Document:

Exhibit 10.26

 

	
  TURN
  TO US

  	
   

  	
  

  	
   

  	
  John
  V. Howard

  Chief Legal Officer and Secretary

  	
  www.vertisinc.com

  
	
   

  	
   

  	
   

  	
   

  	
  250
  West Pratt Street Suite 1800 Baltimore, MD 21201

  
	
   

  	
   

  	
   

  	
   

  	
  D:
  410.361.8347 F: 410.454.8460

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  jhoward@vertisinc.com

  	
   

  

 

November 18, 2007

 

VIA HAND DELIVERY

 

Michael
T. DuBose

 

Dear
Mike:

 

This
letter (“Letter Agreement”) confirms the
agreement reached between the Board of Directors and you concerning relocation
of your principal employment location pursuant to the terms and conditions of
that certain employment agreement by and among Vertis, Inc. (the “Company”), Vertis Holdings, Inc. (“Holdings”)
and you, dated and effective as of November 28, 2006 (the “Employment  Agreement”).  This Letter Agreement serves to amend the
Employment Agreement as set forth below as of this date.

 

Section 3(f) of
the Employment Agreement provides that until September 30, 2007, your
principal employment location is Williams, Oregon, and after such date your
principal employment location would be at such Company office as is mutually
agreed upon between the Company and you by September 30, 2007 (the “Relocation Date”).  It
further provides that you would relocate your principal place of residence to
the metropolitan area encompassing such agreed-upon office by the first
anniversary of your commencement of employment with the Company.

 

Section 3(f) of
the Employment Agreement is hereby amended to change the Relocation Date from September 30,
2007 to December 31, 2007.  Section 3(f) of
the Employment Agreement is hereby further amended to provide that you will
relocate your principal place of residence to the metropolitan area
encompassing the agreed-upon Company office by or as soon as practicable after December 31,
2007.

 

Section 3(f) of
the Employment Agreement provides that you will be reimbursed for reasonable
commuting, moving and other cost-of-relocation expenses incurred by you in
relocating to your principal employment location and for reasonable costs
incurred in traveling between your principal employment location and other
employment locations in accordance with the Company’s existing reimbursement
policies (including amounts expended for meals and lodging at other employment
locations).  Section 3(f) of
the Employment Agreement further provides that the above-described reimbursement
will also include any incremental tax liability incurred by you with respect to
the reimbursements for relocation costs and traveling costs, so 

 

 

that
you are in the same tax position you would have been in if such reimbursement
were not subject to income tax, provided, however, that, after September 30,
2007, you will not be reimbursed for incremental tax liability attributable to
reimbursement for amounts expended for meals and lodging.

 

Section 3(f) of
the Employment Agreement is hereby amended to provide that the reimbursements
described therein for moving and other cost-of-relocation expenses, reasonable
commuting expenses, and reasonable costs incurred in traveling between your
principal employment location and other employment locations in accordance with
the Company’s existing reimbursement policies (including amounts expended for
meals and lodging at other employment locations) will continue indefinitely
into the future.

 

You
further acknowledge and understand that the reimbursements for commuting
expenses and for amounts expended for meals and lodging in the vicinity of your
principal employment location after the first anniversary of your commencement
of employment with the Company will be reported by the Company as W-2 wages,
but such amounts will not be taken into consideration as compensation for
purposes of the Company’s employee benefit plans in which you participate, now
or in the future, or for purposes of calculating any severance benefit to which
you may become entitled under the Employment Agreement.

 

This
Letter Agreement shall be governed by, and construed in accordance with, the
laws of the State of Maryland, without reference to principles of conflict of
laws.  Except as modified by the terms of
this Letter Agreement, the Employment Agreement remains in full force and
effect.  You acknowledge that nothing in
this Letter Agreement gives you any contractual or other rights to continued
employment for any period of time and your employment with the Company remains
at will at all times.  This Letter
Agreement shall not be modified, waived or amended except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.  This Letter
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

 

If
the foregoing terms are acceptable to you, please confirm your agreement by
signing your name below.  Your signature
below will indicate that you are entering into this Letter Agreement freely and
with a full understanding of its terms and effect.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  /s/
  John V. Howard, Jr.

  
	
   

  	
  John
  V. Howard, Jr.

  
	
   

  	
  On
  behalf of Vertis, Inc. and

  
	
   

  	
  Vertis
  Holdings, Inc.

  
	
   

  	
   

  
	
  AGREED
  AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  /s/
  Mike DuBose

  	
   

  
	
  Mike
  DuBose

  	
   

  
	
   

  
	
  Date:

  	
  September 18,
  2007Exhibit 10.27

 

EMPLOYMENT AGREEMENT

 

THIS
AGREEMENT (the “Agreement”) by and among Vertis, Inc. (the “Company”),
Vertis Holdings, Inc. (“Holdings”), and Barry C. Kohn (the “Executive”),
dated and effective as of December 18, 2007 (the “Effective Date”).

 

WHEREAS,
the Company wishes to provide for the continued employment by the Company of
the Executive, and the Executive wishes to continue to serve the Company, in
the capacities and on the terms and conditions set forth in this Agreement;

 

NOW,
THEREFORE, it is hereby agreed as follows:

 

1.                                       EMPLOYMENT AT
WILL.  The employment of the Executive by
the Company shall be at will and shall be terminable by either party upon 30
days prior written notice or as otherwise set forth in Section 4.  The provisions of Sections 4 and 5 shall
govern the consequences of any termination of the Executive’s employment.

