Exhibit 10.4

 

AMENDED AND RESTATED MANAGEMENT SUBSCRIPTION AGREEMENT

 

 

This AMENDED AND RESTATED MANAGEMENT SUBSCRIPTION AGREEMENT (this “Agreement”),
dated as of August 31, 2003, by and among Vertis Holdings, Inc., formerly known
as Big Flower Holdings Inc., a Delaware corporation (the “Company”), Thomas H.
Lee Equity Fund IV, L.P. (the “Sponsor”) and Donald E. Roland (the “Executive”),
who is presently an officer, member of management or key employee of the
Company.

 

WHEREAS, the Company, the Sponsor and the Executive desire to enter into this
Agreement to amend and restate the Management Subscription Agreement dated as of
November 24, 1999, (the “Original Agreement”), and to otherwise govern certain
of their rights, duties and obligations with respect to certain Rights (as
hereinafter defined) and Shares (as hereinafter defined);

 

WHEREAS, pursuant to the Original Agreement, the Executive was issued shares
(the “Shares”) of common stock, $.01 par value, of the Company (the “Common
Stock”) and/or rights to receive Common Stock of the Company (the “Rights”),
subject to the terms and conditions of the Original Agreement;

 

WHEREAS, the Company previously issued Shares and Rights to certain other
officers, members of management and key employees of the Company and certain of
its subsidiaries (the “Other Executives”);

 

WHEREAS, this Agreement does not alter in any way the original purchase of
Shares, if any, and grant of Rights, if any, pursuant to the Original Agreement,
but does alter certain rights, duties and obligations with respect thereto;

 

WHEREAS, this Agreement is one of several Amended and Restated Management
Subscription Agreements (such Amended and Restated Management Subscription
Agreements with the Other Executives, the “Other Executives’ Agreements”), that
have been and are being entered into by the Company with the Executive and the
Other Executives.

 

NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereto agree as follows:

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings ascribed
to them below:

 

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Affiliate. The term “Affiliate” shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.

 

Agreement. The term “Agreement” shall have the meaning ascribed to it in the
preamble hereto.

 

Beneficial Ownership. The terms “beneficial ownership,” “beneficially owns”
“beneficial owner” and the like shall have the meaning ascribed to it in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

 

Business Day. The term “Business Day” shall mean any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or
required by law to close.

 

Call Closing. The term “Call Closing” shall have the meaning ascribed to it in
Section 5.1(b).

 

Common Stock. The term “Common Stock” shall have the meaning ascribed to it in
the second “Whereas” clause.

 

Company. The term “Company” shall have the meaning ascribed to it in the
preamble hereto.

 

Disability. The term “Disability” of the Executive shall have the meaning
ascribed to it in the Employment Agreement, or if no such agreement is then in
effect, as determined by the Board of Directors of the Company.

 

Drag-Along Notice. The term “Drag-Along Notice” shall have the meaning ascribed
to it in Section 7.4(b).

 

Drag-Along Notice Period. The term “Drag-Along Notice Period” shall have the
meaning ascribed to it in Section 7.4(b).

 

Drag-Along Portion. The term “Drag-Along Portion” shall have the meaning
ascribed to it in Section 7.4(a).

 

Drag-Along Rights. The term “Drag-Along Rights” shall have the meaning ascribed
to it in Section 7.4(a).

 

Drag-Along Sale. The term “Drag-Along Sale” shall have the meaning ascribed to
it in Section 7.4(a).

 

Drag Shares. The term “Drag Shares” shall have the meaning ascribed to it in
Section 7.4(a).

 

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Employment Agreement. The term “Employment Agreement” shall mean the employment
agreement by and among Vertis, the Company, and the Executive, dated as of
August 31, 2003.

 

Exchange. The term “Exchange” shall mean the principal stock exchange, including
the NASDAQ Stock Market, on which the Common Stock is listed or approved for
listing, if any.

 

Executive. The term “Executive” shall have the meaning ascribed to it in the
preamble hereto.

 

Executive’s Group. The term “Executive’s Group” shall have the meaning ascribed
to it in Section 5.1(a).

 

Fair Market Value. The term “Fair Market Value” used in connection with the
value of the Securities shall mean, with respect to such Securities, the fair
market value thereof as determined by the Board of Directors of the Company in
its reasonable discretion after considering any valuations of the Company or any
subsidiary of the Company which have been received by the Company or any
subsidiary of the Company or the trustee of any benefit plan of the Company or
any subsidiary of the Company; provided, however, that if there is a Minimum
Public Float, the term “Fair Market Value” shall mean the average of the daily
closing prices, or the average of the daily bid and asked prices (as the case
may be), per share of Common Stock for the 20 trading days immediately preceding
the date upon which Fair Market Value is determined.

 

Liquidation Event. The term “Liquidation Event” shall mean (1) a public offering
of the Common Stock registered pursuant to the Securities Act where there is a
Minimum Public Float immediately following such offering, (2) a merger or other
business combination or recapitalization whereby the Common Stock is exchanged
for cash and/or publicly traded equity or debt securities in another entity or a
combination of cash and other non-publicly traded equity or debt securities
where cash constitutes at least a majority of the consideration to be received
in such merger, business combination or recapitalization or (3) a sale or other
disposition of all or substantially all of the Company’s assets to another
entity, for cash and/or publicly traded equity or debt securities of another
entity or a combination of cash and other non-publicly traded equity or debt
securities where cash constitutes at least a majority of the proceeds of such
sale or disposition, in each case, other than to the Company, any subsidiary of
the Company, or any entity controlled by the ultimate control Persons of the
Company,

 

Minimum Public Float. The term “Minimum Public Float” shall mean the
circumstances existing when (i) the consummation of one or more public offerings
registered pursuant to the Securities Act of shares of Common Stock if, upon
such consummation, the aggregate number of shares of Common Stock held by the
public, not including Affiliates of the Company, represents at least 20% of the
total number of outstanding shares of Common Stock at the time of such public
offering and (ii) the Common Stock is listed on an Exchange.

