EXHIBIT 10.44

 

NIL COST OPTION AGREEMENT

 

VERTIS HOLDINGS, INC.
1999 EQUITY AWARD PLAN

 

GRANTEE: ADRIAAN ROOSEN

 

NO. OF SHARES: 5,497

 

This Agreement (the “Agreement”), approved by Thomas H. Lee Equity Fund IV, L.P.
(the “Sponsor”), evidences the award of an option (“Option”) to acquire 5,497
shares (each, an “Option Share,” and collectively, the “Option Shares”) of the
Common Stock of Vertis Holdings, Inc., a Delaware corporation (the “Company”),
granted to you, Adriaan Roosen, effective as of July 27, 2004 (the “Grant
Date”), pursuant to the Vertis Holdings, Inc. 1999 Equity Award Plan (the
“Plan”) and subject to the terms described below.  All of the provisions of the
Plan are expressly incorporated into this Agreement.

 

You must return to Jennifer M. Bass an executed copy of this Agreement within 10
Business Days after the date indicated below the name of the officer who signed
this Agreement on behalf of the Company.  If you fail to do so, the Option will
be forfeited without consideration and this Agreement will be null and void.

 

1.                                       Terminology.  The Glossary at the end
of this Agreement contains definitions of all words that appear in this
Agreement with an initial capital letter that are not defined elsewhere in this
Agreement.

 

2.                                       Vesting.  The Option may only be
exercised over vested Option Shares and all of the Option Shares are nonvested
as of the Grant Date.  So long as your Service with the Company is continuous
from the Grant Date through the applicable date upon which vesting occurs, the
Option Shares will vest immediately prior to the first to occur of the
following:

 

(a)                                  a Liquidity Event (provided you are not on
a leave of absence from the Company’s group at this time);

(b)                                 your death; or

(c)                                  the date upon which you suffer a
Disability.

 

If you are on a leave of absence from the Company’s group at the time of the
Liquidity Event, your Option will vest on the day of your return to work.

 

3.                                       Termination of Employment or Service.

 

3.1                                 Unvested Option.  If your Service with the
Company ceases for any reason other than your death or Disability and your
Option is unvested, it will immediately lapse upon such cessation, unless
otherwise determined by the Administrator.

 

3.2                                 Vested Option.  If your Service with the
Company ceases for any reason, and your Option is vested it will not be affected
by such cessation but will remain vested and exercisable and subject to the
provisions of this Agreement.

 

4.                                       Restrictions on Transfer of the Option

 

4.1                                 Your Option may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process provided that this shall not prevent the exercise of your
Option by your executors or personal representatives in the event of your death.

 

1

--------------------------------------------------------------------------------

 

5.                                       Restrictions on Transfer of Option
Shares

 

5.1                                 EXCEPT AS OTHERWISE PROVIDED UNDER
SECTION 5.3 OR 7 OF THIS AGREEMENT OR IN ACCORDANCE WITH YOUR WILL OR THE LAWS
OF DESCENT AND DISTRIBUTION UPON YOUR DEATH, UNTIL A LIQUIDITY EVENT HAS
OCCURRED ANY OPTION SHARE ACQUIRED ON THE EXERCISE OF THE OPTION MAY NOT BE
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR DISPOSED OF IN ANY WAY (WHETHER
BY OPERATION OF LAW OR OTHERWISE) AND SHALL NOT BE SUBJECT TO EXECUTION,
ATTACHMENT OR SIMILAR PROCESS.

 

5.2                                 YOU HEREBY REPRESENT AND WARRANT TO THE
COMPANY AS FOLLOWS:

 

(A)                                  ANY OPTION SHARES YOU ACQUIRE ON THE
EXERCISE OF YOUR OPTION YOU WILL HOLD FOR YOUR OWN ACCOUNT FOR INVESTMENT ONLY
AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY “DISTRIBUTION” OF
THE SHARES WITHIN THE MEANING OF THE SECURITIES ACT.