 

2.                                       POSITION AND
DUTIES.

 

(a)                                  During his
employment with the Company, the Executive shall serve as the Senior Vice
President and Chief Financial Officer of the Company and shall perform such
duties and have such responsibilities as are customarily assigned to such
position, and shall also perform or hold such other duties and responsibilities
with respect to the Company or its subsidiaries not inconsistent therewith as
may from time to time be assigned to him by the Board of Directors of the
Company (the “Board”).

 

(b)                                 During his
employment with the Company, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall devote his full
business attention and time to the business and affairs of the Company and
shall use all reasonable efforts to carry out his responsibilities faithfully
and efficiently.  However, the Executive
may serve on corporate, industry, civic or charitable boards or committees, so
long as these activities do not materially interfere with the performance of
the Executive’s responsibilities to the Company.  It is further agreed that Executive may,
through June 2009, continue to provide those services, if any, requested
by the Board of Directors of Aftermarket Technology Corp. pursuant to the
Amended and Restated Employment Agreement between Executive and Aftermarket
Technology Corp. dated July 1, 2002. 
The Executive represents that such services will not interfere with the
Executive’s ability to perform his duties to the Company.

 

3.                                       COMPENSATION.

 

(a)                             BASE SALARY.  During
his employment with the Company, the Executive shall receive an annual base
salary of $470,000, as adjusted by the Board from time to time as set forth
below (the “Annual Base Salary”).  The
Annual Base Salary shall be paid in accordance with the Company’s regular
payroll practice for its senior executives, as in effect from time to
time.  The Annual Base Salary shall be
reviewed for adjustment by the Board at least annually during the 

 

1

 

Executive’s
employment with the Company, with such review to occur as soon as practicable
each year after the Company’s release of audited financial statements for the
prior year.

 

(b)                                 ANNUAL CASH
BONUS.  For fiscal years during the Executive’s employment with the
Company, the Executive shall participate in an annual cash incentive
compensation plan (currently the Company’s Management Incentive Compensation
Plan), as adopted and approved by the Board from time to time, with applicable
corporate and individual performance targets and maximum award amounts
determined by the Board.  The target
bonus of the Executive pursuant to the annual cash incentive compensation plan
shall be determined in accordance with the Management Incentive Compensation
Plan (or the applicable replacement or successor plan) with respect to each
such fiscal year, but said target bonus shall be set at a level at least equal
to fifty percent (50%) of the Annual Base Salary.  Any cash bonuses payable to the Executive
will be paid at the time the Company normally pays such bonuses to its senior
executives and will be subject to the terms and conditions of the applicable
annual cash incentive compensation plan. 
For the purposes of the 2007 Management Incentive Compensation Plan, the
executive’s employment will be deemed to have started on January 1, 2007.

 

(c)                                  LONG-TERM
INCENTIVE COMPENSATION.  During the
Executive’s employment with the Company, the Executive shall be eligible to
receive long-term equity incentive compensation awards (which may consist of
stock options or other types of awards, as determined by the Board in its
discretion) pursuant to the Company’s equity incentive compensation plans and
programs in effect from time to time.  These awards
shall be granted in the discretion of the Board, shall include such terms and
conditions (including performance objectives) as the Board deems appropriate,
and shall be subject to such other agreements affecting the capital securities
of the Company as the Board may determine to be appropriate.  However, said
other agreements shall specify that Executive is entitled to receive, as soon
as practicable after execution of this Agreement, an initial grant of 250,000
shares of restricted stock.  Further, the
Company and Executive agree that any such other agreements relating to the
award to the Executive of restricted stock shall provide (i) that the
Executive may make an election pursuant to Section 83(b) of the
Internal Revenue Code to recognize as ordinary income an amount equal to the
fair market value of the restricted stock as of the date of transfer and (ii) that
the Company shall be responsible for the reasonable cost of obtaining a valuation
of the fair market value of the restricted stock as of the date of transfer.

 

(d)                                 OTHER
BENEFITS.  During the Executive’s employment with the Company, the
Executive shall be eligible to participate in the retirement, welfare benefit,
and fringe benefit plans, practices, policies and programs of the Company
(including any medical, prescription, dental, disability, life insurance,
accidental death and travel accident insurance plans and programs maintained by
the Company) to the same extent, and subject to substantially the same terms
and conditions, as these arrangements are made available generally to the
senior officers of the Company.

 

(e)                                  VACATION;
EXPENSES.  The Executive shall be
entitled to 4 weeks annual paid executive leave in accordance with the
provisions of the Company’s executive leave policy as in effect from time to
time, which shall be taken at times selected by the Executive with due regard
for the business needs of the Company. 
The Company shall pay or reimburse the 

 

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Executive
for ordinary and necessary business expenses incurred by him in the performance
of his duties in accordance with the Company’s usual policies.

