Exhibit 10.43


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT
by and among Vertis Inc., (the “Company”), Vertis Holdings, Inc. (“Holdings”)
and Dean D. Durbin (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
Financial Officer 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 provided 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 Section 4(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:


 


Dean D. Durbin


19001 Windsor Forest Road


Mt. Airy, Maryland 21771


 


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 matter herein and supercede any other agreement or other understanding,
whether oral or written, express or implied, between them to the extent that
such agreements or


 


13

















 


understandings contain
provisions addressed herein. 
Specifically, this Agreement supercedes, without limitation, the
Executive Change in Control Severance Agreement between the Executive and
Treasure Chest Advertising Company, Inc., dated May 18, 1999 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.


 


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:

  	
  /s/ Donald
  E. Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E.
  Roland

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  VERTIS HOLDINGS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald
  E. Roland

  	
   

  
	
   

  	
  Name:

  	
  Donald E.
  Roland

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
     /s/
  Dean D. Durbin

  	
   

  
	
   

  	
  Dean D.
  Durbin

  
						



 


14

















 


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