 

(B)                                 YOU UNDERSTAND THAT THE OPTION SHARES HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT BY REASON OF A SPECIFIC EXEMPTION
AND THAT THE OPTION SHARES MUST BE HELD INDEFINITELY, UNLESS THEY ARE
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR YOU OBTAIN AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED.  YOU FURTHER ACKNOWLEDGE AND UNDERSTAND THAT
THE COMPANY IS UNDER NO OBLIGATION TO REGISTER THE OPTION SHARES.

 

(C)                                  YOU WILL ACQUIRE THE OPTION SHARES SUBJECT
TO THE COMPANY’S BY-LAWS AND SUBJECT TO THE CONDITION THAT THE COMPANY MAY, IN
ITS DISCRETION, IMPOSE RESTRICTIONS ON THE SALE, PLEDGE OR OTHER TRANSFER OF THE
OPTION SHARES ACQUIRED BY YOU ON EXERCISE (INCLUDING THE PLACEMENT OF
APPROPRIATE LEGENDS ON STOCK CERTIFICATES) IF, IN THE JUDGMENT OF THE COMPANY,
SUCH RESTRICTIONS ARE NECESSARY OR DESIRABLE TO COMPLY WITH THE SECURITIES ACT,
THE SECURITIES LAWS OF ANY STATE OR ANY OTHER LAW.

 

(D)                                 YOU ARE AWARE THAT ANY INVESTMENT IN THE
COMPANY IS A SPECULATIVE INVESTMENT THAT HAS LIMITED LIQUIDITY AND IS SUBJECT TO
THE RISK OF COMPLETE LOSS.

 

5.3                                 The provisions of Sections 5.1 and 5.2(b)
shall not apply to the following transfers; provided, however, that no transfer
of Option Shares pursuant to this Section 5.3 (other than a transfer to the
Company) shall be given effect on the books of the Company unless and until the
Permitted Transferee (as defined below) 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:

 

(a)                                  a transfer of vested Option Shares made to
an Affiliate of the Company or an Affiliate of any subsidiary of the Company;

 

(b)                                 a transfer of vested Option Shares upon your
death to your executors, administrators, testamentary trustees, legatees or
beneficiaries;

 

(c)                                  a transfer of vested Option Shares to a
trust, the beneficiaries of which include only you and your spouse, siblings, or
direct lineal ancestors or descendants;

 

(d)                                 a transfer of vested Option Shares made as a
gift to your spouse or lineal descendants; or

 

(e)                                  a transfer of vested Option Shares made
pursuant to a court order in connection with a divorce proceeding.

 

The transferee in each of the subclauses (a) through (e) 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.

 

2

--------------------------------------------------------------------------------

 

5.4                                 THE COMPANY SHALL NOT BE REQUIRED TO
(A) TRANSFER ON ITS BOOKS ANY  OPTION SHARES THAT HAVE BEEN SOLD OR TRANSFERRED
IN CONTRAVENTION OF THIS AGREEMENT OR (B) TREAT AS THE OWNER OF OPTION SHARES,
OR OTHERWISE ACCORD VOTING, DIVIDEND OR LIQUIDATION RIGHTS TO, ANY TRANSFEREE TO
WHOM OPTION SHARES HAVE BEEN TRANSFERRED IN CONTRAVENTION OF THIS AGREEMENT.

 

6.                                       Stock Certificates.  You will be
reflected as the owner of record of the Option Shares as of the date of exercise
of the Option on the Company’s books.  The Company will hold the share
certificates for safekeeping, or otherwise retain the Option Shares in
uncertificated book entry form, until the Option Shares become vested and
nonforfeitable and until they may be transferred freely without restriction
under this Agreement and any share certificates representing such shares will
include a legend in substantially the following form, in addition to any other
legends that may be required under federal or state securities laws.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE APPLICABLE SECURITIES ACT OF ANY STATE BUT
HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION CONTAINED IN SAID
ACTS.  NO SALE, OFFER TO SELL OR OTHER TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE MAY BE MADE UNLESS A REGISTRATION STATEMENT UNDER SAID ACTS IS
IN EFFECT WITH RESPECT TO THE SECURITIES, OR AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF SUCH ACTS IS THEN APPLICABLE.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND THE OTHER TERMS AND CONDITIONS SET FORTH IN A CERTAIN OPTION
AGREEMENT DATED JULY 27, 2004, AS AMENDED FROM TIME TO TIME, BETWEEN THE COMPANY
AND THE REGISTERED OWNER OF THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST),
AND SUCH AGREEMENT IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE OFFICE OF
THE SECRETARY OF THE COMPANY.

 

All regular cash dividends and other distributions on the Option Shares held by
the Company will be paid directly to you, but any stock dividends will be
treated in the manner set forth in Section 9 of this Agreement.

 

7.                                       Market Stand-Off Agreement.  You agree
that following the effective date of a registration statement of the Company
filed under the Securities Act, to the extent requested by the Company and an
underwriter of Common Stock or other securities of the Company, you will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any equity securities of the Company, or any securities convertible
into or exchangeable or exercisable for such securities, enter into a
transaction which would have the same effect, or enter into any swap, hedge or
other arrangement that transfers, in whole or in part, any of the economic
consequences of ownership of such securities, whether any such transaction is to
be settled by delivery of such securities or other securities, in cash or
otherwise, or publicly disclose the intention to make any such offer, sale,
pledge or disposition, or to enter into any such transaction, swap, hedge or
other arrangement, in each case during the seven days prior to and the one
hundred and eighty (180) days after the effectiveness of any underwritten
offering of the Company’s equity securities (or such longer or shorter period as
may be requested in writing by the managing underwriter and agreed to in writing
by the Company) (the “Market Stand-Off Period”), except as part of such
underwritten registration if otherwise permitted.  In addition, you agree to
execute any further letters, agreements and/or other documents requested by the
Company or its underwriters which are consistent with the terms of this
Section 6.  The Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such Market
Stand-Off Period.

 

7.1.                              Tag-Along and Drag-Along Rights.

 

(a)                                  With respect to Option Shares which you
acquire on the exercise of your Option: 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

 

3

--------------------------------------------------------------------------------

 

accordance with Section 7.4 (a “Tag-Along Sale”), the Sponsor shall cause you
and your Permitted Transferees to have the option to exercise your rights under
this Section 7.1, provided, however, that you and your 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, you and your Permitted
Transferees, if any, shall have no rights under 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 you 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 you and your 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), you and your
Permitted Transferees shall be entitled to sell up to a Pro Rata Portion (as
defined below) of your Option Shares (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 your 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.

 

(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 your Tag Shares which you
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, you and your Permitted Transferees shall have the right (a
“Tag-Along Right”), exercisable by written notice (“Tag-Along Response Notice”)
given by you 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 you
and your 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;

 

4

--------------------------------------------------------------------------------

 

provided, however, that if the aggregate number of shares of Common Stock
proposed to be sold by (i) the Sponsor, (ii) you and your Permitted Transferees,
(iii) Other Option Grantees and their permitted transferees giving tag-along
notices similar to the Tag-Along Notice during such period prescribed in other
Option Grantees’ 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, those certain Amended and Restated
Management Subscription Agreements, those certain Retained Share Agreements, and
those certain Restricted Stock Agreements, each between the Company, the Sponsor
and you 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 you shall
be sold pursuant to the Tag-Along Sale.  “Tag-Along Portion” means, with respect
to you and your Permitted Transferees, the number of shares of Common Stock
beneficially owned by you and your 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
you to the Sponsor pursuant to Section 7.1(c) shall constitute an irrevocable
election by you and your 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 you and your Permitted Transferees
shall again be in effect.

 

(e)                                  If at the termination of the Tag-Along
Response Notice Period you and your Permitted Transferees, if any, shall not
have exercised its 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 you
and your Permitted Transferees, if you and your Permitted Transferees, if any,
exercise your or their Tag-Along Right pursuant to this Section 5.1, 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.

 

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

 

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.

 

7.4.                              Drag-Along Rights.  With respect to Option
Shares which you acquire on the exercise of your Option:  (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”),
you and your Permitted Transferees shall, at the Sponsor’s option and in the
Sponsor’s sole discretion, upon your receipt of written notice from the Sponsor,
sell the Drag-Along Portion of your Option Shares to such Third Party 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”).

 

The “Drag-Along Portion” of your Option Shares means, at any time, the number of
Option Shares beneficially owned by you and your Permitted Transferees,
multiplied by a fraction, the

 

5

--------------------------------------------------------------------------------

 

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.

 

(b)                                 The Sponsor shall provide written notice of
such Drag-Along Sale to you (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 Option Shares which
you are 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), you 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”), you shall deliver to a
representative of the Sponsor designated in the Drag-Along Notice certificates
representing all the Option Shares beneficially owned and held by you, 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 Option Shares
pursuant to this Section 7.4 at the closing for such Drag-Along Sale against
delivery to you of the consideration therefor.  If you 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 you all certificates representing Option Shares that you
delivered for transfer pursuant hereto, together with any documents in the
possession of the Sponsor executed by you 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.

 

7.5.                              Other Responsibilities.  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 your sole responsibility, unless otherwise agreed
to in writing between such Permitted Transferee and the Sponsor.  Neither the
Company nor the Sponsor shall be liable to any Permitted Transferee for your
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.

 

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 Section 7 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, you and your
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.

 

8.                                       Tax Withholding

 

8.1 Tax Withholding.  The Company shall have the right to deduct from any
compensation or any other payment of any kind (including, upon approval of the
Board of Directors of the Company, withholding the delivery of shares of Common
Stock) due you the amount of any federal, state, local or foreign taxes required
by law to be withheld which arise in connection with the Option Shares;
provided, however, that the value of the shares of Common Stock withheld may not
exceed the statutory minimum withholding amount required by law.  In lieu of
such deduction and as a condition of the exercise of the Option, the Company may
require you to make a cash payment to the Company equal to the amount required
to be withheld or may sell a sufficient number of Option Shares on your behalf
to realize an amount as nearly as possible equal to the withholding liability or
require your agreement to such other arrangements it deems

 

6

--------------------------------------------------------------------------------

 

necessary or desirable for the recovery of any taxes, duties or social security
payments paid on your behalf.  If you do not make such payment when requested,
the Company may refuse to issue any Common Stock certificate under this
Agreement until arrangements satisfactory to the Administrator for such payment
have been made.

 

9.                                       Adjustments for Corporate Transactions
and Other Events.

 

9.1                                 Stock Dividend, Stock Split and Reverse
Stock Split.  Upon a stock dividend of, or stock split, reverse stock split, or
similar event affecting, the Common Stock, the number of such Option Shares
subject to your Option, without further action of the Administrator, shall be
adjusted to reflect such event.  The Administrator may make adjustments, in its
discretion, to address the treatment of fractional shares with respect to the
Option Shares as a result of the stock dividend, stock split, reverse stock
split, or similar event.  Adjustments under this Section 9 will be made by the
Administrator, whose determination as to what adjustments, if any, will be made
and the extent thereof will be final, binding and conclusive.  No fractional
Option Shares will result from any such adjustments.

 

9.2                                 Binding Nature of Agreement.  The terms and
conditions of this Agreement shall apply with equal force to any additional
and/or substitute securities received by you in exchange for, or by virtue of
your Option, whether as a result of any spin-off, stock split-up, stock
dividend, stock distribution, other reclassification of the Common Stock of the
Company, or similar event, except as otherwise determined by the Administrator. 
If the Option Shares are converted into or exchanged for, or stockholders of the
Company receive by reason of any distribution in total or partial liquidation or
pursuant to any merger of the Company or acquisition of its assets, securities
of another entity, or other property (including cash), then the rights of the
Company under this Agreement shall inure to the benefit of the Company’s
successor, and this Agreement shall apply to the securities or other property
received upon such conversion, exchange or distribution in the same manner and
to the same extent as the Option Shares.