 

(f)                                    RELOCATION;
TEMPORARY HOUSING.  The Executive shall
be reimbursed (upon presentation of appropriate documentation) for reasonable
commuting, moving and other cost-of-relocation expenses incurred by the
Executive in relocating to Executive’s principal employment location.  The Executive will be reimbursed for
reasonable costs incurred in traveling between his principal employment
location and other employment locations in accordance with the Company’s
existing reimbursement policies (including amounts expended for meals and
lodging at other employment locations). 
It is understood that on or before May 21, 2008 (the “Relocation
Date”), the Executive’s principal employment location shall be Columbus,
Ohio.  After the Relocation Date, the
Executive’s principal employment location shall be that Company office as to
which agreement is reached by the Company and the Executive by May 21,
2008 (the “Post-May 21, 2008 Principal Employment Location”) and, as soon
as is reasonably practicable after the Relocation Date or such other date, not
later than the first anniversary of the Executive’s commencement of employment
with the Company, as may be agreed upon by the Company, the Executive shall
change his principal place of residence to the metropolitan area encompassing
the Post-May 21, 2008 Principal Employment Location.  The above-described reimbursement shall also
include any incremental tax liability incurred by the Executive with respect to
the reimbursements for relocation costs and traveling costs, so that the
Executive is in the same tax position he would have been in if such reimbursement
were not subject to income tax, provided, however, that, after the Relocation
Date, the Executive shall not be reimbursed for incremental tax liability
attributable to reimbursement for amounts expended for meals and lodging.  Upon termination other than a Termination for
Cause or by the Executive without Good Reason, the Executive will be reimbursed
for the reasonable cost-of-relocation expenses by the Executive in relocating
back to Columbus, Ohio.

 

4.                                       TERMINATION OF
EMPLOYMENT.

 

(a)                                  DEATH OR DISABILITY.  The Executive’s employment shall terminate
automatically upon the Executive’s death during his employment with the
Company.  The Company shall be entitled
to terminate the Executive’s employment because of the Executive’s
Disability.  “Disability” means that (1) the
Executive is permanently disabled within the meaning of the long-term
disability plan of the Company in which the Executive participates or (2) if
there is no such plan in effect, that (i) the Executive has been absent
from the full-time performance of the Executive’s duties with the Company for a
period of 120 days, (ii) the Company shall have given the Executive a
notice of termination for Disability, and (iii) within 30 days after such
notice of termination is given, the Executive shall not have returned to the
full-time performance of the Executive’s duties.  The effective date of any such termination
for Disability shall be in the case of a termination pursuant to clause (l),
the date on which the Executive is determined to be disabled for purposes of
such plan or, in the case of a termination pursuant to clause (2), the date
which is 30 days following the notice of termination for Disability (either
such date, the “Disability Effective Time”).

 

3

 

(b)                                 TERMINATION BY
THE COMPANY.

 

(i)                                     The Company may
terminate the Executive’s employment with the Company for Cause or without
Cause.  Except as set forth in Section 4(b)(ii),
“Cause” shall mean (i) gross negligence or willful misconduct by the
Executive in connection with the performance of his duties hereunder that is
materially injurious to the Company, monetarily or otherwise, (ii) the
conviction of the Executive by a court of competent jurisdiction for felony
criminal conduct or (iii) material violation by the Executive of the
provisions of Section 6 of this Agreement, unless, in the case of clauses (i) or
(iii), the event constituting Cause is curable and has been cured by the
Executive within ten business days of his receipt of written notice from the
Company that an event constituting Cause has occurred and specifying in
reasonable detail the actions required to effect a cure.

 

(ii)                                  Notwithstanding
the provisions of Section 4(b)(i), following a Change in Control (as
defined herein), “Cause” shall only mean (A) the conviction of the
Executive by a court of competent jurisdiction for felony criminal conduct; or (B) the
willful engaging by the Executive in fraud or dishonesty which is demonstrably
and materially injurious to the Company or its reputation, monetarily or
otherwise.  For purposes of this Section 4(b),
no act, or failure to act, on the Executive’s part shall be deemed “willful”
unless committed, or omitted by the Executive in bad faith.

 

(iii)                               A termination
of the Executive’s employment for Cause shall require a vote of a majority of
the Board.  Following a Change in Control
a termination of the Executive’s employment for Cause shall not be effective
unless it is accomplished in accordance with the following procedures.  The Board shall give the Executive written
notice (“Notice of Termination for Cause”) of its intention to terminate the
Executive’s employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute Cause and the
specific provision(s) of this Agreement on which it relies, and stating
the date, time and place of the Special Board Meeting for Cause.  The “Special Board Meeting for Cause” means a
meeting of the Board called and held specifically and exclusively for the
purpose of considering the Executive’s termination for Cause.  The Special Board Meeting for Cause must take
place not less than thirty business days after the Executive receives the
Notice of Termination for Cause.  The
Executive shall be given an opportunity, together with counsel, to be heard at
the Special Board Meeting for Cause.  The
Executive’s termination for Cause shall be effective when a resolution is duly
adopted at the Special Board Meeting for Cause stating that, in the good faith
opinion of the Board, the Executive is guilty of the conduct described in the
Notice of Termination for Cause and that such conduct constitutes Cause under
the applicable provision of this Agreement.

 

(c)                                  TERMINATION BY
THE EXECUTIVE.

 

(i)                                     The Executive may
terminate employment with the Company for Good Reason or without Good
Reason.  “Good Reason” shall mean the
occurrence of any of the following events, without the Executive’s consent
(other than in connection with an 

 

4

 

event
constituting Cause): (a) any action by the Company which results in a
significant diminution in the Executive’s position, authority, duties or
responsibilities as contemplated by this Agreement; (b) a reduction in the
Executive’s Annual Base Salary or the Executive’s annual cash bonus opportunity
under the Executive Incentive Plan (or a successor plan) or a failure by the
Company to timely pay any portion of the Executive’s current or deferred
compensation; (c) the Company requiring the Executive to be based at an
office that is greater than 50 miles from where the Executive’s office is
located at such time except for required travel on the Company’s business to an
extent substantially consistent with the business travel obligations which the
Executive undertook on behalf of the Company prior to a Change in Control; or (d) the
failure by the Company to obtain from any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company an express
written assumption and agreement to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place unless, in each case, such action is remedied
by the Company within ten business days after receipt of a Notice of
Termination for Good Reason (as defined below) given by the Executive.

 

(ii)                                  The Executive
shall automatically be deemed to have Good Reason (“Deemed Good Reason”)
despite the absence of any of the events or circumstances described in the
second sentence of Section 4(c)(i) for the thirty day period
commencing on the first anniversary of a Change in Control; provided, however,
that if the Executive terminates his employment pursuant to the provisions of
this subparagraph (ii), the Executive’s entitlement to the benefits provided in
Section 5(d) (and the benefits provided in connection with a
termination described in such Section) may be conditioned by the Company on the
Executive continuing to serve the Company for up to six months following the
Notice of Termination for Good Reason (the “Transition Period”).  A failure by the Executive to comply with
such a request absent an event or circumstance described in the second sentence
of Section 4(c)(i) will result in the termination being treated as a
termination described in Section 5(a). 
In the event that the Company invokes its right to require the Executive
to continue to serve the Company during the Transition Period, the Executive’s
Annual Base Salary shall not be reduced during such period, nor shall the
Executive’s annual bonus opportunity (which bonus, if any, (i) shall be
paid out on a pro-rata basis for the applicable period during which the
Executive was employed, (ii) shall be paid at the time such bonuses are
paid to the Company’s executives generally and (iii) shall be based upon
the Company’s (and, if applicable, the Executive’s) scheduled performance
against target applicable to the portion of the performance period during which
the Executive was employed - in each case consistent with (and not in
duplication of) the provisions of Section 5(e).

 

(iii)                               A termination
of employment by the Executive for Good Reason or Deemed Good Reason shall be
effected by giving the Company written notice (“Notice of Termination for Good
Reason”) of the termination, setting forth in the case of a termination for
Good Reason in reasonable detail the specific conduct of the Company that
constitutes Good Reason and the specific provision(s) of this Agreement on
which the Executive relies.  A
termination of employment by the Executive for Good Reason 

 

5

 

shall
be effective ten business days following the date when the Notice of Termination
for Good Reason is given, unless, if applicable, the event constituting Good
Reason is remedied by the Company prior to that date.  Actions by the Company which constitute Good
Reason shall be disregarded in the calculation of termination benefits
described in Section 5.

 

(iv)                              A termination
of the Executive’s employment by the Executive without Good Reason shall be
effected by giving the Company 30 days’ written notice of the termination.

 

(d)                                 DATE OF
TERMINATION; RESIGNATION. The “Date of Termination” means the date of the
Executive’s death, the Disability Effective Time or the date on which the
termination of the Executive’s employment by the Company for Cause or without
Cause or by the Executive for Good Reason or without Good Reason is effective.  Following termination of the Executive’s
employment for any reason, the Executive shall immediately resign from the
Board and from all other offices and positions he holds with the Company and
its subsidiaries if requested by the Board.

 

5.                                       OBLIGATIONS OF
THE COMPANY UPON TERMINATION.

 

(a)                                  TERMINATION BY
THE COMPANY (OTHER THAN TERMINATIONS FOR CAUSE, DEATH OR DISABILITY), OR
TERMINATION BY THE EXECUTIVE FOR GOOD REASON. 
If the Company terminates the Executive’s employment for any reason
other than for Cause (other than a termination for Disability or death), or the
Executive terminates his employment for Good Reason, then, except for any
termination to which Section 5(d) applies, the Company shall pay to
the Executive (i) a cash payment equal to 1.5 times the sum of (A) the
Executive’s Annual Base Salary immediately prior to the Date of Termination and
(B) the greater of (1) the annual bonus earned by the Executive for
the last completed fiscal year prior to the fiscal year in which the Date of
Termination occurs, (2) the annual bonus the Executive would have earned
for the fiscal year in which the Date of Termination occurs absent such
termination (which amount shall be based upon the Company’s (and, if
applicable, the Executive’s) actual performance against target (expressed as a
percentage of achievement of targeted performance) applicable to the portion of
the performance period during which the Executive was employed, with such
percentage level of achievement annualized for the full fiscal year) and (3) the
annual target bonus the Executive would have been eligible to earn for the
fiscal year in which the Date of Termination occurs (the greatest of such
amounts being referred to hereafter as the “Applicable Bonus Amount”); and (ii) any
unpaid amounts of the Executive’s Annual Base Salary for periods prior to the
Date of Termination and earned annual bonuses for completed fiscal years prior
to the Date of Termination.  The payment
described in clauses (i) and in clause (ii) of the preceding sentence
shall be made within 30 days of the Date of Termination.  The Company shall also provide to the
Executive (and, as applicable, his eligible dependents), in the event of such a
termination continued participation at the Company’s expense in the Company’s
medical, dental, prescription and vision care insurance plans (or substantially
equivalent coverage under an alternative arrangement) for 18 months following
the Date of Termination (or, if earlier, until the date the Executive obtains
alternative coverage from a subsequent employer) following which, if no such
alternative coverage has been obtained, the 

 

6

 

Executive
will be entitled to elect continuation coverage (“COBRA”) in accordance with
the provisions of Section 4980B of the Internal Revenue Code of 1986, as
amended (the “Code”), which COBRA coverage period shall begin at the close of
the period of such continued participation. 
For purposes of this Agreement, the Executive’s employment shall be
deemed to have been terminated within the thirteen month period following a
Change in Control and during the Term by the Company without Cause (and shall
be governed by Section 5(d), if the Executive’s employment is terminated
by the Company without Cause either (i) during the 120 day period prior to
the execution of an agreement, the consummation of which would result in a
Change in Control or (ii) following the execution of an agreement, the
consummation of which would result in a Change in Control and such termination
is effective at the time, or during the pendency, of such Change in Control (in
either case whether or not such Change in Control actually occurs).

 

(b)                                 DEATH AND
DISABILITY.  If the Executive’s
employment is terminated by the Company due to Disability or terminated
automatically upon the Executive’s death then, (i) the Company shall pay
to the Executive (or the Executive’s estate, as applicable) in a lump sum in
cash within 30 days after the Date of Termination, any portion of the Executive’s
Annual Base Salary earned through the Date of Termination that has not been
paid and earned annual bonuses for completed fiscal years prior to the Date of
Termination and (ii) all outstanding equity awards shall be treated
according to the provisions of the plan and agreements under which such awards
were granted.  The Company shall also
provide to the Executive (and, as applicable, his eligible dependents), in the
event of such a termination continued participation at the Company’s expense in
the Company’s medical, dental, prescription and vision care insurance plans (or
substantially equivalent coverage under an alternative arrangement) for 18
months following the Date of Termination (or, if earlier, until the date the
Executive obtains alternative coverage from a subsequent employer) following
which, if no such alternative coverage has been obtained, the Executive (or his
eligible dependents, if applicable) will be entitled to elect COBRA
continuation coverage in accordance with the provisions of Section 4980B
of the Code, which COBRA coverage period shall begin at the close of the period
of such continued participation.

 

(c)                                  BY THE COMPANY
FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON.  If the Executive’s employment is terminated
by the Company for Cause or the Executive voluntarily terminates employment
other than for Good Reason then, (i) the Company shall pay to the
Executive in a lump sum in cash within thirty days after the Date of
Termination, any portion of the Executive’s Annual Base Salary earned through
the Date of Termination that has not been paid and earned annual bonuses for
completed fiscal years prior to the Date of Termination and (ii) all
outstanding equity awards shall be treated according to the provisions of the
plan and agreements under which such awards were granted.

 

(d)                                 CHANGE IN
CONTROL TERMINATION.

 

(i)                                     If, within the
13-month period immediately following the occurrence of a Change in Control,
the Executive’s employment by the Company is terminated by the Company other
than for Cause (other than a termination for Disability or death) or by the
Executive for Good Reason (subject, if applicable, to the proviso set forth in
the first sentence of Section 4(c)(ii)), then the Company shall pay to the
Executive (i) a cash 

 

7

 

payment
equal to three times the sum of (A) the Executive’s Annual Base Salary
immediately prior to the Date of Termination and (B) the Applicable Bonus
Amount; and (ii) any unpaid amounts of the Executive’s Annual Base Salary
for periods prior to the Date of Termination and earned annual bonuses for
completed fiscal years prior to the Date of Termination.  The cash payments described in clause (i) and
(ii) of the preceding sentence shall be made in a lump sum within 30 days
following the Date of Termination. 
Notwithstanding the foregoing, if the amounts of such payments cannot be
finally determined on or before a date when a payment is due, the Company shall
pay to the Executive on such day an estimate, as reasonably determined by the
Company, of the minimum amount of such payments to which the Executive is
clearly entitled and shall pay the remainder of such payments, if any, as soon
as the amount thereof can be determined. 
The Company shall also provide to the Executive (and, as applicable, his
eligible dependents), in the event of such a termination continued
participation at the Company’s expense in the Company’s medical, dental,
prescription and vision care insurance plans (or substantially equivalent
coverage under an alternative arrangement) for 36 months following the Date of
Termination (or, if earlier, until the date the Executive obtains alternative
coverage from a subsequent employer) following which, if no such alternative
coverage has been obtained, the Executive will be entitled to elect COBRA
continuation coverage in accordance with the provisions of Section 4980B
of the Code, which COBRA coverage period shall begin at the close of the period
of such continued participation.

 

(ii)                                  For purposes of
this Agreement, a “Change in Control” shall be deemed to have occurred on the
first date after the Effective Date on which (1) any Person (as defined
below) shall acquire, whether by purchase, exchange, tender offer, merger,
consolidation or otherwise, beneficial ownership of securities of the Company
constituting fifty percent (50%) or more of the combined voting power of the
securities of the Company, (2) any Person shall acquire all or
substantially all of the assets of the Company pursuant to a sale, dissolution
or liquidations or (3) any Person shall acquire the ability to appoint or
elect a majority of the members of the Board. 
For purposes of the preceding sentence, “Person” shall have the meaning
given in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended from time to time, as such term is modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) Holdings,
Thomas H. Lee Partners or Thomas H. Lee Equity Fund IV, L.P., Evercore Capital
Partners L.P. and each of their respective affiliates (the “Designated
Investors”), (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities and (iv) a corporation owned, directly or indirectly, by the
Designated Investors, such that the aggregate ownership of securities or assets
of the Company or the ability to appoint or elect directors of the Company that
is attributable to such Designated Investors would not decrease to a level that
would result in a Change in Control, if such ownership or ability was deemed to
be held directly in the Company.  The
completion of an initial public offering in which no Person acquires beneficial
ownership of fifty percent (50%) or more of the combined voting power of the
securities of such Person shall not constitute a Change in Control, nor shall
the acquisition of beneficial ownership of securities of the Company by a
Person which has a 

 

8

 

class
of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended, if such acquisition does not result in the Designated
Investors owning thirty percent (30%) or less of the combined voting power of
the securities of the Company. 
Notwithstanding the foregoing, a Change in Control shall be deemed to
have occurred on the date when the Designated Investors together with the
senior management of the Company (as determined by the Designated Investors)
cease to beneficially own at least thirty percent (30%) or more of the combined
voting power of the securities of the Company.

 

(iii)                               For purposes of
this Agreement, the Executive’s employment shall be deemed to have been terminated
within the thirteen month period following a Change in Control and during the
Term by the Company without Cause (and shall be governed by this Section 5(d)),
if the Executive’s employment is terminated by the Company without Cause either
(i) during the 120 day period prior to the execution of an agreement, the
consummation of which would result in a Change in Control or (ii) following
the execution of an agreement, the consummation of which would result in a
Change in Control and such termination is effective at the time, or during the
pendency, of such Change in Control (in either case whether or not such Change
in Control actually occurs).

 

(e)                                  PRO-RATA BONUS
PAYMENTS.  Except as set forth in the
following sentence, for purposes of this Section 5, bonus amounts shall
only be considered to be earned if the Executive was employed by the Company
through the last day of the performance period to which the bonus relates.  In case of a termination described in Section 5(a),
5(b) or 5(d), in addition to the payments provided in such Section, the
Executive shall be considered to have earned an annual bonus (the “Pro-rata
Bonus”) equal to the bonus (if any) the Executive would have received (as
determined consistent with the provisions set forth below) had the Executive
remained employed by the Company through the last day of the fiscal year during
which the Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days in such fiscal year during which the Executive
was employed by the Company and the denominator of which is 365.  The Pro-rata Bonus for purposes of a
termination described in Section 5(d), shall be determined, as near as
practicable, based on actual performance achieved for the fiscal year through
the Date of Termination, expressed as a percentage of targeted performance for
that period. For purposes of a termination described in Section 5(a) or
5(b), such Pro-rata Bonus payment shall be based on the actual results for the
completed fiscal year during which the Date of Termination occurs.  In the event of a termination described in Section 5(a),
5(b) or 5(d), the payment of any amount of Pro-rata Bonus which becomes
due in accordance with this Section 5(e) shall be made at the time
the Company normally pays such bonuses to its senior executives, irrespective
of whether any such bonuses are paid to other senior executives for such fiscal
year, and will be subject to the terms and conditions of the applicable annual
cash incentive compensation plan but without giving effect to any requirement
therein that the Executive remain employed with the Company through the payment
date or the last day of the applicable fiscal year in order to receive payment
thereunder.  Exhibit A hereto sets
forth examples of the calculation of the Pro-rata Bonus.

 

(f)                                    OUTPLACEMENT
SERVICES. If the Executive’s employment is terminated under the circumstances
described in Section 5(a) or 5(d), the Company shall pay the cost of

 

9

 

 

providing
the Executive with outplacement services, up to a maximum of five percent (5%)
of the sum of the Base Salary and the Applicable Bonus Amount, provided that
such services are (a) utilized by the Executive within six months
following the Date of Termination and (b) provided by a recognized
outplacement provider.  Such payment
shall be made by the Company directly to the service provider promptly
following the provision of such services and the presentation to the Company of
documentation of the provision of such services, and in all events by no later
than the first anniversary of the Date of Termination.  Such services shall include office facilities
and telephone answering services during such six month period.

 

(g)           ACCRUED BENEFITS. Upon the Executive’s
termination of employment for any reason, in addition to any other amounts and
benefits provided for in Section 5, the Executive (and his beneficiaries
and dependents, as applicable) shall be entitled to receive all vested benefits
under the Company’s benefit plans policies and programs in which the Executive
participated, in accordance with the terms of such plans (except to the extent
that such benefits are duplicative of benefits provided for in Section 5).

 

(h)           RELEASE.  The Executive shall not be entitled to any
payment or benefit provided under Sections 5(a), 5(d), 5(e), and 5(f), other
than COBRA continuation coverage at the Executive’s expense, unless (a) the
Executive executes and delivers to the Company a release, in form and substance
acceptable to the Company, by which the Executive release the Company from all
claims arising from the Executive’s employment by the Company, in consideration
for such payment or benefit, and (b) the Executive shall not be in breach
of any of the provisions of Section 6 of this Agreement at any time during
the effectiveness thereof.  In no event
will such payment or benefit be provided prior to such release becoming
effective upon expiration of the applicable withdrawal period.

 

(i)            409A SAFE HARBOR.

