Exhibit
10.10


 


Execution
Copy


 


EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT
(this “Agreement”) is executed on May 7, 2004, but is effective as of January 1,
2004, by and between Quad/Graphics, Inc., a Wisconsin corporation (the “Company”),
and John C. Fowler (“Executive”).


 


WHEREAS, Executive is currently employed by the
Company as its Vice President of Finance, having previously spent his working
career in various capacities with the Company;


 


WHEREAS, the Company desires to continue to
employ Executive upon the terms and subject to the conditions set forth in this
Agreement and, conversely, to be protected in the event Executive’s employment
is terminated for any reason;


 


WHEREAS, Executive desires to accept such
employment and to serve the Company upon the terms and subject to the
conditions set forth in this Agreement and accepts the restrictions on his
future employment as defined herein; and


 


WHEREAS, capitalized terms used but not defined
in the context of the Section in which such terms first appear shall have
the meaning set forth in Section 12.


 


NOW,
THEREFORE, in
consideration of the covenants set forth below, the continued employment of
Executive by the Company, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:


 


1.                                       Employment; Term.


 


(a)                                  Employment.  The Company
hereby agrees to employ Executive, and Executive hereby agrees to serve the
Company, upon the terms and subject to the conditions set forth in this Agreement.


 


(b)                                 Term.  The term of
Executive’s employment with the Company shall continue for a period of at least
two years ending on December 31, 2005, unless terminated earlier pursuant
to Section 4 hereof. If the Executive is not notified on or before December 31,
2004, by the Chairman of the Board or the Chairman of the Compensation
Committee that the term of his employment under this Agreement will not be
extended, then it shall automatically be extended (subject to Section 4)
for an additional year, and this process of automatic one-year extensions shall
continue until Executive is notified in any calendar year that the term will
not be extended beyond the end of the ensuing calendar year.


 


2.                                       Nature of Employment.


 


(a)                                  Position and Duties. Executive shall serve the Company as
its Vice President of Finance and Chief Financial Officer, with responsibility
as the chief financial officer 


 

















 


of the Company, and in such other capacities consistent with Executive’s
role as Vice President of Finance and Chief Financial Officer as may be
reasonably assigned from time to time to Executive by the Company’s Chairman,
Chief Executive Officer or Board of Directors.


 


(b)                                 Commitment.  During the
term of this Agreement, Executive shall be employed by the Company full time
and shall devote substantially all of the Executive’s entire working time to
the business and affairs of the Company and its Affiliates, subject to
vacation, absences because of illness, sabbaticals approved in accordance with
Company policy and approved leaves of absence. Notwithstanding the forgoing, it
shall not be a violation of this Section 2(b) for the Executive to: (i) serve
on civic or charitable boards or committees; (ii) serve as a director (or
similar capacity) of another business as long as such other business is not a
competitor of the Company; (iii) deliver lectures, fulfill speaking
engagements or teach occasional courses or seminars at educational
institutions; or (iv) manage his personal and business finances; provided
that the activities described in subsections (i), (ii), (iii) and (iv) above
do not interfere, in any material respect, with Executive’s responsibilities
under this Agreement.


 


3.                                       Compensation.


 


(a)                                  Base Salary. 
Executive shall receive a salary (“Base Salary”) at the initial rate of
Three Hundred Seventy-Five Thousand Dollars ($375,000) per year. Executive’s
Base Salary shall be subject to discretionary increases (but not decreases)
based on an annual review by the Company’s Board of Directors or its
Compensation Committee. Executive’s Base Salary shall be paid in accordance
with the standard payroll practices of the Company in effect from time to time.


 


(b)                                 Bonus and Incentive Compensation. 
Executive shall be eligible to earn an annual cash performance bonus and
such long-term incentive compensation as is established or awarded from time to
time by the Company’s Board of Directors or its Compensation Committee and
applied in a manner consistent with the then current prevailing practices for
other executive officers of the Company.


 


(c)                                  Vacations.  Executive
shall be entitled to four (4) weeks, or such longer period as the Company
may provide to all other executive officers of the Company, of paid vacation
each calendar year. The timing for taking such vacation shall be reasonable in
relation to the duties of Executive. Such vacation shall not cumulate from year
to year. Executive shall also be entitled to all paid holidays and sabbaticals
given by the Company to all other executive officers of the Company.


