to receive pursuant to Section 8.02(a) specifically resulting from a breach by the Company of any Excluded Company Representations or Section 3.16(m) or (n) against amounts otherwise payable as an Earn-Out Payment. The exercise of the Set-Off Right by Parent will not constitute a breach of the Parent's obligations pursuant to Article II hereof. Any amounts subject to the Set-Off Right will reduce the amount of Earn-Out Payment otherwise payable pursuant to Section 2.04 hereof. A Parent Indemnitee may not exercise the Set-Off Right until the Indemnification Escrow Amount at the time of exercise that is not subject to outstanding good faith claims is equal to $0. Any amount of any Earn-Out Payment that is withheld from the Stockholders pursuant to this Section 8.06 and ultimately determined to be payable to the Stockholders shall accrue interest at the rate of six percent (6%) per annum from April 30, 2007 until the date of payment to the Stockholders.

        SECTION 8.07.    Procedures Relating to Indemnification.

        (a)   In order for a party to be entitled to any indemnification provided for under this Agreement (such party the "Claiming Party"), in respect of a claim or demand made by any Person against the Claiming Party (a "Third Party Claim"), such Claiming Party must notify the indemnifying party (the "Defending Party") in writing, and in reasonable detail, of the Third Party Claim as promptly as reasonably possible after receipt by such Claiming Party of notice of the Third Party Claim; provided that failure to give such notification on a timely basis shall not affect the indemnification provided hereunder except to the extent the Defending Party shall have been actually prejudiced as a result of such failure. Thereafter, the Claiming Party shall deliver to the Defending Party, within five business days after the Claiming Party's receipt thereof, copies of all notices and documents (including court papers) received by the Claiming Party relating to the Third Party Claim.

        (b)   If a Third Party Claim is made against a Claiming Party, the Defending Party shall be entitled to participate in the defense thereof and, if it so chooses, to assume the defense thereof with counsel selected by the Defending Party and reasonably satisfactory to the Claiming Party; provided, however, that the Stockholder Representative may assume the defense of a matter involving a Parent Indemnitee only if (i) there is not conflict of interest between the Parent Indemnitee and the Stockholders, (ii) the sole remedy sought by such Third Party Claim is monetary damages, (iii) the Stockholder Representative acknowledges in writing that the Stockholders are obligated to indemnify the Parent Indemnitee pursuant to Section 8.02(b), and

48

(iv) the amounts available in the Indemnification Escrow Amount at that time are equal to or greater than the monetary damages sought as the sole remedy in connection with the Proceeding. Should a Defending Party so elect to assume the defense of a Third Party Claim, the Defending Party shall not be liable to the Claiming Party for legal expenses subsequently incurred by the Claiming Party in connection with the defense thereof. If the Defending Party assumes such defense, the Claiming Party shall have the right to participate in the defense thereof and to employ counsel, at its own expense, separate from the counsel employed by the Defending Party, it being understood, however, that the Defending Party shall control such defense. The Defending Party shall be liable for the fees and expenses of counsel employed by the Claiming Party for any period during which the Defending Party has not assumed the defense thereof. If the Defending Party chooses to defend any Third Party Claim, then all the parties hereto shall cooperate in the defense or prosecution of such Third Party Claim, including by retaining and (upon the Defending Party's request) providing to the Defending Party all records and information which are reasonably relevant to such Third Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Stockholder Representative (on behalf of the Stockholders) shall act on behalf of all Defending Parties in the case of all Third Party Claims with respect to which Parent is seeking indemnification from the Stockholders under Section 8.02 (with each Stockholder responsible for his, her or its allocable share of such costs and expenses based on such Stockholder's Proportional Amount). Whether or not the Stockholder Representative (on behalf of the Stockholders) shall have assumed the defense of a Third Party Claim, neither Parent nor any of its Affiliates shall admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim for which any sums are recoverable from the Indemnification Escrow Amount without the prior written consent of the Stockholder Representative.

        SECTION 8.08.    Mitigation.    Each Person entitled to indemnification hereunder shall take all reasonable steps to mitigate all Losses after becoming aware of any event which could reasonably be expected to give rise to any Losses that are indemnifiable or recoverable hereunder or in connection herewith.

        SECTION 8.09.    Exclusive Remedy; Exceptions.    From and after the Closing Date, the provisions of this Article VIII shall be the sole and exclusive remedy for monetary damages arising out of or resulting from the breach of any representations, warranties or covenants made pursuant to this Agreement, except for intentional breach, intentional misrepresentation or fraud by the Company against Parent or Merger Sub in connection with this Agreement and the Merger. In the event of intentional breach, intentional misrepresentation or fraud by the Company against Parent or Merger Sub in connection with this Agreement and the Merger, none of the limitations set forth in Sections 8.01, 8.04, 8.05 and 8.06 will apply.

        SECTION 8.10.    Determination of Loss Amount.

        (a)   Losses for breaches of representations and warranties contained in this Agreement shall be net of any insurance proceeds realized by and paid to any party entitled to indemnification hereunder, with the amount of any such proceeds calculated net of any direct increase in insurance premiums incurred as a result of such claim. The Defending Party shall seek full recovery under all insurance policies covering any Loss to the same extent as they would if such Loss were not subject to indemnification hereunder. In the event that an insurance or other recovery is made by any Claiming Party with respect to any Loss for which any such Person has been indemnified hereunder and has received funds in the amount of the Loss, then a refund equal to the aggregate amount of the recovery shall be made promptly to the Stockholder Representative (on behalf of the Stockholders).

        (b)   In no event shall Parent be entitled to recover or make a claim for any amounts in respect of consequential, incidental or indirect damages, lost profits or punitive damages and, in

49

particular, no "multiple of profits" or "multiple of cash flow" or similar valuation methodology shall be used in calculating the amount of any Losses.

        (c)   There shall be no indemnification obligations pursuant to this Article VIII for any amount which has been included in Final Working Capital or involves income Taxes for the Company or the Subsidiaries for the year beginning January 1, 2005.

        SECTION 8.11.    Tax Benefits.    To the extent that a Claiming Party recognizes Tax Benefits (defined below) as a result of any Loss as to which the Claiming Party has received funds in the amount of such Loss, such party shall pay the amount of such Tax Benefits (but not in excess of the indemnification payment or payments actually received from the Defending Party with respect to such Loss) to the Defending Party as such Tax Benefits are actually recognized by the Claiming Party. For this purpose, the Claiming Party shall be deemed to recognize a tax benefit ("Tax Benefit") with respect to a taxable year if, and to the extent that, the Claiming Party's cumulative liability for Taxes through the end of such taxable year, calculated by excluding any Tax items attributable to the Loss as to which the Claiming Party has received funds in the amount of such Loss from all taxable years, exceeds the Claiming Party's actual cumulative liability for Taxes through the end of such taxable year, calculated by taking into account any Tax items attributable to such Loss for all taxable years (to the extent permitted by relevant Tax law and not already taken into account for a previous taxable year pursuant to this Section 8.11 and treating such Tax items as the last items claimed for any taxable year).

ARTICLE IX

TERMINATION OF AGREEMENT

        Section 9.01.    Events of Termination.    This Agreement may be terminated, and the transactions contemplated hereby may be abandoned, at any time prior to the Closing Date:

        (a)   At the election of the Company or Parent on or after December 31, 2005, if the Closing shall not have occurred by the close of business on such date, provided that the terminating party is not in material default of any of its obligations hereunder;

        (b)   by mutual written consent of the Company and Parent;

        (c)   by the Company or Parent if there shall be in effect a final nonappealable Order of a Governmental Body of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby;

        (d)   by Parent (provided that neither Parent nor Merger Sub are then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement), if the Company materially breaches any of the representations, warranties, covenants or agreements contained in this Agreement and such breach (if curable) has not been cured within 10 days following written notice of such breach; or

        (e)   by the Company (provided that the Company is not then in material breach of any representation, warranty, covenant or other agreement contained in this Agreement), if Parent or Merger Sub materially breaches any of their respective representations, warranties, covenants or agreements contained in this Agreement and such breach (if curable) has not been cured within 10 days following written notice of such breach.

        SECTION 9.02.    Effect of Termination.    In the event that any party shall elect to terminate this Agreement pursuant to any provision contained herein expressly giving such party the right to terminate this Agreement, this Agreement shall forthwith terminate and have no further effect, and neither party shall have any further obligation or liability (except with respect to those provisions hereof which expressly survive any termination of this Agreement). Notwithstanding the foregoing, the termination of this Agreement pursuant to any provision hereof shall not relieve any party of any liability for a breach of any representation or warranty, or nonperformance of any covenant or obligation hereunder, and any such termination shall not be deemed to be a waiver of any available remedy for any such breach or nonperformance. Upon termination of this Agreement for any reason, Parent and Merger Sub agree to return to the Company all information (including but not limited to financial information, sales information, marketing information and operational information) provided by the Company in connection with this Agreement and the transactions contemplated herein.

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ARTICLE X

NOTICES

        Any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified, on the next business day after delivery to a nationally recognized overnight courier service, when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or five days after deposit with the United States Post Office, by registered or certified mail, postage prepaid, and addressed to the party to be notified at the address or facsimile number indicated below for such party, or at such other address as such party may designate upon written notice to the other parties (except that notice of change of address shall be deemed given upon receipt).

(a)

In the case of Parent or Merger Sub:

Merrill Communications LLC
One Merrill Circle
St. Paul, MN 55108
Attn: Steven J. Machov
Facsimile: (651) 632-1272

With a copy to:

Oppenheimer Wolff & Donnelly LLP
45 South Seventh Street
Plaza VI, Suite 3300
Minneapolis, MN 55402
Attn: Bruce A. Machmeier, Esq.
Facsimile: (612) 607-7267

(b)

In the case of the Company:

WordWave, Inc.
160 Commonwealth Ave, U-3
Boston, MA 02116
Attn: Perry L. Solomon
Facsimile: (617) 262-7718

With a copy to:

Weil, Gotshal & Manges LLP
100 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Facsimile: (617) 772-8377
Telephone: (617) 772-8300

In the case of Stockholder Representative:

Perry Solomon
c/o WordWave, Inc.
160 Commonwealth Ave, U-3
Boston, MA 02116
Facsimile: (617) 262-7718

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With a copy to:

Weil, Gotshal & Manges LLP
100 Federal Street
Boston, Massachusetts 02110
Attn: James Westra, Esq.
Facsimile: (617) 772-8377
Telephone: (617) 772-8300

ARTICLE XI

MISCELLANEOUS

        SECTION 11.01.    Expenses.    Except as otherwise provided in this Agreement, each party will bear its own expenses and costs incurred in connection with this Agreement and the transactions contemplated hereby, whether or not such transactions will be consummated. Notwithstanding the foregoing, the Stockholders shall pay at Closing (by reducing the Aggregate Merger Consideration) 50% of the first $200,000 in fees to due to Sagent Advisors Inc. for up to a maximum of $100,000, provided, however, that Parent shall pay the remaining 50% of the first $200,000 in fees and 100% of the total fees in excess of $200,000 due to Sagent Advisors Inc.

        SECTION 11.02.    Entire Agreement.    This Agreement, together with the Exhibits and Schedules annexed hereto, constitutes the entire understanding and agreement by and among the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and understandings among such parties.

        SECTION 11.03.    Amendments and Waivers.    Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only by an instrument in writing and signed by the party against whom such amendment or waiver is sought to be enforced; provided that the Stockholder Representative may amend or waive any term of this Agreement on behalf of the Stockholders pursuant to Section 11.13(b) hereof, and such amendment or waiver shall be binding and enforceable against the Stockholders.

        SECTION 11.04.    Successors and Assigns.    Merger Sub shall have the right to assign this Agreement and its rights and obligations hereunder to any direct or indirect wholly-owned subsidiary of Parent. Except as provided in the preceding sentence, neither this Agreement nor any rights hereunder may be assigned by any party without the prior written consent of the other parties. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.

        SECTION 11.05.    Governing Law.    This Agreement, including the validity hereof and the rights and obligations of the parties hereunder, and all amendments and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the domestic substantive laws of the State of New York without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction (other than those provisions set forth herein that are required to be governed by the DGCL). The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York or the Commonwealth of Massachusetts over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient

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forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

        SECTION 11.06.    Severability.    If any provisions of this Agreement as applied to any part or to any circumstance shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of such provision in any other circumstances or the validity or enforceability of this Agreement.

        SECTION 11.07.    No Third-Party Beneficiaries.    Nothing in this Agreement, express or implied, shall create or confer on any person other than the parties or their respective successors and permitted assigns, any rights, remedies, obligations or liabilities, except as expressly provided herein.

        SECTION 11.08.    Remedies.    In case any one or more of the covenants and/or agreements set forth in this Agreement shall have been breached by any party hereto, the party or parties entitled to the benefit of such covenants or agreements may, except as otherwise provided in this Agreement, proceed to protect and enforce their rights either by suit in equity and/or by action at law, including, but not limited to, an action for damages as a result of any such breach and/or an action for specific performance of any such covenant or agreement contained in this Agreement. Except as otherwise provided in this Agreement, (a) the rights, powers and remedies of the parties under this Agreement are cumulative and not exclusive of any other right, power or remedy which such parties may have under any other agreement or law and (b) no single or partial assertion or exercise of any right, power or remedy of a party hereunder shall preclude any other or further assertion or exercise thereof.

        SECTION 11.09.    Captions.    The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

        SECTION 11.10.    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

        SECTION 11.11.    Certain References.    Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. The terms "herein", "hereof" or "hereunder" or similar terms as used in this Agreement refer to this entire Agreement and not to the particular provision in which the term is used. Unless otherwise stated, all references herein to Articles, Sections, subsections or other provisions are references to Articles, Sections, subsections or other provisions of this Agreement.

        SECTION 11.12.    Guaranty by Parent.    By its signature below, Parent hereby guarantees the obligations of Merger Sub pursuant to this Agreement to be performed on or prior to the Closing Date.

        SECTION 11.13.    Stockholder Representative.

        (a)    Appointment.    Each Stockholder (other than a holder of Dissenting Shares), and each holder of Company Stock Options and Company Warrants, as the case may be, constitutes and appoints Perry Solomon (the "Stockholder Representative") to act as such Person's representative under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, with full authority to act on behalf of, and to bind, each such Person for purposes of this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, and Stockholder Representative accepts such appointment. Stockholder Representative shall have full power and authority to represent all of such holders and their successors with respect to all matters arising under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, and all actions taken by Stockholder Representative

53

hereunder and thereunder shall be binding upon all such holders and their successors as if expressly confirmed and ratified in writing by each of them. Stockholder Representative shall take any and all actions which it believes are necessary or appropriate under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, for and on behalf of such holders, as fully as if such holders were acting on their own behalf, including, without limitation, dealing with Parent, the Paying Agent under this Agreement and Escrow Agents under the Working Capital Escrow Agreement and the Indemnification Escrow Agreement with respect to all matters arising under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, taking any and all other actions specified in or contemplated by this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, and engaging counsel, accountants or other Stockholder Representatives, in connection with the foregoing matters. Without limiting the generality of the foregoing, Stockholder Representative shall have full power and authority to effect and interpret all the terms and provisions of this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement, and to consent to any amendment hereof or thereof on behalf of all such holders and their successors.

        (b)    Indemnification of Stockholder Representative.    Stockholder Representative may act upon any instrument or other writing believed by Stockholder Representative in good faith to be genuine and to be signed or presented by the proper Person and shall not be liable in connection with the performance by it of its duties pursuant to the provisions of this Agreement, the Working Capital Escrow Agreement or the Indemnification Escrow Agreement, except for its own willful default or gross negligence. Stockholder Representative shall be, and hereby is, indemnified and held harmless, jointly and severally, by each Stockholder (other than a holder of Dissenting Shares), and each holder of Company Stock Options and Company Warrants from all losses, costs and expenses (including attorneys' fees) that may be incurred by Stockholder Representative as a result of Stockholder Representative's performance of its duties under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement; provided that Stockholder Representative shall not be entitled to indemnification for losses, costs or expenses that result from any action taken or omitted by Stockholders Representative as a result of its own willful default or gross negligence.

        (c)    Reasonable Reliance.    In the performance of its duties hereunder, Stockholder Representative shall be entitled to rely upon any document or instrument reasonably believed by it to be genuine, accurate as to content and signed by any Stockholder (other than a holder of Dissenting Shares), or any holder of Company Stock Options or Company Warrants or Parent. Stockholder Representative may assume that any Person purporting to give any notice in accordance with the provisions hereof has been duly authorized to do so.

        (d)    Attorney-in-Fact.

        (A)  Stockholder Representative is hereby appointed and constituted the true and lawful attorney-in-fact of each Stockholder (other than a holder of Dissenting Shares), holder of Company Stock Options or Company Warrants with full power in their name and on their behalf to act according to the terms of this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement in the absolute discretion of Stockholder Representative; and in general to do all things and to perform all acts including, without limitation, executing and delivering the Working Capital Escrow Agreement and the Indemnification Escrow Agreement and any other agreements, certificates, receipts, instructions, notices or instruments contemplated by or deemed advisable in connection with this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement. Such appointment shall be deemed to be a power coupled with an interest.

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        (B)  This power of attorney and all authority hereby conferred is granted and shall be irrevocable, subject to replacement of Stockholder Representative pursuant to Section 11.01(e), and shall not be terminated by any act of any Stockholder (other than a holder of Dissenting Shares), or holder of Company Stock Options or Company Warrants by operation of Law, whether by such holder's death, disability, protective supervision or any other event. Without limitation to the foregoing, this power of attorney is to ensure the performance of a special obligation and, accordingly, each Stockholder (other than a holder of Dissenting Shares), and each holder of Company Stock Options and Company Warrants hereby renounces its, his or her right to renounce this power of attorney unilaterally any time before the termination or expiration of the Working Capital Escrow Agreement or Indemnification Escrow Agreement.

