Exhibit 10.5


 


AMENDED AND RESTATED MANAGEMENT SUBSCRIPTION AGREEMENT


 


 


This
AMENDED AND RESTATED MANAGEMENT SUBSCRIPTION
AGREEMENT (this “Agreement”), dated as of August 31, 2003, by and
among Vertis Holdings, Inc., formerly known as Big Flower Holdings Inc., a
Delaware corporation (the “Company”), Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”)
and Dean D. Durbin (the “Executive”), who is presently an officer, member of
management or key employee of the Company.


 


WHEREAS, the Company, the Sponsor and the Executive desire to enter into this
Agreement to amend and restate the Management Subscription Agreement dated as
of November 24, 1999, (the “Original Agreement”), and to otherwise govern
certain of their rights, duties and obligations with respect to certain Rights
(as hereinafter defined) and Shares (as hereinafter defined);


 


WHEREAS, pursuant to the Original Agreement, the Executive was issued shares
(the “Shares”) of common stock, $.01 par value, of the Company (the “Common
Stock”) and/or rights to receive Common Stock of the Company (the “Rights”),
subject to the terms and conditions of the Original Agreement;


 


WHEREAS, the Company previously issued Shares and Rights to certain other
officers, members of management and key employees of the Company and certain of
its subsidiaries (the “Other Executives”);


 


WHEREAS, this Agreement does not alter in any way the original purchase of
Shares, if any, and grant of Rights, if any, pursuant to the Original
Agreement, but does alter certain rights, duties and obligations with respect
thereto;


 


WHEREAS, this Agreement is one of several Amended and Restated Management
Subscription Agreements (such Amended and Restated Management Subscription
Agreements with the Other Executives, the “Other Executives’ Agreements”), that
have been and are being entered into by the Company with the Executive and the
Other Executives.


 


NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:


 


ARTICLE I 


 


CERTAIN DEFINITIONS


 


As used in this Agreement, the following terms shall have the meanings
ascribed to them below:


 

















 


Affiliate. The term “Affiliate” shall mean a Person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, the Person specified.


 


Agreement. The term “Agreement” shall have the meaning
ascribed to it in the preamble hereto.


 


Beneficial
Ownership. The terms “beneficial
ownership,” “beneficially owns” “beneficial owner” and the like shall have the
meaning ascribed to it in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended.


 


Business
Day. The term “Business
Day” shall mean any day except a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.


 


Call
Closing. The term “Call
Closing” shall have the meaning ascribed to it in Section 5.l(b).


 


Common
Stock. The term “Common
Stock” shall have the meaning ascribed to it in the second “Whereas” clause.


 


Company. The term “Company” shall have the meaning
ascribed to it in the preamble hereto.


 


Disability. The term “Disability” of the Executive
shall have the meaning ascribed to it in the Employment Agreement, or if no
such agreement is then in effect, as determined by the Board of Directors of
the Company.


 


Drag-Along
Notice. The term “Drag-Along
Notice” shall have the meaning ascribed to it in Section 7.4(b).


 


Drag-Along
Notice Period. The
term “Drag-Along Notice Period” shall have the meaning ascribed to it in
Section 7.4(b).


 


Drag-Along
Portion. The term “Drag-Along
Portion” shall have the meaning ascribed to it in Section 7.4(a).


 


Drag-Along
Rights. The term “Drag-Along
Rights” shall have the meaning ascribed to it in Section 7.4(a).


 


Drag-Along
Sale. The term “Drag-Along
Sale” shall have the meaning ascribed to it in Section 7.4(a).


 


Drag
Shares. The term “Drag
Shares” shall have the meaning ascribed to it in Section 7.4(a).


 


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Employment
Agreement. The term “Employment
Agreement” shall mean the employment agreement by and among Vertis, the
Company, and the Executive, dated as of August 31, 2003.


 


Exchange. The term “Exchange” shall mean the
principal stock exchange, including the NASDAQ Stock Market, on which the
Common Stock is listed or approved for listing, if any.


 


Executive. The term “Executive” shall have the meaning
ascribed to it in the preamble hereto.


 


Executive’s
Group. The term “Executive’s
Group” shall have the meaning ascribed to it in Section 5.1 (a).


 


Fair
Market Value. The
term “Fair Market Value” used in connection with the value of the Securities
shall mean, with respect to such Securities, the fair market value thereof as
determined by the Board of Directors of the Company in its reasonable
discretion after considering any valuations of the Company or any subsidiary of
the Company which have been received by the Company or any subsidiary of the
Company or the trustee of any benefit plan of the Company or any subsidiary of
the Company; provided, however, that if there is a Minimum Public
Float, the term “Fair Market Value” shall mean the average of the daily closing
prices, or the average of the daily bid and asked prices (as the case may be),
per share of Common Stock for the 20 trading days immediately preceding the
date upon which Fair Market Value is determined.


 


Liquidation
Event. The term “Liquidation
Event” shall mean (1) a public offering of the Common Stock registered pursuant
to the Securities Act where there is a Minimum Public Float immediately
following such offering, (2) a merger or other business combination or
recapitalization whereby the Common Stock is exchanged for cash and/or publicly
traded equity or debt securities in another entity or a combination of cash and
other non-publicly traded equity or debt securities where cash constitutes at
least a majority of the consideration to be received in such merger, business
combination or recapitalization or (3) a sale or other disposition of all or substantially
all of the Company’s assets to another entity, for cash and/or publicly traded
equity or debt securities of another entity or a combination of cash and other
non-publicly traded equity or debt securities where cash constitutes at least a
majority of the proceeds of such sale or disposition, in each case, other than
to the Company, any subsidiary of the Company, or any entity controlled by the
ultimate control Persons of the Company.


