Exhibit 10.7


 


RESTRICTED STOCK AGREEMENT


 


VERTIS HOLDINGS, INC.


1999 EQUITY AWARD PLAN


 


GRANTEE: MICHAEL S. RAWLINGS


NO. OF SHARES: 2,500


 


This Agreement (the
“Agreement”), approved
by Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”), evidences the award of
2,500 restricted shares (each, an “Award Share,” and collectively, the “Award Shares”) of
the Common Stock of Vertis Holdings, Inc., a Delaware corporation (the “Company”), granted
to you, Michael S. Rawlings, effective as of May 17, 2005 (the “Grant Date”), pursuant
to the Vertis Holdings, Inc. 1999 Equity Award Plan (the “Plan”) and
conditioned upon your agreement to the terms described below. All of the
provisions of the Plan are expressly incorporated into this Agreement.


 


You must return to Jennifer M. Bass an executed copy of this
Agreement within 10 Business Days after the date indicated below the name of
the officer who signed this Agreement on behalf of the Company. If you fail to
do so, the Award Shares will be forfeited without consideration and this
Agreement will be null and void.


 


1.                                       Terminology.
The Glossary at the end of this Agreement contains definitions of all words
that appear in this Agreement with an initial capital letter that are not
defined elsewhere in this Agreement.


 


2.                                       Vesting.
All of the Award Shares are nonvested and forfeitable as of the Grant Date. So
long as your Service with the Company is continuous from the Grant Date through
the applicable date upon which vesting occurs, the Award Shares will vest and
become nonforfeitable immediately prior to the first to occur of the following:


 


(a)                                  a
Liquidity Event;


(b)                                 your
death; or


(c)                                  the
date upon which you suffer a Disability.


 


Except as provided
above, unless otherwise determined by the Administrator, none of the Award
Shares will become vested and nonforfeitable after your Service with the
Company ceases.


 


3.                                       Termination
of Employment or Service.


 


3.1                                 Unvested
Award Shares. If your Service with the Company ceases for any reason other than
your death or Disability, all Award Shares that are not then vested and
nonforfeitable will be immediately forfeited to the Company upon such cessation
for no consideration.


 


3.2                                 Vested
Award Shares. If your Service with the Company ceases for any reason, all Award
Shares that are then vested and nonforfeitable will not be affected by such
cessation but will remain subject to the provisions of this Agreement,
including the restrictions on transfer set forth under Section 4 of this Agreement.


 

















 


4.                                       Restrictions on Transfer.


 


4.1                                 Except as otherwise provided under Sections
4.3 or 7 of this Agreement or in accordance with your will or the laws of
descent and distribution upon your death, until an Award Share becomes vested
and nonforfeitable and a Liquidity Event has occurred, the Award Share may not
be assigned, transferred, pledged, hypothecated or disposed of in any way
(whether by operation of law or otherwise) and shall not be subject to execution,
attachment or similar process.


 


4.2                                 You hereby represent and warrant to the
Company as follows:


 


(a)                                  You will hold the Award Shares for your own
account for investment only and not with a view to, or for resale in connection
with, any “distribution” of the Award Shares within the meaning of the
Securities Act.


 


(b)                                 You understand that the Award Shares have not
been registered under the Securities Act by reason of a specific exemption and
that the Award Shares must be held indefinitely, unless they are subsequently
registered under the Securities Act or you obtain an opinion of counsel, in form and
substance satisfactory to the Company and its counsel, that such registration
is not required. You further acknowledge and understand that the Company is
under no obligation to register the Award Shares.


 


(c)                                  You understand that the Company may, in its
discretion, impose restrictions on the sale, pledge or other transfer of the
Award Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company, such restrictions are
necessary or desirable to comply with the Securities Act, the securities laws
of any State or any other law.


 


(d)                                 You are aware that your investment in the
Company is a speculative investment that has limited liquidity and is subject
to the risk of complete loss.