 


(d)                                 Fringe Benefits.  Executive shall be entitled to participate in
or receive benefits under such retirement savings plans, life insurance, health
and accident plans or arrangements and other employee benefits as are made
available from time to time by the Company to all other executive officers of
the Company. Without limiting the generality of the foregoing, Executive shall
be entitled to participate in or receive benefits under the employee benefits
that are described in Exhibit A, as it may be amended from time to time by
written agreement of Executive and an authorized executive officer of the
Company (the “Fixed Employee Benefits”), provided that with respect to any
Fixed Employee Benefit, Executive 


 


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meets the eligibility requirements of such Fixed Employee Benefit that
are generally applicable to all participants thereof. After the Termination
Date, Executive shall continue to participate in the Fixed Employee Benefits to
the extent they apply to an executive officer of the Company whose employment
has been terminated.


 


(e)                                  Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable travel, entertainment and similar business
expenses incurred by Executive in performing services under this Agreement,
subject to and on a basis consistent with the Company’s expense reimbursement
practices in effect from time to time.


 


(f)                                    Withholding. The Company shall withhold
from amounts paid to Executive such amounts as are required by federal, state
and local laws, regulations and rulings relating to taxes, unemployment
compensation and disability compensation.


 


4.                                       Early Termination. 
Executive’s employment with the Company pursuant to this Agreement may
be terminated as set forth below and in such cases Executive shall have the
rights set forth in Section 6.


 


(a)                                  Death.  Executive’s
employment with the Company shall terminate automatically and immediately upon
Executive’s death.


 


(b)                                 Termination Without Cause. 
Either the Company or Executive may terminate Executive’s employment
hereunder at any time for any or no reason. If the Company fails in any year to
renew the term of Executive’s employment under this Agreement for an additional
year as permitted in Section 1(b), then such failure to renew shall constitute
termination of Executive’s employment by the Company for no reason (without
Cause) effective as of December 31 of the year in which such failure
occurs.


 


(c)                                  Termination by Company for Cause. 
Notwithstanding any other provision contained in this Agreement, the
Company may terminate Executive’s employment hereunder immediately, at any
time, for Cause.


 


(d)                                 Termination by Company in the Event of
Disability.  The Company may terminate Executive’s
employment hereunder, immediately, at any time, in the event of Executive’s
Disability. Executive shall cooperate, as and when reasonably requested by an
authorized executive officer of the Company, in the Company’s efforts to
determine whether Executive has become subject to a Disability.


 


(e)                                  Termination by Executive for Good Reason. 
Executive may terminate Executive’s employment hereunder immediately, at
any time, for Good Reason.


 


5.                                       Notice of Termination. 
If either the Company or Executive wishes to terminate Executive’s
employment hereunder pursuant to Section 4 (except for the second sentence
of Section 4(b)), then the terminating party shall communicate such
termination by delivering a written notice to the non-terminating party. Such
written notice shall (a) indicate the specific termination provision of
this Agreement relied upon to terminate Executive’s employment, (b) set
forth in reasonable detail the facts and circumstances related to the
termination of Executive’s employment under the provision so indicated and (c) specify
the date that 


 


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Executive’s employment shall be terminated, which date shall be any
date, as determined by the terminating party, within sixty (60) days after the
date such written notice is delivered to the non-terminating party, provided
that if Executive is terminating Executive’s employment for any reason other
than Good Reason or if the Company is terminating Executive’s employment for
any reason other than Cause or the death or Disability of the Executive, then
such date shall be at least six (6) months after the date such written
notice is delivered to the non-terminating party; provided, further, that if
the Company is terminating Executive’s employment on account of the Executive’s
Disability, such date shall be after at least one hundred twenty (120)
consecutive days of Disability or a period of one hundred eighty (180) days of
Disability within any twelve (12) month period, and in either case, while the
Disability is continuing (the date of termination is referred to herein as the “Termination
Date”).


 


6.                                       Effect of Termination.


 


(a)                                  Termination for Cause or Without Good
Reason or By Reason of Death or Disability.  If Executive’s
employment with the Company pursuant to this Agreement is terminated by the
Company for Cause or by Executive for any reason other than Good Reason or by
reason of Executive’s death or Disability, then Executive shall be entitled to
receive from the Company the continued payment of Executive’s Base Salary and
employee benefits through the Termination Date.