 

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Original Agreement. The term “Original Agreement” shall have the meaning
ascribed to it in the first “Whereas” clause.

 

Other Executives. The term “Other Executives” shall have the meaning ascribed to
it in the third “Whereas” clause.

 

Other Executives’ Agreements. The term “Other Executives’ Agreements” shall have
the meaning ascribed to it in the fifth “Whereas” clause.

 

Other Key People. The term “Other Key People” shall mean the officers, members
of management, key employees of the Company and certain of its subsidiaries.

 

Participants. The term “Participants” shall have the meaning ascribed to it
Section 7.1(c).

 

Permitted Transferee. The term “Permitted Transferee” shall have the meaning
ascribed to it in Section 4.2.

 

Person. The term “Person” shall mean any individual, group, corporation, limited
liability company, partnership, trust, unincorporated organization or government
or political department or agent thereof or other entity.

 

Principal Beneficial Owners. The term “Principal Beneficial Owners” shall mean
the Sponsor, CLI/THLEF TV Vertis LLC, Evercore Capital Partners L.P., CLI
Associates LLC, J.P. Morgan Partners (BHCA), L.P., Wachovia Capital Partners,
LLC (formerly First Union Capital Partners, LLC), and Cadogan Capital, LLC and
their respective Affiliates and successors.

 

Pro-Rata Portion. The term “Pro-Rata Portion” shall have the meaning ascribed to
it in Section 7.1.

 

Rights. The term “Rights” shall have the meaning ascribed to it in the second
“Whereas” clause.

 

SEC. The term “SEC” shall mean the Securities and Exchange Commission or any
successor thereto.

 

Securities Act. The term “Securities Act” shall mean the Securities Act of 1933,
as amended, and all rules and regulations promulgated hereunder.

 

Securities. The term “Securities” shall mean the Rights (and any shares of
Common Stock issued upon exercise of the Rights) and the Shares.

 

Shares. The term “Shares” shall have the meaning ascribed to it in the second
“Whereas” clause.

 

Small Transfer. The term “Small Transfer” shall have the meaning ascribed to it
in Section 7.l(a).

 

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Sponsor. The term “Sponsor” shall have the meaning ascribed to it in the
preamble hereto.

 

Tag-Along Notice. The term “Tag-Along Notice” shall have the meaning ascribed to
it in Section 7.1(b)(i).

 

Tag-Along Portion. The term “Tag-Along Portion” shall have the meaning ascribed
to it in Section 7.1(c).

 

Tag-Along Response Notice. The term “Tag-Along Response Notice” shall have the
meaning ascribed to it in Section 7.1 (c).

 

Tag-Along Response Notice Period. The term “Tag-Along Response Notice Period”
shall have the meaning ascribed to it in Section 7.1(c).

 

Tag-Along Right. The term “Tag-Along Right” shall have the meaning ascribed to
it in Section 7.1(c).

 

Tag-Along Sale. The term “Tag-Along Sale” shall have the meaning ascribed to it
in Section 7.1 (a).

 

Tag Shares. The term “Tag Shares” shall have the meaning ascribed to it in
Section 7.l(b)(ii).

 

Third Party. The term “Third Party” shall mean any Person or entity excluding
each of the following: (a) the Executive, the Other Executives and their
respective Permitted Transferees; (b) the Company, and its subsidiaries or
Affiliates; and (c) the Principal Beneficial Owners.

 

Transfer. The term “Transfer” shall mean any sale, transfer, assignment, pledge,
hypothecation, encumbrance or other disposition.

 

Trust. The term “Trust” shall have the meaning ascribed to it in Section 7.5.

 

Vertis. The term “Vertis” shall mean Vertis Inc., a Delaware corporation.

 

ARTICLE II

 

PURCHASE OF SHARES AND GRANT OF RIGHTS IN
ORIGINAL AGREEMENT

 

Section 2.1           No Alteration of Original Purchase or Grant. Nothing in
this Agreement shall be deemed to alter, change or nullify any purchase of
Shares or any grant of Rights under Section 2 of the Original Agreement, which
purchase and/or grant has already occurred. Each Right shall entitle the
Executive to one share of Common Stock upon the occurrence of a Liquidation
Event, or as otherwise provided herein. The Executive acknowledges and agrees
that the Trust is an irrevocable trust, the assets of

 

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which are subject to the claims of the Company’s creditors. The Executive shall
have no security interest in the Trust or its assets and shall have the status
of an unsecured creditor of the Company with respect to the Company’s obligation
to issue the shares of Common Stock upon the occurrence of a Liquidation Event.
The shares of Common Stock deposited in the Trust are issued and outstanding as
of the date hereof and are beneficially owned by the Trust. Until the occurrence
of a Liquidation Event, or as otherwise provided herein, all actions with
respect to the shares of Common Stock deposited in the Trust, including, without
limitation, the voting thereof, will continue to be performed solely by the
Trust, without any communication with, notice to, or approval of the holder of
the Rights.