 


4.3                                 The provisions of Sections 4.1 and 4.2(b) shall
not apply to the following transfers; provided, however, that no
transfer of Award Shares pursuant to this Section 4.3 (other than a
transfer to the Company) shall be given effect on the books of the Company
unless and until the Permitted Transferee (as defined below) 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:


 


(a)                                  a transfer of vested Award Shares made to an
Affiliate of the Company or an Affiliate of any subsidiary of the Company;


 


(b)                                 a transfer of vested Award Shares upon your
death to your executors, administrators, testamentary trustees, legatees or
beneficiaries;


 


(c)                                  a transfer of vested Award Shares to a trust,
the beneficiaries of which include only you and your spouse, siblings, or
direct lineal ancestors or descendants;


 


(d)                                 a transfer of vested Award Shares made as a
gift to your spouse or lineal descendants; or


 


(e)                                 a transfer of vested Award Shares made
pursuant to a court order in connection with a divorce proceeding.


 


The transferee in each of the subclauses (a) through (e) 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


 


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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.


 


4.4           The Company shall not be required to (a) transfer
on its books any Award Shares that have been sold or transferred in contravention
of this Agreement or (b) treat as the owner of Award Shares, or otherwise
accord voting, dividend or liquidation rights to, any transferee to whom Award
Shares have been transferred in contravention of this Agreement.


 


5.                                       Stock
Certificates. You will be reflected as the owner of record of the Award
Shares as of the Grant Date on the Company’s books. The Company will hold the
share certificates for safekeeping, or otherwise retain the Award Shares in
uncertificated book entry form, until the Award Shares become vested and
nonforfeitable and until they may be transferred freely without
restriction under this Agreement. Until the Award Shares become vested and
nonforfeitable, any share certificates representing such shares will include a
legend in substantially the following form, in addition to any other legends
that may be required under federal or state securities laws.


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE APPLICABLE
SECURITIES ACT OF ANY STATE BUT HAVE BEEN ISSUED IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION CONTAINED IN SAID ACTS. NO SALE, OFFER TO SELL OR OTHER
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE
UNLESS A REGISTRATION STATEMENT UNDER SAID ACTS IS IN EFFECT WITH RESPECT TO
THE SECURITIES, OR AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF SUCH ACTS
IS THEN APPLICABLE.


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND THE OTHER TERMS AND CONDITIONS SET FORTH IN A
CERTAIN RESTRICTED STOCK AGREEMENT DATED May 17, 2005, AS AMENDED FROM
TIME TO TIME, BETWEEN THE COMPANY AND THE REGISTERED OWNER OF THIS CERTIFICATE
(OR HIS PREDECESSOR IN INTEREST), AND SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.


 


All regular cash
dividends and other distributions on the Award Shares held by the Company will
be paid directly to you, but any stock dividends will be treated in the manner
set forth in Section 9 of this Agreement.


 


6.                                       Market
Stand-Off Agreement. You agree that following the effective date of a
registration statement of the Company filed under the Securities Act, to the
extent requested by the Company and an underwriter of Common Stock or other
securities of the Company, you will not offer, sell, contract to sell, pledge
or otherwise dispose of, directly or indirectly, any equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
such securities, enter into a transaction which would have the same effect, or
enter into any swap, hedge or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of such securities, whether
any such transaction is to be settled by delivery of such securities or other securities,
in cash or otherwise, or publicly disclose the intention to make any such
offer, sale, pledge or disposition, or to enter into any such transaction,
swap, hedge or other arrangement, in each case during the seven days prior to and
the one hundred and eighty (180) days after the effectiveness of any
underwritten offering of the Company’s equity securities (or such longer or
shorter period as may be requested in writing by the managing underwriter
and agreed to in writing by the Company) (the “Market Stand-Off Period”), except
as part of such underwritten registration if otherwise permitted. In
addition, you agree to execute any further letters, agreements and/or other documents
requested by the Company or its underwriters which are consistent with the
terms of this Section 6. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Stand-Off Period.


 


7.                                       Tag-Along
and Drag-Along Rights.


 


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


 


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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 you and your Permitted Transferees to have the
option to exercise your rights under this Section 7.1, provided, however,
that you and your 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, you and your Permitted Transferees, if any, shall have no
rights under 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 you written notice of the terms and conditions of such proposed
Tag-Along Sale, as described in Section 7.1(c)(“Tag-Along Notice”),
at least 10 Business Days prior to the consummation of such proposed
Tag-Along Sale and offer you and your 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. l(c), you and your Permitted Transferees shall be entitled to
sell up to a Pro Rata Portion (as defined below) of your Award Shares (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 your 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.