 

10.                                 Non-Guarantee of Employment or Service
Relationship.  Nothing in the Plan or this Agreement shall alter your at-will or
other employment status or other service relationship with the Company, nor be
construed as a contract of employment or service relationship between the
Company and you, or as a contractual right of you to continue in the employ of,
or in a service relationship with, the Company for any period of time, or as a
limitation of the right of the Company to discharge you at any time with or
without cause or notice and whether or not such discharge results in the
forfeiture of any Option Shares or any other adverse effect on your interests
under the Plan.

 

11.                                 The Company’s Rights.  Except as provided
under this Agreement, the existence of the Options shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of the Company’s assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

 

12.                                 Notices.  All notices and other
communications made or given pursuant to this Agreement shall be in writing and
shall be sufficiently made or given if hand delivered or mailed by certified
mail, addressed to you at the address contained in the records of the Company,
or addressed to the Administrator, care of the Company for the attention of its
Corporate Secretary at its principal executive office or, if the receiving party
consents in advance, transmitted and received via telecopy or via such other
electronic transmission mechanism as may be available to the parties.

 

13.                                 Entire Agreement.  This Agreement contains
the entire agreement between the parties with respect to the Award Shares
granted hereunder.  Any oral or written agreements, representations, warranties,
written inducements, or other communications made prior to the execution of this
Agreement with respect to the Option Shares granted hereunder shall be void and
ineffective for all purposes.

 

14.                                 Amendment.  This Agreement may be amended
from time to time only be a written instrument duly executed by the Company, the
Sponsor, and you.

 

7

--------------------------------------------------------------------------------

 

15.                                 Conformity with Plan.  This Agreement is
intended to conform in all respects with, and is subject to all applicable
provisions of, the Plan.  Inconsistencies between this Agreement and the Plan
shall be resolved in accordance with the terms of the Plan.  In the event of any
ambiguity in this Agreement or any matters as to which this Agreement is silent,
the Plan shall govern.  A copy of the Plan is available upon request.  Please
contact the Company by email at dselby@vertisinc.com or at 250 W. Pratt Street,
18th Floor, Baltimore, Maryland 21201, Attention: Dolores D. Selby, (telephone:
410-361-8394), to receive a copy of the Plan.

 

16.                                 Governing Law. The validity, construction
and effect of this Agreement, and of any determinations or decisions made by the
Administrator relating to this Agreement, and the rights of any and all persons
having or claiming to have any interest under this Agreement, shall be
determined exclusively in accordance with the laws of the State of Delaware,
without regard to its provisions concerning the applicability of laws of other
jurisdictions.  Any suit with respect hereto will be brought in the federal or
state courts in the districts which include New York, New York, and you hereby
agree and submit to the personal jurisdiction and venue thereof.

 

17.                                 Headings.  The headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

 

18.                                 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 the Sponsor, at the address set forth below:

 

(b)                       If to you, at the address set forth in the Company’s
records;

 

(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

Attention: Anthony J. DiNovi

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).

 

19.                                 Limitation of Liability.  None of the
Affiliates of the Sponsor shall have any liability to the you or any of your
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,
you, your Permitted Transferees, if any, and the Company will only seek to
recover direct damages for any breach of this Agreement.  You, your 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.

 

8

--------------------------------------------------------------------------------

 

20.                                 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, 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.

 

21.                                 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.

 

9

--------------------------------------------------------------------------------

 

GLOSSARY

 

(a)                                  “Administrator” means the Committee as
determined under Section 2.7 of the Plan.

 

(b)                                 “Affiliate” has the meaning given to such
term in the Plan.

