Exhibit 10.6

 

RESTRICTED STOCK AGREEMENT

 

VERTIS HOLDINGS, INC.

1999 EQUITY AWARD PLAN

 

GRANTEE: MICHAEL S. RAWLINGS

 

No. OF SHARES: 2,500

 

This Agreement (the “Agreement”), approved by Thomas H. Lee Equity Fund IV, L.P.
(the “Sponsor”), evidences the award of 2,500 restricted shares (each, an “Award
Share,” and collectively, the “Award Shares”) of the Common Stock of Vertis
Holdings, Inc., a Delaware corporation (the “Company”), granted to you, Michael
S. Rawlings, effective as of April    , 2004 (the “Grant Date”), pursuant to the
Vertis Holdings, Inc. 1999 Equity Award Plan (the “Plan”) and conditioned upon
your agreement 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 Award Shares
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. All of the Award Shares are nonvested and forfeitable 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 Award
Shares will vest and become nonforfeitable immediately prior to the first to
occur of the following:

 

(a)           a Liquidity Event;

(b)           your death; or

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

 

Except as provided above, unless otherwise determined by the Administrator, none
of the Award Shares will become vested and nonforfeitable after your Service
with the Company ceases.

 

3.             Termination of Employment or Service.

 

3.1           Unvested Award Shares. If your Service with the Company ceases for
any reason other than your death or Disability, all Award Shares that are not
then vested and nonforfeitable will be immediately forfeited to the Company upon
such cessation for no consideration.

 

3.2           Vested Award Shares. If your Service with the Company ceases for
any reason, all Award Shares that are then vested and nonforfeitable will not be
affected by such cessation but will remain subject to the provisions of this
Agreement, including the restrictions on transfer set forth under Section 4 of
this Agreement.

 

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4.             Restrictions on Transfer.

 

4.1           Except as otherwise provided under Sections 4.3 or 7 of this
Agreement or in accordance with your will or the laws of descent and
distribution upon your death, until an Award Share becomes vested and
nonforfeitable and a Liquidity Event has occurred, the Award Share 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.

 

4.2           You hereby represent and warrant to the Company as follows:

 

(a)           You will hold the Award Shares for your own account for investment
only and not with a view to, or for resale in connection with, any
“distribution” of the Award Shares within the meaning of the Securities Act.

 

(b)           You understand that the Award Shares have not been registered
under the Securities Act by reason of a specific exemption and that the Award
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 Award Shares.

 

(c)           You understand that the Company may, in its discretion, impose
restrictions on the sale, pledge or other transfer of the Award Shares
(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 your investment in the Company is a speculative
investment that has limited liquidity and is subject to the risk of complete
loss.

 

4.3           The provisions of Sections 4.1 and 4.2(b) shall not apply to the
following transfers; provided, however, that no transfer of Award Shares
pursuant to this Section 4.3 (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 Award Shares made to an Affiliate of the
Company or an Affiliate of any subsidiary of the Company;

 

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

 

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

 

(e)           a transfer of vested Award 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

 

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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.

 

4.4           The Company shall not be required to (a) transfer on its books any
Award Shares that have been sold or transferred in contravention of this
Agreement or (b) treat as the owner of Award Shares, or otherwise accord voting,
dividend or liquidation rights to, any transferee to whom Award Shares have been
transferred in contravention of this Agreement.

 

5.             Stock Certificates. You will be reflected as the owner of record
of the Award Shares as of the Grant Date on the Company’s books. The Company
will hold the share certificates for safekeeping, or otherwise retain the Award
Shares in uncertificated book entry form, until the Award Shares become vested
and nonforfeitable and until they may be transferred freely without restriction
under this Agreement. Until the Award Shares become vested and nonforfeitable,
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 RESTRICTED
STOCK AGREEMENT DATED APRIL     , 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 Award 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.

 

6.             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.

 

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7.             Tag-Along and Drag-Along Rights.

 

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 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. l(c), you and your Permitted Transferees
shall be entitled to sell up to a Pro Rata Portion (as defined below) of your
Award 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

 

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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; 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 Award Share
Grantees and their permitted transferees giving tag-along notices similar to the
Tag-Along Notice during such period prescribed in Other Award Share 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, and those certain Retained Share 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 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.

 

7.2.          Limitation of Rights Following Termination of Employment or
Service. Notwithstanding any other provision of this Agreement, upon the
termination of your employment or service relationship with the Company or any
of its subsidiaries for Cause, or if you terminate your employment or service
relationship 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 or service relationship, 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, (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

 

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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 Award 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 Award Shares means, at any time, the number of
Award Shares beneficially owned by you and your Permitted Transferees,
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.

 

(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 Award 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
Award 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 Award Shares pursuant to this Section 7.4 at the
closing for such Drag-Along Sale against delivery to you of the consideration
therefore. 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 Award 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 and Tax Election.