        (C)  Each Stockholder (other than a holder of Dissenting Shares), and holder of Company Stock Options or Company Warrants, waives any and all defenses which may be available to contest, negate or disaffirm the action of Stockholder Representative taken in good faith under the Working Capital Escrow Agreement and Indemnification Escrow Agreement.

        (e)    Successor Representatives.    Stockholder Representative shall designate one or more Persons to serve as successor Stockholder Representative in the event of its death, incapacity, bankruptcy or dissolution which Person or Persons shall in such event succeed to and become vested with all the rights, powers, privileges and duties of Stockholder Representative under this Agreement, the Working Capital Escrow Agreement and the Indemnification Escrow Agreement. Each successor Stockholder Representative shall designate one or more successors to serve as Stockholder Representative in the event of such successor Stockholder Representative's death, incapacity, bankruptcy or dissolution.

        SECTION 11.14.    Employee Benefit Matters.    For purposes of any Employee Benefit Plan maintained by Parent or the Surviving Corporation for the employees of the Surviving Corporation on and after the Closing Date, any years of eligibility service or vesting service credited to the such employees under the Company Employee Plans as of the Closing Date shall be credited under Parent's or the Surviving Corporation's Employee Benefit Plans solely for purposes of determining eligibility service or vesting service (but not for purposes of calculating any benefit accruals), except to the extent (a) the consent of a third party is required and cannot be obtained by Parent after having used reasonable commercial efforts to obtain any such consent, (b) the crediting of such prior service is not allowed under the Code, ERISA or other applicable Law, or (c) a particular employee has agreed in writing that he or she will not be credited for such prior service.

        SECTION 11.15.    Company Disclosure Schedule.    Any item, information or facts set forth in the Company Disclosure Schedule will be deemed adequate to disclose an exception to a representation and warranty made in Article III unless a reasonable person would not reasonably understand the exception taken from the item, information or facts on their face. In addition, any item, information or facts disclosed in one section or subsection of the Company Disclosure Schedule will be deemed to be disclosed in all other applicable sections or subsections of the Company Disclosure Schedule if the relevance of such disclosure is reasonably apparent on its face or such disclosure is specifically identified by cross reference or otherwise in the Company Disclosure Schedule. However, the mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or other item itself).

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        SECTION 11.16.    Defined Terms.    The following terms used in this Agreement shall have the following meanings or the meanings set forth in the corresponding Sections or subsections of this Agreement:

"Accrued Dividends" means all accrued but unpaid dividends on the Company Preferred Stock.
"Affiliate" means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through owners of voting securities, by contract or otherwise
"Aggregate Exercise Price"	2.01(d)
"Aggregate Merger Consideration"	Section 2.01(d)
"Agreement"	Heading Paragraph
"Arbitrator"	Section 2.01(h)
"Balance Sheet"	Section 3.06(a)
"Balance Sheet Date"	Section 3.06(a)
"Basket"	Section 8.04(c)
"Business"	Recitals
"Cash" means the amount of cash and Cash Equivalents that should be reflected on the balance sheet of the Company as determined in accordance with GAAP.
"Cash Equivalents" means, as of any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within six months after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within six months after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either Standard & Poor's Ratings Group or Moody's Investors Service, Inc.
"Certificate of Merger"	Section 1.02
"Certificates"	Section 2.02(b)
"Claiming Party"	Section 8.06(a)
"Closing"	Section 7.01
"Closing Consideration"	2.01(d)
"Closing Consideration Per Common Share"	2.01(d)

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"Closing Consideration Per Preferred C Share"	2.01(d)
"Closing Date"	Section 7.01
"Code" means the Internal Revenue Code of 1986, as amended.
"Company"	Heading Paragraph
"Company Capital Stock" means the Company Common Stock, the Company Preferred Stock and any other equity interest in the Company, including Company Warrants and Company Stock Options.
"Company Common Stock" means the common stock, par value $0.01 per share, of the Company.
"Company Disclosure Schedules"	Article III
"Company Documents"	Section 3.02(a)
"Company Employee Plan"	Section 3.15(a)
"Company Indebtedness"	Section 5.18
"Company Intellectual Property"	Section 3.13(b)
"Company's Knowledge" or "Knowledge of the Company" means knowledge of Perry L. Solomon, MaryAnn Collins, Scot Rosenblum, Patricia Prozzi, Kevin Reilley and Sarah Andrews.
"Company Preferred Stock" means the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock.
"Company Stock Option" means each outstanding option to purchase a share of Company Common Stock, which options pursuant to the Company's 1996 Stock Option Plan will automatically vest according to their terms immediately prior to the Effective Time.
"Company Warrant" means each outstanding option, warrant or other rights agreement, arrangement or commitment of any character to purchase shares of Company Capital Stock, other than Company Stock Options
"Confidentiality Agreement"	Section 5.04
"Contract" means any contract, indenture, note, bond, lease, commitment or other agreement, whether written or oral.
"Debt Financing"	Section 4.06
"Defending Party"	Section 8.06(a)
"DGCL" means the Delaware General Corporation Law.
"Dissenting Shares"	Section 2.03(a)
"D&O Insurance"	Section 5.10
"EBITDA of the Company"	Section 2.04(d)
"EBITDA Target"	Section 2.04(a)
"Effective Time"	Section 1.02
"Employee Benefit Plan"	Section 3.15(a)

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"Environmental Law" means any foreign, federal, state or local statute, regulation, ordinance, rule of common law or other legal requirement, as now or hereafter in effect, in any way relating to the protection of human health and safety, the environment or natural resources including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning and Community Right to Know Act (42 U.S.C. § 11011), the Hazard Communication Act (29 U.S.C. §§ 651 et seq.), the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), and the Environment Act 1995 of the United Kingdom, as each has been or may be amended and the regulations promulgated pursuant thereto.
"Environmental Permits"	Section 3.19(a)
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Affiliate"	Section 3.15(a)
"Escrow Agent" means LaSalle Bank National Association, or such other financial institution which is reasonably acceptable to Parent and Stockholder Representative and which has been appointed to act as escrow agent for the holders of Company Capital Stock, Company Warrants and Company Stock Options in connection with Indemnification Escrow Agreement and the Working Capital Escrow Agreement.
"Estimated Working Capital"	Section 2.01(h)
"Excluded Company Representations"	Section 8.01
"Final Closing Date Working Capital Statement"	Section 2.01(h)
"Final Working Capital"	Section 2.01(h)
"Financial Advisor"	Section 3.20
"Financial Statements"	Section 3.06(a)
"Financing Commitments"	Section 4.06
"GAAP" means generally accepted United States accounting principles as of the date hereof.
"General Survival Date"	Section 8.01
"Governmental Body"	Section 3.03(a)

58

"Hazardous Materials" means: (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, and transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls above regulated levels and radon gas; and (ii) any chemicals, materials or substances which are now defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," or words of similar import, under any Environmental Law; and (iii) any other chemical, material, substance or waste, exposure to which as of the date hereof is prohibited, limited or regulated by any Governmental Body.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
"IC Representatives"	Section 3.16(n)
"ICTA"	Section 3.09(g)
"Indebtedness" of any Person means, without duplication, (i) the principal of, accrued interest of, premium (if any) in respect of and prepayment and other penalties, charges, expenses and fees associated with (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; (ii) all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding trade accounts payable and other accrued current liabilities arising in the Ordinary Course of Business); (iii) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction; (iv) all obligations of the type referred to in clauses (i) through (iii) of other Persons for the payment of which such Person is responsible or liable, directly or indirectly, as obligor, guarantor, surety or otherwise, including guarantees of such obligations; and (v) all obligations of the type referred to in clauses (i) through (iv) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person).
"Indemnification Escrow Agreement"	Section 8.04(a)
"Indemnification Escrow Amount"	Section 8.04(a)
"Information Statement"	Section 3.25
"Intellectual Property"	Section 3.13(a)
"Interested Party"	Section 3.22
"IRS" means the Internal Revenue Service.
"Labor Laws"	Section 3.16(g)
"Law" means any federal, state, local or foreign law (including common law), statute, code, ordinance, rule, regulation or other requirement.

59

"Letter of Transmittal"	Section 2.02(b)
"Liability" means any debt, liability or obligation (whether direct or indirect, known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to become due) and including all costs and expenses relating thereto. "Liens" means any lien, encumbrance, security interest, charge, pledge, mortgage, deed of trust, claim, lease, option, right of first refusal, easement, servitude or transfer restriction, except for (a) liens for current Taxes not yet due and payable or for Taxes the validity of which is being contested in good faith and which are scheduled on the Company Disclosure Schedule, and (b) liens to secure indebtedness reflected on the Company Balance Sheet or indebtedness incurred in the Ordinary Course of business after the date thereof.
"Losses"	Section 8.02
"Material Adverse Effect" means an event, change or occurrence which, individually or together with any other event, change or occurrence, has or is reasonably likely to have a (i) a material adverse effect on the business, assets, properties, results of operations or financial condition of the Company and Subsidiaries taken as a whole or (ii) a material adverse effect on the ability of the Company to consummate the transactions contemplated by this Agreement, in either case other than an effect resulting from an Excluded Matter. For purposes hereof, "Excluded Matter" means any one or more of the following: (i) the effect of any change in the United States or foreign economies (which change does not disproportionately affect the Company in any material respect); (ii) the effect of any change that generally affects the litigation support, digital recording and transcription and captioning services industries (which change does not disproportionately affect the Company in any material respect); (iii) effect of any change arising in connection with earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or worsening of any such hostilities, acts of war, sabotage or terrorism or military actions existing or underway as of the date hereof; provided that the Company's operations are not directly and adversely affected by such action or occurrence; (iv) the effect of any action taken by Parent or Merger Sub with respect to the transactions contemplated hereby or with respect to the Company which is in contravention of the terms or provisions of this Agreement; (v) any effect resulting from the public announcement of this Agreement.
"Material Contracts"	Section 3.14(a)
"Maximum Premium"	Section 5.10
"Merger"	Section 1.01
"Merger Consideration"	Section 2.01(d)
"Merger Consideration Per Common Share"	Section 2.01(d)
"Merger Sub"	Heading Paragraph
"Merrill Options"	Section 4.07

60

"Mini-Basket"	Section 8.04(c)
"Net Indebtedness for Borrowed Money" means any Indebtedness of the Company, less Cash.
"Non-Trade Liabilities" means (without duplication): (a) all liabilities of the Company that would appear as liabilities on a balance sheet prepared in accordance with GAAP; (b) liabilities associated with unfunded pensions; and (c) all amounts due or to become due by the Company in connection with or by reason of the transactions contemplated by this Agreement, but shall not include Indebtedness, any current liabilities, any tax liabilities, any liabilities for the payment of severance or similar benefits to employees of the Company or the Subsidiaries in connection with or by reason of the transactions contemplated by this Agreement or any other liabilities that have been included in the determination of Working Capital.
"Optionholders"	Section 2.01(e)
"Options Acknowledgment"	Section 2.02(b)
"Order" means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award.
"Ordinary Course of Business" means the ordinary and usual course of business of the Company consistent with past practices.
"OSHA" means the Occupational Safety and Health Administration.
"Outstanding Shares" means, after the Effective Time, (a) shares of Company Capital Stock outstanding immediately prior to the Effective Time and (b) shares of Company Common Stock issuable upon exercise of Company Stock Options and Company Warrants outstanding immediately prior to the Effective Time (whether or not vested) with an exercise price greater than the Closing Consideration Per Common Share.
"Parent"	Heading Paragraph
"Parent Indemnitees"	Section 8.02
"Parent Material Adverse Effect" means an event, change or occurrence which, individually or together with any other event, change or occurrence, has or is reasonably likely to have a material adverse effect on the ability of Parent and Merger Sub to consummate the transactions contemplated by this Agreement.
"Parent Working Capital Statement"	Section 2.01(h)
"Paying Agent" means LaSalle Bank National Association, or such other financial institution which is reasonably acceptable to Parent and Stockholder Representative and which has been appointed to act as agent for the holders of Company Capital Stock in connection with the Merger and to receive the funds to which such holders shall become entitled pursuant to Article II.
"Paying Agent Agreement" means the Paying Agent Agreement in the form attached as Exhibit E.

61

"Pension Plan"	Section 3.15(a)
"Permit" means any approvals, authorizations, consents, licenses, permits or certificates.
"Person" means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity
"Personal Property Lease"	Section 3.11
"Preferred Payment Amount"	Section 2.01(d)
"Prior Acquisition"	Section 3.27(a)
"Proportional Amount" for each Stockholder, means a ratio, the numerator of which is the number of Outstanding Shares held by such Stockholder and the denominator of which is the total number of Outstanding Shares.
"Real Property Leases"	Section 3.10
"Requisite Stockholder Consent"	Section 3.02(c)
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Stock" means the Series A preferred stock, $0.01 par value per share, of the Company.
"Series B Preferred Stock" means the Series B preferred stock, $0.01 par value per share, of the Company.
"Series C Preferred Stock" means the Series C preferred stock, $0.01 par value per share, of the Company.
"Significant Customer"	Section 3.24
"Special Representations"	Section 8.01
"Stockholder" means the holders of the Company Capital Stock immediately before the Effective Time, as listed in Company Disclosure Schedule 3.04, and at and after the Effective Time, shall include the holders of Company Stock Options and Company Warrants immediately prior to the Effective Time that were converted into the right to receive cash pursuant to Section 2.01(e) or (f).
"Stockholder Representative"	Section 11.13(a)
"Stockholder Representative Expense Amount"	Section 2.01(i)
"Stock Plans" means all plans of the Company under which the Company Stock Options were issued and any other Company sponsored plan providing for the issuance, transfer or grant of any capital stock of the Company or any interest therein, including any stock appreciation rights or stock-based performance units.
"Straddle Period"	Section 5.14(e)
"Subsidiaries"	Section 3.05(a)
"Surrender and Cancellation Agreement"	Section 2.02(b)
"Surviving Corporation"	Section 1.01

62

"Target Working Capital"	Section 2.01(h)
"Tax Benefit"	Section 8.10
"Taxes" means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, national insurance contributions, PAYE, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i), including without limitation any penalties for failing to report any "reportable transactions" required by Section 6011 of the Code or similar provision of state law, and (iii) any Liability of the Company or the Subsidiaries for the Taxes of any other person under U.S. Treasury Regulations Section 1.1502-6 (or similar provisions of state, local or foreign law), as a transferee or successor by contract or otherwise.
"Tax Return" means all returns, declarations, reports, estimates, forms, information returns, schedules, notices and statements or other document or information required to be filed with or submitted to any Governmental Body in connection with the determination, assessment, collection or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any legal requirement relating to any Tax.
"Third Party Claims"	Section 8.06(a)
"Third Party Intellectual Property"	Section 3.13(b)
"Transaction Expenses" means (i) all amounts due to lawyers, accountants and other professional service providers engaged by the Company or the Stockholders, (ii) the amounts which the Company or the Stockholders may be obligated to pay to Financial Advisor or any other broker, finder or investment banker in connection with, and conditioned upon, the consummation of the transactions contemplated herein, including without limitation $100,000 in fees due to Sagent Advisors, Inc. for which the Stockholders are responsible, as set forth in Section 11.01, and (iii) all fees and charges, including LIBOR breakage costs, related to prepayment of the Company's Indebtedness determined based on the prepayment thereof as of the Closing, all of which items (i) through (iii) shall be considered to be Transaction Expenses to the extent such expenses are incurred for services provided prior to and through the Closing, whether due or to become due by the Company in connection with or by reason of the transactions contemplated by this Agreement, whether or not accrual of such expenses is required by GAAP or otherwise, and shall be included in Working Capital at Closing (to the extent not paid).

63

"Transaction Tax Benefits" means any federal, state and local income tax benefits attributable to deductions or expenses incurred by the Company or any of its Subsidiaries and that will be realized on the Company's final Tax Return, as a result of or in connection with the transactions contemplated by this Agreement (including, without limitation, deductions related to the cash-out, exercise or cancellation of any options, to holders of Company Stock Options pursuant to Section 2.01(e) hereof and the payment of any fees or other costs and expenses associated with the transaction contemplated hereby) and any write-off of expenses incurred in connection with Net Indebtedness for Borrowed Money paid off on the Closing Date.
"Transfer Taxes" means any real property transfer, sales, use, value added, stamp, documentary, recording, registration, conveyance, stock transfer, intangible property transfer, personal property transfer, gross receipts, registration, duty, securities transactions or similar fees or Taxes or governmental charges (together with any interest or penalty, addition to Tax or additional amount imposed) as levied by any Governmental Body in connection with the transactions contemplated by this Agreement, including, without limitation, any payments made in lieu of any such Taxes or governmental charges, which become payable in connection with the transactions contemplated by this Agreement.
"Working Capital"	Section 2.01(h)
"Working Capital Escrow Agreement"	Section 2.01(g)
"Working Capital Escrow Amount"	Section 2.01(g)

        SECTION 11.17.    Interpretation.    This Agreement shall be construed reasonably to carry out its intent without presumption against or in favor of either party.

