Exhibit
10.4


 


QUAD/GRAPHICS, INC.


 


1990 STOCK OPTION PLAN


 


1.                                       Purpose. The purpose of the Quad/Graphics, Inc. 1990
Stock Option Plan (the “Plan”) is to promote the best interests of
Quad/Graphics, Inc. (the “Company”) and its shareholders by providing key employees
of the Company and its related corporations, as defined in Section 3, and
members of the Company’s Board of Directors (the “Board”) who are not employees
of the Company or its related corporations, with an opportunity to acquire or
increase their proprietary interest in the Company and thereby develop a
stronger incentive to put forth maximum effort for the continued success and
growth of the Company.  In addition, the
opportunity to acquire or increase their proprietary interest in the Company will
aid in attracting and retaining key personnel of outstanding ability and
persons of exceptional competence as members of the Board. It is intended that
certain of the options issued pursuant to the Plan will constitute incentive
stock options (“Incentive Stock Options”) within the meaning of Section 422A
of the Internal Revenue Code of 1986, as amended (the “Code”), and the
remainder of the options issued pursuant to the Plan will constitute
nonstatutory options. The Board shall determine which options are to be
Incentive Stock Options and which are to be nonstatutory options and shall in
each case enter into a written option agreement with the recipient thereof (an “Option
Agreement”) setting forth the terms and conditions of the grant and the
exercise of the subject option, as determined by the Board in accordance with
the Plan.


 


2.                                       Administration. The Plan shall be administered by the
Board. Subject to the provisions of the Plan, the Board, in its complete and
sole discretion, shall select the persons to whom options shall be granted;
shall determine the type of options, the number and class of shares to be
embraced in each option, the time at which the option is to be granted, the
option period, the option price and the manner in which options become exercisable;
and shall establish such other provisions of the Option Agreements as the Board
may deem necessary or desirable. The Board may adopt such rules and
regulations for carrying out the Plan as it may deem proper and in the best
interest of the Company. The interpretation by the Board of any provision of
the Plan or an Option Agreement shall be final.


 

















 


3.                                       Eligibility. Any key employee (“Employee”) of the
Company, or its present and future parent corporation and/or subsidiaries, as
defined in Sections 425(e) and (f) of the Code (“Related Corporations”),
including any Employee who is a director of the Company or its Related
Corporations, whose judgment, initiative and efforts contribute materially, in
the opinion of the Board, to the successful performance of the Company or its
Related Corporations, shall be eligible to receive any type of options under
the Plan. In addition, any member of the Board (“Director”) who is not also an
Employee of the Company or its Related Corporations shall be eligible to
receive nonstatutory options under the Plan.


 


4.                                       Shares Subject to the Plan. The shares to be subject to options
under the Plan shall, in the sole discretion of the Board, be shares of the
Company’s Class A Common Stock, $0.025 par value (“Class A Stock”) or
the Company’s Class B Common Stock, $0.025 par value (“Class B Stock”
and, together with the Class A Stock, “Stock”), and may be either
authorized and unissued or treasury shares. The total amount of Stock, in the
combination of Class A Stock and Class B Stock determined by the
Board, for which options may be granted under the Plan shall not exceed two
million (2,000,000) shares, subject to adjustment as provided in Section 10,
which number includes the Shares of Stock available as a result of the stock
dividend declared by the Board immediately prior to the adoption of the Plan on
April 12, 1990. In the event that an option granted under the Plan to any
optionee expires, is cancelled or is terminated unexercised as to any shares of
Stock covered thereby, then such shares thereafter shall be available for the
granting of additional options under the Plan.


 


5.                                       Option Price. The option price per share of Stock
shall be fixed by the Board, but shall be not less than 100% of the fair market
value of the subject Stock on the date the option is granted. In the case of
any Incentive Stock Option granted to an Employee who, at the time such option
is granted, owns Stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Related Corporations (a “10%
Shareholder”), the option price shall not be less than 110% of such fair market
value. For this purpose, the fair market value of Stock shall be determined by
the Board. For purposes of determining whether an Employee is a 10%
Shareholder, there shall be taken into account both stock owned directly by the
Employee and stock which is attributed to the Employee under Section 425(d) of
the Code.


 


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6.                                       Grant of Options. Subject to the terms and conditions of
the Plan, the Board may, from time to time grant to such Employees or Directors
as the Board may determine options to purchase such number of shares of Stock
and on such terms and conditions as the Board may determine, provided that no
Incentive Stock Options maybe granted after April 11, 2000. More than one
option may be granted to the same optionee. The day on which the Board approves
the granting of an option shall be considered as the date on which such option
is granted.


 


7.                                       Option Period. Subject to the limits set forth in this
Section 7, the Board shall determine and set forth in the particular
Option Agreement the period during which each option may be exercised (the “Option
Period”). The expiration date of the Option Period for any Incentive Stock
Option granted to any Employee who, at the time the option is granted, is not a
10% Shareholder shall be no later than ten years after the date such option is
granted. The expiration date of the Option Period for any Incentive Stock
Option granted to any Employee who, at the time the option is granted, is a 10%
Shareholder shall be no later than five years after the date such option is
granted.


 


8.                                       Maximum Per Optionee. The aggregate fair market value, as
determined by the Board, of Stock with respect to which Incentive Stock Options
under the Plan and any other plans of the Company or its Related Corporations
are exercisable by an Employee for the first time during any calendar year
shall not exceed $100,000. To the extent the Code is amended from time to time
to provide additional or different limitations on the grant of Incentive Stock
Options, the foregoing limitation shall be considered to be amended
accordingly. For purposes of this Section, the fair market value of Stock
subject to an Incentive Stock Option shall be determined as of the date such
Incentive Stock Option is granted.


 


9.                                       Exercise of Options. An option may be exercised, in whole or
in part, in accordance with the terms of the particular Option Agreement to
which the option is subject, but only within the Option Period and only by
delivery to the Company of a written notice of exercise specifying the number
of shares with respect to which the option is being exercised. Any notice of
exercise shall be accompanied by full payment of the option price of the shares
being purchased (a) in cash or its equivalent; (b) if allowed by the
terms of the particular Option Agreement, by tendering shares of Stock (valued
at their fair market value, as determined by the 


 


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Board, as of the date of exercise); or (c) if
allowed by the terms of the particular Option Agreement, by any combination of (a) and
(b).  No shares shall be issued until
full payment therefor has been made or arranged, and the granting of an option
to an individual shall give such individual no rights as a shareholder except
as to shares actually issued to him or her upon proper exercise.


 


10.                                 Capital Adjustments Affecting Common
Stock. In the
event of any capital adjustment, whether resulting from a stock dividend, stock
split, reorganization, split-off, split-up, merger, consolidation, combination
or exchange of shares, extraordinary distribution or the like (but not
including the stock dividend declared by the Board immediately prior to the
adoption of the Plan on April 12, 1990), then the number and/or kind of
shares of Stock subject to the Plan and the number and/or kind of shares under
option in then-outstanding Option Agreements shall coincidentally be considered
to be adjusted in a manner consistent with such capital adjustment. If any such
adjusted number determined pursuant to the preceding sentence includes a
fractional share, then such adjusted number shall be reduced to the next lower
whole number without any offsetting or compensating adjustments. The option
price per share of any shares under option shall similarly be considered to be
adjusted so that there will be no disproportionate change in the aggregate
purchase price payable upon exercise of any such option, except insofar as the
number of shares subject to the Plan or an outstanding option is reduced to
eliminate any fractional shares.


 


11.                                 Corporate Mergers and Other
Consolidations.
The Board may also grant options having terms and provisions which vary from
those specified in the Plan provided that any options granted pursuant to this Section 11
are granted in substitution for, or in connection with the assumption of,
existing options granted by another corporation and assumed or otherwise agreed
to be provided by the Company pursuant to or by reason of a transaction
involving a corporate merger, consolidation, acquisition or other
reorganization to which the Company is a party.


 


12.                                 Amendment of Plan. The Board shall have the right to amend
the Plan at any time, provided that, unless approved by the shareholders of the
Company, no amendment shall be made in the Plan which (a) materially
modifies the eligibility requirements provided in 


 


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Section 3 or (b) increases the total number
of shares of Stock, except as provided in Section 11, which may be
purchased under the Plan by Employees or Directors as provided in Section 4.


 


13.                                 Effective Date and Term of Plan. The effective date of the Plan is April 12,
1990. The Plan shall terminate on such date as may be determined by the Board,
provided, however, that no Incentive Stock Options may be granted under the
Plan after April 11, 2000. Termination of the Plan, however, shall not
affect the rights of optionees under options theretofore granted, and all
unexpired options shall continue in force and operation after termination of
the Plan except as they may lapse or be terminated by their own terms and
conditions.


 


14.                                 Tax Withholding. The Company may deduct and withhold
from any cash otherwise payable to an optionee such amount as may be required
for the purpose of satisfying the Company’s obligation to withhold federal,
state or local taxes. Further, in the event the amount so withheld is insufficient
for such purpose, the Company may require as a condition precedent to the issuance
or transfer of any shares of Stock upon or after exercise of any option that
the optionee pay to the Company upon its demand or otherwise make arrangements
satisfactory to the Company for payment of, such amount as may be requested by
the Company in order to satisfy its obligation to withhold any such taxes. If
the amount so requested is not paid, or if such arrangements are not made, the
Company may refuse to issue or transfer shares of Stock upon or after exercise
of the option.


 


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


 


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