 

8.1           Tax Withholding. [Intentionally Omitted]

 

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8.2           Tax Election. You hereby acknowledge that you have been advised by
the Company to seek independent tax advice from your own advisors regarding the
availability and advisability of making an election under Section 83(b) of the
Code, and that any such election, if made, must be made within 30 days of the
Grant Date. You expressly acknowledge that you are solely responsible for filing
any such Section 83(b) election with the appropriate governmental authorities,
irrespective of the fact that such election is also delivered to the Company.
You may not rely on the Company or any of its officers, directors or employees
for tax or legal advice regarding this award. You acknowledge that you have
sought tax and legal advice from your own advisors regarding this award or have
voluntarily and knowingly foregone such consultation. You must pay over to the
Company by check the amount of any and all applicable withholding taxes at the
time that you make a Section 83(b) election.

 

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 Award Shares and the number of such Award Shares
that are nonvested and forfeitable shall, without further action of the
Administrator, 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 Award 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 Award 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 ownership of,
the Award Shares, 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 Award 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 Award 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 Award
Shares or any other adverse effect on your interests under the Plan.

 

11.           Rights as Stockholder. Except as otherwise provided in this
Agreement with respect to the nonvested and forfeitable Award Shares, you are
entitled to all rights of a stockholder of the Company, including the right to
vote the Award Shares and receive dividends and/or other distributions declared
on the Award Shares.

 

12.           The Company’s Rights. Except as provided under Section 7.6 of this
Agreement, the existence of the Award Shares 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.

 

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13.           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.

 

14.           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 Award Shares granted hereunder shall be void and ineffective for all
purposes.

 

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

 

16.           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.

 

17.           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.

 

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

 

19.           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

 

8

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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).

 

20.           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 patties 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.

 

21.           Severabilitv. 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.

 

22.           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

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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 or, if you are a director, as
determined by the Company’s stockholders. 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.

 

10

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(k)   “Other Award Share Grantees” means other persons receiving Award Shares
pursuant to a restricted stock agreement having terms substantially identical to
those contained in this Agreement.

 

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

 

(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 or for which you serve 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 Award 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 Award 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

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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, Jr.

 

 

 

 

 

 

 

 

 

 

Date:

4/20/04

 

 

 

 

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

 

 

 

 

 

By:

/s/ Anthony J. DiNovi

 

 

 

 

 

 

 

 

 

 

Date:

06/07/04

 

 

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

 

 

 

 

 

 

/s/ John V. Howard, Jr.

 

/s/ Michael Rawlings

 

 

 

 

 

 

 

 

Date:

4/20/04

 

 

Enclosure: Vertis Holdings, Inc. 1999 Equity Award Plan

 

12

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[g95901kji001.jpg]

 

 

 

 

COMMON STOCK

INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE

[g95901kji002.jpg]

[g95901kji003.jpg]

SEE REVERSE FOR CERTAIN DEFINITIONS

 

THIS CERTIFIES THAT

 

Michael S. Rawlings

 

IS THE OWNER OF **TWO THOUSAND FIVE HUNDRED**

 

FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE PER SHARE,
OF

 

VERTIS HOLDINGS INC.

 

transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

 

Dated:

 

June 7, 2004

 

/s/ John V. Howard, Jr.

 

/s/ Donald E. Roland

SECRETARY

[g95901kji004.jpg]

PRESIDENT AND CHIEF EXECUTIVE OFFICER

 

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

 

VERTIS HOLDINGS, INC.

 

The Corporation shall furnish without charge to each stockholder who so requests
a statement of the powers, designations, preferences and relative,
participating, optional, or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation’s Secretary at the principal office of the Corporation.

 

The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

 

TEN COM –

as tenants in common

 

UNIF GIFT MIN ACT-                     Custodian                       

TEN ENT  –

as tenants by the entireties

 

 

(Cust)

 

(Minor)

 

JT TEN      –

as joint tenants with right of

 

 

under Uniform Gifts to Minors

 

survivorship and not as tenants

 

 

Act                                                        

 

in common

 

 

(State)

 

 

 

UNIF TRF MIN ACT-                 Custodian (until age             )

 

 

 

 

(Cust)

 

 

 

 

 

                      under Uniform Transfers

 

 

 

 

(Minor)

 

 

 

 

 

to Minors Act                                       

 

 

 

 

 

(State)

 

Additional abbreviations may also be used though not in the above list.

 

FOR VALUE RECEIVED,                                     hereby sell, assign and
transfer unto

 

PLEASE INSERT SOCIAL SECURITY OR OTHER
      IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

 

 

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

 

 

Shares

of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

 

 

Attorney

to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.

 

Dated

 

 

 

 

 

 

 

 

 

 

 

 

 

NOTICE:

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN
UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.

 

 

 

Signature(s) Guaranteed

 

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.

 

By.

 

 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

 

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND THE OTHER TERMS AND CONDITIONS SET FORTH IN A CERTAIN RESTRICTED
STOCK AGREEMENT DATED MAY 20, 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.

 

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