Exhibit 10.4


 


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 Donald E. Roland (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 5.1(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).


 


2

















 


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.


 


3

















 


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 7.1(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 TV 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.l(a).


 


4

















 


Sponsor. The term “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 7.1(c).


 


Tag-Along Response Notice. The term “Tag-Along Response Notice” shall
have the meaning ascribed to it in Section 7.1 (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.l(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 2.1(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. The Company
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. The Executive 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).


 


6

















 


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 7.1(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 VIII


 


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/Donald E. Roland

  	
   

  
	
   

  	
  Donald
  E. Roland

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone
  No.

  	
   

  	
   

  
	
   

  	
  Social
  Security No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Vertis
  Holdings, Inc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John V. Howard Jr.

  	
   

  
	
   

  	
  Name:

  	
  John V. Howard Jr.

  	
   

  
	
   

  	
  Title:

  	
  Jr.
  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: