Exhibit
10.11


 


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 David A. Blais (“Executive”).


 


WHEREAS, Executive is currently employed by the
Company as its Vice President of Operations, 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 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 Operations, responsible for production planning,
scheduling, estimating, pricing, 


 

















 


contract administration, purchasing, and liaison with major customers,
and in such other capacities consistent with Executive’s role as Vice President
of Operations 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 Two Hundred Twenty-Five Thousand Dollars
($225,000) 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 


 


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Employee Benefits”), provided that with respect to any Fixed Employee
Benefit, Executive 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 


 


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Executive’s employment under the provision so indicated and (c) specify
the date that 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 


 


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accrued under the bonus and incentive compensation arrangements
described in Section 3(b) in 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 any 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 the 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) hereinafter 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 any individual who is employed by the
Company or its Affiliates to perform services for the Company (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.; QuadlMed, 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 Three Hundred
Eighty-Seven Thousand Dollars ($387,000).


 


(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 Vice President of Operations 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)(1) 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 extend 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/ David A. Blais

  
	
   

  	
  David A. Blais

  



 


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