Exhibit 10.1


 


QUAD/GRAPHICS, INC.


 


1999 NONQUALIFIED STOCK
OPTION PLAN


 


1.             Purpose.  The purpose of the Quad/Graphics, Inc.
1999 Nonqualified Stock Option Plan (the “Plan”) is to promote the best
interests of Quad/Graphics, Inc. (the “Company”) and its shareholders by
providing (a) employees of the Company and its Related Corporations (as
defined in Section 3) and (b) members of the Company’s Board of
Directors (the “Board”) who are not employees of the Company or its Related
Corporations with an opportunity to acquire or increase their proprietary
interest in the Company and thereby develop a stronger incentive to put forth
maximum effort for the continued success and growth of the Company.  In addition, the opportunity to acquire or
increase a proprietary interest in the Company will aid in attracting and
retaining key personnel of outstanding ability and persons of exceptional
competence as members of the Board.  It
is intended that the options issued pursuant to the Plan will constitute
nonqualified stock options that do not meet the requirements of incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”), or any successor provision thereto.  Each option granted under the Plan shall be
evidenced by a written option agreement with the recipient thereof (an “Option
Agreement”) setting forth the terms and conditions of the grant and the
exercise of the subject option, as determined by the Board in accordance with
the Plan.


 


2.             Administration.  The Plan shall be administered by the
Board.  The Board may, in its discretion,
delegate to another committee of the Board or to one or more senior officers of
the Company any or all of the authority and responsibility of the Board hereunder,
except to the extent prohibited by any applicable law or rules.  Any such


 

















 


allocation
or delegation may be revoked by the Board at any time.  To the extent that the Board has delegated to
such other committee or one or more officers the authority and responsibility
of the Board hereunder, all references to the Board herein shall include such
other committee or one or more officers. 
Subject to the provisions of the Plan, the Board, in its complete and
sole discretion, shall select the persons to whom options shall be granted;
shall determine the number and class of shares to be embraced in each option,
the time at which the option is to be granted, the option period, the option
price and the manner in which options become exercisable; and shall establish
such other provisions of the Option Agreements as the Board may deem necessary
or desirable.  The Board may adopt such rules and
regulations for carrying out the Plan as it may deem proper and in the best
interest of the Company.  The
interpretation by the Board of any provision of the Plan or an Option Agreement
shall be final.


 


3.             Eligibility.  Any employee (“Employee”) of the Company, or
its present and future parent corporation and/or subsidiaries, as defined in
Sections 424(e) and (f) of the Code (“Related Corporations”),
including any Employee who is a director of the Company or its Related
Corporations, whose judgment, initiative and efforts contribute materially, in
the opinion of the Board, to the successful performance of the Company or its
Related Corporations, shall be eligible to receive options under the Plan.  In addition, any member of the Board (“Director”)
who is not also an Employee of the Company or its Related Corporations shall be
eligible to receive options under the Plan. 
The Board’s decisions and determinations under the Plan need not be
uniform and may be made selectively among recipients, whether or not they are
similarly situated.  The Board’s


 


2

















 


designation
of a recipient of options hereunder in any year shall not require the Board to
designate such person to receive options in any other year.


 


4.             Shares
Subject to the Plan.  The shares to
be subject to options under the Plan shall, in the sole discretion of the
Board, be shares of the Company’s Class A Common Stock, $0.025 par value (“Class A
Stock”) or the Company’s Class B Common Stock, $0.025 par value (“Class B
Stock” and, together with Class A Stock, “Stock”), and may be either
authorized and unissued or treasury shares. 
The total amount of Stock for which options may be granted under the
Plan will be determined by the Board from time to time, with such amount
subject to adjustment as provided in Section 9.  In the event that an option granted under the
Plan to any optionee expires, is cancelled or is terminated unexercised as to
any shares of Stock covered thereby, then such shares thereafter shall be
available for the granting of additional options under the Plan.


 


5.             Option
Price.  The option price per share of
Stock shall be fixed by the Board at the time of the grant of an option
hereunder.


 


6.             Grant
of Options.  Subject to the terms and
conditions of the Plan, the Board may from time to time grant to such Employees
and Directors as the Board may determine options to purchase such number of
shares of Stock and on such terms and conditions as the Board may
determine.  More than one option may be
granted to the same optionee.  The day on
which the Board approves the granting of an option shall be considered as the
date on which such option is granted, unless otherwise provided by the Board.


 


3

















 


7.             Option
Period.  The Board shall determine
and set forth in the particular Option Agreement the period during which each
option may be exercised (the “Option Period”).


 


8.             Exercise
of Options.  An Option may be
exercised, in whole or in part, in accordance with the terms of the particular
Option Agreement to which the option is subject, but only within the Option
Period and only by delivery to the Company of a written notice of exercise
specifying the number of shares with respect to which the option is being
exercised.  Any notice of exercise shall
be accompanied by full payment of the option price of the shares being
purchased in cash or its equivalent or such other consideration as allowed by
the terms of the particular Option Agreement to which the option is subject or
as deemed adequate by the Board.  No
shares shall be issued until full payment therefor has been made or arranged,
and the granting of an option to an individual shall give such individual no
rights as a shareholder except as to shares actually issued to him or her upon
proper exercise.


 


9.             Capital
Adjustments Affecting Common Stock. 
In the event of any capital adjustment, whether resulting from a stock dividend,
stock split, reorganization, split-off, split-up, merger, consolidation,
combination or exchange of shares, extraordinary distribution or the like, then
the number and/or kind of shares of Stock subject to the Plan and the number
and/or kind of shares under option in then-outstanding Option Agreements shall
coincidentally be considered to be adjusted in a manner consistent with such
capital adjustment.  In the event there
is any change other than as specified above in the number or kind of outstanding
shares of Stock or of any other stock or other securities into which such Stock
shall have been changed or for which it shall have been


 


4

















 


exchanged,
then the Board may, in its sole discretion, determine that such change or
exchange equitably requires an adjustment in the number and/or kind of shares
of Stock subject to the Plan and the number and/or kind of shares under option
in then-outstanding Option Agreements. 
If any such adjusted number determined pursuant to the preceding
sentences includes a fractional share, then such adjusted number shall be
reduced to the next lower whole number without any offsetting or compensating
adjustments.  The option price per share
of any shares under option shall similarly be considered to be adjusted so that
there will be no disproportionate change in the aggregate purchase price
payable upon exercise of any such option, except insofar as the number of
shares subject to the Plan or an outstanding option is reduced to eliminate any
fractional shares.


 


10.           Corporate
Mergers and Other Consolidations. 
The Board may also grant options having terms and provisions which vary
from those specified in the Plan provided that any options granted pursuant to
this Section 10 are granted in substitution for, or in connection with the
assumption of, existing options granted by another corporation and assumed or
otherwise agreed to be provided by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition or other
reorganization to which the Company is a party.


 


11.           Amendment, Modification and
Termination.


 


11.1         The Board may, at any time, amend,
alter, suspend, discontinue or terminate the Plan; provided, however, that
shareholder approval of any amendment of the Plan shall be obtained if
otherwise required by the Code, or any rules promulgated thereunder, or
any applicable federal or state law, rule or regulation.  Termination of the Plan shall not affect the
rights of optionees with respect to options previously granted to


 


5

















 


them, and all unexpired options shall
continue in force and effect after termination of the Plan except as they may
lapse or be terminated by their own terms and conditions.


 


11.2         Amendment of Agreements.  The Board, subject to the same shareholder
approval requirements set forth above, may amend an Option Agreement at any
time; provided that no amendment may, in the absence of written consent to the
change by the affected optionee, adversely affect the rights of any optionee
under any Option Agreement effective under the Plan prior to the date such
amendment is adopted.