 

Section 2.2           No Redemption Upon Exchange Offer. Section 2.1(d) of the
Original Agreement is hereby revoked, and no rights granted thereby shall
survive the date of this Agreement.

 

Section 2.3           Representations and Warranties in Original Agreement.
Nothing in this Agreement shall be deemed to alter, change or nullify the
representations and warranties of the Executive made in Sections 2.4, 3.1 and
3.2 of the Original Agreement with respect to the purchase of Shares, if any,
and the grant of Rights, if any, under the Original Agreement. Nothing in this
Agreement shall be deemed to alter, change or nullify the representations and
warranties of the Company made in Section 2.3 of the Original Agreement with
respect to the purchase of Shares, if any, and the grant of Rights, if any,
under the Original Agreement.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1           Representations and Warranties of the Company. The Company
represents and warrants to the Executive that the Company has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder, and this Agreement is a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
liquidation, reorganization, moratorium and other laws affecting the rights of
creditors generally and subject to the exercise of judicial discretion in
accordance with general principles of equity (whether applied by a court of law
or equity).

 

Section 3.2           Representations and Warranties of the Executive. The
Executive represents and warrants to the Company that the Executive has all
requisite power and authority to enter into this Agreement, and to perform the
obligations required to be performed by the Executive hereunder, and this
Agreement is a valid and binding obligation of the Executive enforceable against
the Executive in accordance with its terms, except as such enforceability may be
limited by applicable law and subject to the exercise of judicial discretion in
accordance with general principles of equity (whether applied by a court of law
or equity).

 

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ARTICLE IV

 

RESTRICTIONS ON TRANSFER

 

Section 4.1           General Restrictions on Transfer. Except as permitted by
Section 4.2 or Articles V and VII hereof, the Executive agrees that until a
Liquidation Event occurs, neither the Executive nor any of the Executive’s
Permitted Transferees will Transfer all or any portion of the Securities. Prior
to recognizing or permitting any Transfer permitted by the provisions of this
Agreement, the Company may (in its sole discretion) require the Executive or the
Executive’s Permitted Transferee, as the case may be, to deliver such opinions
of counsel and other documents as the Company deems necessary or appropriate in
connection with such proposed Transfer. No Transfer of Securities in violation
of this Agreement shall be made or recorded on the books of the Company and any
such Transfer shall be void and of no effect.

 

Section 4.2           Certain Permitted Transfers of Securities.

 

(a)                                  The provisions of Section 4.1 shall not
apply to any Transfers of Securities made (i) pursuant to or in connection with
a registered public offering with respect to which there is in effect a
registration statement under the Securities Act covering such proposed Transfer
and such Transfer is made in accordance with such registration statement,
(ii) in accordance with Rule 144 promulgated under the Securities Act or
(iii) after the occurrence of a Liquidation Event.

 

(b)                                 The provisions of Section 4.1 shall not
apply to the following Transfers by an Executive; provided, however, that no
Transfer of Securities pursuant to this Section 4.2 (other than a Transfer to
the Company) shall be given effect on the books of the Company unless and until
such Permitted Transferee executes an agreement in writing with the parties
hereto pursuant to which he, she, or it agrees to be bound by all of the terms
and conditions of this Agreement to the same extent as the parties hereto;
provided, further, that no Transfer will be permitted if the Company determines
that, in its sole discretion, such Transfer is, or is reasonably likely to be,
in violation of applicable federal or state securities laws:

 

(i)                                     a Transfer made to an Affiliate of the
Company or an Affiliate of any subsidiary of the Company;

 

(ii)                                  a Transfer upon the death of the Executive
to the Executive’s executors, administrators, testamentary trustees, legatees or
beneficiaries;

 

(iii)                               a Transfer to a trust, the beneficiaries of
which include only the Executive and the Executive’s spouse, siblings, or direct
lineal ancestors or descendants;

 

(iv)                              a Transfer made as a gift to the Executive’s
spouse or lineal descendants; or

 

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(v)                                 a Transfer made pursuant to a court order in
connection with a divorce proceeding.

 

The transferee in each of the subclauses (i) through (v) above is referred to
herein as a “Permitted Transferee.” Notwithstanding anything to the contrary in
this Agreement, no Transfer made to the Company, any subsidiary of the Company
or the Sponsor shall be subject to any restriction on transfer contained herein,
so long as any such Transfer is made in accordance with all applicable federal
and state securities laws and does not violate any contractual agreement in
effect at the time of such Transfer.

 

Section 4.3           Rule 144. If any Securities held by the Executive are
disposed of in accordance with Rule 144 under the Securities Act or otherwise,
the Executive shall deliver to the Company at or prior to the time of such
disposition such documentation as the Company may reasonably request in
connection with such sale and, in the case of a disposition in accordance with
Rule 144, an executed copy of Form 144 required to be filed with the SEC (if
required by Rule 144).

 

Section 4.4           Discharge of Indebtedness Upon Transfer of Securities. Any
Transfer of Securities by the Executive or the Executive’s Permitted
Transferees, if any, shall be void and of no effect unless and until all
outstanding indebtedness of the Executive and the Executive’s Permitted
Transferees to, or guaranteed by, the Company or any of its subsidiaries or
Affiliates (including interest accrued but unpaid thereon and all other fees,
expenses and penalties payable in connection therewith) shall have been paid and
discharged in full and evidence of same, reasonably acceptable to the Company,
is presented by the Executive to the Company.

 

Section 4.5           Legend.

 

(a)                                  Each certificate representing the Shares
and the shares of Common Stock issued upon exercise of the Rights, if any, and
any certificates representing the Rights shall bear substantially the following
legends:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE DISPOSED OF UNLESS SUCH
SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION, ENCUMBRANCE OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF THAT CERTAIN AMENDED AND RESTATED
MANAGEMENT SUBSCRIPTION AGREEMENT DATED AS OF AUGUST 31, 2003, AS SUCH AGREEMENT
MAY BE AMENDED FROM TIME TO TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY AND WHICH WILL BE MAILED TO A STOCKHOLDER WITHOUT CHARGE PROMPTLY
AFTER RECEIPT BY THE COMPANY OR ANY SUCCESSOR THERETO OF A WRITTEN REQUEST
THEREFOR FROM SUCH STOCKHOLDER).

 

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND
MAY NOT BE TRANSFERRED OR

 

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RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR
EXEMPTION THEREFROM.

 

(b)                                 A notation shall be made in the appropriate
records of the Company indicating that the Securities are subject to
restrictions on transfer and, if the Company should at some time in the future
engage the service of a securities transfer agent, appropriate stop-transfer
instructions will be issued to such transfer agent with respect to the
Securities.

 

ARTICLE V

 

CERTAIN SALES UPON TERMINATION OF EMPLOYMENT

 

Section 5.1           Call. (a) Subject to Section 5.1(b), if the Executive’s
employment with the Company or an Affiliate of the Company is terminated by
either the Executive or the Company for any reason other than Disability or
death of the Executive, the Company may elect, subject to the terms and
conditions contained herein, to purchase any or all of the Securities then held
by the Executive and the Executive’s Permitted Transferees, if any, (hereinafter
sometimes collectively referred to as the “Executive’s Group”), in accordance
with the provisions of Section 5.2.

 

(b)                                 If the Company determines to purchase any
Securities pursuant to this Section 5.1, the Company shall, not later than 180
days after the date of such termination of employment, deliver to the Executive
and the Executive’s Permitted Transferees, if any, written notice of its
intention to purchase some or all of the Securities pursuant to this
Section 5.1, specifying the number of Securities to be so purchased and the
purchase price to be paid therefor (as described in Section 5.2). The closing of
the purchase (the “Call Closing”) shall take place at the principal office of
the Company within 10 days after the delivery of such notice. At the Call
Closing (i) the Executive and the Executive’s Permitted Transferees, as the case
may be, shall deliver the certificates evidencing the Securities, duly endorsed
and assigned to the Company or in blank, in each case with the signature
guaranteed, and take all other actions and deliver any other documents the
Company, in its reasonable judgment, shall deem necessary, and (ii) the Company
shall deliver to the Executive and the Executive’s Permitted Transferee, as the
case may be, the purchase price as determined pursuant to Section 5.2 in
accordance with the methods described in Section 6.1 hereof.

 

Section 5.2           Purchase Price to Be Paid by Company. The purchase price
to be paid by the Company upon exercise of a call right shall be the Fair Market
Value of such Securities determined as of the date the notice of such exercise
is delivered; provided, however, that if the Executive is terminated for Cause
(as such term is defined in the Executive’s employment agreement with the
Company in effect at such time or, if no such agreement is in effect or if such
term is undefined in such agreement, as determined by the Board of Directors of
the Company), then the purchase price to be paid by the Company shall be the
lesser of the Fair Market Value and the original cost of such Securities paid by
the Executive.

 

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Section 5.3           Obligation to Sell. If there is more than one member of
the Executive’s Group, the failure of any member thereof to perform its
obligations under this Article V shall not excuse or affect the obligations of
any other member thereof, and the closing of the purchases from such other
members by the Company shall not excuse, or constitute a waiver of its rights
against, the defaulting members. The Company reserves its rights to take all
action necessary to cause the defaulting members to perform its obligations
under this Article V and the Executive hereby acknowledges the Company’s right
to have the provisions of this Agreement specifically performed. If the
defaulting member fails to timely perform its obligations under this Article V,
the Company shall cause the books and records of the Company to show that such
Securities are subject to the provisions of this Article V and that such
Securities shall be Transferred to the Company immediately upon surrender for
Transfer by the holder thereof.

 

ARTICLE VI

 

PAYMENT FOR SECURITIES

 

Section 6.1           Payment for Securities. The purchase price in respect of
Securities purchased by the Company pursuant to Section 5.1 shall be paid
(i) first by the cancellation of any indebtedness (including, without
limitation, accrued but unpaid interest thereon) owing from the Executive and/or
his Permitted Transferees to the Company or any of its subsidiaries or
Affiliates and (ii) then by the Company’s delivery of a bank cashier’s check or
certified check for the remainder of the purchase price, if any. The Company
shall have the right set forth in clause (i) in the preceding sentence whether
or not the member of the Executive’s Group selling such Securities is an obligor
under any of the indebtedness referred to therein.

 

ARTICLE VII

 

TAG-ALONG RIGHTS AND DRAG-ALONG RIGHTS

 

Section 7.1           Tag-Along Rights. (a) If the Sponsor proposes to Transfer
all or a portion of the shares of Common Stock beneficially owned by it to a
Third Party which would not be an Affiliate of the Sponsor immediately upon
consummation of such Transfer, and the Sponsor does not exercise its Drag-Along
Rights in accordance with Section 7.4 (a “Tag-Along Sale”), the Sponsor shall
cause the Executive and the Executive’s Permitted Transferees to have the option
to exercise its rights under this Section 7.1, provided, however, that the
Executive and the Executive’s Permitted Transferees, if any, shall have no
rights under this Section 7.1 if the shares of Common Stock to be Transferred in
such transaction and any shares of Common Stock which have been Transferred to
any Third Party within a 90-day period preceding the date of such Transfer have,
in the aggregate, a Fair Market Value less than ten million dollars
($10,000,000) (a “Small Transfer”), and provided, further, that when the
cumulative Fair Market Value of all such Small Transfers, the value to be
calculated at the time of each such Transfer, exceeds fifty million dollars
($50,000,000), the restrictions provided for in the first proviso of this
Section 7.1(a) shall no longer be in effect. Moreover, the Executive and the
Executive’s Permitted Transferees, if any, shall have no rights under

 

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this Section 7.1 with respect to any Transfer by the Sponsor of any shares of
Common Stock beneficially owned by it to any limited partner of the Sponsor.

 

(b)                                 In the event of a proposed Tag-Along Sale:

 

(i)             the Sponsor shall provide the Executive written notice of the
terms and conditions of such proposed Tag-Along Sale, as described in
Section 7.1(c) (“Tag-Along Notice”), at least 10 Business Days prior to the
consummation of such proposed Tag-Along Sale and offer the Executive and the
Executive’s Permitted Transferees the opportunity to participate in such
Tag-Along Sale on the terms and conditions set forth in this Section 7.1; and

 

(ii)          subject to Section 7.1(c), the Executive and the Executive’s
Permitted Transferees shall be entitled to sell up to a Pro Rata Portion (as
defined below) of its Shares and Common Stock issued upon an exercise of the
Rights, if any, (collectively, the “Tag Shares”) at the same price and on the
same terms as the shares of Common Stock proposed to be sold by the Sponsor in
such Tag-Along Sale in accordance with the terms set forth in this Section 7.1.

 

The “Pro-Rata Portion” of the Executive’s Tag Shares shall mean an amount of
such Tag Shares equal to the product of:

 

(A)                              (x) a fraction, the numerator of which is the
number of shares of Common Stock proposed to be Transferred by the Sponsor and
its Affiliates in such Tag-Along Sale and the denominator of which is the total
number of shares of Common Stock beneficially owned by the Sponsor and its
Affiliates collectively, immediately prior to Transferring such shares of Common
Stock; or, (y) for the first Transfer after the restrictions set forth in the
first proviso of Section 7.1(a) are no longer in effect, a fraction, the
numerator of which is the number of shares of Common Stock proposed to be
Transferred by the Sponsor and its Affiliates in such Tag-Along Sale plus the
cumulative number of shares of Common Stock Transferred by the Sponsor and its
Affiliates in all Small Transfers, and the denominator of which is the total
number of shares of Common Stock beneficially owned by the Sponsor and its
Affiliates collectively, immediately prior to Transferring such shares of Common
Stock plus the cumulative number of shares of Common Stock Transferred by the
Sponsor and its Affiliates in all Small Transfers; and

 

(B)                                the total amount of Tag Shares beneficially
owned by such Executive at the time of the Tag-Along Sale.

 

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(c)                                  The Tag-Along Notice shall identify the
proposed transferee, the number of shares of Common Stock to be sold by the
Sponsor in the Tag-Along Sale, the Pro Rata Portion of the Executive’s Tag
Shares which the Executive shall be entitled to Transfer in such Tag-Along Sale,
the price at which the Transfer of shares of Common Stock is proposed to be
made, and all other material terms and conditions of the proposed Tag-Along
Sale. From the date of the Tag-Along Notice, the Executive and the Executive’s
Permitted Transferees shall have the right (a “Tag-Along Right”), exercisable by
written notice (“Tag-Along Response Notice”) given by the Executive to the
Sponsor within seven Business Days from the date of the Tag-Along Notice (the
“Tag-Along Response Notice Period”), to request that the Sponsor includes in the
proposed Transfer the number of Tag Shares held by the Executive and the
Executive’s Permitted Transferees (up to their Pro Rata Portion) as is specified
in such Tag-Along Response Notice at the same price and on the same terms and
conditions set forth in the Tag Along Notice; provided, however, that if the
aggregate number of shares of Common Stock proposed to be sold by (i) the
Sponsor, (ii) the Executive and the Executive’s Permitted Transferees,
(iii) Other Executives and their permitted transferees giving tag-along notices
similar to the Tag-Along Notice during such period prescribed in Other
Executives’ Agreements and (iv) any other Persons entitled to give (and giving
on a timely basis) tag-along notices similar to the Tag-Along Notice pursuant to
agreements substantially similar to this Agreement, including those certain
Option Transfer Agreements between the Company, the Sponsor, and the Executive
or Other Key People, as amended, and those certain Retained Share Agreements
between the Company, the Sponsor and the Executive or Other Key People, as
amended, (the persons identified in subclauses (i). (ii), (iii) and (iv) of this
subsection, collectively, the “Participants”), in such Tag-Along Sale exceeds
the number of shares of Common Stock which can be sold on the terms and
conditions set forth in the Tag-Along Notice, then only the Tag-Along Portion of
shares of Common Stock beneficially owned by the Executive shall be sold
pursuant to the Tag-Along Sale. “Tag-Along Portion” means, with respect to the
Executive and the Executive’s Permitted Transferees, the number of shares of
Common Stock beneficially owned by the Executive and the Executive’s Permitted
Transferees on the date of the Tag-Along Notice multiplied by a fraction, the
numerator of which is the maximum number of shares of Common Stock which can be
sold in the Tag-Along Sale and the denominator of which is the aggregate number
of shares of Common Stock beneficially owned by the Participants, collectively.