 


Minimum
Public Float. The
term “Minimum Public Float” shall mean the circumstances existing when (i) the
consummation of one or more public offerings registered pursuant to the
Securities Act of shares of Common Stock if, upon such consummation, the
aggregate number of shares of Common Stock held by the public, not including
Affiliates of the Company, represents at least 20% of the total number of
outstanding shares of Common Stock at the time of such public offering and (ii)
the Common Stock is listed on an Exchange.


 


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Original
Agreement. The term “Original
Agreement” shall have the meaning ascribed to it in the first “Whereas” clause.


 


Other
Executives. The term “Other
Executives” shall have the meaning ascribed to it in the third “Whereas”
clause.


 


Other
Executives’ Agreements.
The term “Other Executives’ Agreements” shall have the meaning ascribed to it
in the fifth “Whereas” clause.


 


Other
Key People. The term “Other
Key People” shall mean the officers, members of management, key employees of
the Company and certain of its subsidiaries.


 


Participants. The term “Participants” shall have the
meaning ascribed to it Section 7.l(c).


 


Permitted
Transferee. The term “Permitted
Transferee” shall have the meaning ascribed to it in Section 4.2.


 


Person. The term “Person” shall mean any
individual, group, corporation, limited liability company, partnership, trust,
unincorporated organization or government or political department or agent
thereof or other entity.


 


Principal
Beneficial Owners.
The term “Principal Beneficial Owners” shall mean the Sponsor, CLI/THLEF IV
Vertis LLC, Evercore Capital Partners L.P., CLI Associates LLC, J.P. Morgan
Partners (BHCA), L.P., Wachovia Capital Partners, LLC (formerly First Union
Capital Partners, LLC), and Cadogan Capital, LLC and their respective
Affiliates and successors.


 


Pro-Rata
Portion. The term “Pro-Rata
Portion” shall have the meaning ascribed to it in Section 7.1.


 


Rights. The term “Rights” shall have the meaning
ascribed to it in the second “Whereas” clause.


 


SEC. The term “SEC” shall mean the Securities
and Exchange Commission or any successor thereto.


 


Securities
Act. The term “Securities
Act” shall mean the Securities Act of 1933, as amended, and all rules and
regulations promulgated hereunder.


 


Securities. The term “Securities” shall mean the Rights
(and any shares of Common Stock issued upon exercise of the Rights) and the
Shares.


 


Shares. The term “Shares” shall have the meaning
ascribed to it in the second “Whereas” clause.


 


Small
Transfer. The term “Small
Transfer” shall have the meaning ascribed to it in Section 7.1(a).


 


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Sponsor. The terra “Sponsor” shall have the meaning
ascribed to it in the preamble hereto.


 


Tag-Along
Notice. The term “Tag-Along
Notice” shall have the meaning ascribed to it in Section 7.1(b)(i).


 


Tag-Along
Portion. The term “Tag-Along
Portion” shall have the meaning ascribed to it in Section 7. l(c).


 


Tag-Along
Response Notice. The
term “Tag-Along Response Notice” shall have the meaning ascribed to it in Section
7.l(c).


 


Tag-Along
Response Notice Period.
The term “Tag-Along Response Notice Period” shall have the meaning ascribed to
it in Section 7.1 (c).


 


Tag-Along
Right. The term “Tag-Along
Right” shall have the meaning ascribed to it in Section 7.1 (c).


 


Tag-Along
Sale. The term “Tag-Along
Sale” shall have the meaning ascribed to it in Section 7.1(a).


 


Tag
Shares. The term “Tag
Shares” shall have the meaning ascribed to it in Section 7.1(b)(ii).


 


Third
Party. The term “Third
Party” shall mean any Person or entity excluding each of the following: (a) the
Executive, the Other Executives and their respective Permitted Transferees; (b)
the Company, and its subsidiaries or Affiliates; and (c) the Principal
Beneficial Owners,


 


Transfer. The term “Transfer” shall mean any sale,
transfer, assignment, pledge, hypothecation, encumbrance or other disposition.


 


Trust. The term “Trust” shall have the meaning
ascribed to it in Section 7.5.


 


Vertis. The term “Vertis” shall mean Vertis Inc., a
Delaware corporation,


 


ARTICLE II


 


PURCHASE OF SHARES AND GRANT OF
RIGHTS IN ORIGINAL AGREEMENT


 


Section 2.1           No
Alteration of Original Purchase or Grant. Nothing in this Agreement shall be deemed to
alter, change or nullify any purchase of Shares or any grant of Rights under
Section 2 of the Original Agreement, which purchase and/or grant has already
occurred. Each Right shall entitle the Executive to one share of Common Stock
upon the occurrence of a Liquidation Event, or as otherwise provided herein.
The Executive acknowledges and agrees that the Trust is an irrevocable trust,
the assets of


 


5

















 


which are subject to the
claims of the Company’s creditors. The Executive shall have no security
interest in the Trust or its assets and shall have the status of an unsecured
creditor of the Company with respect to the Company’s obligation to issue the
shares of Common Stock upon the occurrence of a Liquidation Event. The shares
of Common Stock deposited in the Trust are issued and outstanding as of the
date hereof and are beneficially owned by the Trust. Until the occurrence of a
Liquidation Event, or as otherwise provided herein, all actions with respect to
the shares of Common Stock deposited in the Trust, including, without
limitation, the voting thereof, will continue to be performed solely by the
Trust, without any communication with, notice to, or approval of the holder of
the Rights.