 


(b)                                 Termination Without Cause or With Good
Reason.  If Executive’s employment with the Company
pursuant to this Agreement is terminated by the Company without Cause (pursuant
to Section 4(b)) or by Executive with Good Reason, then Executive shall be
entitled to receive: (i) payment from the Company in an amount equal to
one-twelfth (1/12) of the Executive’s Average Annual Cash Consideration times
the number of months (or proportionate for portions of a month) through the
remaining term of this Agreement (the “Benefit Payment End Date”); and (ii) continuation
through the Benefit Payment End Date in the Company’s medical, health,
prescription drug, dental, disability, accident and life insurance plans;
provided that the provision of any such benefit described in (ii) shall
immediately cease at such time that Executive becomes eligible to receive a
similar type of benefit through subsequent employment. Executive shall also be
entitled to outplacement services at Company cost in an amount not to exceed $50,000
from an outplacement service provider selected by the Executive. In addition,
Executive shall be entitled to receive his Base Salary (or a portion thereof as
applicable) during the period commencing on the day following the Benefit
Payment End Date and ending on the last day of the Noncompete Period.


 


(c)                                  Bonus and Incentive Payments. 
If the Executive’s employment with the Company pursuant to this
Agreement is terminated by the Company for Cause or by the Executive for any
reason other than Good Reason, Executive shall be deemed to have forfeited the
right to receive all amounts accrued during the fiscal year of termination
under the bonus and incentive compensation arrangements described in Section 3(b) and
the Company shall have no obligation to pay Executive any amounts arising under
such bonus and incentive compensation arrangements. Upon the termination of the
Executive’s employment with the Company pursuant to this Agreement for any
other reason, including by reason of the Executive’s death or Disability, the
Executive (or his beneficiaries or estate) shall be entitled to receive all
amounts accrued under the bonus and incentive compensation arrangements
described in Section 3(b) in 


 


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proportion to the number of days worked in the relevant year, with the
bonus and incentive compensation amounts determined by the Company’s
Compensation Committee at a time and in a manner consistent with the
arrangements then in effect and with any similar awards given to other key
executive officers of the Company.


 


(d)                                 Payment.  The Company
shall pay the amounts payable to Executive under this Section 6 in
accordance with the standard payroll practices of the Company in effect from
time to time.


 


(e)                                  Other Obligations. Notwithstanding any provision of this
Agreement to the contrary, no termination of the Executive’s employment
hereunder shall affect the Executive’s entitlement to receive vacation pay
(including pay for any unused sabbatical), expense reimbursement, and other
vested benefits pursuant to any stock purchase, stock option, retirement or
other benefit plan or program in which Executive was a participant or as
otherwise provided in this Agreement or legally mandated benefits.


 


(f)                                    No Further Obligations. Except as expressly set forth in this Section 6
or provided for after termination of employment in the Fixed Employee Benefits,
the Company shall have no further obligations to Executive or his beneficiaries
or estate with respect to the termination of Executive’s employment hereunder.


 


(g)                                 No Mitigation. In no event shall the Executive be
obligated to seek other employment or take other action by way of mitigation of
the amounts payable to the Executive under any of the provisions of this
Agreement.  Except as otherwise set forth
herein with respect to medical, health, prescription drug, dental, disability,
accident and life insurance, the severance benefits payable to the Executive
hereunder shall not be subject to reduction for any compensation received from
other employment.


 


(h)                                 Change of Control. 
Upon the consummation of a Change of Control following the Termination
Date, the remaining cash portion of any severance benefits payable hereunder
shall be immediately due and payable in full.


 


(i)                                     Stock Options. 
Notwithstanding the terms and conditions of any stock option agreement
or stock option plan, (i) all stock options held by the Executive which
are currently outstanding shall immediately vest on the Termination Date, to
the extent not already vested, regardless of the reason for termination; and (ii) Executive’s
exercise date for all options shall be extended for a period of two (2) years
from the Termination Date.


 


(j)                                     Retiree Benefits. If the Company is obligated to make
payments to the Executive under Section 6(b) on or after the date
Executive turns age 55, Executive will, on such date, become eligible to
receive benefits/be a participant under those Fixed Employee Benefits under
which turning age 55 is an eligibility requirement and will be deemed to have
turned 55 while still employed by the Company for purposes thereof, subject to
the Executive meeting all other eligibility requirements of such Fixed Employee
Benefits that are generally applicable to all participants thereof.


 


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7.                                       Unauthorized Disclosure and Use.