 

(d)                                Delivery of a Tag-Along Response Notice by
the Executive to the Sponsor pursuant to Section 7.1(c) shall constitute an
irrevocable election by the Executive and the Executive’s Permitted Transferees,
if any, to sell the number of Tag Shares beneficially owned by it or them as is
specified in such Tag-Along Response Notice in such Tag-Along Sale. If, at the
end of a 90 day period after such delivery, the Tag-Along Sale has not been
consummated on substantially the same terms and conditions set forth in the
Tag-Along Notice, all restrictions on Transfers of Tag Shares contained in this
Agreement or otherwise applicable at such time with respect to Tag Shares owned
by the Executive and the Executive’s Permitted Transferees shall again be in
effect,

 

(e)                                  If at the termination of the Tag-Along
Response Notice Period the Executive and the Executive’s Permitted Transferees,
if any, shall not have exercised its

 

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or their Tag-Along Right by providing the Sponsor with a Tag-Along Response
Notice, such Executive and such Executive’s Permitted Transferees shall be
deemed to have waived its or their Tag-Along Right with respect to Transferring
its or their Tag Shares pursuant to such Tag-Along Sale.

 

(f)     The Sponsor may sell, on behalf of the Executive and the Executive’s
Permitted Transferees, if the Executive and the Executive’s Permitted
Transferees, if any, exercises its or their Tag-Along Right pursuant to this
Section 7.1, the shares of Common Stock entitled to be Transferred in the
Tag-Along Sale on the terms and conditions set forth in the Tag-Along Notice
within 90 days of the date on which Tag-Along Rights shall have been waived or
exercised.

 

Section 7.2           Limitation of Rights Following Termination of Employment.
Notwithstanding any other provision of this Agreement, upon the termination of
the Executive’s employment with the Company or any of its subsidiaries for Cause
(as such term is defined in the Employment Agreement), or if the Executive
terminates employment with the Company or any of its subsidiaries without Good
Reason (as such term is defined in the Employment Agreement), the Executive and
the Executive’s Permitted Transferees shall have no rights under Section 7.1. In
the case of any other termination of the Executive’s employment, the Executive
and the Executive’s Permitted Transferees shall continue to have the rights
specified in Section 7.1.

 

Section 7.3           Termination of Tag-Along Rights Notwithstanding anything
to the contrary, the provisions of Section 7.1 shall not be applicable if the
Common Stock is publicly traded on an Exchange and there exists a Minimum Public
Float.

 

Section 7.4           Drag-Along Rights. (a) If the Sponsor and its Affiliates
propose to Transfer all or any portion of the shares of Common Stock
beneficially owned by them to a Third Party (a “Drag-Along Sale”),

 

(i)             the Executive and the Executive’s Permitted Transferees shall,
at the Sponsor’s option and in the Sponsor’s sole discretion, upon the
Executive’s receipt of written notice from the Sponsor, sell the Drag-Along
Portion of such Executive’s Shares to such Third Party; and

 

(ii)          (subject to, and at the closing of the Drag-Along Sale) the
Executive shall, at the Sponsor’s option and in the Sponsor’s sole discretion,
upon the Executive’s receipt of written notice from the Sponsor, exercise that
portion of his Rights which constitute the Drag-Along Portion and sell all of
the Common Stock received upon such exercise to such Third Party;

 

(the Shares and Common Stock referred to in subclauses (i) and (ii) of this
subsection, collectively, the “Drag Shares”) for the same consideration and
otherwise on the same terms and conditions on which the Sponsor and its
Affiliates sell their shares of Common Stock in such Drag-Along Sale (the
“Drag-Along Rights”).

 

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The “Drag-Along Portion” of an Executive’s Drag Shares means, at any time, the
number of Drag Shares beneficially owned by such Executive and the Executive’s
Permitted Transferees after any compelled exercise of Rights, multiplied by a
fraction, the numerator of which is the number of shares of Common Stock
proposed to be sold on behalf of the Sponsor in such Drag-Along Sale and the
denominator of which is the total number of shares of Common Stock then
beneficially owned by the Sponsor. In the event the Drag-Along Sale is not
consummated with respect to any shares acquired upon exercise of Rights, such
Rights shall be deemed not to have been exercised or cancelled, as applicable.

 

(b)                                 The Sponsor shall provide written notice of
such Drag-Along Sale to the Executive (a “Drag-Along Notice”) not less than 20
days prior to the consummation of such proposed Drag-Along Sale which notice
shall state that the Sponsor proposes to effect a Transfer of a certain number
of shares of Common Stock, the number of shares of Common Stock proposed to be
Transferred, the purchase price, the proposed transferee, the number of Drag
Shares which the Executive is required to Transfer in such Drag-Along Sale
(based on the methodology set forth in Section 7.4(a)), and all other material
terms and conditions of the Drag-Along Sale. Subject to Section 7.4(c), the
Executive shall be required to participate in the Drag-Along Sale on the terms
and conditions set forth in the Drag-Along Notice. Not later than the tenth day
following the date of the Drag-Along Notice (the “Drag-Along Notice Period”),
the Executive shall deliver to a representative of the Sponsor designated in the
Drag-Along Notice certificates representing all the Drag Shares beneficially
owned and held by the Executive, duly endorsed, together with all other
documents required to be executed in connection with such Drag-Along Sale, or,
if such delivery is not permitted by applicable law, an unconditional agreement
to deliver such Drag Shares pursuant to this Section 7.4 at the closing for such
Drag-Along Sale against delivery to the Executive of the consideration therefor.
If the Executive should fail to deliver such certificates to the Sponsor in a
Drag-Along Sale pursuant to this Section 7.4, the Company shall cause the books
and records of the Company to show that such shares of Common Stock are bound by
the provisions of this Section 7.4 and that such shares of Common Stock shall be
Transferred to the purchaser of the shares of the Common Stock immediately upon
surrender for Transfer by the holder thereof.