[SIGNATURES ON FOLLOWING PAGE]

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

MERGER SUB:
CAPTURE MERGER CORP.
By:	/s/  STEVEN J. MACHOV Name: Steve Machov Title: Secretary
PARENT:
MERRILL COMMUNICATIONS LLC
By:	/s/  RICK ATTERBURY Name: Rick Atterbury Title: President and Chief Operating Officer
COMPANY:
WORDWAVE, INC.
By:	/s/  PERRY SOLOMON Name: Perry Solomon Title: CEO
STOCKHOLDER REPRESENTATIVE:
By:	/s/  PERRY SOLOMON Name:

[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]

65

EXHIBIT A

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
WORDWAVE, INC.

        WordWave, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify as follows:

        FIRST: WordWave, Inc. (formerly known as HCP Acquisition Co., Inc.) originally filed its Certificate of Incorporation of the corporation with the Secretary of State of the State of Delaware on December 21, 1995. The original name of the corporation was "HCP Acquisition Co., Inc."

        SECOND: This Amended and Restated Certificate of Incorporation was duly adopted by and in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code.

        THIRD: This Amended and Restated Certificate of Incorporation not only restates and integrates, but also amends the provisions of the corporation's Certificate of Incorporation.

        FOURTH: All amendments reflected in this Amended and Restated Certificate of Incorporation have been duly proposed by the Board of Directors of the corporation and adopted by the sole stockholder of the corporation in the manner and by the vote prescribed by Section 242 of the General Corporation Law of the State of Delaware.

        FIFTH: The text of the Certificate of Incorporation of the corporation is hereby amended and restated to read in its entirety as follows:

ARTICLE I

        The name of this corporation is WordWave, Inc. (the "Company").

ARTICLE II

        The address of its registered office in the State of Delaware is 615 South Dupont Highway, Dover, Delaware 19901 in the County of Kent. The name of its registered agent at such address is National Corporate Research, Ltd.

ARTICLE III

        The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE IV

        The total number of shares of capital stock that the Company shall have authority to issue is [One Hundred (100)] shares of Common Stock, $0.01 par value.

ARTICLE V

        Any action required or permitted to be taken at any annual or special meeting of stockholders of the Company may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Company by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Company having custody of the book in which proceedings of meetings of stockholders are recorded.

ARTICLE VI

        In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the Company, subject to the power of the stockholders of the Company to alter or repeal any bylaw whether adopted by them or otherwise.

ARTICLE VII

        The Company shall indemnify, to the fullest extent authorized or permitted by law, as the same exists or may hereafter be amended, any person who was or is made or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that such person is or was a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of any other Company, partnership, joint venture, trust, employee benefit plan or other enterprise; provided, however, that the Company shall not indemnify any director or officer in connection with any action by such director or officer against the Company unless the Company shall have consented to such action. The Company may, to the extent authorized from time to time by the Board, provide rights to indemnification to employees and agents of the Company similar to those conferred in this Article VII to directors and officers of the Company. No amendment or repeal of this Article VII shall apply to or have any effect on any right to indemnification provided hereunder with respect to any acts or omission occurring prior to such amendment or repeal.

ARTICLE VIII.

        No director of the Company shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty by such a director as a director, except to the extent provided by applicable law (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which such director derived an improper personal benefit. If the General Corporation Law of Delaware is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware as so amended. No amendment to or repeal of this Article VIII shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ARTICLE IX

        The Company reserves the right to amend, alter, change or repeal any provisions contained in this Certificate of Incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE X

        Elections of directors need not be by written ballot unless the bylaws of the Company shall so provide.

2

        IN WITNESS WHEREOF, the Company has caused this Amended and Restated Certificate of Incorporation to be executed this    day of December, 2005, in its name by and on its behalf by its                        pursuant to Section 103 of the General Corporation Law of the State of Delaware.

Name:

Title:

3

EXHIBIT B

WORKING CAPITAL ESCROW AGREEMENT

        This Working Capital Escrow Agreement (the "Escrow Agreement") dated as of                        , 2005 (the "Effective Date") by and among Merrill Communications LLC, a Delaware limited liability company ("Parent"), Perry Solomon (the "Stockholder Representative") and LaSalle Bank National Association, as escrow agent hereunder (the "Escrow Agent").

WHEREAS, Parent, WordWave, Inc., a Delaware corporation (the "Company"), Capture Merger Corp., a Delaware corporation, and Stockholder Representative have entered into that certain Agreement and Plan of Merger, dated as of November     , 2005 (the "Merger Agreement" and capitalized terms used herein and not otherwise defined in this Escrow Agreement shall have the meaning ascribed to them in the Merger Agreement); and

WHEREAS, the Closing under the Merger Agreement is occurring on the date hereof; and

WHEREAS, Section 2.01(g) of the Merger Agreement provides for the deposit into escrow of a portion of the Aggregate Merger Consideration as a non-exclusive source of funds to secure the obligations of the Stockholders to Parent under the Working Capital adjustment provisions set forth in Section 2.01(h) of the Merger Agreement, and the parties desire for such deposit to be subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.    Appointment. Parent and the Stockholder Representative (on behalf of the Stockholders) each hereby appoints the Escrow Agent as the escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

2.    Working Capital Escrow Fund. Simultaneous with or immediately after the execution and delivery of this Escrow Agreement, Parent is depositing with the Escrow Agent Three Hundred Thousand Dollars ($300,000) (the "Escrow Deposit"). The Escrow Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit and the proceeds thereof (collectively, the "Working Capital Escrow Fund") as directed in Section 3.

3.     Investment of Working Capital Escrow Fund; Reports and Records.

(a)

During the term of this Escrow Agreement, the Working Capital Escrow Fund shall be invested and reinvested by the Escrow Agent in the Federated Treasury Obligations Fund (Trust Shares) or, as directed in writing signed by both Parent and the Stockholder Representative, other investments of the types listed on Schedule 1 attached hereto. All investment orders involving U.S. Treasury obligations, commercial paper and other direct investments may be executed through broker-dealers selected by the Escrow Agent. The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated on Schedule 1 or any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Working Capital Escrow Fund.



(b)

Each month during the term of this Escrow Agreement, the Escrow Agreement will prepare and send to Parent and the Stockholder Representative a report describing in detail: (i) a summary of receipts and disbursements from the Working Capital Escrow Fund and (ii) a summary of the Escrow Agent's fees and expenses and legal fees and expenses. The Escrow Agent will maintain complete and accurate records concerning all receipts and distributions to and from the Working Capital Escrow Fund.

4.     Disposition and Termination.

(a)

The Working Capital Escrow Fund shall secure obligations with respect to amounts payable by the Stockholders to Parent pursuant to the Working Capital adjustment provisions set forth in Section 2.01(h) of the Merger Agreement. Parent and the Stockholder Representative agree and acknowledge that the Working Capital Escrow Fund is a non-exclusive source of funds to secure the Stockholders' obligations under the Working Capital adjustment provisions set forth in Section 2.01(h) of the Merger Agreement and that Parent may pursue other means to obtain such payment if the Working Capital Escrow Fund is exhausted, including, without limitation, exercising its rights under Article VIII of the Merger Agreement. Within five (5) days following the determination of the Final Closing Date Working Capital in accordance with Section 2.01(h) of the Merger Agreement, Parent and Stockholder Representative shall deliver joint written instructions to the Escrow Agent specifying the payments required to be made to Parent and/or the Stockholders from the Working Capital Escrow Fund pursuant to Section 2.01(h) of the Merger Agreement. The Escrow Agent shall make such payments from the Working Capital Escrow Fund within five (5) days following receipt by the Escrow Agent of such joint written instructions. All disbursements from the Working Capital Escrow Fund shall be made by wire transfer of cash in immediately available funds to the person entitled thereto, provided that the Escrow Agent has been provided written wiring instructions for such person.



(b)

The escrow provided for hereunder shall terminate upon the disbursement of the aggregate amount of the Working Capital Escrow Fund pursuant to the terms of this Escrow Agreement.



(c)

All amounts distributed to the Stockholders will be distributed by the Escrow Agent in their respective Proportional Amounts in accordance with the Merger Agreement. In order to facilitate payments to Stockholders, attached hereto as Schedule 2 is a list of the Stockholders and their respective Proportional Amount. Stockholder Representative will provide addresses and wire instructions to the Escrow Agent prior to the release of funds pursuant to Section 4(a) above.



(d)

To the extent any portion of the Working Capital Escrow Fund has not been disbursed to the Stockholders pursuant to subsection (b) above within one (1) year following the date of this Escrow Agreement, the Escrow Agent will promptly deliver any such portion of the Working Capital Escrow Fund to the Parent, and thereafter the Stockholders shall be entitled to look to Parent only as general creditors thereof with respect to any portion of the consideration payable upon due surrender of their Certificates or Company Warrants, without interest.

5.    Escrow Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement, including without limitation, the Merger Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments, which may be due it or the Working Capital Escrow Fund. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction or arbitrator determines that the Escrow Agent's bad faith, gross negligence or willful misconduct was the primary cause of any loss to Parent, the Stockholders or the Stockholder Representative. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The

2

Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its reasonable opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction (with respect to which the time for filing an appeal or request for reconsideration has lapsed). Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

6.    Succession. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving thirty (30) days' advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect. The Escrow Agent may be removed by the mutual consent of Parent and the Stockholder Representative upon thirty (30) days' prior written notice to the Escrow Agent. No resignation or removal of the Escrow Agent and no appointment of a successor escrow agent, however, shall be effective until the acceptance of appointment by the successor escrow agent in the manner herein provided. In the event of the resignation or removal of the Escrow Agent, Parent and the Stockholder Representative shall agree upon a successor escrow agent. Any successor escrow agent, whether appointed by the mutual agreement of Parent and the Stockholder Representative or otherwise, shall execute and deliver to the Parent and the Stockholder Representative an instrument accepting such appointment and thereupon such successor escrow agent shall, without further act, become vested with all rights, powers and duties of the predecessor escrow agent as if originally named as Escrow Agent. If Parent and the Stockholder Representative are unable to agree upon a successor escrow agent, the Escrow Agent shall be entitled to apply to a court of competent jurisdiction for the appointment of a successor. If the Escrow Agent either resigns or receives a written notice signed by Parent and the Stockholder Representative stating that they have selected another escrow agent, any portion of the Working Capital Escrow Fund invested by the Escrow Agent shall be promptly liquidated, and the Escrow Agent shall deliver the Working Capital Escrow Fund to the successor escrow agent named in the aforesaid notice within ten (10) days of its receipt of such notice. Upon the resignation or removal of the Escrow Agent pursuant to this Section 6, the Escrow Agent shall have the right to withhold an amount equal to any amount then due and owing to the Escrow Agent pursuant to Section 7 hereof. The rights of the Escrow Agent and the obligations of the other parties hereto under Sections 7 and 8 hereof shall survive the resignation or removal of the Escrow Agent.

7.    Fees. Parent shall (a) pay the Escrow Agent upon execution of this Escrow Agreement and from time to time thereafter reasonable compensation for the services to be rendered hereunder, which (unless otherwise agreed in writing) shall be as described in Schedule 1, and (b) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances (including reasonable attorney's fees and expenses) reasonably incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination of this Escrow Agreement. All fees pursuant to this Section 7 shall be borne by Parent and shall be invoiced by the Escrow Agent. Parent shall be liable to the Stockholders for any amounts in the Working Capital Escrow Fund withheld by the Escrow Agent that relate to fees or expenses payable by Parent on account hereof.

8.    Indemnity. Parent and the Stockholders shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (collectively the "indemnitees" and each individually, an "indemnitee") from all loss, liability or expense (including the fees and expenses of in house or outside counsel) arising out of or in connection with (i) the Escrow

3

Agent's execution and performance of this Escrow Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the gross negligence or willful misconduct of such indemnitee, or (ii) its following any instructions or other directions from Parent or the Stockholder Representative, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The parties hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Escrow Agreement. The parties hereby grant the Escrow Agent a lien on, right of set-off against and security interest in the Working Capital Escrow Fund for the payment of any claim for indemnification, compensation, expenses and amounts due hereunder. Without affecting their joint and several indemnification liability to the Escrow Agent under this Section 8, Parent and the Stockholder Representative agree as among Parent and the Stockholders, that any such indemnification liability shall be allocated among them on a fair and equitable basis reflecting the merits of their respective positions and the responsibility of each of them for the controversy or other circumstance with respect to which indemnification is required.

9.    TINs. Parent represents that its correct Taxpayer Identification Number ("TIN") assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1. All interest or other income earned under the Escrow Agreement shall be allocated and/or paid as directed in a joint written direction of Parent and the Stockholder Representative and reported by the recipient to the Internal Revenue Service or any other taxing authority. Notwithstanding such written directions, the Escrow Agent shall report and, as required, pay or withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution. In the absence of timely direction, all proceeds of the Working Capital Escrow Fund shall be retained in the Working Capital Escrow Fund and reinvested from time to time by the Escrow Agent as provided in Section 3. In the event that any earnings remain undistributed at the end of any calendar year, the Escrow Agent shall report to the Internal Revenue Service or such other authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by Parent and the Stockholder Representative and shall pay from the Working Capital Escrow Fund any federal, state or local income taxes that it is reasonably required to pay to the appropriate authorities.

10.    Notices. All communications hereunder shall be in writing and shall be deemed to be duly given and received:

(a)

upon delivery if delivered personally or upon confirmed transmittal if by facsimile;



(b)

the next Business Day (as hereinafter defined) if sent by overnight courier; or



(c)

four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address set forth on Schedule 1 or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested;

and addressed to the party to be notified at the address or facsimile number indicated below for such in Schedule 1.

Notwithstanding the foregoing, in the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate. For purposes of this Section 10, "Business Day" shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

11.    Miscellaneous. The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto. Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties. Notwithstanding the foregoing, (a) Parent

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may assign its rights and obligations hereunder, in whole or in part, to the Company or any of its other affiliates without the consent of the Stockholder Representative or the Escrow Agent, (b) Parent may assign any or all of its rights, but not its obligations, hereunder to any of its lenders as collateral security without the consent of the Stockholder Representative or the Escrow Agent, and (c) any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act. Notwithstanding the foregoing, the Stockholder Representative may assign its rights and obligations to a successor Stockholder Representative appointed pursuant to the Merger Agreement. This Escrow Agreement, including the validity hereof and the rights and obligations of the parties hereunder, and all amendments and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the domestic substantive laws of the State of New York without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York or the Commonwealth of Massachusetts over any dispute arising out of or relating to this Escrow Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. In the event that any part of this Escrow Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, such provision shall survive to the extent it is not so declared, and all of the other provisions of this Escrow Agreement shall remain in full force and effect. No party to this Escrow Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, floods, strikes, terrorism, equipment or transmission failure, or other causes reasonably beyond its control. This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures on this Escrow Agreement shall be deemed original signatures.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the Effective Date.

LaSalle Bank National Association,
as Escrow Agent

By:

Name:

Title:

Merrill Communications LLC

By:

Name:

Title:

Stockholder Representative

Perry Solomon

[Signature Page to the Escrow Agreement]

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Schedule 1

Name of Parent:	Merrill Communications LLC
Notice Address:	One Merrill Circle St. Paul, MN 55108 Attn: Steven J. Machov Fax: (651) 632-1272
Parent TIN:	[                        ]
Name of Stockholder Representative and Notice Address:
	Perry Solomon c/o WordWave, Inc. 160 Commonwealth Ave, U-3 Boston, MA 02116
Name of Company:	WordWave, Inc. 160 Commonwealth Ave, U-3 Boston, MA 02116 Attn: Perry L. Solomon Facsimile: (617) 262-7718
Investment:	Money Market Funds in which the Escrow Agent is capable of investing on an automated basis.
	U.S. Treasury obligations and other obligations backed by the full faith and credit of the United States Government.
Escrow Agent's Address:	LaSalle Bank National Association Corporate Trust Department 135 South LaSalle Street, Suite 1960 Chicago, IL 60603 Attn: Anthony Veloz Phone: (312) 904-6841 Fax:      (312) 904-2236

Schedule 1

Escrow Agent's compensation:

ESCROW AGENT
SCHEDULE OF FEES

Acceptance Fee:	$   500.00*
Annual Administration Fee:	$2,500.00*
Wire Transfers	$   20.00 each
Check Preparation and Mailing	$   25.00 each
1099 Preparation and Reporting	$      5.00 each ($250 annual minimum if any 1099 reports required for account)

        The Acceptance and first year's Annual Administration Fees are due upon execution of the Escrow Agreement.

*Should the Escrow Account remain open for less than a full year after an initial twelve month period, the Annual Administration Fee will be prorated on a six-month basis.

Any investment transaction not in a money market fund or a LaSalle Enhanced Liquidity Management account will incur a $150.00 per transaction fee. The parties to the agreement understand and agree that the Escrow Agent may receive certain revenue on certain mutual fund investments. These revenues take one of two forms:

Shareholder Servicing Payments:    Escrow Agent may receive Shareholder Servicing Payments as compensation for providing certain services for the benefit of the Money Market Fund Company. Shareholder Services typically provided by LaSalle include the maintenance of shareholder ownership records, distributing prospectuses and other shareholder information materials to investors and handling proxy-voting materials. Typically Shareholder Servicing payments are paid under a Money Market Fund's 12b-1 distribution plan and impact the investment performance of the Fund by the amount of the fee. The shareholder servicing fee payable from any money market fund is detailed in the Fund's prospectus that will be provided to you.