 


(a)                                  Unauthorized Disclosure or Use. During Executive’s employment with the
Company, Executive shall use and disclose the Company’s Confidential
Information solely in the interests of the Company and its Affiliates.  For a period of two (2) years following
the Termination Date, Executive shall not, without the written consent of the
Company’s Board of Directors, directly or indirectly use or disclose to any
person or entity, any Confidential Information, except to the extent required
by law or legal process. Notwithstanding anything to the contrary in this
Agreement, Executive’s obligations under this Section 7(a) with
respect to Confidential Information (i) that constitutes a trade secret
under applicable law shall continue until the longer of (1) such two-year
period; or (2) when such Confidential Information is no longer a trade
secret through no action or inaction by Executive and (ii) that is subject
to contractual restrictions between the Company and third parties (not
including Affiliates) or judicial order shall continue until the longer of (1) such
two year period; or (2) when such contractual or judicial restriction
expires.


 


(b)                                 Return of Information and Other Property. On or before the last day of Executive’s
employment with the Company (or any other time upon the Company’s request),
Executive shall deliver to the Company the original and all copies of all
documents, records and property of any nature whatsoever, including, without limitation,
telephones, computers, automobiles and other tangible personal property and any
records, documents or property created by Executive, that are in Executive’s
possession or control and that are the property of the Company or any of its
Affiliates, except as authorized in writing or pursuant to the Company’s then
existing policies permitting withdrawing executives to retain computers, cell
phones or other items of Company property for their personal use. Executive
further agrees that, within ten (10) days following the Termination Date,
he shall deliver to the Company a certificate to the effect that he has deleted
all Confidential Information and Company trade secrets stored on any computer
owned by him or owned by any person then residing with him.


 


8.                                       Covenant Not to Compete. 
Executive acknowledges that he has obtained and will continue to obtain
during his employment with the Company, knowledge of Confidential Information,
customer relationships, know-how and goodwill that would, in the event Executive
were to become employed by or otherwise associated with a competitor, cause
irreparable harm to the Company and its Affiliates. In consideration of the
promises of Company herein and to protect these and other legitimate business
interests, Executive agrees to the following independent and severable
restrictions:


 


(a)                                  During the Noncompete Period, Executive
shall not directly or indirectly, as a director, officer, employee,
shareholder, investor, partner, consultant or otherwise, provide any services in
connection with the business of any person or entity who/which produces or
sells any products or services (i) that compete with those produced, sold
or offered for sale by the Company or any Affiliate as of the Termination Date;
or (ii) which, during the twenty-four (24) months prior to the Termination
Date, the Company or an Affiliate has taken internal or external steps to sell
or produce or has materially considered, at an executive level, selling or
producing (both (i) and (ii) hereafter referred to as “Restricted
Products/Services”). The geographic scope (the “Territory”) of this covenant
shall include the United States and any other country in which the Company or
an Affiliates has direct operations, operates through a joint venture in which
it 


 


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has more than a nominal investment interest or has sold or engaged in
marketing of Restricted Products/Services. Nothing in this Agreement shall
prohibit Executive’s ownership of securities of corporation that is listed on a
national securities exchange or traded in the national over-the-counter market
in an amount that does not exceed five percent (5%) of the outstanding shares
of any such corporation.


 


(b)                                 During the Noncompete Period, the
Executive shall not solicit any customer of the Company to whom/which is sold
restricted Products/Services during the two (2) years preceding the
Terminate Date anywhere in the territory for the purpose of selling Restricted
Products/Services to such customer.


 


(c)                                  Recognizing the specialized nature of the
business of the Company and its Affiliate, Executive acknowledges and agrees
that the duration, geographic scope and activity restrictions of this covenants
not to compete are reasonable and will not prevent him from earning a living.


 


9.                                       Solicitation of Employees. During the Noncompete Period, Executive
shall not directly or indirectly (a) solicit for employment with an entity
other than the Company or its Affiliates to perform services for the Company
any individual who is employed by the Company or its Affiliates (an “Employee”);
(b) engage in discussions encouraging any Employee to terminate his/her
employment with the Company or its Affiliates or engagement as an independent
contractor providing services to the Company; (c) in any way prompt any
Company or Affiliate Employee or contractor to diminish the services he/she/it
provides to the Company; or (d) assist any third party with respect to any
of the foregoing.  Notwithstanding the
foregoing, nothing in this Section 9 shall (i) prohibit the Executive
from offering employment to, or an independent contractor relationship with,
any such person who initiates employment or independent contractor relationship
discussions with Executive’s then current employer without any direct or
indirect solicitation or involvement by Executive or (ii) during the term
of his employment with the Company, restrict Executive from encouraging any
Company or Affiliate Employee to resign or any contractor to terminate
his/her/its contractual relationship with the Company or Affiliate, or from
terminating any employee or contractor of the Company or Affiliates, provided
that such discussions are in the best interest of the Company or its
Affiliates.