 


Section 2.2            No
Redemption Upon Exchange Offer. Section 2.l(d) of the Original Agreement is hereby revoked, and no
rights granted thereby shall survive the date of this Agreement.


 


Section 2.3            Representations
and Warranties in Original Agreement.Nothing in this Agreement shall be deemed to alter, change or nullify
the representations and warranties of the Executive made in Sections 2.4, 3.1
and 3.2 of the Original Agreement with respect to the purchase of Shares, if
any, and the grant of Rights, if any, under the Original Agreement. Nothing in
this Agreement shall be deemed to alter, change or nullify the representations
and warranties of the Company made in Section 2.3 of the Original Agreement
with respect to the purchase of Shares, if any, and the grant of Rights, if
any, under the Original Agreement.


 


ARTICLE III


 


REPRESENTATIONS AND WARRANTIES


 


Section 3.1            Representations
and Warranties of the Company. TheCompany represents and warrants to the Executive that the Company has
full corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and this Agreement is a valid and binding
obligation of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, liquidation, reorganization, moratorium and other laws
affecting the rights of creditors generally and subject to the exercise of
judicial discretion in accordance with general principles of equity (whether
applied by a court of law or equity).


 


Section 3.2            Representations
and Warranties of the Executive. TheExecutive represents and warrants to the Company that the Executive has
all requisite power and authority to enter into this Agreement, and to perform
the obligations required to be performed by the Executive hereunder, and this
Agreement is a valid and binding obligation of the Executive enforceable
against the Executive in accordance with its terms, except as such
enforceability may be limited by applicable law and subject to the exercise of
judicial discretion in accordance with general principles of equity (whether
applied by a court of law or equity).


 


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ARTICLE IV


 


RESTRICTIONS ON TRANSFER


 


Section 4.1           General
Restrictions on Transfer. Except as permitted by Section 4.2 or Articles V and VII hereof, the
Executive agrees that until a Liquidation Event occurs, neither the Executive
nor any of the Executive’s Permitted Transferees will Transfer all or any
portion of the Securities. Prior to recognizing or permitting any Transfer
permitted by the provisions of this Agreement, the Company may (in its sole
discretion) require the Executive or the Executive’s Permitted Transferee, as
the case may be, to deliver such opinions of counsel and other documents as the
Company deems necessary or appropriate in connection with such proposed
Transfer. No Transfer of Securities in violation of this Agreement shall be
made or recorded on the books of the Company and any such Transfer shall be
void and of no effect.


 


Section 4.2           Certain
Permitted Transfers of Securities.


 


(a)           The
provisions of Section 4.1 shall not apply to any Transfers of Securities made
(i) pursuant to or in connection with a registered public offering with respect
to which there is in effect a registration statement under the Securities Act
covering such proposed Transfer and such Transfer is made in accordance with
such registration statement, (ii) in accordance with Rule 144 promulgated under
the Securities Act or (iii) after the occurrence of a Liquidation Event.


 


(b)           The
provisions of Section 4.1 shall not apply to the following Transfers by an
Executive; provided, however, that no Transfer of Securities
pursuant to this Section 4.2 (other than a Transfer to the Company) shall be
given effect on the books of the Company unless and until such Permitted
Transferee executes an agreement in writing with the parties hereto pursuant to
which he, she, or it agrees to be bound by all of the terms and conditions of
this Agreement to the same extent as the parties hereto; provided, further,
that no Transfer will be permitted if the Company determines that, in its sole discretion,
such Transfer is, or is reasonably likely to be, in violation of applicable
federal

or state securities laws:


 


(i)            a Transfer made to an Affiliate of
the Company or an Affiliate of any subsidiary of the Company;


 


(ii)           a Transfer upon the death of the
Executive to the Executive’s executors, administrators, testamentary trustees,
legatees or beneficiaries;


 


(iii)          a Transfer to a trust, the
beneficiaries of which include only the Executive and the Executive’s spouse,
siblings, or direct lineal ancestors or descendants;


 


(iv)          a Transfer made as a gift to the
Executive’s spouse or lineal descendants; or 


 


7

















 


(v)      a
Transfer made pursuant to a court order in connection with a divorce
proceeding.


 


The
transferee in each of the subclauses (i) through (v) above is referred to
herein as a “Permitted Transferee.” Notwithstanding anything to the contrary in
this Agreement, no Transfer made to the Company, any subsidiary of the Company
or the Sponsor shall be subject to any restriction on transfer contained
herein, so long as any such Transfer is made in accordance with all applicable
federal and state securities laws and does not violate any contractual
agreement in effect at the time of such Transfer.


 


Section 4.3            Rule
144. If any
Securities held by the Executive are disposed of in accordance with Rule 144
under the Securities Act or otherwise, the Executive shall deliver to the
Company at or prior to the time of such disposition such documentation as the
Company may reasonably request in connection with such sale and, in the case of
a disposition in accordance with Rule 144, an executed copy of Form 144
required to be filed with the SEC (if required by Rule 144).


 


Section 4.4            Discharge
of Indebtedness Upon Transfer of Securities. Any Transfer of Securities by the Executive
or the Executive’s Permitted Transferees, if any, shall be void and of no
effect unless and until all outstanding indebtedness of the Executive and the
Executive’s Permitted Transferees to, or guaranteed by, the Company or any of
its subsidiaries or Affiliates (including interest accrued but unpaid thereon
and all other fees, expenses and penalties payable in connection therewith)
shall have been paid and discharged in full and evidence of same, reasonably
acceptable to the Company, is presented by the Executive to the Company.


 


Section 4.5          Legend.