Revenue Sharing Payments:    Escrow Agent may receive revenue sharing payments from a Money Market Fund Company. These payments represent a reallocation to Escrow Agent of a portion of the compensation payable to the fund company in connection with your account's money market fund investment. Revenue Sharing payments constitute a form of fee sharing between the fund company and Escrow Agent and do not, as a general rule, result in any additional charge or expense in connection with a money market fund investment, are not paid under a 12b-1 plan, and do not impact the investment performance of the Fund. The amount of any revenue share, if any, payable to Escrow Agent with respect to your account's investments is available upon request.

        All out-of-pocket expenses will be billed at the Escrow Agent's cost. Out-of-pocket expenses include, but are not limited to, professional services (e.g. legal or accounting), travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), and copying charges.

Schedule 2

[Weil, Gotshal & Manges LLP letterhead]

EXHIBIT C—FORM OF WGM LEGAL OPINION

            , 2005

Merrill Communications LLC
One Merrill Circle
St. Paul, MN 55108

Ladies and Gentlemen:

        We have acted as counsel to WordWave, Inc. (the "Company") in connection with the preparation, authorization, execution and delivery, and consummation of the transactions contemplated by the Agreement and Plan of Merger dated as of November 18, 2005 by and among the Company, Merrill Communications LLC, Capture Merger Corp., and Perry Solomon as Stockholder Representative (the "Agreement"). Capitalized terms defined in the Agreement and used (but not otherwise defined) herein are used herein as so defined.

        In so acting, we have examined originals or copies (certified or otherwise identified to our satisfaction) of the Agreement and such corporate records, agreements, documents and other instruments, and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such inquiries of such officers and representatives, as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth.

        In such examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. As to all questions of fact material to these opinions that have not been independently established, we have relied upon certificates or comparable documents of officers and representatives of the Company and upon the representations and warranties of the Company contained in the Agreement. As used herein, "to our knowledge" and "of which we are aware" mean the conscious awareness of facts or other information by any lawyer in our firm actively involved in the transactions contemplated by the Agreement.

        Based on the foregoing, and subject to the qualifications stated herein, we are of the opinion that:

        1.     The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

        2.     The authorized capital stock of the Company consists of 20,000,000 shares of common stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per share, divided into 2,916,666 shares of Series A Preferred Stock, 1,818,182 shares of Series B Preferred Stock, and 903,517 Series C Preferred Stock. As of November 18, 2005, there were 5,612,759 shares of common stock, 2,897,107 shares of Series A Preferred Stock, 1,818,182 shares of Series B Preferred Stock and 829,230 shares of Series C Preferred Stock issued and outstanding. All of such outstanding shares are duly authorized, validly issued, fully paid and nonassessable, with no personal liability attaching to the ownership thereof and have not been issued in violation of any preemptive rights pursuant to law or in the Company's Certificate of Incorporation. To our knowledge, there are no outstanding securities of the Company convertible into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company, there are no outstanding or authorized options, warrants, calls, subscriptions, rights, commitments or any other instruments or agreements of any character obligating the Company to issue any shares of its capital stock or any securities convertible into or evidencing the right to purchase or subscribe for any shares of such stock, and there are no agreements or understandings with respect to the voting, sale or transfer of any shares of capital stock of the Company to which the Company is a party except as provided in Section 3.04 of the Company Disclosure Schedule.

        3.     The Company has all requisite corporate power and authority to execute and deliver the Agreement and to perform its obligations thereunder. The execution, delivery and performance of the Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. The Agreement has been duly and validly executed and delivered by the Company and (assuming the due authorization, execution and delivery thereof by the other parties thereto) constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that (i) rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto and (ii) no opinion is expressed with respect to non-competition provisions.

        4.     The execution and delivery by the Company of the Agreement and the performance by the Company of its obligations thereunder will not conflict with, constitute a default under or violate (i) any of the terms, conditions or provisions of the Certificate of Incorporation or by-laws of the Company, (ii) any of the terms, conditions or provisions of any document, agreement or other instrument listed on Schedule A hereto, (iii) Delaware corporate, New York, or federal law or regulation (other than federal and state securities or blue sky laws, as to which we express no opinion in this paragraph), or (iv) any judgment, writ, injunction, decree, order or ruling of any court or governmental authority binding on the Company of which we are aware.

        5.     No consent, approval, waiver, license or authorization or other action by or filing with any Delaware corporate, New York, or federal governmental authority is required in connection with the execution and delivery by the Company of the Agreement, the consummation by the Company of the transactions contemplated thereby or the performance by the Company of its obligations thereunder, except for the filing with the appropriate authorities of the Certificate of Merger and those already obtained, such as the grant of early termination under the HSR Act.

        6.     Except as set forth in Section 3.17 of the Company Disclosure Schedule, to our knowledge, there is no litigation, proceeding or governmental investigation pending or overtly threatened against the Company that relates to any of the transactions contemplated by the Agreement.

        The opinions expressed herein are limited to the laws of the State of New York, the corporate laws of the State of Delaware, and the federal laws of the United States, and we express no opinion as to the effect of the laws of any other jurisdiction on the matters covered by this letter.

        The opinions expressed herein are rendered solely for your benefit in connection with the transactions described herein. Those opinions may not be used or relied upon by any other person, nor may this letter or any copies hereof be furnished to a third party, filed with a governmental agency, quoted, cited or otherwise referred to without our prior written consent

Very truly yours,

Schedule A

[To include contracts from Section 3.14 of the Company Disclosure Schedule]

EXHIBIT D

INDEMNIFICATION ESCROW AGREEMENT

        This Indemnification Escrow Agreement (the "Escrow Agreement") dated as of January 3, 2006 (the "Effective Date") by and among Merrill Communications LLC, a Delaware limited liability company ("Parent"), Perry Solomon (the "Stockholder Representative") and LaSalle Bank National Association, as escrow agent hereunder (the "Escrow Agent").

WHEREAS, Parent, WordWave, Inc., a Delaware corporation (the "Company"), Capture Merger Corp., a Delaware corporation, and the Stockholder Representative have entered into that certain Agreement and Plan of Merger, dated as of November 18, 2005 (the "Merger Agreement" and capitalized terms used herein and not otherwise defined in this Escrow Agreement shall have the meaning ascribed to them in the Merger Agreement); and

WHEREAS, the Closing under the Merger Agreement is occurring on the date hereof; and

WHEREAS, Section 2.02(a)(ii) of the Merger Agreement provides for the deposit into escrow of a portion of the Aggregate Merger Consideration as a source of funds to secure the obligations of the Stockholders to Parent under the indemnification provisions set forth in Article VIII of the Merger Agreement, and the parties desire for such deposit to be subject to the terms and conditions set forth herein.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

1.    Appointment. Parent and the Stockholder Representative (on behalf of the Stockholders) each hereby appoints the Escrow Agent as the escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

2.    Escrow Fund. Simultaneous with or immediately after the execution and delivery of this Escrow Agreement, Parent is depositing with the Escrow Agent Eight Million Dollars ($8,000,000) (the "Escrow Deposit"). The Escrow Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit and the proceeds thereof (collectively, the "Escrow Fund") as directed in Section 3.

3.     Investment of Escrow Fund; Reports and Records.

(a)

During the term of this Escrow Agreement, the Escrow Fund shall be invested and reinvested by the Escrow Agent in the Federated Treasury Obligations Fund (Trust Shares) or, as directed in a writing signed by both Parent and the Stockholder Representative, other investments of the types listed on Schedule 1 attached hereto. All investment orders involving U.S. Treasury obligations, commercial paper and other direct investments may be executed through broker-dealers selected by the Escrow Agent. The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Escrow Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated on Schedule 1 or any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund.



(b)

Each month during the term of this Escrow Agreement, the Escrow Agent will prepare and send to Parent and the Stockholder Representative a report describing in detail: (i) a summary of receipts and disbursements from the Escrow Fund and (ii) a summary of the Escrow Agent's fees and expenses and legal fees and expenses. The Escrow Agent will maintain complete and accurate records concerning all receipts and distributions to and from the Escrow Fund.

4.     Disposition and Termination.

(a)

The Escrow Fund shall secure obligations with respect to amounts payable by the Stockholders to any of the Parent Indemnitees pursuant to the indemnification provisions set forth in Article VIII of the Merger Agreement. Claims by any of the Parent Indemnitees for payment out of the Escrow Fund based on the Stockholders' obligations under the indemnification provisions set forth in Article VIII of the Merger Agreement shall hereinafter be referred to, individually, as an "Escrow Claim" and, collectively, as "Escrow Claims." This Escrow Agreement shall not change or modify in any way the events or circumstances which give rise to the obligation of the Stockholders to make any payments pursuant to the Merger Agreement, but shall provide Parent Indemnitees security therefor. The Escrow Agent shall disburse the amounts from time-to-time on deposit in the Escrow Fund as follows:



(i)

If any of the Parent Indemnitees desires to make an Escrow Claim, Parent shall deliver to the Escrow Agent and to the Stockholder Representative a notice setting forth such Escrow Claim, which notice shall state in reasonable detail the basis for and dollar amount of the claim in accordance with the terms of the Merger Agreement (the "Notice of Claim"). If the Stockholder Representative desires to dispute such Escrow Claim or any part thereof, the Stockholder Representative shall deliver to the Escrow Agent and Parent a written notice (the "Rebuttal Notice") setting forth in reasonable detail the basis for the dispute of such claim and the portion of such claim (if less than all) which is the subject of the Rebuttal Notice. Stockholder Representative agrees not to object to a Notice of Claim unless the Stockholder Representative in good faith believes that all or a portion (as the case may be) of such claim is not payable to Parent pursuant to the Merger Agreement.



(ii)

If, upon the expiration of thirty (30) days after the Notice of Claim has been delivered to the Escrow Agent, the Escrow Agent shall not have received a Rebuttal Notice from the Stockholder Representative, then the Escrow Agent shall distribute to Parent, out of the Escrow Fund, the dollar amount of the Escrow Claim provided for in the Notice of Claim, and the Stockholders and Escrow Agent shall have no further liabilities with respect to the funds so delivered. If, prior to the expiration of such thirty (30) day period, the Escrow Agent shall receive a Rebuttal Notice from the Stockholder Representative, the Escrow Agent shall refrain from distributing to Parent any Escrow Funds that are the subject of the Rebuttal Notice until the Escrow Agent receives either (A) a writing executed by Parent and the Stockholder Representative authorizing the release to Parent of the Escrow Funds that are the subject of the Rebuttal Notice or (B) a final, non-appealable decision of a court of competent jurisdiction presented to the Escrow Agent in writing (which decision shall be certified in writing by the Parent and the Stockholder Representative to the effect that such decision is final and non-appealable) directing the release to Parent of Escrow Funds that are the subject of the Rebuttal Notice



(iii)

If any Rebuttal Notice includes an objection to only a portion of an Escrow Claim, the Escrow Agent shall promptly release to Parent an amount of Escrow Funds equal to the portion of the Escrow Claim for which there is no objection; provided, however, that no such partial release by the Escrow Agent shall terminate or otherwise prejudice Parent's rights with respect to amounts claimed in any Notice of Claim which is in excess of the amounts so released.



(iv)

On the first business day after April 30, 2007 (the "First Release Date"), the Escrow Agent shall distribute to the Stockholders, an amount, if greater than zero, equal to fifty percent (50%) of (A) the amount then held in the Escrow Fund less (B) the aggregate amount of

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all Escrow Claims made by the Parent Indemnitees that have been asserted in writing (and furnished to the Escrow Agent) but are unresolved (the "Unresolved Escrow Claims") as of such date. With respect to any then Unresolved Escrow Claim as of such date, promptly following resolution of any such claim pursuant to the procedures set forth in this Section 4(a), the amount, if any, of such claim which has not been paid to Parent in connection with such resolution, and which would have been paid to the Stockholders if the claim had been resolved prior to the First Release Date, shall be promptly paid by the Escrow Agent to the Stockholders.

(v)

On the first business day after April 30, 2008 (the "Second Release Date"), the Escrow Agent shall distribute to the Stockholders, an amount, if greater than zero, equal to (A) the amount then held in the Escrow Fund less (B) the aggregate amount of all Unresolved Escrow Claims as of such date.



(b)

This Escrow Agreement shall continue until the resolution of the Unresolved Escrow Claims, and during such continuance, the Escrow Agent shall continue to hold that portion of the Escrow Fund up to the amount of the outstanding Unresolved Escrow Claims only, with the balance of the Escrow Fund being distributed in accordance with subparagraph (v). Upon resolution of all Unresolved Escrow Claims, and the payment of all amounts payable to Parent with respect thereto, the Escrow Agent shall distribute to the Stockholders the balance of the Escrow Fund. To the extent any portion of the Escrow Fund has not been disbursed to the Stockholders pursuant to the preceding sentence within three (3) months following the resolution of all Unresolved Escrow Claims, and the payment of all amounts payable to Parent with respect thereto, the Escrow Agent will promptly deliver any such portion of the Escrow Fund to the Parent, and thereafter the Stockholders shall be entitled to look to Parent only as general creditors thereof with respect to any portion of the consideration payable upon due surrender of their Certificates, Company Stock Options or Company Warrants, without interest.



(c)

The escrow provided for hereunder shall terminate upon the disbursement of the aggregate amount of the Escrow Fund pursuant to the terms of this Escrow Agreement.



(d)

All amounts distributed to the Stockholders will be distributed by the Escrow Agent in their respective Proportional Amounts. In order to facilitate payments to Stockholders, attached hereto as Schedule 2 is a list of the Stockholders and their respective Proportional Amount. Stockholder Representative will provide addresses and wire instructions to the Escrow Agent prior to the First Release Date.



(e)

All disbursements from the Escrow Fund to Parent pursuant to this Escrow Agreement shall be made by wire transfer of cash to an account specified by Parent in writing to the Escrow Agent.

5.    Escrow Agent. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement, including, without limitation, the Merger Agreement. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document. The Escrow Agent shall have no duty to solicit any payments, which may be due it or the Escrow Fund. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction or arbitrator determines that the Escrow Agent's bad faith, gross negligence or willful misconduct was the primary cause of any loss to Parent, the Stockholders or the Stockholder Representative. The Escrow Agent

3

may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its reasonable opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction (with respect to which the time for filing an appeal or request for reconsideration has lapsed). Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

6.    Succession. The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving thirty (30) days' advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect. The Escrow Agent may be removed by the mutual consent of Parent and the Stockholder Representative upon thirty (30) days' prior written notice to the Escrow Agent. No resignation or removal of the Escrow Agent and no appointment of a successor escrow agent, however, shall be effective until the acceptance of appointment by the successor escrow agent in the manner herein provided. In the event of the resignation or removal of the Escrow Agent, Parent and the Stockholder Representative shall agree upon a successor escrow agent. Any successor escrow agent, whether appointed by the mutual agreement of Parent and the Stockholder Representative or otherwise, shall execute and deliver to the Parent and the Stockholder Representative an instrument accepting such appointment and thereupon such successor escrow agent shall, without further act, become vested with all rights, powers and duties of the predecessor escrow agent as if originally named as Escrow Agent. If Parent and the Stockholder Representative are unable to agree upon a successor escrow agent, the Escrow Agent shall be entitled to apply to a court of competent jurisdiction for the appointment of a successor. If the Escrow Agent either resigns or receives a written notice signed by Parent and the Stockholder Representative stating that they have selected another escrow agent, any portion of the Escrow Fund invested by the Escrow Agent shall be promptly liquidated, and the Escrow Agent shall deliver the Escrow Fund to the successor escrow agent named in the aforesaid notice within ten (10) days of its receipt of such notice. Upon the resignation or removal of the Escrow Agent pursuant to this Section 6, the Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent pursuant to Section 7 hereof. The rights of the Escrow Agent and the obligations of the other parties hereto under Sections 7 and 8 hereof shall survive the resignation or removal of the Escrow Agent.

7.    Fees. Parent shall (a) pay the Escrow Agent upon execution of this Escrow Agreement and from time to time thereafter reasonable compensation for the services to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule 1, and (b) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances (including reasonable attorney's fees and expenses) reasonably incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination of this Escrow Agreement. All fees pursuant to this Section 7 shall be borne by Parent and shall be invoiced by the Escrow Agent. Parent shall be liable to the Stockholders for any amounts in the Escrow Fund withheld by the Escrow Agent that relate to fees or expenses payable by Parent on account hereof.

8.    Indemnity. Parent and the Stockholders shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (collectively the

4

"indemnitees" and each individually, an "indemnitee") from all loss, liability or expense (including the fees and expenses of in house or outside counsel) arising out of or in connection with (i) the Escrow Agent's execution and performance of this Escrow Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the bad faith, gross negligence or willful misconduct of such indemnitee, or (ii) its following any instructions or other directions from Parent or the Stockholder Representative, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof. The parties hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Escrow Agreement. The parties hereby grant the Escrow Agent a lien on, right of set-off against and security interest in the Escrow Fund for the payment of any claim for indemnification, compensation, expenses and amounts due hereunder. Without affecting their joint and several indemnification liability to the Escrow Agent under this Section 8, Parent and the Stockholder Representative (on behalf of the Stockholders) agree as among themselves that any such indemnification liability shall be allocated among them on a fair and equitable basis reflecting the merits of their respective positions and the responsibility of each of them for the controversy or other circumstance with respect to which indemnification is required.