 


(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 your Tag Shares which you 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, you and your Permitted
Transferees shall have the right (a “Tag-Along Right”),
exercisable by written notice (“Tag-Along Response Notice”)
given by you 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 you and your 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


 


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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) you
and your Permitted Transferees, (iii) Other Award Share Grantees and their
permitted transferees giving tag-along notices similar to the Tag-Along Notice
during such period prescribed in Other Award Share Grantees’ 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, those
certain Amended and Restated Management Subscription Agreements, and those
certain Retained Share Agreements, each between the Company, the Sponsor and
you 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 you shall
be sold pursuant to the Tag-Along Sale. “Tag-Along Portion” means, with respect to you and
your Permitted Transferees, the number of shares of Common Stock beneficially
owned by you and your 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 you to the Sponsor pursuant to Section 7.1(c) shall
constitute an irrevocable election by you and your 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 you and your Permitted Transferees shall again be in effect.


 


(e)                                  If
at the termination of the Tag-Along Response Notice Period you and your
Permitted Transferees, if any, shall not have exercised its 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 you and your Permitted Transferees, if you
and your Permitted Transferees, if any, exercise your 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.


 


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


 


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.


 


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”), you and your Permitted
Transferees shall, at the Sponsor’s option and in the Sponsor’s sole
discretion, upon your receipt of written notice from the Sponsor, sell the
Drag-Along Portion of your Award Shares to such Third Party 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”).


 


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The “Drag-Along Portion” of your Award
Shares means, at any time, the number of Award Shares beneficially owned by you
and your Permitted Transferees, 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.


 


(b)                                 The Sponsor shall provide written notice of
such Drag-Along Sale to you (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 Award Shares which you are 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),
you 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”),
you shall deliver to a representative of the Sponsor designated in the
Drag-Along Notice certificates representing all the Award Shares beneficially
owned and held by you, 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 Award Shares pursuant to this Section 7.4 at the closing for
such Drag- Along Sale against delivery to you of the consideration therefore.
If you 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 you all certificates representing Award Shares that you delivered for
transfer pursuant hereto, together with any documents in the possession of the
Sponsor executed by you 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.


 


7.5.                              Other Responsibilities. 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 your sole responsibility, unless otherwise agreed to in writing
between such Permitted Transferee and the Sponsor. Neither the Company nor the
Sponsor shall be liable to any Permitted Transferee for your 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.


 


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 Section 7
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, you and your 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.


 


8.                                       Tax Withholding and Tax Election.


 


8.1                                 Tax Withholding. [Intentionally Omitted]


 


8.2                                 Tax Election. You hereby acknowledge that you have been
advised by the Company to seek independent tax advice from your own advisors
regarding the availability and advisability of making an election under Section 83(b) of
the Code, and that any such election, if made, must be made within 30 days of
the Grant Date. You expressly acknowledge that you are solely responsible for
filing any such Section 83(b) election with the appropriate
governmental authorities, irrespective of the fact that such election is also
delivered to the


 


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Company. You may not
rely on the Company or any of its officers, directors or employees for tax or
legal advice regarding this award. You acknowledge that you have sought tax and
legal advice from your own advisors regarding this award or have voluntarily
and knowingly foregone such consultation. You must pay over to the Company by
check the amount of any and all applicable withholding taxes at the time that
you make a Section 83(b) election.


 


9.                                       Adjustments
for Corporate Transactions and Other Events.


 


9.1                                 Stock
Dividend. Stock Split and Reverse Stock Split. Upon a stock dividend of, or
stock split, reverse stock split, or similar event affecting, the Common Stock,
the number of Award Shares and the number of such Award Shares that are
nonvested and forfeitable shall, without further action of the Administrator,
be adjusted to reflect such event. The Administrator may make adjustments,
in its discretion, to address the treatment of fractional shares with respect
to the Award Shares as a result of the stock dividend, stock split, reverse
stock split, or similar event. Adjustments under this Section 9 will be
made by the Administrator, whose determination as to what adjustments, if any,
will be made and the extent thereof will be final, binding and conclusive. No
fractional Award Shares will result from any such adjustments.