 

(c)                                  “Business Day” means any day other than a
Saturday, Sunday, or other day during which the Company’s principal executive
office is not open for business.

 

(d)                                 “Cause” generally means your
insubordination, dishonesty, incompetence, moral turpitude, other misconduct of
any kind or the refusal to perform your duties or responsibilities for any
reason other than illness or incapacity, in each case as determined by the Board
in good faith.  However, if you have an employment agreement, consulting
agreement, change of control agreement or similar agreement in effect with the
Company at the time in question that defines “cause” (or words of like import),
then “cause” has the meaning ascribed to it under such agreement, as such
agreement shall provide at the time in question; provided that with respect to
any agreement that conditions “cause” on the occurrence of a change of control,
such definition of “cause” shall not apply until a change of control actually
takes place and then only with regard to a termination thereafter.

 

(e)                                  “Common Stock” means the common stock, $.01
par value, of Vertis Holdings, Inc..

 

(f)                                    “Company” means Vertis Holdings, Inc. and
its Affiliates, except where the context otherwise requires.  For purposes of
determining whether a Liquidity Event has occurred, Company shall mean only
Vertis Holdings, Inc.

 

(g)                                 “Disability” means your inability to perform
substantially your duties and responsibilities to the Company by reason of a
physical or mental disability or infirmity for a continuous period of three
months.  The date of such disability shall be the earlier of (1) the last day of
such three-month period or (2) the day on which you submit, or cause to be
submitted, to the Board any medical evidence of such disability reasonably
satisfactory to the Board.

 

(h)                                 “Exchange” means the principal stock
exchange, including The Nasdaq Stock Market, on which the Common Stock is listed
or approved for listing, if any.

 

(i)                                     “Liquidity Event” means (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.

 

(j)                                     “Minimum Public Float” means 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.

 

(k)                                  “Other Option Share Grantees” means other
persons receiving Options pursuant to an agreement having terms substantially
identical to those contained in this Agreement.

 

(l)                                     “Other Key People” means the officers,
members of management, key employees of the Company and its Affiliates.

 

10

--------------------------------------------------------------------------------

 

(m)                               “Principal Beneficial Owner” means any of the
Sponsor, CLI/THLEF IV 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.

 

(n)                                 “Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

 

(o)                                 “Service” means your employment or other
service relationship with the Company and its Affiliates.  Service will be
considered to have ceased with the Company if, after a sale, merger or other
corporate transaction, the trade, business or entity with which you are employed
is no longer an Affiliate of Vertis Holdings, Inc.

 

(p)                                 “Third Party” means any person or entity
excluding each of the following:  (a) the Company and its employees, officers,
directors and (b) the Principal Beneficial Owners.

 

(q)                                 “You”; “Your”.  You means the recipient of
the Option Shares as reflected in the first paragraph of this Agreement. 
Whenever the word “you” or “your” is used in any provision of this Agreement
under circumstances where the provision should logically be construed, as
determined by the Administrator, to apply to the estate, personal
representative, or beneficiary to whom the Option Shares may be transferred by
will or by the laws of descent and distribution, the words “you” and “your”
shall be deemed to include such person.

 

11

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Company and the Sponsor have caused this Agreement to be
executed by their duly authorized officers.

 

 

 

VERTIS HOLDINGS, INC.

 

 

 

 

 

By:

/S/ John V. Howard

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

THOMAS H. LEE EQUITY FUND IV, L.P.

 

 

 

 

 

By:

/S/ Anthony DiNovi

 

 

 

 

 

 

Date:

 

 

 

 

The undersigned hereby acknowledges that he/she has carefully read this
Agreement and agrees to be bound by all of the provisions set forth herein.

 

WITNESS:

GRANTEE

 

 

 

 

[Witness]

 

/S/ Adriaan Roosen

 

 

 

 

 

 

Date:

 

 

 

 

Enclosure: Vertis Holdings, Inc. 1999 Equity Award Plan

 

 

12

--------------------------------------------------------------------------------