Exhibit 10.46


 





 


 


Plan Document


 


 


Executive
Incentive Plan – FY 2005


 


Purpose


 


The Executive Incentive
Plan (“EIP” or the “Plan”) is designed to reward executives of Vertis, Inc.
and any subsidiary corporation (the “Company”) for achieving corporate and business
unit performance objectives. The Plan is intended to provide an incentive for
superior work and to motivate participating executives toward an even higher
achievement of business results. The Plan encourages participants to align
their goals and interests more closely with those of the Company and its
shareholders and enables the Company to continue to attract and retain highly
qualified executives. This Plan Overview, as it is written, is intended to
serve as a reference guide and planning tool with which the Company can further
administer the Plan.


 


Eligibility and Participation


 


	
  1.1

  	
   

  	
  All
  members of management designated as directors (or equivalent) and above are
  eligible to participate in the Plan, subject to selection and approval as set
  forth in paragraph 1.2.

  
	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  The
  Administrative Committee, as defined below, for the Plan shall have the
  authority, with the approval of the President & COO to identify
  those eligible employees (“Participants”) who will participate in the Plan
  for each Performance Period. Participants are generally defined as director
  level and above.

  
	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  The
  Administrative Committee also has authority, in its sole discretion; to
  select non-director-level employees to participate in the EIP who it feels
  can significantly impact business results.

  



 


Plan Year, Performance Period and Performance Goals


 


	
  2.1

  	
   

  	
  The
  fiscal year of the Plan shall be the calendar year (the “Plan Year”). The
  performance period in which incentives may be payable under the Plan
  shall normally be the Plan Year; provided however, that the
  Chairman & CEO, President

  
	
   

  	
   

  	
   

  


















 


	
  & COO and
  the Administrative Committee shall have the authority to designate
  alternative performance periods under the Plan (“Performance Period”).

  
	
   

  



 


	
  2.2

  	
   

  	
  The
  Administrative Committee shall establish in writing, with respect to each
  Performance Period, Vertis-wide performance goals and specific target
  objectives for each (“Vertis Performance Goals”). To the extent that Vertis
  Performance Goals are attained, a method or formula for computing the amount
  of incentive compensation payable to each participant under the Plan shall be
  communicated at the beginning of each Performance Period or as soon as
  administratively possible after the beginning of the Performance Period.

  



 


	
  2.3

  	
   

  	
  Vertis Performance
  Goals specific to the current Plan Year are attached as Attachment A. In
  addition, other performance goals may be established and may be
  based upon a particular business unit or participant’s attainment of specific
  objectives set for the Performance Period (“Other Performance Goals”) (the
  Vertis Performance Goals and the Other Performance Goals are collectively
  referred to as “Performance Goals”).

  



 


Determination of Incentive Awards


 


	
  3.1

  	
   

  	
  As soon as
  practicable following the end of the applicable Performance Period, the Chair
  of the Administrative Committee shall certify in writing to what extent the
  Company, its subsidiaries, operating divisions or other operating units and
  the Participants have achieved any established Performance Goal(s) for the Performance
  Period(s), including the satisfaction of material terms of the Performance
  Goals. The Committee Chair shall calculate the amount of incentive for each
  Participant based upon the formula or method as set out for the applicable
  Performance Period.

  



 


Payment of Incentive Awards


 


	
  4.1

  	
   

  	
  Approved
  incentive awards shall be payable by the Company by direct deposit, unless
  other arrangements are agreed to, to each Participant, or to his/her estate
  in the event of his/her death, as soon as practicable after the end of each
  Performance Period and after the Committee Chair has certified in writing
  pursuant to Section 3.1 that the relevant Performance Goals were
  achieved.

  



 


	
  4.2

  	
   

  	
  Except as
  otherwise provided (a) by the Administrative Committee and the
  Chairman & CEO or (b) in any employment agreement, scheduled
  retirement, severance agreement or other agreement between the Company and a
  Participant, there shall be no pro rata payment of any incentive award to any
  Participant who is not actively employed or on an approved leave of absence
  by the Company as of the date of payment of the incentive award. In the event
  of a scheduled retirement, a minimum of two months notice of the planned
  retirement is required, and the

  



 


 


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  actual timing
  and amount of the payout will be prorated upon the reconciliation of the Plan
  results for the Plan Year

  



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  4.3

  	
   

  	
  To be eligible
  to receive a payout under this policy, the participant must be an employee in
  good standing with the company. “Good standing” for purposes of this document
  shall mean that they shall have received a performance rating of at least
  Proficient as of the date of their most recent performance review or if the
  review is more than 3 months old, must be currently performing at least in a
  Proficient manner as of the end of the Plan Year.

  



 


 


	
  4.4

  	
   

  	
  Except as
  otherwise provided (a) by the Administrative Committee or (b) in
  any employment or other agreement between the Company and a Participant,
  eligible participants hired during the Plan Year shall be eligible to receive
  a pro rata payment of the incentive award based on the Participant’s date of
  hire. Eligible participants hired during the 4th quarter of the
  Plan Year are not eligible to participate in the Plan and will not receive an
  incentive award for that Plan Year. Any agreements as outlined in
  4.3(b) must first be approved by the Administrative Committee before
  execution.

  



 


 


	
  4.5

  	
   

  	
  Calculation of
  payouts, if any, will be based on the participant’s base salary as of the end
  of the Plan Year (December 31).

  



 


 


	
  4.6

  	
   

  	
  The Company will
  deduct from any incentive award any applicable withholding taxes or any
  amounts owed by the Participant to the Company or any of its subsidiaries.

  



 


2005 Executive Incentive Plan Payment Schedule


 


	
  5.1

  	
   

  	
  In
  order to provide additional motivation to participants during the 2005 Plan
  year progress payments will be made available, based on achievement of
  prescribed goals for each quarter. Based on achievement of quarterly EBITDA
  goals, 75% of the EBITDA earned incentive will be paid to participants
  following the end of each quarter per the schedule below. The balance of
  the earned incentive will be withheld until year-end performance is known and
  certified.

  



 


 


•                  40% of the annualized payout will be
based on achieving first half EBITDA (before EIP) – 75% of this number will be
paid out in Q3.


•                  30% of the annualized payout will be
based on achieving Q3 EBITDA (before EIP) – 75% of this number will be paid out
in Q4.


•                  30% of the annualized payout will be
based on achieving Q4 EBITDA (before EIP) – 75% of this number will be paid out
in Q1, 2006.


•                  If the full year EBITDA goals are
achieved, the remaining 25% of bonus payout held back will be awarded in Q1,
2006.


 


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Other Terms and Conditions


 


	
  6.1

  	
   

  	
  Except as may be
  otherwise required by law, incentive awards under the Plan shall not be
  subject in any manner to anticipation, alienation, sale, transfer,
  assignment, pledge, encumbrance, charge, garnishment, execution, or levy of
  any kind, either voluntary or involuntary. Incentives awarded under the Plan
  shall be payable from the general assets of the Company, and no participant
  shall have any claim with respect to any specific assets of the Company.

  



 


 


	
  6.2

  	
   

  	
  Neither the Plan
  nor any action taken under the Plan shall be construed as giving any employee
  the right to be retained in the employment of the Company or any parent,
  subsidiary or affiliate of the Company or to maintain any Participant’s
  compensation at any level. Nothing in this Plan shall in any way diminish or
  limit either party’s right to terminate the employment relationship at any
  time and for any lawful reason, in its sole discretion.

  



 


 


Administration


 


	
  7.1

  	
   

  	
  The Administrative
  Committee is comprised of the President & Chief Operating Officer,
  SVP & CFO, VP Human Resources, Chief Legal Officer, and the Manager,
  Corporate Compensation & Benefits. The VP, Human Resources is the
  chair of the Committee.

  



 


 


	
  7.2

  	
   

  	
  The Administrative
  Committee shall have full power, authority and discretion to administer and
  interpret the provisions of the Plan and to adopt such rules, regulations,
  agreements, guidelines and instruments for the administration of the Plan and
  for the conduct of its business as the Committee deems necessary or
  advisable.

  



 


 


	
  7.3

  	
   

  	
  The
  Administrative Committee shall have full power to delegate to any officer or
  employee of the Company the authority to administer and interpret procedural
  and administrative issues, and unless the Committee otherwise delegates this
  authority, the Manager, Corporate Compensation & Benefits fulfils
  this role.

  



 


 


	
  7.4

  	
   

  	
  The Administrative Committee may rely on
  opinions, reports or statements of officers or employees of the Company or
  any subsidiary thereof and of Company counsel (inside or retained counsel),
  public accountants and other professional or expert persons.

  



 


 


	
  7.5

  	
   

  	
  The Vertis, Inc.
  Board reserves the right to amend or terminate the Plan in whole or in
  part at any time without advance notice to the Participants.

  



 


 


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  7.6

  	
   

  	
  To the extent permitted by applicable law,
  (a) no member of the Administrative Committee shall be liable for any
  action taken or omitted to be taken or for any determination made in good
  faith with respect to the Plan, and (b) the Company shall indemnify and
  hold harmless each member of the Administrative Committee against any
  reasonable cost or expense (including reasonable counsel fees) or liability
  (including any sum paid in settlement of a claim with the approval of the
  Administrator) arising out of any act or omission in connection with the
  administration or interpretation of the Plan, unless arising out of fraud or
  bad faith.

  



 


 


	
  7.7

  	
   

  	
  The
  place of administration of the Plan shall be in the State of Maryland, and
  the validity, construction, interpretation, administration and effect of the
  Plan and of its rules and regulations, and rights relating to the Plan,
  shall be determined solely in accordance with the laws of the State of
  Maryland.

  



 


 


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