 


10.                                 Rights to Inventions; Assignment.


 


(a)                                  Disclosure; Ownership. During Executive’s employment with the
Company and for a period of one (1) year thereafter, Executive shall
provide the Company with written notice of all Inventions and all work that he
performs during his employment with the Company that is in any way connected
with the business of the Company shall be work for hire. Executive agrees that
all Inventions shall be the sole and exclusive property of the Company.
Executive also agrees that all Inventions that Executive discloses to others or
attempts to develop, sell, patent, trademark, copyright or use within one (1) year
after the last day of Executive’s employment with the Company shall be presumed
to have been conceived during the term of such employment, unless Executive can
establish clear and convincing evidence of specific facts that prove that
Executive did not conceive the Invention during the term of such employment.
Further, Executive disclaims and agrees not to assert rights in any Invention
as having been made, conceived or acquired prior to employment with the
Company.


 


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(b)                                 Assignment; Cooperation. Executive hereby assigns to the Company
all of Executive’s right, title and interest in and to all Inventions. During
Executive’s employment with the Company and at all times thereafter, upon the
request of an authorized executive officer of the Company, Executive shall do
any reasonable act and thing to assist the Company in any way to vest in the
Company all of Executive’s right, title and interest in and to all Inventions
and to obtain, defend and enforce the Company’s rights in all Inventions
including, without limitation, agreeing to testify in any suit or other
proceeding involving any Invention or document, to review, return or sign all
documents that the Company reasonably determines to be necessary or proper, and
to apply for, obtain or enforce any patents or copyrights relating to any
Invention. The Company shall compensate Executive at a reasonable rate for time
actually spent assisting the Company with any of the foregoing after the last
day of Executive’s employment with the Company.


 


11.                                 Gross-Up.


 


(a)                                  Gross-Up Payment. If any portion of any Severance
Payments would, in the Opinion of Tax Counsel (as hereafter defined) be subject
to the tax imposed by Section 4999 of the Code (or any successor
provision) (the “Excise Tax”), then the Company shall pay to the Executive, no
later than the 30th day following the Executive’s consent, an additional amount
(the “Gross-Up Payment”) such that the net amount retained by the Executive,
after deduction of (i) any Excise Tax; (ii) any federal, state or
local income tax, interest charges or penalties arising in respect of the
imposition of such Excise Tax; and (iii) any federal, state or local
income tax or Excise Tax imposed upon the payment provided for by this Section 11(a),
necessary to place the Executive in the same after-tax financial position that
he would have been in if he had not incurred any liability for the Excise Tax.
For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest marginal stated rate
of federal income taxation in the calendar year in which the Gross-Up Payment
is to be made and state and local income taxes at the highest marginal states
rates of taxation in the state and locality of the Executive’s domicile for
income tax purposes on the date the Gross-Up Payment is made, net of the
expected reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.


 


(b)                                 Gross-Up Adjustments. As a result of the uncertainty in the
application of Section 280G of the Code at the time of the initial
determinations by the Tax Counsel, it is possible that amounts will have been
paid or distributed by the Company to or for the benefit of the Executive
pursuant to this Agreement which should not have been so paid or distributed (“Overpayment”)
or that additional amounts which should have been paid or distributed (“Underpayment”),
in each case, consistent with the calculation of the Gross-Up Payment
hereunder. In the event that the Tax Counsel, based upon the assertion of a
deficiency by the Internal Revenue Service against the Company or the Executive
which the Tax Counsel believes has a high probability of success or other
controlling precedent or substantial authority, determines that an Underpayment
has been made, any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive. In the event that the Tax Counsel, based
upon controlling precedent or other substantial authority, determines that an
Overpayment has occurred, any such Overpayment paid or distributed by the
Company to or for the benefit of the Executive shall be treated for all
purposes as a loan to the Executive which the Executive shall promptly repay to
the Company; provided, however, that no amount shall be payable by the 


 


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Executive to the Company if and to the extent such payment would not
reduce the amount which is subject to the Excise Tax.


 


(c)                                  Change in Law. In the event that the provisions of
Sections 280G and 4999 of the Code (or any successor provisions) are repealed
and not reinstated, this Section 11 shall cease to be effective on the
effective date of such repeal.


 


12.                                 Definitions. As used in this Agreement, the
following capitalized terms shall have the meanings set forth below:


 


(a)                                  “Affiliate” means any person or
entity from time to time controlling, controlled by or under common control
with Quad/Graphics, Inc. For this purpose, the terms “controlling,” “controlled
by” or “under common control with” mean direct or indirect ownership of more
than fifty percent (50%) of the voting power of another entity. As of the date
hereof, “Affiliates” means and includes (without limitation) each of the
following entities: Parcel/Direct, Inc.; Anselmo L. Morvillo, S.A.; Plural
Editora e Grafica; Winkowski Sp. z o.o; Quad/Tech, Inc.; QuadTech Europe, Inc.;
Quad/Creative, Inc.; Duplainville Transport, Inc.; Quad/Pak, Inc.;
The Quad Technology Group, Inc.; Silver Spring Realty, Inc.; Chemical
Research/Technology Co.; Quad/West, Inc.; Quad/Med, Inc.; and
Quad/Electric, Inc.


 


(b)                                 “Average Annual Cash Consideration”
shall mean an amount equal to (i) the annual Base Salary in effect on the
Termination Date plus (ii) the average annual cash performance bonus paid
to Executive pursuant to this Agreement during the three (3) year period
immediately preceding the Termination Date; provided that the amount of the
Average Annual Cash Consideration shall not be less than Six Hundred
Thirty-Three Thousand Dollars ($633,000).


 


(c)                                  “Cause” shall mean (i) any
intentional and willful act of Executive involving fraud, embezzlement or theft
of the assets of the Company or any of its Affiliates or the assets of
customers of the Company or any of its Affiliates; (ii) gross misconduct
on the part of the Executive that is intentional and willful and that
materially and demonstrably causes serious financial injury to the Company or
any of its Affiliates; (iii) any conviction of Executive of a felony; (iv) any
breach by Executive of Section 7 that materially and demonstrably causes
serious financial injury to the Company or any of its Affiliates; (v) any
breach of Section 8; or (vi) any intentional, willful and material
failure of Executive to perform Executive’s employment duties (other than any
such failure resulting from Executive’s Disability) for an extended period
after the Board of Directors of the Company delivers a written demand for
performance to Executive that specifically identifies the manner in which the
Board believes that Executive has not substantially performed Executive’s
employment duties. For purposes of this paragraph, no act or failure to act on
the part of Executive shall be considered “intentional” or “willful” unless it
is done, or omitted to be done, by Executive in bad faith and without
reasonable belief that Executive’s act or omission was in the best interests of
the Company and its Affiliates, and any act or failure to act based upon
authority given pursuant to a resolution duly adopted by the Board or advice of
counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by Executive in good faith and in the best interests of the Company
and its Affiliates.


 


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(d)                                 “Change of Control” shall mean (i) a
sale, in one transaction or series of related transactions, of the Company’s
stock or Quad/Graphics, Inc. Voting Trust certificates, its merger,
consolidation, reorganization or other transaction, the result of which is that
voting control sufficient to elect a majority of the Board of Directors of the
Company (or its successor) no longer resides (A) in the Quad/Graphics, Inc.
Voting Trust and any successor thereto, or (B) collectively in the family
of Harry V. and Betty Quadracci, their lineal descendants, trusts, estates,
foundations and other entities established for their benefit or effectively
controlled by some or all of them or (ii) a sale of all or substantially
all of the assets of the Company to an entity that is not controlled by one or
more of the entities described in (A) or (B) above.


 


(e)                                  “Code” means the Internal Revenue
Code of 1986, including any amendments or successor provisions or tax codes
thereof.


 


(f)                                    “Confidential Information” shall
mean all ideas, information, knowledge and discoveries, whether or not
patentable, trademarkable or copyrightable, that are not generally known in the
trade or industry and about which Executive has knowledge as a result of
Executive’s employment with the Company or other relationship with any of the
Company’s Affiliates, including, without limitation, the Company’s or any
Affiliate’s product specifications, methods, equipment, technology, patents,
know-how, inventions, improvements, designs, business plans, marketing plans,
budget, cost and pricing information, employee compensation information,
employee performance evaluations and employment related personnel information,
internal memoranda, development programs, sale methods, customer lists,
customer usages and requirements, computer programs, trade secrets and other
confidential technical or business information and data. Confidential
Information shall not include such information that Executive can demonstrate
by clear and convincing evidence: (i) at the time of disclosure by the
Company or any of its Affiliates to Executive, was published or known publicly
or otherwise was in the public domain; or (ii) after disclosure by the
Company or any of its Affiliates to Executive and other than as a result of
breach of Executive’s obligations under this Agreement, becomes published or
publicly known or otherwise becomes part of the public domain.