 


(a)           Each certificate representing the
Shares and the shares of Common Stock issued upon exercise of the Rights, if
any, and any certificates representing the Rights shall bear substantially the
following legends:


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE
DISPOSED OF UNLESS SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE,
HYPOTHECATION, ENCUMBRANCE OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF
THAT CERTAIN AMENDED AND RESTATED MANAGEMENT SUBSCRIPTION AGREEMENT DATED AS OF AUGUST _31, 2003, AS
SUCH AGREEMENT MAY BE AMENDED FROM TIME TO
TIME (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WHICH
WILL BE MAILED TO A STOCKHOLDER WITHOUT CHARGE PROMPTLY AFTER RECEIPT BY THE
COMPANY OR ANY SUCCESSOR THERETO OF A WRITTEN REQUEST THEREFOR FROM SUCH
STOCKHOLDER).


 


THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR


 


8

















 


RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR EXEMPTION
THEREFROM.


 


(b)           A notation shall be made in the
appropriate records of the Company indicating that the Securities are subject
to restrictions on transfer and, if the Company should at some time in the future
engage the service of a securities transfer agent, appropriate stop-transfer
instructions will be issued to such transfer agent with respect to the
Securities.


 


ARTICLE V


 


CERTAIN SALES UPON TERMINATION OF EMPLOYMENT


 


Section 5.1            Call.
(a) Subject to Section
5.1(b), if the Executive’s employment with the Company or an Affiliate of the
Company is terminated by either the Executive or the Company for any reason
other than Disability or death of the Executive, the Company may elect, subject
to the terms and conditions contained herein, to purchase any or all of the
Securities then held by the Executive and the Executive’s Permitted
Transferees, if any, (hereinafter sometimes collectively referred to as the “Executive’s
Group”), in accordance with the provisions of Section 5.2.


 


(b)           If the Company determines to purchase
any Securities pursuant to this Section 5.1, the Company shall, not later than
180 days after the date of such termination of employment, deliver to the
Executive and the Executive’s Permitted Transferees, if any, written notice of
its intention to purchase some or all of the Securities pursuant to this
Section 5.1, specifying the number of Securities to be so purchased and the
purchase price to be paid therefor (as described in Section 5.2). The closing
of the purchase (the “Call Closing”) shall take place at the principal office
of the Company within 10 days after the delivery of such notice. At the Call
Closing (i) the Executive and the Executive’s Permitted Transferees, as the
case may be, shall deliver the certificates evidencing the Securities, duly
endorsed and assigned to the Company or in blank, in each case with the
signature guaranteed, and take all other actions and deliver any other
documents the Company, in its reasonable judgment, shall deem necessary, and
(ii) the Company shall deliver to the Executive and the Executive’s Permitted
Transferee, as the case may be, the purchase price as determined pursuant to
Section 5,2 in accordance with the methods described in Section 6.1 hereof.


 


Section 5.2            Purchase
Price to Be Paid by Company. The purchase price to be paid by the Company upon exercise of a call
right shall be the Fair Market Value of such Securities determined as of the
date the notice of such exercise is delivered; provided, however,
that if the Executive is terminated for Cause (as such term is defined in the
Executive’s employment agreement with the Company in effect at such time or, if
no such agreement is in effect or if such term is undefined in such agreement,
as determined by the Board of Directors of the Company), then the purchase
price to be paid by the Company shall be the lesser of the Fair Market Value
and the original cost of such Securities paid by the Executive.


 


9

















 


Section 5.3            Obligation
to Sell. If there is
more than one member of the Executive’s Group, the failure of any member
thereof to perform its obligations under this Article V shall not excuse or
affect the obligations of any other member thereof, and the closing of the
purchases from such other members by the Company shall not excuse, or
constitute a waiver of its rights against, the defaulting members. The Company
reserves its rights to take all action necessary to cause the defaulting
members to perform its obligations under this Article V and the Executive
hereby acknowledges the Company’s right to have the provisions of this
Agreement specifically performed. If the defaulting member fails to timely
perform its obligations under this Article V, the Company shall cause the books
and records of the Company to show that such Securities are subject to the
provisions of this Article V and that such Securities shall be Transferred to
the Company immediately upon surrender for Transfer by the holder thereof.


 


ARTICLE VI


 


PAYMENT FOR SECURITIES


 


Section 6.1            Payment
for Securities. The
purchase price in respect of Securities purchased by the Company pursuant to
Section 5.1 shall be paid (i) first by the cancellation of any indebtedness
(including, without limitation, accrued but unpaid interest thereon) owing from
the Executive and/or his Permitted Transferees to the Company or any of its
subsidiaries or Affiliates and (ii) then by the Company’s delivery of a bank
cashier’s check or certified check for the remainder of the purchase price, if
any. The Company shall have the right set forth in clause (i) in the preceding
sentence whether or not the member of the Executive’s Group selling such
Securities is an obligor under any of the indebtedness referred to therein.