 

(c)                                 The Sponsor shall have a period of 90 days
from the date of the Drag-Along Notice to consummate the Drag-Along Sale on the
terms and conditions set forth in such Drag-Along Sale Notice. If the Drag-Along
Sale shall not have been consummated during such period, the Sponsor shall
return to the Executive all certificates representing Drag Shares that such
Executive delivered for Transfer pursuant hereto, together with any documents in
the possession of the Sponsor executed by the Executive in connection with such
proposed Transfer, and the Drag-Along Notice shall be deemed to be cancelled and
this Agreement will remain in full force and effect in accordance with its
terms.

 

Section 7.5           Responsibilities of Executive. The delivery of any notices
to, and the obtaining of any consents from, any Permitted Transferee with
respect to any provision of this Agreement, including, but not limited to,
Sections 7.1 and 7.4, shall be the sole responsibility of the Executive, unless
otherwise agreed to in writing between

 

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such Permitted Transferee and the Sponsor. Neither the Company nor the Sponsor
shall be liable to any Permitted Transferee for the Executive’s failure to
deliver a notice to, or obtain a consent from, any Permitted Transferee with
respect to any provision of this Agreement, including, but not limited to,
Sections 7.1 and 7.4. In the event that the terms of this Agreement require the
delivery of Rights which are held in trust (the “Trust”) pursuant to the Big
Flower Holdings, Inc. Rights Trust Agreement, dated as of December 7, 1999, by
and between Big Flower Holding, Inc. and The Chase Manhattan Bank, the Executive
shall cooperate with the Company to effect the release of the shares of Common
Stock issuable upon exercise of such Rights from the Trust in order that they
may delivered in accordance with the terms hereof.

 

Section 7.6           Sales to Principal Beneficial Owners. The Sponsor and its
Affiliates shall not Transfer all or any portion of the shares of Common Stock
beneficially owned by them to a Principal Beneficial Owner, other than an
Affiliate of the Sponsor, unless such Principal Beneficial Owner agrees to be
bound by this Article VII as if it were the Sponsor. To the extent that the
Sponsor and its Affiliates Transfer any shares of Common Stock to a Principal
Beneficial Owner other than an Affiliate of the Sponsor, the Executive and the
Executive’s Permitted Transferees agree that such Principal Beneficial Owner
shall receive the benefits set forth in Sections 7.4 and 7.5 hereof as if such
Principal Beneficial Owner were the Sponsor.

 

ARTICLE VIII

 

MISCELLANEOUS

 

Section 8.1           State Securities Laws. The Company hereby agrees to use
commercially reasonable efforts to comply with all state securities or “blue
sky” laws which might be applicable to the sale of the Securities by the Company
to the Executive pursuant to this Agreement.

 

Section 8.2           Binding Effect. The provisions of this Agreement shall be
binding upon the parties hereto and their respective heirs, legal
representatives, successors and assigns; provided, however, that the Executive
and the Executive’s Permitted Transferees shall not assign any rights hereunder
except as specifically permitted by the terms of this Agreement. The Company
may assign its rights under the call contained in Section 8.1 to any of its
subsidiaries or Affiliates, or to the Principal Beneficial Owners of the Company
or any of their Permitted Transferees, provided that no such assignment shall
release the Company from its obligations hereunder. Neither this Agreement nor
any purchase or sale of Securities pursuant hereto shall create, or be construed
or deemed to create, any right to employment or continued employment in favor of
the Executive or any other Person by the Company or any subsidiary or Affiliate
of the Company.

 

Section 8.3           Severability. The invalidity, illegality or
unenforceability of one or more of the provisions of this Agreement in any
jurisdiction shall not affect the validity, legality or enforceability of the
remainder of this Agreement in such jurisdiction or the validity, legality or
enforceability of this Agreement, including any such provision,

 

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in any other jurisdiction, it being intended that all rights and obligations of
the parties hereunder shall be enforceable to the fullest extent permitted by
law.

 

Section 8.4           Recapitalizations, Exchanges, Etc., Affecting Common
Stock. The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Securities, to any and all shares of capital
stock of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of all or substantially all of the assets of the
Company or otherwise) which may be issued in respect of, in exchange for, or in
substitution of the Securities, by reason of any stock dividend, stock split,
stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation, conversion or otherwise.

 

Section 8.5           Amendment. This Agreement may be amended only by a written
instrument duly signed by the Company, the Sponsor, and the Executive.

 

Section 8.6           Notices. All notices and other communications provided for
herein shall be dated and in writing and shall be deemed to have been duly given
when delivered, if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid and when received if delivered
otherwise, to the party to whom it is directed:

 

(a)                    If to the Company, to it at the following address:

 

250 W. Pratt Street, 18th Floor

Baltimore, Maryland 21201

Attention: General Counsel

Fax No.: (410)528-9287

 

with a copy to Sponsor, at the address set forth in Section 8.6(c).