 


12.           Effective
Date and Term of Plan.  The effective
date of the Plan is March 31, 1999. 
The Plan shall terminate on such date as may be determined by the Board
pursuant to Section 11.1 (the “Termination Date”).  Unless otherwise expressly provided in an
applicable Option Agreement, any options granted before the Termination Date
shall extend beyond the Termination Date and, to the extent set forth in the
Plan, the authority of the Board to administer the Plan and to amend, alter,
adjust, suspend, discontinue or terminate any such award, or to waive any
conditions or restrictions with respect to any such award, and the authority of
the Board to amend the Plan and the Option Agreement as provided herein, shall
extend beyond the Termination Date.


 


13.           Tax
Withholding.  The Company or any
Related Corporation may deduct and withhold from any cash otherwise payable to
an optionee such amounts as may be required for the purpose of satisfying the
Company’s or such Related Corporation’s obligation to withhold federal, state
or local taxes.  Further, in the event
the amount so withheld is insufficient for such purpose, the Company may
require as a condition precedent to the issuance or transfer of any shares of
Stock upon or after exercise of any option that the optionee pay to the Company
upon its demand, or otherwise make


 


6

















 


arrangements
satisfactory to the Company for payment of, such amount as may be requested by
the Company in order to satisfy its obligation to withhold any such taxes.  If the amount so requested is not paid, or if
such arrangements are not made, the Company may refuse to issue or transfer
shares of Stock upon or after exercise of the option.


 


With the consent of the Board, an
optionee may be permitted to satisfy the Company’s withholding tax requirements
by electing to have the Company withhold shares of Stock otherwise issuable to
the optionee or to deliver to the Company shares of Stock having a fair market
value on the date income is recognized pursuant to the exercise of an option
equal to the amount required to be withheld. 
The election shall be made in writing and shall be made according to
such rules and in such form as the Board may determine.


 


14.           Miscellaneous.


 


14.1         Stock Transfer Restrictions.


 


(a)           Shares of Stock purchased under the
Plan may not be sold or otherwise disposed of except (i) pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the “Act”), or in a transaction which, in the opinion of counsel for the
Company, is exempt from registration under the Act; and (ii) in compliance
with state securities laws.  Further, as
a condition to issuance of shares of Stock purchased under the Plan, the
optionee or his or her heirs, legatees or legal representatives, as the case
may be, may be required by the Board to execute and deliver to the Company a
restrictive stock transfer agreement in such form, and subject to such terms
and conditions, as shall be reasonably determined or approved by the Board,
which agreement, among


 


7

















 


other things, may impose certain
restrictions on the sale or other disposition of any shares of Stock acquired
under the Plan.  The Board may waive the
foregoing restrictions, in whole or in part, in any particular case or cases or
may terminate such restrictions whenever the Board determines that such
restrictions afford no substantial benefit to the Company.


 


(b)           All certificates for shares delivered
under the Plan pursuant to the exercise of an option shall be subject to such
stock transfer orders and other restrictions as the Board may deem advisable
under the Plan and any applicable federal or state securities laws, and the
Board may cause a legend or legends to be put on any such certificates to make
appropriate references to such restrictions.


 


14.2         Option Agreement.  No person shall have any rights under any
options granted under the Plan unless and until the Company and the person to
whom the options were granted shall have executed an Option Agreement pursuant
to Section 1 hereof.


 


14.3         Requirements of Law.  The granting of options under the Plan, and
the issuance of shares of Stock in connection with the exercise of such
options, shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies or national securities exchanges
as may be required.


 


14.4         Governing Law.  The Plan, and all agreements hereunder, shall
be construed in accordance with and governed by the laws of the State of
Wisconsin.


 


14.5         Severability.  If any provision of the Plan or any Option
Agreement (a) is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction, or as to any person or option, or (b) would
disqualify the Plan, any Option 


 


8

















 


Agreement or any option under any law deemed
applicable by the Board, then such provision shall be construed or deemed
amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Board, materially altering
the intent of the Plan, any Option Agreement or any option, then such provision
shall be stricken as to such jurisdiction, person, or the Plan or Option
Agreement and the remainder of the Plan and any such Option Agreement shall
remain in full force and effect.


 


9