 


ARTICLE VII 


 


TAG-ALONG RIGHTS AND DRAG-ALONG RIGHTS


 


Section 7.1           Tag-Along
Rights. (a) If the
Sponsor proposes to Transfer all or a portion of the shares of Common Stock
beneficially owned by it to a Third Party which would not be an Affiliate of
the Sponsor immediately upon consummation of such Transfer, and the Sponsor
does not exercise its Drag-Along Rights in accordance with Section 7.4 (a “Tag-Along
Sale”), the Sponsor shall cause the Executive and the Executive’s Permitted
Transferees to have the option to exercise its rights under this Section 7.1, provided,
however, that the Executive and the Executive’s Permitted Transferees,
if any, shall have no rights under this Section 7.1 if the shares of Common
Stock to be Transferred in such transaction and any shares of Common Stock
which have been Transferred to any Third Party within a 90-day period preceding
the date of such Transfer have, in the aggregate, a Fair Market Value less than
ten million dollars ($10,000,000) (a “Small Transfer”), and provided, further,
that when the cumulative Fair Market Value of all such Small Transfers, the
value to be calculated at the time of each such Transfer, exceeds fifty million
dollars ($50,000,000), the restrictions provided for in the first proviso of
this Section 7.1(a) shall no longer be in effect. Moreover, the Executive and
the Executive’s Permitted Transferees, if any, shall have no rights under


 


10

















 


this
Section 7.1 with respect to any Transfer by the Sponsor of any shares of Common
Stock beneficially owned by it to any limited partner of the Sponsor.


 


(b)           In the event of a proposed Tag-Along
Sale:


 


(i)            the Sponsor shall provide the
Executive written notice of the terms and conditions of such proposed Tag-Along
Sale, as described in Section 7. l(c) (“Tag-Along Notice”), at least 10
Business Days prior to the consummation of such proposed Tag-Along Sale and
offer the Executive and the Executive’s Permitted Transferees the opportunity
to participate in such Tag-Along Sale on the terms and conditions set forth in
this Section 7.1; and


 


(ii)           subject to Section 7.1(c), the
Executive and the Executive’s Permitted Transferees shall be entitled to sell
up to a Pro Rata Portion (as defined below) of its Shares and Common Stock
issued upon an exercise of the Rights, if any, (collectively, the “Tag Shares”)
at the same price and on the same terms as the shares of Common Stock proposed
to be sold by the Sponsor in such Tag-Along Sale in accordance with the terms
set forth in this Section 7.1.


 


The
“Pro-Rata Portion” of the Executive’s Tag Shares shall mean an amount of such
Tag Shares equal to the product of:


 


(A)                             (x) a fraction, the numerator of which is the number of shares of
Common Stock proposed to be Transferred by the Sponsor and its Affiliates in
such Tag-Along Sale and the denominator of which is the total number of shares
of Common Stock beneficially owned by the Sponsor and its Affiliates
collectively, immediately prior to Transferring such shares of Common Stock;
or, (y) for the first Transfer after the restrictions set forth in the first
proviso of Section 7.1(a) are no longer in effect, a fraction, the numerator of
which is the number of shares of Common Stock proposed to be Transferred by the
Sponsor and its Affiliates in such Tag-Along Sale plus the cumulative number of
shares of Common Stock Transferred by the Sponsor and its Affiliates in all
Small Transfers, and the denominator of which is the total number of shares of
Common Stock beneficially owned by the Sponsor and its Affiliates collectively,
immediately prior to Transferring such shares of Common Stock plus the
cumulative number of shares of Common Stock Transferred by the Sponsor and its Affiliates
in all Small Transfers; and


 


(B)                               the total amount of Tag Shares beneficially owned by such Executive at
the time of the Tag-Along Sale.


 


11

















 


(c)           The Tag-Along Notice shall identify
the proposed transferee, the number of shares of Common Stock to be sold by the
Sponsor in the Tag-Along Sale, the Pro Rata Portion of the Executive’s Tag
Shares which the Executive shall be entitled to Transfer in such Tag-Along
Sale, the price at which the Transfer of shares of Common Stock is proposed to
be made, and all other material terms and conditions of the proposed Tag-Along
Sale. From the date of the Tag-Along Notice, the Executive and the Executive’s
Permitted Transferees shall have the right (a “Tag-Along Right”), exercisable by
written notice (“Tag-Along Response Notice”) given by the Executive to the
Sponsor within seven Business Days from the date of the Tag-Along Notice (the “Tag-Along
Response Notice Period”), to request that the Sponsor includes in the proposed
Transfer the number of Tag Shares held by the Executive and the Executive’s
Permitted Transferees (up to their Pro Rata Portion) as is specified in such
Tag-Along Response Notice at the same price and on the same terms and
conditions set forth in the Tag Along Notice; provided, however,
that if the aggregate number of shares of Common Stock proposed to be sold by
(i) the Sponsor, (ii) the Executive and the Executive’s Permitted Transferees,
(iii) Other Executives and their permitted transferees giving tag-along notices
similar to the Tag-Along Notice during such period prescribed in Other Executives’
Agreements and (iv) any other Persons entitled to give (and giving on a timely
basis) tag-along notices similar to the Tag-Along Notice pursuant to agreements
substantially similar to this Agreement, including those certain Option
Transfer Agreements between the Company, the Sponsor, and the Executive or
Other Key People, as amended, and those certain Retained Share Agreements
between the Company, the Sponsor and the Executive or Other Key People, as
amended, (the persons identified in subclauses (i), (ii), (iii) and (iv) of
this subsection, collectively, the “Participants”), in such Tag-Along Sale
exceeds the number of shares of Common Stock which can be sold on the terms and
conditions set forth in the Tag-Along Notice, then only the Tag-Along Portion
of shares of Common Stock beneficially owned by the Executive shall be sold pursuant
to the Tag-Along Sale. “Tag-Along Portion” means, with respect to the Executive
and the Executive’s Permitted Transferees, the number of shares of Common Stock
beneficially owned by the Executive and the Executive’s Permitted Transferees
on the date of the Tag-Along Notice multiplied by a fraction, the numerator of
which is the maximum number of shares of Common Stock which can be sold in the
Tag-Along Sale and the denominator of which is the aggregate number of shares
of Common Stock beneficially owned by the Participants, collectively.