9.    TINs. Parent represents that its correct Taxpayer Identification Number ("TIN") assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1. All interest or other income earned under the Escrow Agreement shall be allocated and/or paid as directed in a joint written direction of Parent and the Stockholder Representative and reported by the recipient to the Internal Revenue Service or any other taxing authority. Notwithstanding such written directions, the Escrow Agent shall report and, as required, pay or withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution. In the absence of timely direction, all proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested from time to time by the Escrow Agent as provided in Section 3. In the event that any earnings remain undistributed at the end of any calendar year, the Escrow Agent shall report to the Internal Revenue Service or such other authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by Parent and the Stockholder Representative and shall pay from the Escrow Fund any federal, state or local income taxes that it is reasonably required to pay to the appropriate authorities.

10.    Notices. All communications hereunder shall be in writing and shall be deemed to be duly given and received:

(a)

upon delivery if delivered personally or upon confirmed transmittal if by facsimile;



(b)

on the next Business Day (as hereinafter defined) if sent by overnight courier; or



(c)

four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address set forth on Schedule 1 or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested.

and addressed to the party to be notified at the address or facsimile number indicated below for such in Schedule 1.

Notwithstanding the foregoing, in the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate. For purposes of this Section 10, "Business Day" shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth in Schedule 1 above is authorized or required by law or executive order to remain closed.

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11.    Miscellaneous. The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto. Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole or in part by any party without the prior written consent of the other parties. Notwithstanding the foregoing, (a) Parent may assign its rights and obligations hereunder, in whole or in part, to the Company or any of its other affiliates without the consent of the Stockholder Representative or the Escrow Agent, (b) Parent may assign any or all of its rights, but not its obligations, hereunder to any of its lenders as collateral security without the consent of the Stockholder Representative or the Escrow Agent, and (c) any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act. Notwithstanding the foregoing, the Stockholder Representative may assign its rights and obligations to a successor Stockholder Representative appointed pursuant to the Merger Agreement. This Escrow Agreement, including the validity hereof and the rights and obligations of the parties hereunder, and all amendments and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the domestic substantive laws of the State of New York without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York or the Commonwealth of Massachusetts over any dispute arising out of or relating to this Escrow Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. In the event that any part of this Escrow Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, such provision shall survive to the extent it is not so declared, and all of the other provisions of this Escrow Agreement shall remain in full force and effect. No party to this Escrow Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, floods, strikes, terrorism, equipment or transmission failure, or other causes reasonably beyond its control. This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures on this Escrow Agreement shall be deemed original signatures.

[Remainder of page intentionally left blank; signature page follows.]

6

IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement as of the Effective Date.

LaSalle Bank National Association,
as Escrow Agent

By:

Name:

Title:

Merrill Communications LLC

By:

Name:

Title:

Stockholder Representative

Perry Solomon

[Signature Page to the Escrow Agreement]

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Schedule 1

Name of Parent: Notice Address:	Merrill Communications LLC One Merrill Circle St. Paul, MN 55108 Attn: Steven J. Machov Fax: (651) 632-1272
Parent TIN:	41-2007271
Name of Stockholder Representative and Notice Address:
	Perry Solomon c/o WordWave, Inc. 160 Commonwealth Ave, U-3 Boston, MA 02116
Name of Company:	WordWave, Inc. 160 Commonwealth Ave, U-3 Boston, MA 02116 Attn: Perry L. Solomon Facsimile: (617) 262-7718
Investment:	Money Market Funds in which the Escrow Agent is capable of investing on an automated basis.
	U.S. Treasury obligations and other obligations backed by the full faith and credit of the United States Government.
Escrow Agent's Address:	LaSalle Bank National Association Corporate Trust Department 135 South LaSalle Street, Suite 1960 Chicago, IL 60603 Attn: Anthony Veloz Phone: (312) 904-6841 Fax: (312) 904-2236

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Schedule 1

Escrow Agent's compensation:

ESCROW AGENT
SCHEDULE OF FEES

Acceptance Fee:	$	500.00	*
Annual Administration Fee:	$	2,500.00	*
Wire Transfers	$	20.00		each
Check Preparation and Mailing	$	25.00		each
1099 Preparation and Reporting	$	5.00		each ($250 annual minimum if any 1099 reports required for account)

        The Acceptance and first year's Annual Administration Fees are due upon execution of the Escrow Agreement.

*Should the Escrow Account remain open for less than a full year after an initial twelve month period, the Annual Administration Fee will be prorated on a six-month basis.

Any investment transaction not in a money market fund or a LaSalle Enhanced Liquidity Management account will incur a $150.00 per transaction fee. The parties to the agreement understand and agree that the Escrow Agent may receive certain revenue on certain mutual fund investments. These revenues take one of two forms:

Shareholder Servicing Payments:    Escrow Agent may receive Shareholder Servicing Payments as compensation for providing certain services for the benefit of the Money Market Fund Company. Shareholder Services typically provided by LaSalle include the maintenance of shareholder ownership records, distributing prospectuses and other shareholder information materials to investors and handling proxy-voting materials. Typically Shareholder Servicing payments are paid under a Money Market Fund's 12b-1 distribution plan and impact the investment performance of the Fund by the amount of the fee. The shareholder servicing fee payable from any money market fund is detailed in the Fund's prospectus that will be provided to you.

Revenue Sharing Payments:    Escrow Agent may receive revenue sharing payments from a Money Market Fund Company. These payments represent a reallocation to Escrow Agent of a portion of the compensation payable to the fund company in connection with your account's money market fund investment. Revenue Sharing payments constitute a form of fee sharing between the fund company and Escrow Agent and do not, as a general rule, result in any additional charge or expense in connection with a money market fund investment, are not paid under a 12b-1 plan, and do not impact the investment performance of the Fund. The amount of any revenue share, if any, payable to Escrow Agent with respect to your account's investments is available upon request.

        All out-of-pocket expenses will be billed at the Escrow Agent's cost. Out-of-pocket expenses include, but are not limited to, professional services (e.g. legal or accounting), travel expenses, telephone and facsimile transmission costs, postage (including express mail and overnight delivery charges), and copying charges.

Schedule 2

EXHIBIT E

PAYING AGENT AGREEMENT

        This Paying Agent Agreement (this "Agreement"), is effective as of                        , 2005, and is entered into by and among LaSalle Bank National Association ("Paying Agent"), Perry Solomon (the "Stockholder Representative") and Merrill Communications LLC, a Delaware limited liability company ("Parent"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement (defined below).

RECITALS

        A.    Parent, WordWave, Inc. a Delaware corporation (the "Company"), Capture Merger Corp., and Stockholder Representative have entered into that certain Agreement and Plan of Merger, dated as of November 18, 2005 (the "Merger Agreement"), which provides for Capture Merger Corp. to be merged with and into the Company (the "Merger"), with the Company as the surviving corporation. A copy of the Merger Agreement is attached hereto as Exhibit A.

        B.    The Merger Agreement provides that, at the Effective Time, holders of Company Capital Stock shall have the right to receive a portion of the Aggregate Merger Consideration.

        C.    Section 2.02 of the Merger Agreement provides that Parent shall pay the Aggregate Merger Consideration payable at Closing to the holders of Company Capital Stock to Paying Agent.

        D.    Parent and Stockholder Representative desire to appoint Paying Agent as Paying Agent under the Merger Agreement, and Paying Agent is willing to accept such appointment and be bound as set forth herein, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Parent, Stockholder Representative and Paying Agent agree as follows:

Article I.

        Section 1.01    Establishment of the Account(s).    Prior to the Effective Time, Paying Agent shall establish such segregated accounts ("Account(s)") as Parent and Stockholder Representative designate to receive and disburse the Aggregate Merger Consideration to holders of Company Capital Stock.

        Section 1.02    Deposits into the Account(s) and Investment.    Following the deposit of the applicable portion of Aggregate Merger Consideration (excluding any Earn-Out Payment) in to the Account(s) by Parent, it shall be invested in accordance with Exhibit B attached hereto.

        Section 1.03    Exchange and Disbursement of the Merger Consideration.

(a)

Stockholder Representative has on or prior to the date hereof provided Paying Agent with a true and complete list of all holders of the Company Capital Stock, (the "Holders"), attached hereto as Exhibit C (the "Company Holders Schedule"). The Company Holders Schedule shall include the following information: (i) Certificate number, as applicable; (ii) Holder of record; (iii) Holder's address and tax identification number; (iv) number of shares and class of Company Capital Stock represented by the Certificate, as applicable; and (v) amount of Merger Consideration to be paid, as applicable.



(b)

As promptly as practical after the date of this Agreement but prior to the Effective Time, Paying Agent shall send by first-class mail a letter of transmittal and related instructions, in substantially the form attached hereto as Exhibit D (the "Letter of Transmittal"), together with a return envelope addressed to Paying Agent, to each Holder of Company Capital Stock listed on the Company Holders Schedule, advising each such Holder of the procedure for receiving

payment of the Merger Consideration to which such Holder is entitled pursuant to the Merger Agreement.

(c)

Paying Agent will examine each of the Letters of Transmittal received to ascertain whether the Letters of Transmittal and any other relevant documents are duly executed and properly completed in accordance with the instructions set forth therein.



(d)

In the case of a properly completed and returned Letter of Transmittal and tendered Certificate(s) from a Holder, Paying Agent shall, as soon as practicable after the Effective Time, mail by first-class mail to such Holder a check made payable to such Holder in the amount of the Merger Consideration set forth in the Company Holders Schedule; provided, however, that in the case such Holder is entitled to receive at least One Hundred Thousand Dollars ($100,000) of Aggregate Merger Consideration, Paying Agent shall make payment of the Merger Consideration by wire transfer to such Holder's account as may be specified by Stockholder Representative. No interest will be paid or will accrue on the cash payable upon the surrender of any Certificate.



(e)

Certificates surrendered with the Letters of Transmittal shall be cancelled. Paying Agent shall keep and maintain complete and accurate ledgers showing all Certificates and Letters of Transmittal sent by and delivered to it and all payments to Holders made pursuant to this Agreement. Paying Agent shall cancel and return to Parent any Certificates delivered for exchange after termination of this Agreement.



(f)

In cases where a Letter of Transmittal has been improperly completed or executed, or where a Certificate is not in proper form for transfer, or if some other irregularity exists in connection with the surrender of Certificates, Paying Agent will endeavor to take such actions as are necessary to cause such irregularity to be corrected. Paying Agent will promptly respond to any telephone or mail requests for information relating to the surrender of Certificates the payment of the Merger Consideration.



(g)

If any Holder shall report that such Holder's failure to surrender any Certificate registered in the Holder's name is due to the loss, theft, misplacement or destruction of such Certificate, Paying Agent shall require such Holder to furnish a bond or indemnity agreement in a form satisfactory to Paying Agent before delivering to such Holder or Holder's transferee the Merger Consideration to which such Holder is entitled.

        Section 1.04    Tax Returns and Reports.    Paying Agreement agrees to be responsible for the preparation, filing and provision of all Tax Returns and reports associated with the funds in the Account(s), including, without limitation, provision of Forms 1099B (as applicable) to the applicable parties. For federal and state income tax purposes, the Accounts will be deemed to have been received in the [2005/2006] tax year.

        Section 1.05    Rights of Paying Agent.

(a)

If any amounts to be distributed pursuant to this Agreement are at any time attached, garnished or levied upon under any court order or in the event the payment of any amounts to be distributed pursuant to this Agreement shall be stayed or enjoined by any court order, or in case any order, writ, judgment or decree shall be made or entered by any court affecting such amounts or any part thereof, then and in any of such events, Paying Agent is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel is binding upon it. If Paying Agent complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties to this Agreement or to any other person by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

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(b)

Paying Agent shall not be liable for any act taken or omitted under this Agreement if taken or omitted by it in good faith and in the exercise of reasonable care under the circumstances. Paying Agent shall also be fully protected in relying upon the Company Holders Schedule, any written direction from any authorized officer of Parent, or any written notice, demand, certificate or document that it in reasonably good faith believes to be genuine (including facsimiles thereof) and to have been signed by the proper party or parties.

        Section 1.06    Indemnification of Paying Agent.    Parent hereby agrees to indemnify Paying Agent from and against any and all costs, losses, liabilities, and expenses (including reasonable outside counsel fees and disbursements) and claims imposed upon or asserted against Paying Agent in respect of any action taken or omitted to be taken by Paying Agent in connection with the performance of its duties under this Agreement. If Paying Agent becomes entitled to indemnity hereunder, Paying Agent will give prompt written notice to Parent and the Stockholder Representative of any claim or of the commencement of any action or proceeding with respect to which Paying Agent seeks indemnification pursuant hereto; provided, however, that the failure to so notify Parent and the Stockholder Representative will not relieve Parent and the Stockholders from any obligation or liability except to the extent that Parent and the Stockholders have been prejudiced by such failure. If such an action or proceeding is brought against Paying Agent, Parent and the Stockholder Representative will be entitled to participate therein and, to the extent they may elect by written notice delivered to Paying Agent promptly after receiving the notice referred to in the immediately preceding sentence, to assume the defense thereof with counsel reasonably satisfactory to Paying Agent; provided, however, that Paying Agent will be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim. Notwithstanding anything in this Section 1.6 or this Agreement to the contrary: (a) Parent and the Stockholders will not be liable for the settlement of any action or proceeding effected without their prior written consent, (b) Parent and the Stockholders will not be liable for any costs, losses, liabilities, expenses or claims to the extent they arise out of Paying Agent's bad faith, negligence or willful misconduct, and (c) in no event shall Parent's and the Stockholders' indemnification obligations hereunder exceed the amount of the fees paid by Parent hereunder. This Section 1.6 will survive any termination of this Agreement.

        Section 1.07    Fees and Expenses of Paying Agent.    Parent agrees to pay the reasonable and customary fees of Paying Agent for the services of Paying Agent hereunder or in connection herewith and to reimburse Paying Agent for all reasonable out-of-pocket expenses incurred by it pursuant to or in connection with its services hereunder, all as set forth in the fee schedule attached as Exhibit E hereto. Such fees are intended as full compensation for Paying Agent's services as contemplated by this Agreement.

Article II.

        Section 2.01    Termination of Agreement.    The parties agree that, unless terminated or extended in writing by the parties hereto, this Agreement shall terminate one (1) year after the Effective Time; provided, however, Paying Agent's rights to indemnity and to receive payment of its fees and expenses hereunder shall survive any termination of this Agreement. Any funds held in the Account(s) (including any interest or other income received with respect thereto) which remain undistributed at the time of such termination shall be immediately delivered to Parent upon demand.

3

Article III.

        Section 3.01    Notices.    All notices, requests, consents or other communications required or permitted under this Agreement shall be in writing and shall be delivered by hand, telecopy, overnight delivery service, or first-class mail, postage prepaid and in each case addressed as follows:

if to Paying Agent, to:

LaSalle Bank National Association
Corporate Trust Department
135 South LaSalle Street, Suite 1960
Chicago, IL 60603
Attn: Arlene Kaminski
Phone: (312) 904-2312
Fax: (312) 904-2236

if to Merrill Communications LLC, to:

Merrill Communications LLC
One Merrill Circle
St. Paul, MN 55108
Attn: Steven J. Machov
Phone: (651) 632-1272
Fax: (651) 632-1272

if to Stockholder Representative, to:

Perry Solomon
c/o WordWave, Inc.
160 Commonwealth Ave, U-3
Boston, MA 02116
Tel: (617) 239-1815
Fax: (617) 262-7718

        Any party by written notice to the other parties pursuant to this Section 3.01 may change the address, facsimile number or the persons to whom notices or copies thereof shall be directed.

        Section 3.02    Assignment.    This Agreement and the rights and duties hereunder shall be binding upon and inure to the benefit of the parties hereto and the successors and assigns of each of the parties to this Agreement. No rights, obligations or liabilities hereunder shall be assignable by any party without the prior written consent of the other parties hereto.

        Section 3.03    Amendments.    This Agreement may be amended or modified only by an instrument in writing duly executed by the parties to this Agreement.

        Section 3.04    Waivers.    Any waiver by any party hereto of any breach of or failure to comply with any provision of this Agreement by any other party hereto shall be in writing and shall not be construed as, or constitute, a continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with, any other provision of this Agreement.

        Section 3.05    Construction.    The headings in this Agreement are solely for convenience of reference and shall not be given any effect in the construction or interpretation of this Agreement. Unless otherwise stated, references to Sections and Exhibits are references to sections of or exhibits to this Agreement.

4

        Section 3.06    Third Parties.    Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person or entity other than the parties to this Agreement, any right, benefit or remedy under or by reason of this Agreement.

        Section 3.07    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed any original and all of which together shall constitute a single instrument.

        Section 3.08    Choice of Law and Jurisdiction.    This Agreement, including the validity hereof and the rights and obligations of the parties hereunder, and all amendments and supplements hereof and all waivers and consents hereunder, shall be construed in accordance with and governed by the domestic substantive laws of the State of New York without giving effect to any choice of law or conflicts of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction. The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of New York or the Commonwealth of Massachusetts over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby and each party hereby irrevocably agrees that all claims in respect of such dispute or any suit, action or proceeding related thereto may be heard and determined in such courts. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

        Section 3.09    Severability.    In the event that any part of this Agreement is declared by any court or other judicial or administrative body to be null, void, or unenforceable, such provision shall survive to the extent it is not so declared, and all of the other provisions of this Agreement shall remain in full force and effect.

        [SIGNATURES ON FOLLOWING PAGE]

5

        IN WITNESS WHEREOF, the parties hereto have caused this Paying Agent Agreement to be executed by their authorized officers as of the date first written above.

