Exhibit 10.44


 


EMPLOYMENT
AGREEMENT


 


THIS
AGREEMENT by and among Vertis Inc., (the “Company”), Vertis Holdings, Inc.
(“Holdings”) and Herbert W. Moloney III (the “Executive”), dated and effective
as of August 31, 2003 (the “Effective Date”).


 


WHEREAS,
the Company wishes to provide for the continued employment by the Company of
the Executive, and the Executive wishes to continue to serve the Company, in
the capacities and on the terms and conditions set forth in this Agreement;


 


NOW,
THEREFORE, it is hereby agreed as follows:


 


1.                                       EMPLOYMENT AT WILL.  The employment of the Executive by the Company shall be at will
and shall be terminable by either party upon 30 days prior written notice or as
otherwise set forth in Section 4. 
The provisions of Sections 4 and 5 shall govern the consequences of any
termination of the Executive’s employment.


 


2.                                       POSITION AND DUTIES.


 


(a)                                  During his employment with the Company, the
Executive shall serve as the Chief Operating Officer - Vertis North America of
the Company and shall perform such duties and have such responsibilities as are
customarily assigned to such position, and shall also perform or hold such
other duties and responsibilities with respect to the Company or its
subsidiaries not inconsistent therewith as may from time to time be assigned to
him by the Board of Directors of the Company (the “Board”).


 


(b)                                 During his employment with the Company, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote his full business attention and time to
the business and affairs of the Company and shall use all reasonable efforts to
carry out his responsibilities faithfully and efficiently. However, the
Executive may serve on corporate, industry, civic or charitable boards or
committees, so long as these activities do not materially interfere with the
performance of the Executive’s responsibilities to the Company.


 


3.                                       COMPENSATION.


 


(a)                                  BASE SALARY. 
During his employment with the Company, the Executive shall continue to
receive an annual base salary at the rate in effect on the Effective Date, as
adjusted by the Board from time to time as set forth below (the “Annual Base
Salary”).  The Annual Base Salary shall
be paid in accordance with the Company’s regular payroll practice for its
senior executives, as in effect from time to time.  The Annual Base Salary shall be reviewed for adjustment by the
Board at least annually prior to the end of each calendar year during the
Executive’s employment with the Company.


 

















 


(b)                                 ANNUAL CASH BONUS.  For fiscal years during the Executive’s employment with the
Company, the Executive shall participate in an annual cash incentive
compensation plan (currently the Company’s Executive Incentive Plan), as adopted
and approved by the Board from time to time, with applicable corporate and
individual performance targets and maximum award amounts determined by the
Board.  The target bonus of the
Executive pursuant to the annual cash incentive compensation plan shall be
determined in accordance with the Executive Incentive Plan (or the applicable
replacement or successor plan) with respect to each such fiscal year.  Any cash bonuses payable to the Executive
will be paid at the time the Company normally pays such bonuses to its senior
executives and will be subject to the terms and conditions of the applicable
annual cash incentive compensation plan.


 


(c)                                  LONG-TERM INCENTIVE COMPENSATION.  During the Executive’s employment with the
Company, the Executive shall be eligible to receive long-term equity incentive
compensation awards (which may consist of stock options or other types of
awards, as determined by the Board in its discretion) pursuant to the Company’s
equity incentive compensation plans and programs in effect from time to time.  These awards shall be granted in the
discretion of the Board and shall include such terms and conditions (including
performance objectives) as the Board deems appropriate.


 


(d)                                 OTHER BENEFITS.  During the Executive’s employment with the Company, the Executive
shall be eligible to participate in the retirement, welfare benefit, and fringe
benefit plans, practices, policies and programs of the Company (including any
medical, prescription, dental, disability, life insurance, accidental death and
travel accident insurance plans and programs maintained by the Company) to the
same extent, and subject to substantially the same terms and conditions, as
these arrangements are made available generally to the senior officers of the
Company.


 


(e)                                  VACATION; EXPENSES.  The Executive shall be entitled to 4 weeks annual paid executive
leave in accordance with the provisions of the Company’s executive leave policy
as in effect from time to time, which shall be taken at times selected by the
Executive with due regard for the business needs of the Company.  The executive leave does not accrue and may
not be carried forward, nor is unused leave paid out upon termination of
employment.  The Company shall pay or
reimburse the Executive for ordinary and necessary business expenses incurred
by him in the performance of his duties in accordance with the Company’s usual
policies.