 


(d)           Delivery of a Tag-Along Response
Notice by the Executive to the Sponsor pursuant to Section 7.1(c) shall constitute
an irrevocable election by the Executive and the Executive’s Permitted
Transferees, if any, to sell the number of Tag Shares beneficially owned by it
or them as is specified in such Tag-Along Response Notice in such Tag-Along
Sale. If, at the end of a 90 day period after such delivery, the Tag-Along Sale
has not been consummated on substantially the same terms and conditions set
forth in the Tag-Along Notice, all restrictions on Transfers of Tag Shares
contained in this Agreement or otherwise applicable at such time with respect
to Tag Shares owned by the Executive and the Executive’s Permitted Transferees
shall again be in effect.


 


(e)           If at the termination of the
Tag-Along Response Notice Period the Executive and the Executive’s Permitted
Transferees, if any, shall not have exercised its


 


12

















 


or their Tag-Along Right by
providing the Sponsor with a Tag-Along Response Notice, such Executive and such
Executive’s Permitted Transferees shall be deemed to have waived its or their
Tag-Along Right with respect to Transferring its or their Tag Shares pursuant
to such Tag-Along Sale.


 


(f)            The
Sponsor may sell, on behalf of the Executive and the Executive’s Permitted
Transferees, if the Executive and the Executive’s Permitted Transferees, if
any, exercises its or their Tag-Along Right pursuant to this Section 7.1, the
shares of Common Stock entitled to be Transferred in the Tag-Along Sale on the
terms and conditions set forth in the Tag-Along Notice within 90 days of the
date on which Tag-Along Rights shall have been waived or exercised.


 


Section 7.2            Limitation
of Rights Following Termination of Employment. Notwithstanding any other provision of this
Agreement, upon the termination of the Executive’s employment with the Company
or any of its subsidiaries for Cause (as such term is defined in the Employment
Agreement), or if the Executive terminates employment with the Company or any
of its subsidiaries without Good Reason (as such term is defined in the
Employment Agreement), the Executive and the Executive’s Permitted Transferees
shall have no rights under Section 7.1. In the case of any other termination of
the Executive’s employment, the Executive and the Executive’s Permitted
Transferees shall continue to have the rights specified in Section 7.1.


 


Section 7.3           Termination
of Tag-Along Rights Notwithstanding
anything to the contrary, the provisions of Section 7.1 shall not be
applicable if the Common Stock is publicly traded on an Exchange and there
exists a Minimum Public Float.


 


Section 7.4           Drag-Along
Rights. (a) If the
Sponsor and its Affiliates propose to Transfer all or any portion of the shares
of Common Stock beneficially owned by them to a Third Party (a “Drag-Along Sale”),


 


(i)            the Executive and the Executive’s
Permitted Transferees shall, at the Sponsor’s option and in the Sponsor’s sole
discretion, upon the Executive’s receipt of written notice from the Sponsor,
sell the Drag-Along Portion of such Executive’s Shares to such Third Party; and


 


(ii)           (subject to, and at the closing of
the Drag-Along Sale) the Executive shall, at the Sponsor’s option and in the
Sponsor’s sole discretion, upon the Executive’s receipt of written notice from
the Sponsor, exercise that portion of his Rights which constitute the Drag-Along
Portion and sell all of the Common Stock received upon such exercise to such
Third Party;


 


(the
Shares and Common Stock referred to in subclauses (i) and (ii) of this
subsection, collectively, the “Drag Shares”) for the same consideration and
otherwise on the same terms and conditions on which the Sponsor and its
Affiliates sell their shares of Common Stock in such Drag-Along Sale (the “Drag-Along
Rights”).


 


13

















 


The “Drag-Along Portion” of
an Executive’s Drag Shares means, at any time, the number of Drag Shares
beneficially owned by such Executive and the Executive’s Permitted Transferees
after any compelled exercise of Rights, multiplied by a fraction, the numerator
of which is the number of shares of Common Stock proposed to be sold on behalf
of the Sponsor in such Drag-Along Sale and the denominator of which is the
total number of shares of Common Stock then beneficially owned by the Sponsor.
In the event the Drag-Along Sale is not consummated with respect to any shares
acquired upon exercise of Rights, such Rights shall be deemed not to have been
exercised or cancelled, as applicable.


 


(b)           The Sponsor shall provide written
notice of such Drag-Along Sale to the Executive (a “Drag-Along Notice”) not
less than 20 days prior to the consummation of such proposed Drag-Along Sale
which notice shall state that the Sponsor proposes to effect a Transfer of a
certain number of shares of Common Stock, the number of shares of Common Stock
proposed to be Transferred, the purchase price, the proposed transferee, the
number of Drag Shares which the Executive is required to Transfer in such Drag-Along
Sale (based on the methodology set forth in Section 7.4(a)), and all other material
terms and conditions of the Drag-Along Sale. Subject to Section 7.4(c), the Executive
shall be required to participate in the Drag-Along Sale on the terms and conditions
set forth in the Drag-Along Notice. Not later than the tenth day following the date
of the Drag-Along Notice (the “Drag-Along Notice Period”), the Executive shall deliver
to a representative of the Sponsor designated in the Drag-Along Notice certificates
representing all the Drag Shares beneficially owned and held by the Executive,
duly endorsed, together with all other documents required to be executed in connection
with such Drag-Along Sale, or, if such delivery is not permitted by applicable law,
an unconditional agreement to deliver such Drag Shares pursuant to this Section
7.4 at the closing for such Drag-Along Sale against delivery to the Executive
of the consideration therefor. If the Executive should fail to deliver such
certificates to the Sponsor in a Drag-Along Sale pursuant to this Section 7.4,
the Company shall cause the books and records of the Company to show that such
shares of Common Stock are bound by the provisions of this Section 7.4 and that
such shares of Common Stock shall be Transferred to the purchaser of the shares
of the Common Stock immediately upon surrender for Transfer by the holder
thereof.