 


(g)                                 “Disability” shall mean Executive
having become incapable of performing Executive’s customary employment duties
on a substantial full-time basis with reasonable accommodation; provided that
two (2) physicians licensed to practice in Wisconsin each certify to the
Company in writing as to such incapacity and the date of its onset. Such
physicians shall be mutually agreed to by the Company and the Executive;
provided that if the Company and the Executive cannot agree on the identity of
such physicians, such physicians shall be selected by the Chief of Staff of the
Medical College of Wisconsin. The Company shall be responsible for the fees of
such physicians and any tests or procedures undertaken at the direction of such
physicians.


 


(h)                                 “Good Reason” shall mean (i) any
material breach of this Agreement by the Company; (ii) other than for
Cause, any reduction in Executive’s salary or any reduction by the Company in
Executive’s performance bonus or other incentive compensation potential (other
than any change in either that applies to substantially all other executive
officers of the Company who are entitled to such benefits), provided that such
reduction shall constitute Good Reason if the Executive’s salary is reduced
below the amount set forth in Section 3(a) above; and (iii) other
than for Cause, any material change, without the prior written consent of
Executive, in 


 


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Executive’s conditions of employment with the Company from such
conditions of employment in effect as of the date hereof, including, without
limitation, (A) any material reduction in the nature or scope of Executive’s
title, authority, powers, functions, duties, reporting requirements or
responsibilities as the Chief Financial Officer and Vice President of Finance
of the Company, and (B) any requirement by the Company that Executive be based
at any office or location that is not within a sixty (60) mile radius of
Sussex, Wisconsin, except for travel reasonably required in the performance of
Executive’s responsibilities and consistent with past practice.


 


(i)                                     “Noncompete Period” shall mean the
period commencing on the date of this Agreement and ending on the date that is
two (2) years after the last day of the Executive’s employment with the
Company.


 


(j)                                     “Tax Counsel” shall mean a
nationally recognized tax counsel selected by the Company’s independent
auditors and acceptable to the Executive in the Executive’s sole discretion.


 


(k)                                  “Opinion of Tax Counsel” shall
mean an opinion of the Tax Counsel (which need not be unqualified) which sets
forth (A) the “base amount” within the meaning of Section 280G of the
Code; (B) the aggregate present value of the payments in the nature of
compensation to the Executive as prescribed in Section 280G(b)(2)(A)(ii) of
the Code; and (C) the amount and present value of any “excess parachute
payment” within the meaning of Section 280G(b)(l) of the Code,
unless, in the reasonable opinion of the Tax Counsel, such excess parachute
payments represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the Code, or are not
otherwise subject to the Excise Tax. For purposes of such opinion, the value of
any non-cash benefits or any deferred payment or benefit shall be determined by
Tax Counsel in accordance with the principles of Section 280G of the Code,
which determination and the method of its determination shall be evidenced in a
certificate of such Tax Counsel addressed to the Company and the Executive. In
providing the opinion or determining the value of any non-cash benefit or
deferred payment or benefit, Tax Counsel may rely on the advice of a firm of
recognized executive compensation consultants, appraisers, actuaries, or
accountants, as to the value or reasonableness of any item of compensation to
be received by the Executive. The Opinion of Tax Counsel shall be dated as of
the date of termination of the Executive’s employment and addressed to the
Company and the Executive and shall be binding upon the Company and the
Executive.


 


(l)                                     “Inventions” shall mean all
designs, discoveries, improvements, ideas and works of authorship, whether or
not patentable, trademarkable or copyrightable, including, without limitation,
any novel or improved products, software, computer programs, processes,
machines, promotional and advertising materials, data processing systems,
circuits, mask works, flowcharts, algorithms, drawings, blue prints, schematics
and other manufacturing and sales techniques, that either (i) relate to (A) the
business of the Company or any of its Affiliates or (B) the actual or
demonstrably anticipated research or development of the Company or any of its
Affiliates, or (ii) result from any work performed by Executive for the
Company or any of its Affiliates.


 


(m)                               “Severance Payments” means any
payments or benefits received or to be received by the Executive from the
Company (whether payable pursuant to the terms of this 


 


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Agreement, or any other plan, agreement or arrangement with the Company
or any corporation affiliated with the Company within the meaning of Section 1504
of the Code).


 


13.                                 Miscellaneous.


 


(a)                                  Resolution of Disputes. Any dispute, controversy or claim
arising out of or relating to this Agreement, including the breach of this
Agreement, or to the employment of Executive, including termination of such
employment, shall be adjudicated by a federal or state court of competent
jurisdiction located in the State of Wisconsin. The parties hereby consent to
personal and subject matter jurisdiction and venue in any such court.


 


(b)                                 Enforcement of Sections 7, 8, 9 and 10. 
Recognizing that compliance with the provisions of Sections 7, 8, 9 and
10 is necessary to protect the goodwill and other proprietary interests of the
Company and its Affiliates and that any breach of Executive’s agreements
thereunder will result in irreparable and continuing injury to the Company and
its Affiliates for which there will be no adequate remedy at law, Executive
hereby agrees that, in the event of any such breach, the Company shall be
entitled to injunctive relief and such other and further relief, including,
without limitation, damages, as may be proper. In addition, Executive
recognizes that payments to Executive under Section 6 of this Agreement
are contingent on compliance with the terms of Sections 7, 8, 9 and 10 and such
payments may be terminated or withheld if Executive fails to comply with such
terms.


 


(c)                                  Severability. 
In the event a court of competent jurisdiction determines that the
provisions of this Agreement are illegal or excessively broad, the parties
expressly agree that this Agreement shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and effect,
and any such illegal or overbroad provisions shall be deemed, without further
action on the part of any person or entity, to be modified, amended and/or
limited to the extent necessary to render the same valid and enforceable in
such jurisdiction.


 


(d)                                 Survivability. 
Notwithstanding anything to the contrary in this Agreement, the
provisions Sections 6, 7, 8, 9 and 10 shall survive the expiration or
termination of this Agreement.


 


(e)                                  Amendment.  Except as
contemplated by Section 13(c), no provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in a writing signed by Executive and an authorized executive officer
of the Company.


 


(f)                                    No Waiver.  No waiver by
either party at any time of any breach by the other party of, or compliance
with, any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar conditions or
provisions at the same or at any prior or subsequent time.


 


(g)                                 Entire Agreement. 
No agreements, representations or conditions, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party that are not expressly set forth in this Agreement. This Agreement
supersedes any prior agreements with respect to the subject matter hereof.


 


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(h)                                 Governing Law.  The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Wisconsin, excluding conflicts of law
principles.


 


(i)                                     Parties in Interest. This Agreement and all rights of
Executive hereunder shall inure to the benefit of and be binding upon and
enforceable by Executive and Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. This Agreement and all rights of the Company hereunder shall inure to
the benefit of and be binding upon and enforceable by the Company and the
Company’s successors and assigns.


 


(j)                                     Headings. The headings contained herein are for reference only
and, shall not affect the meaning or interpretation of this Agreement.


 


(k)                                  Assignment of Agreement. This Agreement may not be assigned by
either party without the prior written consent of the other party; provided,
however that the Company may assign this Agreement to any Affiliate and to any
person or entity that acquires substantially all of the assets of the Company
without the prior written consent of Executive.


 


(l)                                     Indemnification. The Executive shall be indemnified by
the Company against liability as an officer and director of the Company and any
Affiliate of the Company to the maximum extent permitted by the Company’s
Articles of Incorporation, By-Laws and under applicable law. To the fullest
extent permitted under the Articles of Incorporation and By-Laws of the
Company, and subject to any policies of the Company applicable officers and
directors, the Company shall advance to the Executive payment of reasonable
costs of defending against any claims covered by the foregoing indemnification
commitment. The Executive’s rights under this Section 13(1) shall continue
so long as he may be subject to such liability whether or not this Agreement
may have terminated prior thereto.


 


(m)                               Expenses. The Company shall pay all reasonable attorneys’,
accountants’ and other advisors’ fees and expenses incurred by the Executive
solely in connection with the negotiation and preparation of this Agreement,
subject to a limit of $10,000.


 


[The next page is
the signature page.]


 


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IN
WITNESS WHEREOF, the parties have executed this Employment Agreement as of the
day and year first above written.


 


	
   

  	
  QUAD/GRAPHICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas A. Quadracci

  
	
   

  	
   

  	
  Thomas A. Quadracci

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John C. Fowler

  
	
   

  	
  John C. Fowler

  



 


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