 

(b)                   If to the Executive or any of the Executive’s Permitted
Transferees, to the Executive at the address set forth on the signature
page hereof;

 

(c)                    If to the Sponsor, to it at the following address:

 

Thomas H. Lee Equity Fund IV, L.P.

c/o Thomas H. Lee Company

75 State Street, Suite 2600

Boston, MA 02109

Fax No.: (617)227-3514

 

or at such other address as the parties hereto shall have specified by notice in
writing to the other parties (provided, that such notice of change of address
shall be deemed to have been duly given only when actually received).

 

Section 8.7           Applicable Law. The laws of the State of Delaware shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under Delaware’s
principles of conflicts of law.

 

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Section 8.8           Consent to Jurisdiction. The Executive hereby irrevocably
submits to the jurisdiction of any New York state court sitting in the City of
New York or any federal court sitting in the City of New York in respect of any
suit, action or proceeding arising out of or relating to this Agreement, and
irrevocably accepts for the Executive and in respect of the Executive’s
property, generally and unconditionally, jurisdiction of the aforesaid courts.
The Executive irrevocably waives, to the fullest extent the Executive
may effectively do so under applicable law, trial by jury and any objection that
the Executive may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that any such
suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of the Company to
serve process in any manner permitted by law or to commence legal proceedings or
otherwise proceed against Executive in any other jurisdiction.

 

Section 8.9           Integration. This Agreement, and the documents referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. There
are no restrictions, agreements, promises, representations, warranties,
conditions, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein. Except as provided in Article II
hereof, this Agreement supersedes all prior agreements and understanding between
the parties with respect to its subject matter.

 

Section 8.10    Descriptive Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.

 

Section 8.11    Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.

 

Section 8.12    Rights to Negotiate. Nothing in this Agreement shall be deemed
to restrict or prohibit the Company from purchasing Securities from the
Executive or the Executive’s Permitted Transferees at any time upon such terms
and conditions and at such price as may be mutually agreed upon between the
Company and the Executive or the Executive’s Permitted Transferees, whether or
not at the time of such purchase circumstances exist which specifically grant
the Company the right to purchase shares of Securities pursuant to the terms of
this Agreement,

 

Section 8.13    Rights Cumulative; Waiver. The rights and remedies of the
parties hereto shall be cumulative and not exclusive of any rights or remedies
which any party would otherwise have hereunder or at law or in equity or by
statute, and (subject to the provisions of this Agreement regarding specific
time periods within which a right must be exercised or a notice must be given)
no failure or delay by any party in exercising any right or remedy shall impair
any such right or remedy or operate as a waiver of such right or remedy, nor
shall any single or partial exercise of any power or right preclude such party’s
other or further exercise or the exercise of any other power or

 

17

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right. The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any preceding or
succeeding breach and no failure by any party to exercise any right or privilege
hereunder shall be deemed a waiver of such party’s other rights or privileges
hereunder.

 

Section 8.14    Limitation of Liability. None of the Affiliates of the Sponsor
shall have any liability to the Executive or any of the Executive’s Permitted
Transferees or the Company or any of its subsidiaries under any provision of
this Agreement. In the event of an alleged breach of this Agreement by the
Sponsor, the parties hereto acknowledge and agree that the sole remedy which
may be sought against the Sponsor shall be specific performance, provided,
however, that if the remedy of specific performance is not available, the
Executive, the Executive’s Permitted Transferees, if any, and the Company will
only seek to recover direct damages for any breach of this Agreement. The
Executive, the Executive’s Permitted Transferees, if any, and the Company agree
to waive any other remedy against the Sponsor to which they might be entitled at
law, including, but not limited to, compensatory damages, consequential damages,
continuing damages, future damages, incidental damages, punitive damages and
nominal damages. The Company shall indemnify, defend, save and hold harmless
Sponsor from and against any and all liabilities arising under, pursuant to or
in connection with this Agreement.

 

Section 8.15    Specific Performance. Each of the parties hereto acknowledges
and agrees that in the event of any breach of this Agreement, the non-breaching
party would be irreparably harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto will waive the defense
in any action for specific performance that a remedy at law would be adequate
and that the parties hereto, in addition to any other remedy to which they
may be entitled at law or in equity, shall be entitled to compel specific
performance of this Agreement. The parties hereto consent to personal
jurisdiction in any such action brought in any such court in the manner set
forth in Section 8.8 hereof.

 

Section 8.16    No Other Rights. There shall be no other rights, including put
rights, with respect to the Securities, other than those described in this
Agreement.

 

 

[Signature Pages Follow]

 

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

 

 

THE EXECUTIVE

 

 

 

 

 

 

 

/s/Donald E. Roland

 

 

Donald E. Roland

 

 

Address:

 

 

 

 

 

 

 

 

Telephone No.

 

 

 

Social Security No.

 

 

 

 

 

 

 

 

 

 

 

THE COMPANY

 

 

 

 

 

 

 

 

 

 

Vertis Holdings, Inc.

 

 

 

 

 

By:

/s/ John V. Howard Jr.

 

 

Name:

John V. Howard Jr.

 

 

Title:

Jr. President & Secretary

 

 

 

 

 

 

 

 

 

 

THE SPONSOR:

 

 

For Purposes of Articles VII and VIII only

 

 

 

 

 

 

Thomas H. Lee Equity Fund IV, L.P.

 

 

 

 

 

 

By:

/s/ Anthony J. DiNovi

 

 

Name:

Anthony J. DiNovi

 

 

Title:

 

 

 

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