 


4.                                           TERMINATION OF EMPLOYMENT.


 


(a)                                  DEATH OR DISABILITY. The Executive’s
employment shall terminate automatically upon the Executive’s death during his
employment with the Company.  The
Company shall be entitled to terminate the Executive’s employment because of
the Executive’s Disability. 
“Disability” means that (1) the Executive is permanently disabled within
the meaning of the long-term disability plan of the Company in which the
Executive participates or (2) if there is no such plan in effect, that (i) the
Executive has been absent from the full-time performance of the Executive’s
duties with the Company for a period of 120 days, (ii) the Company shall have
given the Executive a notice of


 


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termination
for Disability, and (iii) within 30 days after such notice of termination is
given, the Executive shall not have returned to the full-time performance of
the Executive’s duties.  The effective
date of any such termination for Disability shall be (A) in the case of a
termination pursuant to clause (1), the date on which the Executive is
determined to be disabled for purposes of such plan or, in the case of a
termination pursuant to clause (2), the date which is 30 days following the
notice of termination for Disability (either such date, the “Disability
Effective Time”).


 


(b)                                 TERMINATION BY THE COMPANY.


 


(i)                                     The Company may terminate the Executive’s
employment with the Company for Cause or without Cause.  Except as set forth in
Section 4(b)(ii), “Cause” shall mean (i) gross negligence or willful
misconduct by the Executive in connection with the performance of his duties
hereunder that is materially injurious to the Company, monetarily or otherwise,
(ii) the conviction of the Executive by a court of competent jurisdiction for
felony criminal conduct or (iii) material violation by the Executive of the
provisions of Section 6 of this Agreement, unless, in the case of clauses
(i) or (iii), the event constituting Cause is curable and has been cured by the
Executive within ten business days of his receipt of written notice from the
Company that an event constituting Cause has occurred and specifying in
reasonable detail the actions required to effect a cure.


 


(ii)                                  Notwithstanding the provisions of
Section 4(b)(i), following a Change in Control (as defined herein),
“Cause” shall only mean (A) the conviction of the Executive by a court of
competent jurisdiction for felony criminal conduct; or (B) the willful engaging
by the Executive in fraud or dishonesty which is demonstrably and materially
injurious to the Company or its reputation, monetarily or otherwise.  For purposes of this Section 4(b), no
act, or failure to act, on the Executive’s part shall be deemed “willful”
unless committed, or omitted by the Executive in bad faith.


 


(iii)                               A termination of the Executive’s employment
for Cause shall require a vote of a majority of the Board.  Following a Change in Control a termination
of the Executive’s employment for Cause shall not be effective unless it is
accomplished in accordance with the following procedures.  The Board shall give the Executive written
notice (“Notice of Termination for Cause”) of its intention to terminate the
Executive’s employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute Cause and the
specific provision(s) of this Agreement on which it relies, and stating the
date, time and place of the Special Board Meeting for Cause.  The “Special Board Meeting for Cause” means
a meeting of the Board called and held specifically and exclusively for the
purpose of considering the Executive’s termination for Cause.  The Special Board Meeting for Cause must
take place not less than thirty business days after the Executive receives the
Notice of Termination for Cause.  The
Executive shall be given an opportunity, together with counsel, to be heard at
the Special Board Meeting for Cause. 
The Executive’s termination for Cause shall be effective when a
resolution is duly


 


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adopted
at the Special Board Meeting for Cause stating that, in the good faith opinion
of the Board, the Executive is guilty of the conduct described in the Notice of
Termination for Cause and that such conduct constitutes Cause under the
applicable provision of this Agreement.


 


(c)                                  TERMINATION BY THE EXECUTIVE.


 


(i)                                     The Executive may terminate employment with
the Company for Good Reason or without Good Reason.  “Good Reason” shall mean the occurrence of any of the following
events, without the Executive’s consent (other than in connection with an event
constituting Cause): (a) any action by the Company which results in a
significant diminution in the Executive’s position, authority, duties or
responsibilities as contemplated by this Agreement; (b) a reduction in the
Executive’s Annual Base Salary or the Executive’s annual cash bonus opportunity
under the Executive Incentive Plan (or a successor plan) or a failure by the
Company to timely pay any portion of the Executive’s current or deferred
compensation; (c) the Company requiring the Executive to be based at an office
that is greater than 50 miles from where the Executive’s office is located at
such time except for required travel on the Company’s business to an extent
substantially consistent with the business travel obligations which the
Executive undertook on behalf of the Company prior to a Change in Control; or
(d) the failure by the Company to obtain from any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company an express
written assumption and agreement to perform this Agreement in the same manner
and to the same extent that the company would be required to perform it if no
such succession had taken place unless, in each case, such action is remedied
by the Company within ten business days after receipt of a Notice of
Termination for Good Reason (as defined below) given by the Executive.


 


(ii)                                  Except in the case of a Limited Change in
Control (as defined in Section 5(d) hereof) the Executive shall
automatically be deemed to have Good Reason (“Deemed Good Reason”) despite the
absence of any of the events or circumstances described in the second sentence
of Section 4(c)(i) for the thirty day period commencing on the first
anniversary of a Change in Control; provided, however, that if the Executive
terminates his employment pursuant to the provisions of this subparagraph (ii),
the Executive’s entitlement to the benefits provide in Section 5(d) (and
the benefits provided in connection with a termination described in such
Section) may be conditioned by the Company on the Executive continuing to serve
the Company for up to six months following the Notice of Termination for Good
Reason (the “Transition Period”).  A
failure by the Executive to comply with such a request absent an event or
circumstance described in the second sentence of Section 4(c)(i) (as such
definition is modified by the last sentence of this Section 4(c)(ii)) will
result in the termination being treated as a termination described in
Section 5(a).  In the event that
the Company invokes its right to require the Executive to continue to serve the
Company during the Transition Period, the Executive’s Annual Base Salary shall
not be reduced


 


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during
such period, nor shall the Executive’s annual bonus opportunity (which bonus,
if any, (i) shall be paid out on a pro-rata basis for the applicable period
during which the Executive was employed, (ii) shall be paid at the time such
bonuses are paid to the Company’s executives generally and (iii) shall be based
upon the Company’s (and if applicable the Executive’s) scheduled performance
against target applicable to the portion of the performance period during which
the Executive was employed - in each case consistent with (and not in
duplication of) the provisions of Section 5(g)).  Notwithstanding the definition of Good Reason set forth in the
second sentence of Section4(c)(i), the Company may, in its discretion, change
the Executive’s authority, position, duties or responsibilities during the
Transition Period, without such change constituting Good Reason.


 


(iii)                               A termination of employment by the Executive
for Good Reason or Deemed Good Reason shall be effected by giving the Company
written notice (“Notice of Termination for Good Reason”) of the termination,
setting forth in the case of a termination for Good Reason in reasonable detail
the specific conduct of the Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which the Executive relies.  A termination of employment by the Executive
for Good Reason shall be effective ten business days following the date when
the Notice of Termination for Good Reason is given, unless, if applicable, the
event constituting Good Reason is remedied by the Company prior to that
date.  Actions by the Company which
constitute Good Reason shall be disregarded in the calculation of termination
benefits described in Section 5.


 


(iv)                              A termination of the Executive’s employment
by the Executive without Good Reason shall be effected by giving the Company 30
days’ written notice of the termination.


 


(d)                                 DATE OF TERMINATION; RESIGNATION.  The “Date of Termination” means the date of
the Executive’s death, the Disability Effective Time or the date on which the
termination of the Executive’s employment by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason is
effective.  Following termination of the
Executive’s employment for any reason, the Executive shall immediately resign
from the Board and from all other offices and positions he holds with the Company
and its subsidiaries if requested by the Board.


 


5.                                       OBLIGATIONS OF THE COMPANY UPON TERMINATION.


 


(a)                                  TERMINATION BY THE COMPANY (OTHER THAN
TERMINATIONS FOR CAUSE, DEATH OR DISABILITY), OR TERMINATION BY THE EXECUTIVE
FOR GOOD REASON.   If the Company terminates
the Executive’s employment for any reason other than for Cause (other than a
termination for Disability or death), or the Executive terminates his
employment for Good Reason, then, except for any termination to which
Section 5(d) applies, the Company shall pay to the Executive (i) a cash
payment equal to two times the sum of (A) the Executive’s Annual Base Salary
immediately prior to the Date of Termination and (B) the greater of (1) the
annual bonus earned by the Executive for the last completed fiscal year prior
to the fiscal year in which


 


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the Date of Termination occurs and (2) the annual bonus the Executive
would have earned for the fiscal year in which the Date of Termination occurs
absent such termination (which amount shall be based upon the Company’s (and if
applicable the Executive’s) actual performance against target (expressed as a
percentage of achievement of targeted performance) applicable to the portion of
the performance period during which the Executive was employed, with such
percentage level of achievement annualized for the full fiscal year) (the
greater of such amounts being referred to hereafter as the “Applicable Bonus
Amount”); and (ii) any unpaid amounts of the Executive’s Annual Base Salary for
periods prior to the Date of Termination and earned annual bonuses for
completed fiscal years prior to the Date of Termination.  The payment described in clause (i) of the
preceding sentence shall be made ratably over the two-year period following the
Date of Termination, in accordance with the Company’s normal payroll practices
and the payments described in clause (ii) of the preceding sentence shall be
made within 30 days of the Date of Termination.  The Company shall also provide to the Executive (and, as
applicable, his eligible dependents), in the event of such a termination
continued participation at the Company’s expense in the Company’s medical,
dental, prescription and vision care insurance plans (or substantially
equivalent coverage under an alternative arrangement) for six months following
the Date of Termination (or, if earlier, until the date the Executive obtains
alternative coverage from a subsequent employer) following which, if no such
alternative coverage has been obtained, the Executive will be entitled to elect
continuation coverage (“COBRA”) in accordance with the provisions of
Section 4980B of the Internal Revenue Code of 1986, as amended (the
“Code”), which COBRA coverage period shall begin at the close of the period of
such continued participation.  For
purposes of this Agreement, the Executive’s employment shall be deemed to have
been terminated within the thirteen month period following a Change in Control
and during the Term by the Company without Cause (and shall be governed by
Section 5(d)), if the Executive’s employment is terminated by the Company
without Cause either (i) during the 120 day period prior to the execution of an
agreement, the consummation of which would result in a Change in Control or (ii)
following the execution of an agreement, the consummation of which would result
in a Change in Control and such termination is effective at the time, or during
the pendency, of such Change in Control (in either case whether or not such
Change in Control actually occurs).


 


(b)                                 DEATH AND DISABILITY. If the Executive’s
employment is terminated by the Company due to Disability or terminated
automatically upon the Executive’s death then, (i) the Company shall pay to the
Executive (or the Executive’s estate, as applicable) in a lump sum in cash
within 30 days after the Date of Termination, any portion of the Executive’s
Annual Base Salary earned through the Date of Termination that has not been
paid and earned annual bonuses for completed fiscal years prior to the Date of
Termination and (ii) all outstanding equity awards shall be treated according
to the provisions of the plan and agreements under which such awards were
granted.  The Company shall also provide
to the Executive (and, as applicable, his eligible dependents), in the event of
such a termination continued participation at the Company’s expense in the
Company’s medical, dental, prescription and vision care insurance plans (or
substantially equivalent coverage under an alternative arrangement) for six
months following the Date of Termination (or, if earlier, until the date the
Executive obtains alternative coverage from a subsequent employer) following
which, if


 


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no such alternative coverage has been obtained, the Executive (or his
eligible dependents, if applicable) will be entitled to elect COBRA
continuation coverage in accordance with the provisions of Section 4980B
of the Code, which COBRA coverage period shall begin at the close of the period
of such continued participation.  In
addition, notwithstanding anything to the contrary in any option plan or
agreement of the Executive, outstanding options which are vested as of the Date
of Termination shall remain exercisable until the earlier of (1) the date which
is 180 days following the Date of Termination and (2) the maximum term of the
option.


 


(c)                                  BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE
OTHER THAN FOR GOOD REASON.  If the
Executive’s employment is terminated by the Company for Cause or the Executive
voluntarily terminates employment other than for Good Reason then, (i) the
Company shall pay to the Executive in a lump sum in cash within thirty days
after the Date of Termination, any portion of the Executive’s Annual Base
Salary earned through the Date of Termination that has not been paid and earned
annual bonuses for completed fiscal years prior to the Date of Termination and
(ii) all outstanding equity awards shall be treated according to the provisions
of the plan and agreements under which such awards were granted.


 


(d)                                 CHANGE IN CONTROL TERMINATION.


 


(i)                                     If, within the 13-month period immediately
following the occurrence of a Change in Control, the Executive’s employment by
the Company is terminated by the Company other than for Cause (other than a termination
for Disability or death) or by the Executive for Good Reason (subject, if
applicable to the proviso set forth in the first sentence of Section 4
(c)(ii)), then the Company shall pay to the Executive (i) a cash payment equal
to three times the sum of (A) the Executive’s Annual Base Salary immediately
prior to the Date of Termination and (B) the Applicable Bonus Amount; and (ii)
any unpaid amounts of the Executive’s Annual Base Salary for periods prior to
the Date of Termination and earned annual bonuses for completed fiscal years
prior to the Date of Termination.  The
cash payments described in clause (i) and (ii) of the preceding sentence shall
be made in a lump sum within 30 days following the Date of Termination.  Notwithstanding the foregoing, if the
amounts of such payments cannot be finally determined on or before a date when
a payment is due, the Company shall pay to the Executive on such day an
estimate, as reasonably determined by the Company, of the minimum amount of
such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments, if any, as soon as the amount thereof can be
determined.  The Company shall also
provide to the Executive (and, as applicable, his eligible dependents), in the
event of such a termination continued participation at the Company’s expense in
the Company’s medical, dental, prescription and vision care insurance plans (or
substantially equivalent coverage under an alternative arrangement) for 12
months following the Date of Termination (or, if earlier, until the date the
Executive obtains alternative coverage from a subsequent employer) following
which, if no such alternative coverage has been obtained, the Executive will be
entitled to elect COBRA continuation coverage in accordance with the provisions
of Section


 


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4980B of the Code, which COBRA coverage period shall begin at the close
of the period of such continued participation.


 


(ii)                                  For purposes of this Agreement, a “Change in
Control” Shall be deemed to have occurred on the first date after the Effective
Date on which (1) any Person (as defined below) shall acquire, whether by
purchase, exchange, tender offer, merger, consolidation or otherwise,
beneficial ownership of securities of the Company constituting fifty percent
(50%) or more of the combined voting power of the securities of the Company,
(2) any Person shall acquire all or substantially all of the assets of the
Company pursuant to a sale, dissolution or liquidations or (3) any Person shall
acquire the ability to appoint or elect a majority of the members of the
Board.  For purposes of the preceding
sentence, “Person” shall have the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended from time to time, as such term is
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) Holdings, Thomas H. Lee Partners or Thomas H. Lee Equity
fund IV, L.P., Evercore Capital Partners L.P. and each of their respective
affiliates (the “Designated Investors”), (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any of its
affiliates, (iii) an underwriter temporarily holding securities pursuant to an
offering of such securities and (iv) a corporation owned, directly or
indirectly, by the Designated Investors, such that the aggregate ownership of
securities or assets of the Company or the ability to appoint or elect
directors of the Company that is attributable to such Designated Investors
would not decrease to a level that would result in a Change in Control, if such
ownership or ability was deemed to be held directly in the Company.  The completion of an initial public offering
in which no Person acquires beneficial ownership of fifty percent (50%) or more
of the combined voting power of the securities of such Person shall not
constitute a Change in Control, nor shall the acquisition of beneficial
ownership of securities of the Company by a Person which has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934, as
amended, if such acquisition does not result in the Designated Investors owning
thirty percent (30%) or less of the combined voting power of the securities of
the Company. Notwithstanding the foregoing, other than for purposes of the
existence of Deemed Good Reason (as defined in Section 4(c)(i)), a Change
in Control shall be deemed to have occurred on the date when the Designated
Investors together with the senior management of the Company (as determined by
the Designated Investors) cease to beneficially own at least thirty percent
(30%) or more of the combined voting power of the securities of the Company (a
“Limited Change in Control”).


 


(iii)                               For purposes of this Agreement, the Executive’s
employment shall be deemed to have been terminated within the thirteen month
period following a Change in Control and during the Term by the Company without
Cause (and shall be governed by this Section 5(d)), if the Executive’s
employment is terminated by the Company without cause either (i) during the 120
day period prior to the execution of an agreement, the consummation of which
would result


 


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in a Change in Control or (ii) following the execution of an agreement,
the consummation of which would result in a Change in Control and such
termination is effective at the time, or during the pendency, of such Change in
Control (in either case whether or not such Change in Control actually occurs).


 


(e)                                  OPTION TREATMENT ON TERMINATION OF EMPLOYMENT
DESCRIBED IN SECTION 5(a).  If the
Executive’s employment is terminated under the circumstances described in
Section 5(a), then, notwithstanding anything in any agreement between the
Executive and the Company or Holdings (or any of their predecessors or
affiliated companies) to the contrary, the Executive shall be given credit for
an additional year of vesting service for purposes of the Executive’s then
outstanding options to purchase shares of common stock of Holdings (other than
options that vest upon attainment of performance goals but including options
issued prior to the Effective Date), such that any such options which were
scheduled to vest in the one year period commencing on the Date of Termination
shall be immediately vested and exercisable upon the Date of Termination and
shall remain exercisable in accordance with their existing terms (including
those relating to termination of employment). 
Notwithstanding the foregoing, the Board may, following the Effective
Date and in its discretion, grant options that vest upon attainment of
performance goals and may (but shall not be required to) provide that such
awards shall vest in whole or in part if the Executive’s employment is
terminated under the circumstances described in Section 5(a) or 5(d).


 


(f)                                    OPTION TREATMENT ON TERMINATION OF EMPLOYMENT
DESCRIBED IN SECTION 5(d).  If the
Executive’s employment is terminated under the circumstances described in
Section 5(d), then, notwithstanding anything in any agreement between the
Executive and the Company or Holdings (or any of their predecessors or
affiliated companies) to the contrary, all of the Executive’s then outstanding
options to purchase shares of common stock of Holdings (other than options that
vest upon attainment of performance goals but including options issued prior to
the Effective Date), whether or not previously vested and exercisable, shall be
immediately vested and exercisable upon the Date of Termination and shall
remain exercisable in accordance with their existing terms (including those
relating to termination of employment).


 


(g)                                 PRO-RATA BONUS PAYMENTS.  Except as set forth in the following
sentence, for purposes of this Section 5, bonus amounts shall only be
considered to be earned if the Executive was employed by the Company through
the last day of the performance period to which the bonus relates.  In case of a termination described in
Section 5(a), 5(b) or 5(d), in addition to the payments provided in such
Section, the Executive shall be considered to have earned an annual bonus (the
“Pro-rata Bonus”) equal to the bonus (if any) the Executive would have received
(as determined consistent with the provisions set forth below) had the
Executive remained employed by the Company through the last day of the fiscal
year during which the Date of Termination occurs, multiplied by a fraction, the
numerator of which is the number of days in such fiscal year during which the
Executive was employed by the Company and the denominator of which is 365.  The Pro-rata Bonus for purposes of a
termination described in Section 5(d), shall be determined, as near as
practicable, based on actual performance achieved for the fiscal year through
the Date of Termination, expressed as a


 


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percentage
of targeted performance for that period. 
For purposes of a termination described in Section 5(a) or 5(b),
such Pro-rata Bonus payment shall be based on the actual results for the
completed fiscal year during which the Date of Termination occurs. In the event
of a termination described in Section 5(a), 5(b) or 5(d), the payment of
any amount of Pro-rata Bonus which becomes due in accordance with this
Section 5(g) shall be made at the time the Company normally pays such bonuses
to its senior executives, irrespective of whether any such bonuses are paid to
other senior executives for such fiscal year, and will be subject to the terms
and conditions of the applicable annual cash incentive compensation plan but
without giving effect to any requirement therein that the Executive remain
employed with the Company through the payment date or the last day of the
applicable fiscal year in order to receive payment thereunder.  Exhibit A hereto sets forth examples of the
calculation of the Pro-rata Bonus.


 


(h)                                 OUTPLACEMENT SERVICES.  If the Executive’s employment is terminated
under the circumstances described in Section 5(a) or 5(d), the Company
shall pay the cost of providing the Executive with outplacement services, up to
a maximum of five percent (5%) of the sum of the Base Salary and the Applicable
Bonus Amount, provided that such services are (a) utilized by the Executive
within six months following the Date of Termination and (b) provided by a
recognized outplacement provider.  Such
payment shall be made by the Company directly to the service provider promptly
following the provision of such services and the presentation to the Company of
documentation of the provision of such services.  Such services shall include office facilities and telephone
answering services during such six month period.


 


(i)                                     ACCRUED BENEFITS.  Upon the Executive’s termination of employment for any reason, in
addition to any other amounts and benefits provided for in Section 5, the
Executive (and his beneficiaries and dependents, as applicable) shall be
entitled to receive all vested benefits under the Company’s benefit plans
policies and programs in which the Executive participated, in accordance with
the terms of such plans (except to the extent that such benefits are
duplicative of benefits provided for in Section 5).


 


6.                                       CONFIDENTIALITY; COMPETITION; SOLICITATION;
INTELLECTUAL PROPERTY; RETURN OF PROPERTY.


 


(a)                                  The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its predecessors or
affiliated companies and their respective businesses that the Executive obtains
or has obtained during the Executive’s employment by the Company or any of its predecessors
or affiliated companies and that is not public knowledge (other than as a
result of the Executive’s violation of his obligations to the Company,
including those set forth herein) (“Confidential Information”).  The Executive shall not communicate, divulge
or disseminate Confidential Information at any time during or after the
Executive’s employment with the Company, except with the prior written consent
of the Company or as otherwise required by law or legal process (of which the
Executive has delivered to the Company prompt prior notice).


 


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(b)                                 During the Executive’s employment with the
Company and for a period of two years after the termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of the Board, directly or indirectly engage in or be interested in (as
owner, partner, stockholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business which is in competition
with any line of business actively being conducted or to the Executive’s
knowledge, contemplated on the Date of Termination by the Company or any of its
subsidiaries or affiliates.  Nothing
herein will prohibit the Executive from acquiring or holding not more than one
percent of any class of publicly traded securities of any business.


 


(c)                                  Except as set forth below, during the
Executive’s employment with the Company and for a period of two years after the
termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Board, directly or indirectly,
hire any person who was employed by the Company or any of its subsidiaries or
affiliates within the six-month period preceding the date of such hiring or
solicit, entice, persuade or induce any person or entity doing business with
the Company and its subsidiaries or affiliates, to terminate such relationship
or to refrain from extending or renewing the same.


 


(d)                                 The Executive agrees that the restrictions
set forth in this Section 6 are reasonable and necessary to protect the
legal interests of the Company.  The
Executive further agrees that the Company shall be entitled to injunctive
relief in the event of any actual or threatened breach of the restrictions and
shall not be required to post bond or prove actual damages.  If the scope or content of any restriction
contained in this Agreement is too broad to permit enforcement of such restriction
to its full extent, then the restriction shall be enforced to the maximum
extent permitted by law, and the parties hereby consent that the scope or
restriction shall be judicially modified accordingly in any proceeding brought
with respect to the enforcement of the restriction.


 


(e)                                  The Executive agrees that any and all
intellectual property developed within the scope of employment or relating to
the Company’s business, existing or which in the future may exist, including
all patents, copyrights, trademarks or trade names, all ideas, concepts,
themes, inventions, designs, improvements and discoveries conceived or
developed, whether by the Executive or others, shall remain the sole and
exclusive property of the Company.


 


(f)                                    Immediately upon any termination of
employment with the Company, the Executive shall promptly deliver to the
Company all equipment, notebooks, documents, memoranda, reports, files,
samples, books, correspondence, mailing lists, calendars, card files, rolodexes
and all other records or materials relating to the Company’s business which are
or have been in the possession or control of the Executive.  The Executive shall not maintain any copy or
other reproduction whatsoever of any of the items described in this
Section 6(f) after the termination of such employment.


 


7.                                       INDEMNIFICATION. Except to the extent
inconsistent with the Company’s certificate of incorporation or bylaws, the
Company will indemnify the Executive and


 


11

















 


hold
him harmless to the fullest extent permitted by law with respect to his service
as an officer and director of the Company and its subsidiaries, which
indemnification shall be provided following termination of employment for so
long as the Executive may have liability with respect to his service as an officer
and director of the Company and its subsidiaries.  The Executive will be covered by a directors’ and officers’
insurance policy with respect to his acts as an officer and director to the
same extent as all other Company officers and directors under such policies.


 


8.                                       DISPUTE RESOLUTION; ATTORNEYS’ FEES. Other
than with respect to the Company’s right to obtain injunctive relief under
Section 6 (which shall not be subject to the provisions of this
Section 8), all disputes arising under or related to the employment of the
Executive or the provisions of this Agreement shall be settled by arbitration
under the rules of the American Arbitration Association then in effect, such
arbitration to be held in Baltimore Maryland, as the sole and exclusive remedy
of either party.  The arbitration shall
be heard by one arbitrator mutually agreed upon by the parties, who must be a
former judge.  In the event that the
parties cannot agree upon the selection of the arbitrator within 10 days, each
party shall select one arbitrator and those arbitrators shall select a third
arbitrator who will serve as the sole arbitrator.  The arbitrator shall have the authority to order expedited
discovery, hearing and decision, including the ability to set outside time
limits for such discovery, hearing and decision. The parties shall direct the
arbitrator to render a decision not later than 90 days following the
arbitration hearing. Judgment on any arbitration award may be entered in any
court of competent jurisdiction. The Company shall pay all reasonable legal
fees and expenses incurred by the Executive in connection with any such
arbitration or other legal proceeding which occurs on or following a Change in
Control.


 


9.                                       SUCCESSORS.


 


(a)                                  This Agreement is personal to the Executive
and without the prior written consent of the Company the Executive’s rights
under the Agreement shall not be assignable (except by will or the laws of
descent and distribution).  This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.


 


(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.


 


(c)                                  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would have been required to perform it if
no such succession had taken place.  As
used in this Agreement, the term “Company” shall mean both the Company as
defined above and any such successor.


 


10.                                 MISCELLANEOUS.


 


(a)                                  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Maryland, without
reference to principles of conflict of laws. 
The


 


12

















 


captions
of this Agreement are not part of the provisions hereof and shall have no force
or effect.  This Agreement may not be
amended or modified except by a written agreement executed by the parties
hereto or their respective successors and legal representatives.


 


(b)                                 All notices and other communications under
this Agreement shall be in writing and shall be given by hand delivery to the other
party, by overnight courier or by certified mail, return receipt requested,
postage prepaid, addressed as follows:


 


If
to the Executive:


 


Herbert
W. Moloney III


c/o
Vertis, Inc.


250
W. Pratt Street, 18th Floor


Baltimore,
Maryland 21201


Telephone:
(410) 361-8366


 


If
to the Company:


Vertis
Inc.


250
W. Pratt Street, 18th Floor


Baltimore,
Maryland 21201


Attention:
General Counsel


 


with
a copy to:


 


Thomas
H. Lee Partners


75
State Street


Suite
2600


Boston,
Massachusetts 02109


Attention:  Anthony J. DiNovi


Scott
M. Sperling


Soren
Oberg


Fax:
(617) 227-3514


 


or
to such other address as either party furnishes to the other in writing in
accordance with this Section 10(b).


 


(c)                                  Notwithstanding any other provision of this
Agreement, the Company may withhold from amounts payable under this Agreement
all federal, state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.


 


(d)                                 The Executive’s or the Company’s failure to
insist upon strict compliance with any provisions of, or to assert any right
under, this Agreement shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.


 


(e)                                  Except as set forth in this
Section 10(e), as of the Effective Date, this Agreement shall constitute
the entire understanding of the parties with respect to subject


 


13

















 


matter
herein and supercedes any other agreement or other understanding, whether oral
or written, express or implied, between them to the extent that such agreements
or understandings contain provisions addressed herein.  Specifically, this Agreement supercedes
without limitation, the Executive Change in Control Severance Agreement, dated
November 20, 1995, by and between the Executive and Big Flower Press
Holdings, Inc. and the Key Employee Agreement between the Executive and
Treasure Chest Advertising Company, Inc. For the avoidance of doubt, this
Agreement shall not be deemed to supercede any option agreement between the
Executive and the Company, but such option agreements shall be modified to the
extent specifically set forth herein.


 


(f)                                    This Agreement shall terminate upon the
termination of the Executive’s employment, except that terms of this Agreement
which must survive the termination of this Agreement in order to be effectuated
(including the provisions of Sections 5, 6, 7 and 8) shall survive.  Upon the termination of the Executive’s
employment, Executive consents to the notification by the Company to the
Executive’s new employer of Executive’s obligations under this Agreement.


 


(g)                                 The Executive is not required to seek other
employment or to attempt in any way to mitigate or reduce any amounts payable
to the Executive by the Company pursuant to Section 5 hereof.  Except with respect to alternative medical,
dental, prescription and vision care insurance obtained from a subsequent
employer, the amount of any payment or benefit provided for in this Agreement
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company, or otherwise.


 


(h)                                 This Agreement may be executed in several
counterparts, each of which shall be deemed an original and which together
shall constitute but one and the same instrument.


 


14

















 


IN
WITNESS WHEREOF, the Executive and the Company have executed this Agreement
under seal, as of the day and year first above written.


 


	
   

  	
  VERTIS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    Donald
  E. Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald
  E. Roland

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VERTIS
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    Donald
  E. Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald
  E. Roland

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    Herbert
  W. Moloney III

  	
   

  
	
   

  	
  Herbert
  W. Moloney III

  
					



 


15

















 


EXHIBIT A


 


Solely
for purposes of illustration and clarification of the provisions of
Section 5, and not in limitation thereof, the following examples are provided.  The bonus formula under the annual cash
incentive compensation plan in effect for the fiscal year in the examples below
is 75% of Base Salary payable upon 100% achievement of targeted performance for
the fiscal year; the Company’s bonus plan for the year sets forth that reduced
amounts are payable for achievement between 90% and 99% of targeted performance
(for each 1% above 90%, the Executive would earn 10% of targeted bonus, until
100% achievement yields 100% payout of targeted bonus) but no bonus is payable
for achievement at or below 90%.


 


Example
1: Assume that (A) actual performance against interim quarterly targeted
performance through June 30th is 100%; (B) actual performance
against targeted performance through December 31st is 85%; (C)
Executive’s employment is terminated under circumstances described in
Section 5(d) on July 1st; and (D) Executive’s Base Salary
on the Date of Termination is $100,000. 
The Pro-rata Bonus payable to Executive is $37,500 determined as
follows:


 


Pro-rata
Bonus = (182 days employed through Date of Termination) 365) x 100% achievement
x (75% x $100,000 Base Salary)


 


Example
2: Assume the same facts as Example 1, except that Executive’s employment is
terminated under circumstances described in Section 5(a) or 5(b).  The Pro-rata Bonus payable to Executive is
zero because actual performance for the completed fiscal year in which the Date
of Termination occurs is below the 91% minimum threshold required for a payout
under the plan.


 


Example
3: Assume the same facts as Example 2, except that the actual performance
against targeted performance through December 31st is 95%.  The Pro-rata Bonus payable to Executive is
$18,750 determined as follows:


 


Pro-rata
Bonus = (182 days employed through Date of Termination) 365) x 50% x (75% x
$100,000 Base Salary)


 


A-1