LASALLE BANK NATIONAL ASSOCIATION

By:

Name:

Title:

MERRILL COMMUNICATIONS LLC

By:

Name:

Title:

STOCKHOLDER REPRESENTATIVE

Perry Solomon

6

EXHIBIT A

Merger Agreement

[Attached]

7

EXHIBIT B

Investment Directions

Federated Treasury Obligations Fund (Trust Shares)

8

EXHIBIT C

Company Stock Schedule

[Attached]

9

EXHIBIT D

Letter of Transmittal

[Attached]

10

EXHIBIT E

Exchange Agent Fee Schedule

(a)	Acceptance Fee:	$500.00
(b)	Document review
	Administration Fee:	$3,500.00
	Account set-up, records conversion, letter of transmittal development and general administration
	Address, mail letters of transmittals	No Charge
	Mail material to shareholders by addressing the letter of transmittal and a 9 × 12 mailing envelope
	Each letter of transmittal:	$15.00 each
	Receive and review transmittals, verify and cancel certificates presented, data enter payment information, issue and mail checks, reconcile paid checks
	Option holders	$12.00 each
	(from spreadsheet provided to us and includes payment of net and gross tax reporting, if any)
	1099B issuance and reporting:	No Charge
	Enter reportable data, withhold taxes as required, issue form 1099B to recipient and report all information to the Internal Revenue Service
	Each wire	$45.00
	Send funds electronically to selected shareholders and provide federal reference numbers when requested

        Additional out of pocket expenses to include, but not limited to, postage, cost of envelopes, cost of form 1099B and other miscellaneous expenses.

11

Schedule 2.01(h)

WORKING CAPITAL CALCULATION

        Working Capital shall be calculated from a balance sheet that is prepared using the same accounting practices, methods, policies and procedures, with consistent classification, judgments and estimation methodology as were used by the Company in the December 31, 2004 audited balance sheet of the Company included in the Financial Statements (as defined in the Agreement) except to the extent inconsistent with GAAP (as defined in the Agreement) and except as otherwise contemplated in this Schedule 2.01(h) or in Section 2.01(h) of the Agreement.

Calculation of Working Capital Adjustment

Current Assets			$
	Less Cash			(	)
	Less deferred tax assets			(	)
	Less any Transaction Tax Benefits			(	)
	Plus all pending tax refunds applied for and previous year over-payments applied to 2005 by Company or any Subsidiary			(	)
	Plus any tax payments made in 2005 in respect of 2005 taxes
		Total Working Capital Assets	$
Current Liabilities (adjusted)(1)			$
	Less current portion of Indebtedness for borrowed money and accrued interest thereon			(	)
	Less a liability reserve for taxes of $1,100,000			(1,100,000	)
	Less reserves for deferred Taxes(2)			(	)
	Plus Transaction Expenses (to the extent not paid)
	Plus special bonus or noncompetition payments owing to employees (to the extent not paid)
	Plus regular bonus and commission amounts for employees prorated through the Closing Date (to the extent not paid)
	Plus all paid time off through the Closing Date (to the extent not paid)
		Total Working Capital Liabilities	$
Working Capital Assets			$
	Less Working Capital Liabilities			(	)
		Working Capital

(1)

Equals Current Liabilities less obligations under capital leases, negative cash, and accrued interest (to the extent not double counted).

(2)

Established to reflect timing differences between book and taxable income pursuant to Statement of Financial Accounting Standard No. 109 to the extent such reserves are included in current liabilities.

Schedule 5.03

Certain Changes or Events

1.

In connection with the Closing, the Company will terminate the Fourth Amended and Restated Revolving Credit and Term Loan Agreement (representing a $60 million refinancing of loan facility) dated January 20, 2005, as amended April 12, 2005, May 9, 2005, July 21, 2005, and August 30, 2005, between WordWave, Inc., and Bank of America, N.A.

2.

In connection with the Closing, the Company will terminate the Swap agreement, dated July 20, 2005, between WordWave, Inc., and Bank of America, N.A.

3.

Take any appropriate action pursuant to Section 5.19.

2

Schedule 5.14(h)

CLOSING EXPENSES

Sagent Advisors Fee
Legal Fees
Accounting Fees
Termination Expenses relating to B of A Swap Agreement
Deferred Financing Charges Write-Off
Misc transaction expenses
Investment Banking Expenses
Investment Banking Deal Fee
Expenses relating to Stock Options

3

Schedule 6.01

Consents

None.

4

Schedule 8.02(e)

1.

The Company's oral agreement with Rosemary Koziol which gives Ms. Koziol the option of selling all of her shares of Company Common Stock (17,777 shares) to the Company at a purchase price per share equal to the fair market value as of the put date.

2.

The failure of Smith Bernal WordWave Limited New Zealand to meet its annual filing obligations.

3.

All Losses (including any costs, expenses and attorneys fees) arising from or related to any claim by any Stockholder that the Company is required to purchase its shares of Company Capital Stock at a purchase price greater than the Merger Consideration.

4.

Any severance payment in excess of AU$116,000 that is owed to Jason Woolridge in connection with the termination of his employment from WordWave International PTY Ltd.

5

Schedule 8.02(f)

1.

Uninsured real property and personal property damage in Biloxi, MS as a result of Hurricane Katrina.

6

QuickLinks

Exhibit 10.30

TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF WORDWAVE, INC.

EXHIBIT B

WORKING CAPITAL ESCROW AGREEMENT
Schedule 1
Schedule 1
ESCROW AGENT SCHEDULE OF FEES
Schedule 2

EXHIBIT D

INDEMNIFICATION ESCROW AGREEMENT
Schedule 1
Schedule 1
ESCROW AGENT SCHEDULE OF FEES
Schedule 2

EXHIBIT E

PAYING AGENT AGREEMENT
RECITALS
Article I.
Article II.
Article III.
Schedule 2.01(h)
Schedule 5.03
Certain Changes or Events
Schedule 5.14(h)
CLOSING EXPENSES
Schedule 6.01
Schedule 8.02(e)

EX-10.31

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Exhibit 10.31

CLOSING AGREEMENT
AND AMENDMENT NO. 1 TO MERGER AGREEMENT

        This Closing Agreement and Amendment No. 1 to Merger Agreement (the "Closing Agreement") is entered into and effective as of 6:00 p.m. (Central Standard Time) on December 31, 2005 (the "Effective Time") by and between Merrill Communications LLC, a Delaware limited liability company ("Parent"), Capture Merger Corp., a Delaware corporation ("Merger Sub"), a wholly owned subsidiary of Parent, and WordWave, Inc., a Delaware corporation (the "Company") and Perry Solomon, as Stockholder Representative.

W I T N E S S E T H:

WHEREAS, Parent, Merger Sub, the Company and Perry Solomon, as Stockholder Representative, entered into that certain Agreement and Plan of Merger dated as of November 18, 2005 (the "Merger Agreement") pursuant to which Merger Sub will be merged with and into the Company, with the Company continuing as the surviving corporation. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Merger Agreement.

WHEREAS, Parent, Merger Sub and the Company (collectively, the "Parties") desire to confirm their mutual understanding and agreement with respect to certain matters related to the closing of the transactions contemplated by the Merger Agreement.

WHEREAS, pursuant to Section 11.03 of the Merger Agreement, the Parties also desire to amend the Merger Agreement as provided below.

NOW, THEREFORE, in consideration of the foregoing premises, and the mutual agreements contained herein, intending to be bound legally hereby, the Parties hereby agree as follows:

        1.    Deposit of Closing Documents.    

        (a)   Parent hereby acknowledges receipt of the certificates, instruments and other documents required to be delivered by the Company pursuant to Sections 6.01 and 7.02 of the Merger Agreement (collectively, the "Company Closing Documents"). A list of all of the Company Closing Documents is attached hereto as Exhibit A. Parent acknowledges and agrees that the Company Closing Documents are to be held in escrow until the Company has authorized the release of such Company Closing Documents to the Parent and Merger Sub in accordance with Section 3 below.

        (b)   The Company hereby acknowledges receipt from the Parent and Merger Sub of the certificates, instruments and other documents delivered by the Parent and Merger Sub pursuant to Sections 6.02 and 7.03 of the Merger Agreement (collectively, the "Parent Closing Documents"). A list of all of the Parent Closing Documents is attached hereto as Exhibit B. The Company agrees that the Parent Closing Documents are to be held in escrow until the Parent has authorized the release of such Parent Closing Documents to the Company in accordance with Section 4 below.

        2.    Waiver of Closing Conditions.    Except for the closing condition set forth in Section 6.01(e) ("No Material Adverse Effect") of the Merger Agreement, Parent and Merger Sub each, as of the Effective Time, agrees that the closing conditions set forth in Section 6.01 of the Merger Agreement have been fully satisfied, or to the extent not satisfied waives any such unsatisfied closing conditions. In addition, the Company hereby waives the closing conditions set forth in Section 6.02 of the Merger Agreement. The effect of each Party's waiver under this Section 2 shall eliminate such Party's respective rights under Article VI of the Merger Agreement to delay or prevent the Closing due to the non-fulfillment of the closing conditions set forth therein (exclusive, however, of the closing condition set forth in Section 6.01(e) ("No Material Adverse Effect") of

the Merger Agreement). For the avoidance of doubt, each Party's waiver under this Section 2 shall not limit or prejudice any claims such Party may otherwise have under the Merger Agreement.

        3.    Company Closing Notification.    Immediately prior to 12:01 a.m. (Central Standard Time) on January 1, 2006, the Company will provide Parent with written notification (the "Company Closing Notification") certifying to each of the following: (a) that there has not occurred any Material Adverse Effect between the date hereof and 12:01 a.m. on January 1, 2006; and (b) that, subject to receipt by the Company of the Parent Closing Notification pursuant to Section 5 below, immediately upon disbursement by Parent or Merger Sub of the cash payments specified on the funds flow memorandum attached hereto as Exhibit C (the "Funds Flow Memo") by wire transfer of immediately available funds, the Company Closing Documents are automatically and irrevocably released from escrow and thereby delivered to the Parent and Merger Sub.

        4.    Parent Closing Notification.    If Parent receives the Company Closing Notification and reasonably and in good faith believes that the closing condition set forth in Section 6.01(e) ("No Material Adverse Effect") has been fulfilled and satisfied, then, immediately prior to 12:01 a.m. (Central Standard Time) on January 1, 2006, Parent will provide the Company with written notification (the "Parent Closing Notification") that (a) upon release of the Company Closing Documents from escrow as described in Section 3 above, the Parent Closing Documents are automatically and irrevocably released from escrow and thereby delivered to the Company, (b) it will file the Certificate of Merger with the Secretary of State of the State of Delaware on January 3, 2006, (c) it will disburse the cash payments specified on the Funds Flow Memo by wire transfer of immediately available funds by no later than 12:00 p.m. (Central Standard Time) on January 3, 2006, and (d) it waives the closing condition set forth in Section 6.01(e) of the Merger Agreement. In the event, however, that Parent does not receive the Company Closing Notification or if it reasonably and in good faith believes that the closing condition set forth in Section 6.01(e) ("No Material Adverse Effect") has not been fulfilled and satisfied immediately prior to 12:01 a.m. (Central Standard Time) on January 1, 2006, then Parent will not be obligated to provide the Parent Closing Notification.

        5.    Calculation of Working Capital.    

        (a)   For purposes of calculating Working Capital in accordance with Section 2.01(h) of the Merger Agreement, all references to "Closing Date" in Section 2.01(h) shall be deemed to refer to 11:59 p.m. (Central Standard Time) on December 31, 2005.

        (b)   Subsection (aa) of Section 2.01(h)(i) of the Merger Agreement is hereby amended in its entirety to provide as follows:

"(aa) the current assets of the Company (excluding deferred tax assets and any Transaction Tax Benefits, but including, for the avoidance of doubt, Cash (excluding negative cash) all pending Tax refunds applied for and previous year over-payments applied to 2005 by the Company or any of its Subsidiaries and any Tax payments made in 2005 in respect of 2005 taxes)."

For the avoidance of doubt, for the sole purpose of calculating the amount of the Estimated Working Capital, the parties agree and acknowledge that the Cash included in current assets in the Estimated Working Capital shall equal $1,790,000. Additionally, the parties acknowledge and agree that negative cash shall only be included in current liabilities and shall not be double counted.

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        (c)   Subsection (bb) of Section 2.01(h)(i) of the Merger Agreement is hereby amended in its entirety to provide as follows:

"(bb) less the current liabilities of the Company (excluding the current portion of Indebtedness, accrued interest thereon, liabilities for the payment of severance or similar benefits to employees of the Company or the Subsidiaries in connection with or by reason of the transactions contemplated by this Agreement, liability for income taxes (other than a liability reserve in the amount of $1,100,000 for income Taxes, which shall be included in current liabilities) and reserves for deferred Taxes established to reflect timing differences between book and taxable income pursuant to Statement of Financial Accounting Standard No. 109, but including, for the avoidance of doubt, negative cash, any Transaction Expenses incurred for services provided prior to and through the Closing (to the extent not paid prior to or at the Closing), due or to become due by the Company in connection with or by reason of the transactions contemplated by this Agreement, whether or not required by GAAP or otherwise to be accrued, any special bonus or noncompetition payments owing to employees, regular bonus and commission amounts for employees pro rated through the Closing Date, all paid time off through the Closing Date, and the items on Schedule 2.01(h)."

For the avoidance of doubt, for the sole purpose of calculating the amount of the Estimated Working Capital, the parties agree and acknowledge that the negative cash included in current liabilities in the Estimated Working Capital shall equal $1,500,000.

        (d)   The Parties hereby agree and acknowledge that the amount of the Estimated Working Capital is equal to $21,159,991.00.

        6.    Amendment to Section 9.01(a).    Section 9.01(a) of the Merger Agreement is hereby amended by replacing the reference to "December 31, 2005" with "January 3, 2006."

        7.    Payment for certain Interest, Accrued Dividends and Vacation.    Notwithstanding anything to the contrary in the Merger Agreement, the Parties agree and acknowledge that the Parent will be responsible for and be obligated to pay for (a) any interest that accrues on the Net Indebtedness for Borrowed Money and Accrued Dividends on or after January 1, 2006 (the "Accrued Interest") and (b) certain cash payments made by the Company to employees for accrued vacation liability at the request of Parent and Merger Sub ("Vacation Payments"). Such Accrued Interest and Vacation Payments shall not be deemed part of the Base Purchase Price, but shall increase the total cash payments due by Parent and Merger Sub by $66,467 and $36,137, respectively, for a total of $102,604, which is included in the amount to be disbursed by Parent or Merger Sub in the Funds Flow Memo.

        8.    Breach by Company.    Notwithstanding anything to the contrary in this Closing Agreement or the Merger Agreement, in the event that the Company materially breaches any of the covenants set forth in Article V of the Merger Agreement during the period from January 1, 2006 until 12:00 p.m. Central Standard Time on January 3, 2006, and such material breach results in a Material Adverse Effect, then (a) the Parent Closing Documents will not be deemed to be released from escrow and delivered to the Company and (b) the Parent will not be obligated to (i) close the transactions contemplated by the Merger Agreement, (ii) file the Certificate of Merger with the Secretary of State of the State of Delaware, or (iii) disburse the cash payments on January 3, 2006 according to the Funds Flow Memo.

        9.    Representations and Warranties.    Parent has executed and delivered that certain Amended, Restated and Combined Credit Agreement, dated as of December 22, 2005, among Parent, as Borrower, Merrill Corporation, Various Financial Institutions, as the Lenders, Bank of America, N.A., as the Administrative Agent and Collateral Agent for the Lenders, Credit Suisse, as a Joint

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Lead Arranger and a Joint Bookrunner, Banc of America Securities LLC, as a Joint Lead Arranger and a Joint Bookrunner, Deutsche Bank Securities Inc., as a Joint Bookrunner, Deutsche Bank Securities, Inc., as Syndication Agent and Calyon New York Branch, National City Bank and LaSalle Bank, N.A., as Co-Documentation Agents (the "Merrill Credit Agreement"), and the initial Credit Extension (as defined in the Merrill Credit Agreement) has been completed.

        10.    Amendment to Definition of "Net Indebtedness for Borrowed Money."    The definition of "Net Indebtedness for Borrowed Money" in the Merger Agreement is hereby amended in its entirety to provide as follows:

"Net Indebtedness for Borrowed Money" means any Indebtedness of the Company."

        11.    Amendment to Schedule 2.01(h) of the Merger Agreement.    Schedule 2.01(h) of the Merger Agreement is hereby amended and replaced in its entirety with Exhibit D attached hereto.

        12.    Transaction Expenses Paid at Closing.    Notwithstanding anything to the contrary in the Merger Agreement, the Parties agree and acknowledge that the amount of Transaction Expenses paid by the Parent at Closing (which are in an amount equal to $2,198,115.74) will be considered Non-Trade Liabilities for purposes of calculating the Aggregate Merger Consideration and will not therefore be included in the calculation of Working Capital under Section 2.01(h) of the Merger Agreement.

        13.    Miscellaneous.    

        (a)   Descriptive Headings. The descriptive headings are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Closing Agreement.

        (b)   Amendments. This Closing Agreement may be amended or modified, and the terms hereof may be waived, only by a writing signed by all Parties hereto or, in the case of a waiver, by the Party entitled to the benefit of the terms being waived.

        (c)   Assignment; Binding Effect. This Closing Agreement may not be assigned or delegated, in whole or in part, by any Party hereto without the prior written consent of the other Party hereto. This Closing Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.

        (d)   Governing Law. This Closing Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles regarding the choice of law.

        (e)   Reference to and Effect on the Merger Agreement. Upon the effectiveness of this Closing Agreement, each reference in the Merger Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import shall mean and be a reference to the Merger Agreement giving effect to the modifications and amendments set forth in this Closing Agreement.

        (f)    Counterparts. This Closing Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and each of which shall be deemed an original.

[Signature Page Follows]

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        IN WITNESS WHEREOF, the Parties hereto have duly executed this Closing Agreement the day and year first above written.

MERGER SUB: CAPTURE MERGER CORP.
By:	/s/  STEVEN J. MACHOV Name: Steven J. Machov Title: Secretary
PARENT: MERRILL COMMUNICATIONS LLC
By:	/s/  ROBERT H. NAZARIAN Name: Robert H. Nazarian Title: Executive Vice President and CFO
COMPANY: WORDWAVE, INC.
By:	/s/  PERRY SOLOMON Name: Perry Solomon Title: CEO
STOCKHOLDER REPRESENTATIVE:
By:	/s/  PERRY SOLOMON Name: Perry Solomon Title: CEO

[Signature Page to Closing Agreement]

EXHIBIT A

COMPANY CLOSING DOCUMENTS

EXHIBIT A

1.

Paying Agent Agreement

2.

Working Capital Escrow Agreement

3.

Indemnification Escrow Agreement

4.

Warrant Cancellation Agreement for the following entitles:

•

TCW/Crescent Mezzanine Partners II, L.P.

•

TCW/Crescent Mezzanine Trust II

•

TCW Leveraged Income Trust L.P.

•

TCW Leveraged Income Trust II, L.P.

5.

Option Acknowledgements for the following:

•

Armand Nicholi

•

Cheryl Daley

•

Jason Perez

•

Mark Ricci

•

Gary Buckland

•

Brenda Mikulis

•

Rosemary Koziol

•

Jack Finz

•

Russell Finz

•

Iva Nathanson

•

David Perry

•

Brian Clune

•

Marianne Collins

•

Dave Collins

•

Kristy Villa

•

Ron Harrison

•

Tracey Bowe

•

Lisa DiMonte

•

Joe DiMonte

•

Lissa Scotti

•

Shannon Reed

•

Greta Hisel

•

Gina Creps Carlson

•

Jim Ballard

•

Darryn Cleary

•

Chuck Karlovits

•

Kathy DiLorenzo



•

Dina Smith



•

Dwight Wagner



•

Marty Winchester



•

Robert Beyer



•

Tim Taylor



•

Doug Karlovits



•

Jayne Perry



•

Charlotte Pache



•

Keith Beard



•

Andrew Brown



•

Jason Woolridge



•

Joy Medd



•

Vicki Harris



•

Sarah Lowe



•

Chris Bryne



•

Ron Frank

6.

Resignation and releases for the following directors/officers:

•

Keith Beard

•

Sarah Andrews

•

Lisa Censullo

•

Kevin Callaghan

•

Cheryl Daley

•

Robert Higgins

•

Gary Garrett

•

Charlotte Pache

•

Scot Rosenblum

•

Patricia Prozzi

•

Perry Solomon

7.

Weil Gotshal & Manges LLP Legal Opinion

8.

Payoff letters for:

•

L.A.D. Reporting Company, Inc.

•

Candace O'Barr Jones

•

Bank of America

9.

Assistant Secretary's Certificate of WordWave certifying Board Resolution Authorizing Transaction

10.

Officer's Certificate of WordWave, Inc.

•

Re: accrued dividends

•

Re: Section 7.02(e) and 6.01(h) of the Merger Agreement

11.

FIRPTA Certificate

12.

Certificate of Merger

EXHIBIT B

PARENT CLOSING DOCUMENTS

EXHIBIT B

PARENT CLOSING DOCUMENTS

1.

Paying Agent Agreement

2.

Working Capital Escrow Agreement

3.

Indemnification Escrow Agreement

4.

Secretary's Certificate of Parent and Merger Sub certifying Board Resolutions Authorizing Transaction

5.

Officer's Certificate of Parent and Merger Sub

EXHIBIT C

FUNDS FLOW MEMO

Exhibit C

MERRILL COMMUNICATIONS LLC PURCHASE OF WORDWAVE, INC.
Closing Funds Flow

[Will be provided upon request by the SEC]

EXHIBIT D

Schedule 2.01(h)

WORKING CAPITAL CALCULATION

        Working Capital shall be calculated from a balance sheet that is prepared using the same accounting practices, methods, policies and procedures, with consistent classification, judgments and estimation methodology as were used by the Company in the December 31, 2004 audited balance sheet of the Company included in the Financial Statements (as defined in the Agreement) except to the extent inconsistent with GAAP (as defined in the Agreement) and except as otherwise contemplated in this Schedule 2.01(h) or in Section 2.01(h) of the Agreement. By way of clarification, the parties acknowledge and agree that all balances used to arrive at Working Capital shall not be double counted.

Calculation of Working Capital Adjustment

Current Assets(1)			$
	Less deferred tax assets			(	)
	Less any Transaction Tax Benefits			(	)
	Plus all pending tax refunds applied for and previous year over-payments applied to 2005 by Company or any Subsidiary			(	)
	Plus any tax payments made in 2005 in respect of 2005 taxes
		Total Working Capital Assets	$
Current Liabilities (adjusted)(2)			$
	Less current portion of Indebtedness for borrowed money and accrued interest thereon			(	)
	Less a liability reserve for taxes of $1,100,000			(1,100,000	)
	Less reserves for deferred Taxes(3)			(	)
	Plus Transaction Expenses incurred for services provided prior to and through the Closing (to the extent not paid prior to or at the Closing)
	Plus special bonus or noncompetition payments owing to employees (to the extent not paid prior to or at the Closing)
	Plus regular bonus and commission amounts for employees prorated through the Closing Date (to the extent not paid prior to or at the Closing)
	Plus negative cash
	Plus all paid time off through the Closing Date (to the extent not paid prior to or at the Closing)
		Total Working Capital Liabilities	$
Working Capital Assets			$
	Less Working Capital Liabilities			(	)
		Working Capital

(1)

Includes Cash (including cash on hand at banks, but excluding negative cash)

(2)

Equals Current Liabilities less obligations under capital leases and accrued interest (to the extent not double counted).

(3)

Established to reflect timing differences between book and taxable income pursuant to Statement of Financial Accounting Standard No. 109 to the extent such reserves are included in current liabilities.

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Exhibit 10.31

CLOSING AGREEMENT AND AMENDMENT NO. 1 TO MERGER AGREEMENT

EXHIBIT A

COMPANY CLOSING DOCUMENTS
EXHIBIT A

EXHIBIT B

PARENT CLOSING DOCUMENTS
EXHIBIT B PARENT CLOSING DOCUMENTS

EXHIBIT C

FUNDS FLOW MEMO

Exhibit C

MERRILL COMMUNICATIONS LLC PURCHASE OF WORDWAVE, INC. Closing Funds Flow

EXHIBIT D

Schedule 2.01(h)
Calculation of Working Capital Adjustment

EX-10.32

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Exhibit 10.32

STOCK TRANSFER RESTRICTION AGREEMENT

        This Stock Transfer Restriction Agreement (as amended from time to time pursuant to the terms hereof, this "Agreement"), is made and entered into as of February 10, 2006, by and among Merrill Corporation, a Minnesota corporation ("Merrill"), and each of the undersigned individuals who are also officers of Merrill (each an "Officer/Shareholder" and collectively, the "Officer/Shareholders") of Merrill.

        A.    Merrill is in the process of preparing to file with the SEC a registration statement in connection with a proposed initial public offering of Merrill's Common Stock (the "Merrill IPO"), which transaction Merrill believes to be in the company's best interests.

        B.    Each Officer/Shareholder currently owns, or may upon the completion of the Merrill IPO own, shares of Common Stock of Merrill and/or options to purchase shares of Common Stock of Merrill, and believes that the Merrill IPO would also be in his or her best interest.

        C.    Merrill believes that it is necessary for the successful completion of the Merrill IPO that the Officer/Shareholders agree not to sell any of their Shares in the Merrill IPO and agree to certain additional restrictions on the sale of their Shares after completion of the offering.

        D.    Certain of the Shares held by certain of the Officer/Shareholders were acquired pursuant to the terms of the Direct Investment Plan (as defined below) and related Participation Agreements (as defined below) and were purchased, in part, with the proceeds of Purchase Loans (as defined below) from Merrill, which Purchase Loans (i) are secured by certain of the Shares and (ii) by their terms must be repaid within 120 days of the completion of the Merrill IPO.

        E.    Each of the Officer/Shareholders is a party (or would become a party upon exercise of his or her outstanding stock options) to the Investors' Agreement which provides, among other things, that each such Officer/Shareholder who is a party to the Investors' Agreement has certain piggyback registration rights in connection with certain public offerings by Merrill, including the Merrill IPO.

        F.     Each of the Officer/Shareholders desires to take certain necessary and appropriate actions in furtherance of the Merrill IPO, including (i) paying any and all outstanding amounts owed by such Officer/Shareholder to Merrill under any Purchase Loans held by such Officer/Shareholder; (ii) executing an amended and restated Investors' Agreement which, among other things, provides that piggyback registration rights will be unavailable to the Officer/Shareholder and others in connection with the Merrill IPO; (iii) executing a customary lock-up agreement with the underwriters in connection with the Merrill IPO; (iv) not requesting the inclusion of any Shares held by the Officer/Shareholder in the IPO Registration Statement to be filed by Merrill in connection with the Merrill IPO; and (v) executing this Agreement and becoming subject to the Transfer Restrictions and other terms and provisions set forth herein, and Merrill is willing to pay each of the Officer/Shareholders that currently has an outstanding Purchase Loan a cash bonus in an amount necessary to permit such Officer/Shareholder to pay any and all amounts owing under such Purchase Loan.

        Accordingly, and intending to be legally bound, the parties hereto hereby agree as follows:

        1.    Certain Definitions.    In addition to the capitalized terms otherwise defined herein, the following additional capitalized terms will have the meanings set forth below, unless the context clearly otherwise requires:

        (a)   "Beneficially Own," "Beneficial Owner" or "Beneficial Ownership" with respect to any securities means having voting power or investment power with respect to such securities (as determined pursuant to Rule 13d-3(a) under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing.

        (b)   "Coinvestment Shareholder" means an Officer/Shareholder who has a Purchase Loan outstanding as of the date of this Agreement.

        (c)   "Common Stock" means the class B common stock, par value $0.01 per share, of Merrill, and any capital stock into which such common stock may be converted or exchanged, including without limitation pursuant to that certain plan of recapitalization contemplated to be completed in connection with the Merrill IPO.

        (d)   "Direct Investment Plan" means the Merrill Corporation Direct Investment Plan, as amended from time to time, and with respect to Rick Atterbury, the terms and conditions of any Participation Agreement or other agreement to which he is a party that contain terms and conditions similar to the Direct Investment Plan.

        (e)   "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        (f)    "Investors' Agreement" means the Investors' Agreement, dated November 23, 1999, by and among Merrill and its shareholders, as amended, and as further amended from time to time, including without limitation as contemplated to be amended pursuant to Section 3 of this Agreement.

        (g)   "IPO Registration Statement" means the registration statement intended to be filed by Merrill with the SEC in connection with the Merrill IPO.

        (h)   "Participation Agreement" means the participation agreement, as amended, or other agreement between Merrill and each Officer/Shareholder entered into under the Direct Investment Plan or otherwise pursuant to which the Shares were issued to such Officer/Shareholder.

        (i)    "Person" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

        (j)    "Purchase Loan" means a loan made to an Officer/Shareholder pursuant to the Direct Investment Plan to fund the purchase of Shares pursuant to such plan.

        (k)   "SEC" means the Securities and Exchange Commission.

        (l)    "Securities Act" means the Securities Act of 1933, as amended.

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        (m)  "Shares" means (i) all shares of Common Stock purchased by the Officer/Shareholder pursuant to the Direct Investment Plan and owned by such Officer/Shareholder as of the date of the effectiveness of the IPO Registration Statement; (ii) all shares of Common Stock otherwise held by the Officer/Shareholder as of the date of the effectiveness of the IPO Registration Statement; (iii) all shares of Common Stock acquired by the Officer/Shareholder after the date of this Agreement upon the exercise of options outstanding as of the date of the effectiveness of the IPO Registration Statement; and (iv) all securities issued or exchanged with respect to any such shares upon any reclassification, recapitalization, reorganization, merger, consolidation, spin-off, stock split, combination, stock or other dividend or any other change in Merrill's capital structure. For the avoidance of doubt, the term "Shares" does not include any shares of Common Stock acquired by an Officer/Shareholder in the open market or otherwise upon the exercise of options or other equity incentive awards granted after the date of the effectiveness of the IPO Registration Statement.

        (n)   "Transfer" means, with respect to any security, any sale, transfer, pledge, grant, hypothecation or other disposition of such security, whether direct or indirect, whether or not for value, and includes any disposition of the economic or other risks of ownership of Shares, including short sales of securities of Merrill, option transactions (whether physical or cash settled) with respect to securities of Merrill, use of equity or other derivative financial instruments relating to securities of Merrill and other hedging arrangements with respect to securities of Merrill.

        2.    Payment of Bonus; Requirement to Repay Purchase Loans.

        (a)    Bonus.    Merrill agrees to pay to each Coinvestment Shareholder, subject to applicable income and payroll withholding taxes as described in Section 2(c), on a date determined by Merrill prior to the initial filing of the IPO Registration Statement with the SEC (the "Repayment Date"), a one-time cash bonus (the "Bonus") in an amount equal to the sum of (i) any and all outstanding amounts owing by such Coinvestment Shareholder under the Purchase Loan as of the Repayment Date, including without limitation any and all outstanding principal and accrued and unpaid interest thereon (the "Loan Repayment Amount"), plus (ii) an additional amount (the "Tax Gross-Up Amount") to provide the Coinvestment Shareholder with sufficient funds to pay all applicable income taxes on the Loan Repayment Amount and the Tax Gross-Up Amount, using an estimated tax rate and formula as described in Section 2(c); provided, however, that in order to receive the Bonus the Coinvestment Shareholder must be employed by Merrill or any subsidiary thereof as of the Repayment Date and must not on the Repayment Date be in breach of the Direct Investment Plan, the Participation Agreement or any other agreement between Merrill and the Coinvestment Shareholder. If the IPO Registration Statement is not initially filed with the SEC on or before July 1, 2006, then the Coinvestment Shareholder will return the Bonus, without interest, to Merrill and such Bonus (less any amounts withheld pursuant to Section 2(c)) will deemed to be rescinded and cancelled.

        (b)    Requirement to Repay Purchase Loans.    Each Coinvestment Shareholder hereby agrees to repay, on the Repayment Date, the Loan Repayment Amount. If the IPO Registration Statement is not initially filed with the SEC on or before July 1, 2006, then such repayment will be rescinded and cancelled, Merrill will return the Loan

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Repayment Amount to the Coinvestment Shareholder and the Purchase Loan (and any related pledge of the Shares) will be reinstated on the terms in effect immediately prior to such repayment (including those related to the non-recourse nature of the Purchase Loan). From and after the time that the IPO Registration Statement is initially filed in connection with the IPO, Merrill will have no right to cancel the repayment of any Purchase Loans pursuant to this Section 2.

        (c)    Calculation of Tax Gross-Up Payment; Withholding.    In order to calculate the Tax Gross-Up Amount, each Coinvestment Shareholder's income tax rate will be deemed to be forty-five percent (45%), irrespective of any Coinvestment Shareholder's actual liability for income taxes and the amount of the Tax Gross-Up Amount for each Coinvestment Shareholder will be computed as the Loan Repayment Amount divided by .55, less the Loan Repayment Amount. For example, if the Loan Repayment Amount for a Coinvestment Shareholder was $100,000, then the Tax Gross-Up Amount would be $81,818 (($100,000 ÷ .55) - $100,000). Merrill is hereby authorized to withhold from the Bonus all required income and payroll tax withholding applicable to the inclusion of such amount in the Coinvestment Shareholder's wages for the taxable period in which the Bonus is received. If the IPO Registration Statement is not initially filed with the SEC on or before July 1, 2006 and the Bonus and repayment of the Purchase Loan are rescinded and cancelled, then the Coinvestment Shareholder will cooperate with Merrill in recovering and returning to Merrill any amounts withheld in connection with the Bonus and, if requested by Merrill, will pay to Merrill an amount equal to any such withholding amounts in connection with any portion of the Bonus not returned to Merrill.

        3.    Amendment of Investors' Agreement.    The Officer/Shareholder hereby agrees to the terms and conditions of the amended and restated Investors' Agreement, a copy of which is attached as Exhibit A to this Agreement, and simultaneously with the execution of this Agreement has executed and delivered to Merrill a counterpart signature page to the amended and restated Investors' Agreement.

        4.    No Participation in Merrill IPO.    The Officer/Shareholder hereby understands, acknowledges and agrees that none of the Shares held by the Officer/Shareholder will be included for resale in the IPO Registration Statement and agrees not to request the inclusion of any such Shares in the IPO Registration Statement.

        5.    Merrill IPO Lock-Up Agreement.    The Officer/Shareholder hereby agrees to the terms and conditions of the 180-day lock-up agreement with the underwriters (the "180-Day Lock-Up Agreement") in the Merrill IPO, a copy of which is attached as Exhibit B to this Agreement, and simultaneously with the execution of this Agreement has executed and delivered to the underwriters a counterpart signature page to such lock-up agreement.

        6.    Extended Lock-Up Agreement and Restrictions on Transfer.    In addition to the restrictions pursuant to the 180-Day Lock-Up Agreement, each Officer/Shareholder hereby agrees not to Transfer any Shares (the "Transfer Restrictions"), except as permitted by the terms of this Agreement or as otherwise permitted by the Board of Directors of Merrill.