 


(c)           The Sponsor shall have a period of 90
days from the date of the Drag-Along Notice to consummate the Drag-Along Sale
on the terms and conditions set forth in such Drag-Along Sale Notice. If the
Drag-Along Sale shall not have been consummated during such period, the Sponsor
shall return to the Executive all certificates representing Drag Shares that
such Executive delivered for Transfer pursuant hereto, together with any documents
in the possession of the Sponsor executed by the Executive in connection with such
proposed Transfer, and the Drag-Along Notice shall be deemed to be cancelled
and this Agreement will remain in full force and effect in accordance with its
terms.


 


Section 7.5           Responsibilities of Executive. The delivery
of any notices to, and the obtaining of any consents from, any Permitted
Transferee with respect to any provision of this Agreement, including, but not
limited to, Sections 7.1 and 7.4, shall be the sole responsibility of the
Executive, unless otherwise agreed to in writing between


 


14

















 


such Permitted Transferee
and the Sponsor. Neither the Company nor the Sponsor shall be liable to any
Permitted Transferee for the Executive’s failure to deliver a notice to, or
obtain a consent from, any Permitted Transferee with respect to any provision
of this Agreement, including, but not limited to, Sections 7.1 and 7.4. In the
event that the terms of this Agreement require the delivery of Rights which are
held in trust (the “Trust”) pursuant to the Big Flower Holdings, Inc. Rights
Trust Agreement, dated as of December 7, 1999, by and between Big Flower
Holding, Inc. and The Chase Manhattan Bank, the Executive shall cooperate with
the Company to effect the release of the shares of Common Stock issuable upon exercise
of such Rights from the Trust in order that they may delivered in accordance
with the terms hereof.


 


Section 7.6            Sales
to Principal Beneficial Owners. The Sponsor and its Affiliates shall not Transfer all or any portion of
the shares of Common Stock beneficially owned by them to a Principal Beneficial
Owner, other than an Affiliate of the Sponsor, unless such Principal Beneficial
Owner agrees to be bound by this Article VII as if it were the Sponsor. To the
extent that the Sponsor and its Affiliates Transfer any shares of Common Stock
to a Principal Beneficial Owner other than an Affiliate of the Sponsor, the
Executive and the Executive’s Permitted Transferees agree that such Principal
Beneficial Owner shall receive the benefits set forth in Sections 7.4 and 7.5
hereof as if such Principal Beneficial Owner were the Sponsor.


 


ARTICLE V1I1


 


MISCELLANEOUS


 


Section 8.1            State
Securities Laws. The
Company hereby agrees to use commercially reasonable efforts to comply with all
state securities or “blue sky” laws which might be applicable to the sale of
the Securities by the Company to the Executive pursuant to this Agreement.


 


Section 8.2            Binding
Effect. The
provisions of this Agreement shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors and assigns; provided,
however, that the Executive and the Executive’s Permitted Transferees shall not
assign any rights hereunder except as specifically permitted by the terms of
this Agreement. The Company may assign its rights under the call contained in
Section 8.1 to any of its subsidiaries or Affiliates, or to the Principal
Beneficial Owners of the Company or any of their Permitted Transferees,
provided that no such assignment shall release the Company from its obligations
hereunder. Neither this Agreement nor any purchase or sale of Securities
pursuant hereto shall create, or be construed or deemed to create, any right to
employment or continued employment in favor of the Executive or any other
Person by the Company or any subsidiary or Affiliate of the Company.


 


Section 8.3            Severability.
The invalidity,
illegality or unenforceability of one or more of the provisions of this
Agreement in any jurisdiction shall not affect the validity, legality or
enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of this Agreement, including any such
provision,


 


15

















 


in any other jurisdiction,
it being intended that all rights and obligations of the parties hereunder
shall be enforceable to the fullest extent permitted by law.


 


Section 8.4           Recapitalizations,
Exchanges, Etc., Affecting Common Stock. The provisions of this Agreement shall apply,
to the full extent set forth herein with respect to the Securities, to any and
all shares of capital stock of the Company or any successor or assign of the
Company (whether by merger, consolidation, sale of all or substantially all of
the assets of the Company or otherwise) which may be issued in respect of, in
exchange for, or in substitution of the Securities, by reason of any stock
dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation, conversion or
otherwise.


 


Section 8.5           Amendment.
This Agreement may be
amended only by a written instrument duly signed by the Company, the Sponsor,
and the Executive.


 


Section 8.6           Notices.
All notices and other
communications provided for herein shall be dated and in writing and shall be
deemed to have been duly given when delivered, if delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid and
when received if delivered otherwise, to the party to whom it is directed:


 


(a)           If to the Company, to it at the
following address:


 


250
W. Pratt Street, 18th Floor 


Baltimore,
Maryland 21201 


Attention:
General Counsel 


Fax
No.: (410)528-9287


 


with
a copy to Sponsor, at the address set forth in Section 8.6(c).


 


(b)           If to the Executive
or any of the Executive’s Permitted Transferees, to the Executive at the
address set forth on the signature page hereof;


 


(c)           If to the Sponsor, to it at the
following address:


 


Thomas
H. Lee Equity Fund IV, L.P. 


c/o
Thomas H. Lee Company 


75
State Street, Suite 2600 


Boston,
MA 02109 


Fax
No.: (617)227-3514


 


or
at such other address as the parties hereto shall have specified by notice in
writing to the other parties (provided, that such notice of change of
address shall be deemed to have been duly given only when actually received).


 


Section 8.7            Applicable
Law. The laws of the
State of Delaware shall govern the interpretation, validity and performance of
the terms of this Agreement, regardless of the law that might be applied under
Delaware’s principles of conflicts of law.


 


16

















 


Section 8.8            Consent
to Jurisdiction. The
Executive hereby irrevocably submits
to the jurisdiction of any New York state court sitting in the City of New York
or any federal court sitting in the City of New York in respect of any suit,
action or proceeding arising out of or relating to this Agreement, and
irrevocably accepts for the Executive and in respect of the Executive’s
property, generally and unconditionally, jurisdiction of the aforesaid courts.
The Executive irrevocably waives, to the fullest extent the Executive may
effectively do so under applicable law, trial by jury and any objection that
the Executive may now or hereafter have to the laying of the venue of any such
suit, action or proceeding brought in any such court and any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum. Nothing herein shall affect the right of the Company to
serve process in any manner permitted by law or to commence legal proceedings
or otherwise proceed against Executive in any other jurisdiction.


 


Section 8.9            Integration.
This Agreement, and
the documents referred to herein or delivered pursuant hereto which form a part
hereof contain the entire understanding of the parties with respect to the
subject matter hereof. There are no restrictions, agreements, promises,
representations, warranties, conditions, covenants or undertakings with respect
to the subject matter hereof other than those expressly set forth herein.
Except as provided in Article II hereof, this Agreement supersedes all prior
agreements and understanding between the parties with respect to its subject
matter.


 


Section 8.10         Descriptive
Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning of terms contained herein.


 


Section 8.11         Counterparts.
This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.


 


Section 8.12         Rights
to Negotiate. Nothing
in this Agreement shall be deemed to restrict or prohibit the Company from
purchasing Securities from the Executive or the Executive’s Permitted
Transferees at any time upon such terms and conditions and at such price as may
be mutually agreed upon between the Company and the Executive or the Executive’s
Permitted Transferees, whether or not at the time of such purchase
circumstances exist which specifically grant the Company the right to purchase
shares of Securities pursuant to the terms of this Agreement.


 


Section 8.13         Rights
Cumulative; Waiver. The
rights and remedies of the parties hereto shall be cumulative and not exclusive
of any rights or remedies which any party would otherwise have hereunder or at
law or in equity or by statute, and (subject to the provisions of this
Agreement regarding specific time periods within which a right must be
exercised or a notice must be given) no failure or delay by any party in
exercising any right or remedy shall impair any such right or remedy or operate
as a waiver of such right or remedy, nor shall any single or partial exercise
of any power or right preclude such party’s other or further exercise or the
exercise of any other power or


 


17

















right. The waiver by any party hereto of a breach of any
provision of this Agreement shall
not operate or be construed as a waiver of any preceding or succeeding breach
and no failure by any party to
exercise any right or privilege hereunder shall be deemed a waiver of such party's other rights or privileges
hereunder.


 


Section 8.14         Limitation of Liability.  None of the Affiliates of the Sponsor shall have any liability to the Executive or any of the Executive's
Permitted Transferees or the Company or any of its subsidiaries under any
provision of this Agreement. In the event of an alleged breach of this
Agreement by the Sponsor, the parties hereto acknowledge and agree that the sole remedy which may be sought against
the Sponsor shall be specific
performance, provided, however, that if the remedy of specific performance is not available, the Executive, the
Executive's Permitted Transferees, if any, and the Company will only seek to recover direct damages for any breach
of this Agreement. The Executive, the Executive's Permitted Transferees, if
any, and the Company agree to waive
any other remedy against the Sponsor to which they might be entitled at law, including, but not limited to,
compensatory damages, consequential damages,
continuing damages, future damages, incidental damages, punitive damages and nominal damages. The Company shall indemnify,
defend, save and hold harmless Sponsor from and against any and all liabilities
arising under, pursuant to or in connection
with this Agreement.


 


Section 8.15         Specific Performance. Each of the parties hereto acknowledges and agrees that in the event of any breach of this
Agreement, the non-breaching party would be irreparably harmed and could not be
made whole by monetary damages. It is accordingly
agreed that the parties hereto will waive the defense in any action for
specific performance that a remedy at
law would be adequate and that the parties hereto, in addition to any other
remedy to which they may be entitled at law or in equity, shall be entitled to compel specific performance of this
Agreement. The parties hereto consent to personal jurisdiction in any such action brought in any such court in
the manner set forth in Section 8.8
hereof.


 


Section 8.16         No Other Rights. There shall be no other rights, including put
rights, with respect to the Securities, other than those described in this
Agreement.


 


 


[Signature
Pages Follow]


 


18

















 


IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.


 


	
   

  	
  THE EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/Dean D. Durbin

  	
   

  
	
   

  	
  Dean
  D. Durbin

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone
  No.

  	
   

  	
   

  
	
   

  	
  Social
  Security No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Vertis
  Holdings, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John V. Howard Jr.

  	
   

  
	
   

  	
  Name:

  	
  John V. Howard Jr.

  	
   

  
	
   

  	
  Title:

  	
  Senior
  Vice President & Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE SPONSOR:

  	
   

  
	
   

  	
  For
  Purposes of Articles VII and VIII only

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Thomas
  H. Lee Equity Fund IV, L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony J. DiNovi

  	
   

  
	
   

  	
  Name:

  	
  Anthony
  J. DiNovi

  	
   

  
	
   

  	
  Title: