**Exhibit 10.46**

 

 

 

**Plan Document**

 

 

**ExecutiveIncentive Plan – FY 2005**

 

***Purpose***

 

The Executive IncentivePlan (“EIP” or the “Plan”) is designed to reward executives of Vertis, Inc.and any subsidiary corporation (the “Company”) for achieving corporate and businessunit performance objectives. The Plan is intended to provide an incentive forsuperior work and to motivate participating executives toward an even higherachievement of business results. The Plan encourages participants to aligntheir goals and interests more closely with those of the Company and itsshareholders and enables the Company to continue to attract and retain highlyqualified executives. This Plan Overview, as it is written, is intended toserve as a reference guide and planning tool with which the Company can furtheradminister 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.                                                                                                                                                    |
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| 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. |
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| 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 |
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| & COO and  the Administrative Committee shall have the authority to designate  alternative performance periods under the Plan (“Performance Period”). |
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| 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. |
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| 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”). |
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***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. |
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***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. |
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| 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. |
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| 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. |
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| 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). |
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| 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. |
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***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.** |
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•                  40% of the annualized payout will bebased on achieving first half EBITDA (before EIP) – 75% of this number will bepaid out in Q3.

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

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

•                  If the full year EBITDA goals areachieved, 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. |
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| 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. |
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***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. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| 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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