        (a)    Permitted Transfers to Transferees Agreeing to Restrictions.    Notwithstanding the first sentence of Section 6 of this Agreement, this Agreement will

4

not prohibit a Transfer of Shares by an Officer/Shareholder (i) as a bona fide gift, (ii) to any family member, trust or other Person in a transaction that is principally for estate planning purposes or (iii) to any beneficiary, executor, trust, legal guardian or legal representative upon the death or disability of the Officer/Shareholder; provided that, prior to any such Transfer pursuant to clauses (i), (ii) or (iii) the transferee must (x) execute a counterpart signature page to this Agreement and (y) agree in writing to hold such Shares (or interest in such Shares) subject to all of the terms and provisions of this Agreement, including any and all restrictions to which the Officer/Shareholder transferring the Shares is subject.

        (b)    Non-Registered Sales.    Notwithstanding the first sentence of Section 6 of this Agreement, this Agreement will not prohibit a transfer of Shares by an Officer/Shareholder if (x) the Transfer Restrictions have terminated pursuant to clause (b)(i) below and (y) the Shares are sold pursuant to the terms of clause (b)(ii) below:

          (i)    Termination of Transfer Restrictions.    The Transfer Restrictions will terminate with respect to 25% of the Shares (on a cumulative basis) held by each Officer/Shareholder on the first four anniversaries of the closing date of the Merrill IPO; provided, however, that if (1) during the 17 days prior to each of the first, second, third or fourth anniversaries of the closing of the Merrill IPO, (A) Merrill releases earnings results or (B) material news or a material event relating to Merrill occurs, or (2) at any time, Merrill announces that it will release earnings results during the 16-day periods following each of the first, second, third or fourth anniversaries of the closing of the Merrill IPO, then in each case the Transfer Restrictions that would otherwise have terminated as of such anniversary will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of material news or a material event relating to Merrill, as the case may be.

         (ii)    Sales Pursuant to 10b5-1 Plan.    Notwithstanding the termination of any Transfer Restrictions pursuant to Section 6(b)(i) of this Agreement, each Officer/Shareholder agrees during the term of this Agreement to sell Shares only pursuant to a trading plan established pursuant to and that meets the requirements of Rule 10b5-1 under the Exchange Act (a "10b5-1 Plan"). A 10b5-1 Plan must be entered into by the Officer/Shareholder with a trust officer and/or broker selected by the Officer/Shareholder and reasonably satisfactory to Merrill. The terms and conditions of any such 10b5-1 Plan must be reasonably acceptable to Merrill and may only include provisions customarily included in such plans. The Officer/Shareholder will not establish a 10b5-1 Plan at any time he or she is in possession of material non-public information regarding Merrill or Merrill is in a "black out" period for trading purposes under its insider trading policy. The Officer/Shareholder agrees to cause the trust officer and/or broker administering the 10b5-1 plan to submit a monthly report to Merrill, which will include the number of Shares sold during the previous calendar month and the number of remaining Shares held by the Officer/Shareholder.

        (c)    Compliance with Applicable Securities Laws and Insider Trading Policy.    The Officer/Shareholder agrees that any sale of Shares by the Officer/Shareholder

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pursuant to this Agreement or otherwise must be in compliance with all applicable federal and state securities laws, including without limitation the provisions of Rule 144 of the Securities Act and Section 16 of the Exchange Act, and the terms of any insider trading policy to which the Officer/Shareholder may be subject. Without limiting the generality of the foregoing, the Officer/Shareholder agrees that he or she will not make any sales of Shares while in possession of material non-public information concerning Merrill.

        (d)    Share Sales by Former Employees.    The Transfer Restrictions and other provisions of this Section 6 will continue to apply to an Officer/Shareholder after any termination of the employment of such Officer/Shareholder with Merrill and any subsidiary, except that after all of the Transfer Restrictions lapse pursuant to Section 6(b)(i) sales of Shares by an Officer/Shareholder whose employment with Merrill and all subsidiaries has terminated need not be made pursuant to a Rule 10b5-1 Plan (but still must be made subject to Section 6(c) above). From and after the lapse of all of the Transfer Restrictions lapse pursuant to Section 6(b)(i), each Officer/Shareholder agrees to submit a monthly report to Merrill, which will include the number of Shares sold by the Officer/Shareholder during the previous calendar month and the number of remaining Shares held by the Officer/Shareholder.

        7.    Representations and Warranties of Officer/Shareholders.    Each Officer/Shareholder hereby represents and warrants to Merrill as follows:

        (a)    Ownership.    Except as noted on the appropriate signature page of this Agreement, the Officer/Shareholder is the record owner and Beneficial Owner of the Shares, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, other than in connection with the Purchase Loan.

        (b)    Power; Binding Agreement.    The Officer/Shareholder has the legal capacity, power and authority to enter into and perform all of his or her obligations under this Agreement. This Agreement has been duly and validly executed and delivered by the Officer/Shareholder and constitutes a valid and binding agreement of the Officer/Shareholder, enforceable against the Officer/Shareholder in accordance with its terms.

        (c)    No Conflicts.    The execution, delivery and performance of the terms of this Agreement by the Officer/Shareholder will not (i) result in a violation or breach of, or constitute (with or without notice or lapse of time or both) a default under, any agreement of any kind to which the Officer/Shareholder is a party or by which the Officer/Shareholder or the Shares may be bound, (ii) require any consent, authorization or approval of any person or entity or (iii) violate any order, writ, injunction, decree, judgment, order, statute, rule or regulation applicable to the Officer/Shareholder or any of the Shares.

        (d)    No Encumbrances.    At all times during the term hereof, all of the Shares held of record or Beneficially Owned by the Officer/Shareholder will be held by the Officer/Shareholder free and clear of all liens, claims, security interests, proxies (except

6

any proxy granted to Merrill or its designees), voting trusts or agreements, understandings or arrangements or any other encumbrances whatsoever.

        8.    Restrictive Legends.

        (a)   Each certificate representing Shares will be endorsed with legends in substantially the following form:

          (i)  THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A CERTAIN STOCK TRANSFER RESTRICTION AGREEMENT BY AND AMONG MERRILL CORPORATION AND CERTAIN OF ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF MERRILL CORPORATION.

         (ii)  Any other legends required by applicable securities laws.

        (b)   Any legend endorsed on a certificate pursuant to Section 8(a)(i) will be removed and the Merrill will issue a certificate without such legend to the holder of such Shares, if the Transfer of the Shares is no longer subject to any restrictions under Section 6 of this Agreement (other than those pursuant to Section 6(c)).

        9.    Miscellaneous.

        (a)    Termination Upon Certain Events.    If the IPO Registration Statement is not initially filed by Merrill with the SEC on or before July 1, 2006, this Agreement will terminate and be of no further force or effect. Notwithstanding any other provision in this Agreement, the Board of Directors of Merrill has the right in its sole discretion to terminate this Agreement in its entirety at any time without the consent of any Officer/Shareholder party hereto; provided, however, that from and after the time that the IPO Registration Statement is initially filed, Merrill will have no right to revoke the repayment of the Purchase Loan or otherwise terminate the provisions of Section 2 of this Agreement.

        (b)    Legal Restrictions on Transfer.    The restrictions on transfer of Shares by Officer/Shareholders contained in this Agreement are cumulative and in addition to any restrictions provided by applicable securities or other laws or other agreements restricting the transfer of Shares the Officer/Shareholder may have entered into.

        (c)    Amendments, Modifications and Waivers.    No amendment, modification or waiver in respect of this Agreement will be effective against any party unless it is in writing and signed by Merrill and any Officer/Shareholder who is adversely affected by any such amendment, modification or waiver.

        (d)    Entire Agreement.    This Agreement constitutes the entire agreement among the parties to this Agreement with respect to the subject matter of this Agreement (other than the Investors' Agreement) and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof (other than the Investors' Agreement). Notwithstanding any provision of

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this Agreement, unless and until the amended and restated Investors' Agreement becomes effective pursuant to Section 4.01 of that agreement each Officer/Shareholder who is a party to the Investors' Agreement will continue to enjoy the benefits and remain subject to the duties and obligations as a party to the Investors' Agreement, as in effect as of the date hereof, including without limitation the provisions contained in Article 4 of that agreement prior to its amendment and restatement.

        (e)    Governing Law.    This Agreement will be governed by and construed in accordance with the laws of the State of Minnesota, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. Each party hereto irrevocably consents that any legal action or proceeding against it occurring under, relating to or in connection with this Agreement or any other agreement, document or instrument arising out of or executed in connection with this Agreement may be brought only in a court of the State of Minnesota or in the United States District Court for the District of Minnesota. Each party hereby expressly and irrevocably waives any claim or defense in any action or proceeding based on any alleged lack of personal jurisdiction, improper venue or forum non conveniens or any similar basis.

        (f)    Specific Performance; Injunctive Relief.    The Officer/Shareholder acknowledges that Merrill would be irreparably harmed and that there is no adequate remedy at law for a violation of any of the covenants or agreements of the Officer/Shareholder set forth in this Agreement. Therefore, the Officer/Shareholder hereby agrees that, in addition to any other remedies that may be available to Merrill, as applicable upon any such violation, Merrill will have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to such party at law or in equity without posting any bond or other undertaking.

        (g)    Assignment and Successors.    This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that neither this Agreement nor any of the rights, interests or obligations of the parties hereto may be assigned by any party hereto without prior written consent of the other party hereto except that Merrill, without obtaining the consent of any Officer/Shareholder, will be entitled to assign this Agreement or all or any of its rights or obligations hereunder to any one or more Affiliates of Merrill or to any entity that succeeds to the business of Merrill substantially as an entirety. Any assignment in violation of the foregoing will be void and of no effect.

        (h)    No Third Party Rights.    Nothing in this Agreement, express or implied, is intended to or will confer upon any person or entity (other than the parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

        (i)    Cooperation.    Each Officer/Shareholder agrees to cooperate fully with Merrill and to execute and deliver such further documents, certificates, agreements and instruments and to take such other actions as may be reasonably requested by Merrill to evidence or reflect the transactions contemplated by this Agreement and to carry out the intent and purpose of this Agreement. The Officer/Shareholder hereby agrees that Merrill may publish and disclose such Officer/Shareholder's identity and ownership of

8

Shares and the nature of such Officer/Shareholder's commitments, arrangements and understandings under this Agreement as may be required by applicable law or in any filing made by Merrill with the SEC or any other regulatory entity.

        (j)    Severability.    If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

        (k)    Relationship of Parties.    The terms of this Agreement are not intended to create a separate entity for United States federal or state income tax purposes or under the laws of any other jurisdiction. Nothing in this Agreement should be read to create any partnership, joint venture or separate entity among the parties or to create any trust or other fiduciary relationship between them. Without limitation on the foregoing, Merrill will not be deemed to owe any duties of any kind to any Officer/Shareholder under or on account of this Agreement or the transactions contemplated hereby other than the contractual obligations of Merrill expressly set forth herein.

        (l)    Notices.    All notices, consents, requests, claims, demands and other communications under this Agreement must be in writing and will be deemed given if (i) delivered to the appropriate address by hand or overnight courier (providing proof of delivery) or (ii) sent by facsimile or e-mail with confirmation of transmission by the transmitting equipment confirmed with a copy delivered as provided in clause (i), in each case to the parties at the following address, facsimile or e-mail address (or at such other address, facsimile or e-mail address for a party as it specifies by like notice): (A) if to the Officer/Shareholder, to the Officer/Shareholder's address, e-mail address or facsimile shown below the Officer/Shareholder's on the signature pages hereof; and (B) if to Merrill, as follows:

Merrill Corporation
One Merrill Circle
St. Paul, Minnesota 55108
Attention: Steven J. Machov, General Counsel
Fax: (651) 632-4141
E-mail address: steve.machov@merrillcorp.com

        (m)    Counterparts.    This Agreement may be executed in several counterparts, each of which will be deemed an original and all of which will constitute one and the same instrument, and will become effective when counterparts have been signed by each of the parties and delivered to the other parties; it being understood that all parties need not sign the same counterpart.

        (n)    Headings.    The headings contained in this Agreement are for the convenience of reference only, will not be deemed to be a part of this Agreement and will not be referred to in connection with the construction or interpretation of this Agreement.

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        (o)    Additional Officer/Shareholders.    Each Officer who delivers a counterpart signature page to this Agreement to Merrill agrees that it is a party to and bound by the terms of this Agreement and will be deemed a "Officer/Shareholder" hereunder.

[Signatures on the Following Pages]

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        IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the date first above written.

MERRILL CORPORATION
By:	/s/ JOHN W. CASTRO
Name:	John W. Castro
Title:	Chairman of the Board and Chief Executive Officer
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

11

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ RICK R. ATTERBURY
Name:	Rick R. Atterbury
Title:	President and Chief Operating Officer
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

12

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ B. MICHAEL JAMES
Name:	B. Michael James
Title:	President, Transaction and Compliance Services
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

13

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ ROBERT H. NAZARIAN
Name:	Robert H. Nazarian
Title:	Executive Vice President and Chief Financial Officer
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

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OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ DALE S. KOPEL
Name:	Dale S. Kopel
Title:	Treasurer
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

15

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ CRAIG P. LEVINSOHN
Name:	Craig P. Levinsohn
Title:	Executive Vice President Marketing
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

16

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ STEVEN J. MACHOV
Name:	Steven J. Machov
Title:	Executive Vice President, General Counsel and Secretary
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

17

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ JOHN R. STOLLE
Name:	John R. Stolle
Title:	Executive Vice President and Chief Technology Officer
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

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OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ BRENDA J. VALE
Name:	Brenda J. Vale
Title:	Executive Vice President, Human Resources
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

19

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ PERRY SOLOMON
Name:	Perry Solomon
Title:	President, Legal Solutions
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

20

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ KATHLEEN A. LARKIN
Name:	Kathleen A. Larkin
Title:	Vice President, Operations, Legal Solutions
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

21

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ ALLEN J. MCNEE
Name:	Allen J. McNee
Title:	President, Legal Solutions Sales
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

22

OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ MARK A. ROSSI
Name:	Mark A. Rossi
Title:	President, Financial Services and Brand Management
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

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OFFICER/SHAREHOLDER:
MERRILL CORPORATION
By:	/s/ RAYMOND J. GOODWIN
Name:	Raymond J. Goodwin
Title:	President, Integrated Operations
Address:

Telephone: (      )       -        

Facsimile: (      )       -        

E-Mail Address:

Shares Owned Beneficially and of Record:

Ownership Comments:

[Counterpart Signature Page to Stock Transfer Restriction Agreement]

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Exhibit A

Amended and Restated Investors' Agreement

25

Exhibit B

180-Day Lock-Up Agreement

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Exhibit 10.32

STOCK TRANSFER RESTRICTION AGREEMENT

Exhibit A

Amended and Restated Investors' Agreement

Exhibit B

180-Day Lock-Up Agreement

EX-21.1

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Exhibit 21.1

MERRILL CORPORATION

Name of Subsidiary	State or Other Jurisdiction of Incorporation	Percentage of Ownership
Merrill Communications LLC	Delaware	100
FMC Resource Management Corporation	Washington	100
Merrill Real Estate Company	Minnesota	100
Merrill Corporation, Canada	Ontario	100
793473 Ontario Ltd.	Ontario	100
2089711 Ontario, Inc.	Ontario	100
Quebecor Merrill Canada Inc.	Canada	100
Cetara Corporation	Minnesota	100
Merrill/Global, Inc.	Minnesota	100
Merrill Corporation Ltd.	United Kingdom	100
Merrill France S.A.R.L.	France	100
Merrill Germany GmbH	Germany	100
Merrill Ventures, Inc.	Minnesota	100
Merrill OfficeTiger LLC	Delaware	100
Inventive Marketing Services, Inc.	Minnesota	100
Merrill Fine Arts Engraving, Inc.	Minnesota	100
Merrill Brink International Corporation	Minnesota	100
Merrill Brink International Ltd.	Ireland	100
WordWave, Inc.	Delaware	100
LegaLink, Inc.	Delaware	100
VITAC Corporation	Pennsylvania	100
LAD Acquisition Corp.	Delaware	100
WordWave International PTY Ltd.	Australia	100
National Transcription Services PTY Ltd.	Australia	100
Smith Bernal Group Ltd.	United Kingdom	100
Wordwave International Limited	United Kingdom	100
Captioning & Subtitling International Limited	United Kingdom	50
Captioning & Subtitling CSI PTY Ltd.	Australia	100
Talk Write Back Limited	United Kingdom	100
WordWave International Limited	Asia	100
WordWave International Limited	Malaysia	100
LiveNote Reporting Ltd.	Bermuda	40

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Exhibit 21.1

MERRILL CORPORATION

EX-23.1

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EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the use in this Registration Statement on Form S-1 of our report dated March 25, 2005 relating to the financial statements of Merrill Corporation, which appears in such Registration Statement. We also consent to the references to us under the headings "Experts" and "Selected Financial Data" in such Registration Statement.

/s/  PricewaterhouseCoopers LLP
Minneapolis, MN
February 13, 2006

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EXHIBIT 23.1

EX-23.2

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EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We hereby consent to the use in this Registration Statement on Form S-1 of our report dated April 29, 2005 relating to the financial statements of WordWave, Inc., which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/  PricewaterhouseCoopers LLP
Boston, Massachusetts
February 13, 2006

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EXHIBIT 23.2