 


9.2                                 Binding
Nature of Agreement. The terms and conditions of this Agreement shall apply
with equal force to any additional and/or substitute securities received by you
in exchange for, or by virtue of your ownership of, the Award Shares, whether
as a result of any spin-off, stock split-up, stock dividend, stock distribution,
other reclassification of the Common Stock of the Company, or similar event,
except as otherwise determined by the Administrator. If the Award Shares are
converted into or exchanged for, or stockholders of the Company receive by
reason of any distribution in total or partial liquidation or pursuant to any
merger of the Company or acquisition of its assets, securities of another
entity, or other property (including cash), then the rights of the Company
under this Agreement shall inure to the benefit of the Company’s successor, and
this Agreement shall apply to the securities or other property received upon
such conversion, exchange or distribution in the same manner and to the same
extent as the Award Shares.


 


10.                                 Non-Guarantee
of Employment or Service Relationship. Nothing in the Plan or this
Agreement shall alter your at-will or other employment status or other service
relationship with the Company, nor be construed as a contract of employment or
service relationship between the Company and you, or as a contractual right of
you to continue in the employ of, or in a service relationship with, the
Company for any period of time, or as a limitation of the right of the Company
to discharge you at any time with or without cause or notice and whether or not
such discharge results in the forfeiture of any Award Shares or any other
adverse effect on your interests under the Plan.


 


11.                                 Rights
as Stockholder. Except as otherwise provided in this Agreement with respect
to the nonvested and forfeitable Award Shares, you are entitled to all rights
of a stockholder of the Company, including the right to vote the Award Shares
and receive dividends and/or other distributions declared on the Award Shares.


 


12.                                 The
Company’s Rights. Except as provided under Section 7.6 of this
Agreement, the existence of the Award Shares shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or other stocks with
preference ahead of or convertible into, or otherwise affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of the Company’s assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.


 


13.                                 Notices.
All notices and other communications made or given pursuant to this Agreement
shall be in writing and shall be sufficiently made or given if hand delivered
or mailed by certified mail, addressed to you at the address contained in the
records of the Company, or addressed to the Administrator, care of the Company
for the attention of its Corporate Secretary at its principal executive office
or, if the receiving party consents in advance, transmitted and received via
telecopy or via such other electronic transmission mechanism as may be
available to the parties.


 


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14.                                 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the Award Shares granted
hereunder. Any oral or written agreements, representations, warranties, written
inducements, or other communications made prior to the execution of this
Agreement with respect to the Award Shares granted hereunder shall be void and
ineffective for all purposes.


 


15.                                 Amendment. This Agreement may be amended from time to time only be a
written instrument duly executed by the Company, the Sponsor, and you.


 


16.                                 Conformity with Plan. This Agreement is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan.
Inconsistencies between this Agreement and the Plan shall be resolved in accordance
with the terms of the Plan. In the event of any ambiguity in this Agreement or
any matters as to which this Agreement is silent, the Plan shall govern. A copy
of the Plan is available upon request. Please contact the Company by email at
dselby@vertisinc.com or at 250 W. Pratt Street, 18th Floor,
Baltimore, Maryland 21201, Attention: Dolores D. Selby, (telephone:
410-361-8394), to receive a copy of the Plan.


 


17.                                 Governing Law. The validity, construction and effect of
this Agreement, and of any determinations or decisions made by the
Administrator relating to this Agreement, and the rights of any and all persons
having or claiming to have any interest under this Agreement, shall be
determined exclusively in accordance with the laws of the State of Delaware,
without regard to its provisions concerning the applicability of laws of other jurisdictions.
Any suit with respect hereto will be brought in the federal or state courts in
the districts which include New York, New York, and you hereby agree and submit
to the personal jurisdiction and venue thereof.


 


18.                                 Headings. The headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.


 


19.                                 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 the Sponsor, at the address set forth below:


 


(b)                                 If to you, at the address set forth in the
Company’s records;


 


(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 


Attention: Anthony J. DiNovi 


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).


 


20.                                 Limitation of Liability. None of the Affiliates of the Sponsor shall
have any liability to the you or any of your 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


 


8

















 


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,
you, your Permitted Transferees, if any, and the Company will only seek to
recover direct damages for any breach of this Agreement. You, your 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.


 


21.                                 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, 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.


 


22.                                 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.


 


9

















 


GLOSSARY


 


(a)  “Administrator” means the Committee as determined
under Section 2.7 of the Plan.


 


(b)  “Affiliate” has the meaning given to such term in
the Plan.


 


(c)  “Business Day” means
any day other than a Saturday, Sunday, or other day during which the Company’s
principal executive office is not open for business.


 


(d)  “Cause” generally
means your insubordination, dishonesty, incompetence, moral turpitude, other misconduct
of any kind or the refusal to perform your duties or responsibilities for
any reason other than illness or incapacity, in each case as determined by the
Board in good faith or, if you are a director, as determined by the Company’s
stockholders. However, if you have an employment agreement, consulting
agreement, change of control agreement or similar agreement in effect with the
Company at the time in question that defines “cause” (or words of like import),
then “cause” has the meaning ascribed to it under such agreement, as such
agreement shall provide at the time in question; provided that with respect to
any agreement that conditions “cause” on the occurrence of a change of control,
such definition of “cause” shall not apply until a change of control actually
takes place and then only with regard to a termination thereafter.


 


(e)  “Common Stock” means
the common stock, $.01 par value, of Vertis Holdings, Inc..


 


(f)  “Company” means
Vertis Holdings, Inc. and its Affiliates, except where the context
otherwise requires. For purposes of determining whether a Liquidity Event has
occurred, Company shall mean only Vertis Holdings, Inc.


 


(g)  “Disability” means
your inability to perform substantially your duties and responsibilities
to the Company by reason of a physical or mental disability or infirmity for a
continuous period of three months. The date of such disability shall be the
earlier of (1) the last day of such three-month period or (2) the day
on which you submit, or cause to be submitted, to the Board any medical
evidence of such disability reasonably satisfactory to the Board.


 


(h)  “Exchange” means
the principal stock exchange, including The Nasdaq Stock Market, on which the
Common Stock is listed or approved for listing, if any.


 


(i)  “Liquidity Event” means
(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.


 


(j)  “Minimum Public Float” means 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.


 


(k)  “Other Award Share Grantees” means other persons
receiving Award Shares pursuant to a restricted stock agreement having terms
substantially identical to those contained in this Agreement.


 


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(1) “Other Key People” means
the officers, members of management, key employees of the Company and its
Affiliates.


 


(m) “Principal Beneficial Owner”
means any of 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.


 


(n) “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.


 


(o) “Service” means
your employment or other service relationship with the Company and its
Affiliates. Service will be considered to have ceased with the Company if,
after a sale, merger or other corporate transaction, the trade, business or
entity with which you are employed or for which you serve is no longer an
Affiliate of Vertis Holdings, Inc.


 


(p) “Third Party” means
any person or entity excluding each of the following: (a) the Company and
its employees, officers, directors and (b) the Principal Beneficial
Owners.


 


(q) “You”; “Your”. You
means the recipient of the Award Shares as reflected in the first paragraph of
this Agreement. Whenever the word “you” or “your” is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Administrator, to apply to the estate, personal
representative, or beneficiary to whom the Award Shares may be transferred
by will or by the laws of descent and distribution, the words “you” and “your”
shall be deemed to include such person.


 


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IN WITNESS WHEREOF, the
Company and the Sponsor have caused this Agreement to be executed by their duly
authorized officers.


 


	
   

  	
  VERTIS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John V. Howard, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  May 17th 2005

  	
   

  
	
   

  	
   

  
	
   

  	
  THOMAS
  H. LEE EQUITY FUND IV, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Anthony J. DiNovi

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  May 16, 2005

  	
   

  



 


The undersigned hereby acknowledges that he/she has carefully read this
Agreement and agrees to be bound by all of the provisions set forth herein.


 


	
  WITNESS:

  	
  GRANTEE

  
	
   

  	
   

  
	
  /s/
  Toni Stout

  	
   

  	
  /s/
  Michael Rawlings

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  5/17/2005

  	
   

  
					



 


Enclosure:
Vertis Holdings, Inc. 1999 Equity Award Plan


 


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