July 15, 1998




Mr. Timothy M. Davis
334 Pine Creek Avenue
Fairfield, CT 06430


Dear Tim:

This will confirm that if American Color Graphics, Inc. ("ACG") terminates your
employment without cause, ACG shall continue to pay you your then current base
salary and maintain all your then current benefits (to the extent allowed under
the applicable benefit plans) for a period of three years following your
termination. In such event, ACG shall also pay you a pro rata portion of the
bonus to which you would have been entitled for the year of termination had you
been employed for the entire year, which bonus shall be payable at the time
bonuses are paid to ACG executives generally. You shall not be required to
mitigate the amount of any payment provided for above and such payments will not
be reduced in the event you obtain other employment The term "Cause" shall mean
the termination of your employment hereunder in the event of your (i) conviction
of any crime or offense involving money or other property of ACG or any felony,
(ii) willful and unreasonable refusal to substantially perform your duties
hereunder, (iii) competition with ACG, or (iv) gross negligence in the conduct
of your duties; provided, however, no termination shall be deemed for "Cause"
under clauses (ii), (iii) or (iv) unless you shall have first received written
notice from ACG advising you of the acts or omissions that constitute the basis
for termination and you fail to correct the acts or omissions complained of
within 20 business days following receipt of such notice. Your employment shall
be deemed to have been terminated "without cause" if you terminate your
employment after ACG causes any of the following events to occur: (i) a decrease
in your base salary or a failure to pay you material compensation due and
payable to you in connection with your employment; (ii) a material diminution of
your responsibilities or title; or (iii) you are required to be based at any
office or location more than 25 miles from your current principal employment
location.

For so long as you are employed by ACG, and continuing for three years
thereafter, you shall not, without the prior written consent of ACG, directly or
indirectly, as a sole proprietor, member of a partnership, stockholder or
investor, officer or director of a corporation, or as an employee, associate,
consultant or agent of any person, partnership, corporation or other business
organization or entity other than ACG: (i) render any service to or in any way
be affiliated with a competitor (or any person or entity that is reasonably
anticipated (to the general knowledge of you or the public) to become a
competitor) of ACG; (ii) solicit or endeavor to entice away from ACG any person
or entity who is, or, during the then most recent 12-month period, was employed
by, or had served as an agent or key consultant of, ACG; or (iii) solicit or
endeavor to entice away from ACG any person or entity who is, or was within the
then most recent 12-month period, a customer or client (or reasonably
anticipated (to the general knowledge of you or the public) to become a customer
or client) of ACG.



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                                                                   July 15, 1998
                                                                          Page 2



You covenant and agree with ACG that you will not at any time, except in
performance of your obligations to ACG hereunder or with the prior written
consent of ACG, directly or indirectly, disclose any secret or confidential
information that you may learn or have learned by reason of your association
with ACG. The term "confidential information" includes information not
previously disclosed to the public or to the trade by ACG's management, or
otherwise in the public domain, with respect to ACG's products, facilities,
applications and methods, trade secrets and other intellectual property,
systems, procedures manuals, confidential reports, product price lists, customer
lists, technical information, financial information (including the revenues,
costs or profits associated with any of ACG's products), business plans,
prospects or opportunities, but shall exclude any information which (i) is or
becomes available to the public or is generally known in the industry or
industries in which ACG operates other than as a result of disclosure by you in
violation of your agreements under this paragraph or (ii) you are required to
disclose under any applicable laws, regulations or directives of any government
agency, tribunal or authority having jurisdiction in the matter or under
subpoena or other process of law.

All references to "ACG" include its divisions, subsidiaries and affiliates.

If the foregoing meets with your approval, please sign and return the enclosed
copy of this letter to the undersigned.

                               Sincerely,

                               AMERICAN COLOR GRAPHICS, INC.



                               By:            /s/ Stephen M. Dyott
                                   ---------------------------------------------
                                                  Stephen M. Dyott
                                  Chairman & Chief Executive Officer & President




ACCEPTED AND AGREED TO:

 /s/ Timothy M. Davis
--------------------------------
     Timothy M. Davis