 

(i)            If Executive
becomes eligible for payments under this Agreement on account of his “separation
from service,” as defined below, and Executive is a “specified employee” within
the meaning of Section 409A of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (collectively, the “Code”)
when the separation from service occurs, as determined by the Company, any
portion of the payments that either do not qualify under the “short-term
deferral rule” or exceed two times the lesser of (A) the Executive’s “annualized
compensation” (within the meaning of Section 409A of the Code) for the
calendar year preceding the Executive’s separation from service, or (B) the
maximum amount that may be taken into account under Section 401(a)(17) of
the Code for the year in which the Executive’s separation from service occurs
and which are not otherwise exempt from Section 409A of the Code, shall be
accrued, without interest, and its payment delayed until the first day of the
seventh month following the Executive’s separation from service, or if earlier,
the Executive’s death, at which point the accrued amount will be paid in a
single, lump sum cash payment. 
Furthermore, the Company shall not be required to make, and the
Executive shall not be required to receive, any severance or other payment or
benefit under this Agreement at such time as the making of such payment or the
provision of such benefit or the receipt thereof shall result in a tax to
Executive arising under Section 409A of the Code.  The 

 

 

10

 

preceding
provisions, however, shall not be construed as a guarantee by the Company of
any particular tax effect to Executive under this Agreement.

 

(ii)           “Termination of
Executive’s employment,” or words of similar import, as used in this Agreement,
means for purposes of Section 409A of the Code the date as of which the
Company and the Executive reasonably anticipate that no further services will
be performed by the Executive and shall be construed as the date that the
Executive first incurs a “separation from service” for purposes of Section 409A
of the Code.

 

(iii)          For purposes of Section 409A
of the Code, the right to a series of installment payments under this Agreement
shall be treated as a right to a series of separate payments.

 

(iv)          This Agreement is
intended to comply with, or otherwise be exempt from, Section 409A of the
Code.  This Agreement shall be
administered, interpreted and construed in a manner that does not result in the
imposition to the Executive of additional taxes or interest under Section 409A
of the Code.

 

(v)           The Company and the
Executive agree that they will execute any and all amendments to this Agreement
as they mutually agree in good faith may be necessary to ensure compliance with
the provisions of Section 409A of the Code.

 

(vi)          With respect to any
reimbursement of expenses of, or any provision of in-kind benefits to, the
Executive, as specified under this Agreement, such reimbursement of expenses or
provision of in-kind benefits shall be subject to the following conditions: (A) the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in one taxable year shall not affect the expenses eligible for reimbursement or
the amount of in-kind benefits provided in any other taxable year, except for
any medical reimbursement arrangement providing for the reimbursement of
expenses referred to in Section 105(b) of the Code; (B) the
reimbursement of an eligible expense shall be made no later than the end of the
year after the year in which such expense was incurred; and (C) the right
to reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit.

 

(j)            CERTAIN ADDITIONAL PAYMENTS.

 

(i)            Gross-Up Payment
Amount.  Notwithstanding anything in this
Agreement to the contrary other than the second sentence of this Section 5(j)(i),
in the event it shall be determined that any payment or distribution by the
Company to or for the benefit of the Executive, whether paid, payable, distributed
or distributable pursuant to this Agreement or otherwise (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986 (the “Code”) (or any successor provision) or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are collectively referred to in this Agreement as
the “Excise Tax”), then the Executive shall be entitled to receive an
additional payment (a “Gross-Up Payment”) in an amount such that after the
payment by 

 

 

11

 

the
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payment. 
Notwithstanding the foregoing provisions of this Section 5(j)(i),
if it shall be determined that a reduction in the Payments by an amount that
does not exceed two percent (2%) of the present value of the aggregate Payments
(determined consistent with Code Section 280G(d)(4)) would result in no
portion of the Payments being subject to the Excise Tax, then (x) no
Gross-Up Payment shall be made pursuant to this Section 5(j)(i) to
the Executive and (y) the Payments to the Executive shall be reduced to
the minimum extent necessary so that no portion thereof shall be subject to the
Excise Tax.

 

(ii)           Determinations.  Subject to the provisions of Section 5(j)(iii),
all determinations required to be made under this Section 5(j), including
whether and when a Gross Up Payment is required and the amount of such Gross Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by an accounting firm of national standing reasonably selected by
the Company (the “Accounting Firm”), which shall provide detailed supporting
calculations to both the Company and the Executive within fifteen (15) business
days of the receipt of written notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company.  Any Gross Up Payment, as determined pursuant
to this section, shall be paid by the Company to the Executive within five (5) days
of the receipt of the Accounting Firm’s determination.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any determination by the Accounting Firm shall be binding upon the
Company and the Executive.  As a result
of the possible uncertainty in application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross Up Payments will not have been made by the Company that
should have been made (“Underpayment”), consistent with the calculations
required to be made hereunder.  In the
event that the Company exhausts its remedies pursuant to this section or
related sections and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.

 

(iii)          IRS Claims.  The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross Up Payment.  Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is to be paid.  The Executive shall not pay such claim prior
to the expiration of the thirty (30)  day
period following the date on which the Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due).  If
the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall: (a) give
the Company any information reasonably requested by the Company relating to
such claim; (b) take such action in connection with contesting 

 

 

12

 

such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney selected by the Company and reasonably acceptable to
the Executive; (c) cooperate with the Company in good faith in order
effectively to contest such claim; and (d) permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limitation on the
foregoing provisions of this Section, the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest free basis and shall
indemnify and hold the Executive harmless, on an after tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. 
Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross Up Payment would be payable hereunder and
the Executive shall be entitled in his sole discretion to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

 

(iv)          Refunds.  If, after receipt by the Executive of an
amount advanced by the Company pursuant to this section or related sections,
the Executive becomes entitled to receive any refund with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of such section) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after receipt
by the Executive of an amount advanced by the Company pursuant to this section
or related sections, a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross Up
Payment required to be paid.

 

 

13

 

(v)           In all events, the
Gross-Up Payment, if any, shall not be made later than the December 31
following Executive’s taxable year in which Executive remits the Excise Tax.

 

6.                                       CONFIDENTIALITY;
COMPETITION; SOLICITATION; INTELLECTUAL PROPERTY; RETURN OF PROPERTY.

 

(a)           The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
predecessors or affiliated companies and their respective businesses that the
Executive obtains or has obtained during the Executive’s employment by the
Company or any of its predecessors or affiliated companies and that is not
public knowledge (other than as a result of the Executive’s violation of his
obligations to the Company, including those set forth herein) (“Confidential
Information”).  The Executive shall not
communicate, divulge or disseminate Confidential Information at any time during
or after the Executive’s employment with the Company, except with the prior
written consent of the Company or as otherwise required by law or legal process
(of which the Executive has delivered to the Company prompt prior notice).

 

(b)           During the Executive’s employment
with the Company and for a period of two years after the termination of the
Executive’s employment with the Company, the Executive shall not, without the
prior written consent of the Board, directly or indirectly engage in or be
interested in (as owner, partner, stockholder, employee, director, officer,
agent, consultant or otherwise), with or without compensation, any business
which is in competition with any line of business actively being conducted or
to the Executive’s knowledge, contemplated on the Date of Termination by the Company
or any of its subsidiaries or affiliates. Nothing herein will prohibit the
Executive from acquiring or holding not more than one percent of any class of
publicly traded securities of any business.

 

(c)           Except as set forth below, during the
Executive’s employment with the Company and for a period of two years after the
termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Board, directly or indirectly,
hire any person who was employed by the Company or any of its subsidiaries or
affiliates within the six-month period preceding the date of such hiring or
solicit, entice, persuade or induce any person or entity doing business with
the Company and its subsidiaries or affiliates, to terminate such relationship
or to refrain from extending or renewing the same.

 

(d)           The Executive agrees that the
restrictions set forth in this Section 6 are reasonable and necessary to
protect the legal interests of the Company. 
The Executive further agrees that the Company shall be entitled to
injunctive relief in the event of any actual or threatened breach of the
restrictions and shall not be required to post bond or prove actual
damages.  If the scope or content of any
restriction contained in this Agreement is too broad to permit enforcement of
such restriction to its full extent, then the restriction shall be enforced to
the maximum extent permitted by law, and the parties hereby consent that the
scope or restriction shall be judicially modified accordingly in any proceeding
brought with respect to the enforcement of the restriction.

 

 

14

 

(e)           The Executive agrees that any and all
intellectual property developed within the scope of employment or relating to
the Company’s business, existing or which in the future may exist, including
all patents, copyrights, trademarks or trade names, all ideas, concepts,
themes, inventions, designs, improvements and discoveries conceived or
developed, whether by the Executive or others, shall remain the sole and
exclusive property of the Company.

 

(f)            Immediately upon any termination of
employment with the Company, the Executive shall promptly deliver to the
Company all equipment, notebooks, documents, memoranda, reports, files,
samples, books, correspondence, mailing lists, calendars, card files, rolodexes
and all other records or materials relating to the Company’s business which are
or have been in the possession or control of the Executive unless such
documents are public.  The Executive
shall not maintain any copy or other reproduction whatsoever of any of the
items described in this Section 6(f) after the termination of such
employment.

 

7.             INDEMNIFICATION.  Except to the extent inconsistent with the
Company’s certificate of incorporation or bylaws, the Company will indemnify
the Executive and hold him harmless to the fullest extent permitted by law with
respect to his service as an officer and director of the Company and its
subsidiaries, which indemnification shall be provided following termination of
employment for so long as the Executive may have liability with respect to his
service as an officer and director of the Company and its subsidiaries.  The Executive will be covered by a directors’
and officers’ insurance policy with respect to his acts as an officer and
director to the same extent as all other Company officers and directors under
such policies.

 

8.             DISPUTE RESOLUTION; ATTORNEYS’
FEES.  Other than with respect to the
Company’s right to obtain injunctive relief under Section 6 (which shall
not be subject to the provisions of this Section 8), all disputes arising
under or related to the employment of the Executive or the provisions of this
Agreement shall be settled by arbitration under the rules of the American
Arbitration Association then in effect, such arbitration to be held in
Baltimore Maryland, as the sole and exclusive remedy of either party.  The arbitration shall be heard by one
arbitrator mutually agreed upon by the parties, who must be a former judge. In
the event that the parties cannot agree upon the selection of the arbitrator
within 10 days, each party shall select one arbitrator and those arbitrators
shall select a third arbitrator who will serve as the sole arbitrator.  The arbitrator shall have the authority to
order expedited discovery, hearing and decision, including the ability to set
outside time limits for such discovery, hearing and decision.  The parties shall direct the arbitrator to
render a decision not later than 90 days following the arbitration
hearing.  Judgment on any arbitration
award may be entered in any court of competent jurisdiction.  The Company shall pay all reasonable legal
fees and expenses incurred by the Executive in connection with any such
arbitration or other legal proceeding which occurs on or following a Change in
Control.

 

9.             SUCCESSORS.

 

(a)           This Agreement is personal to the
Executive and without the prior written consent of the Company the Executive’s
rights under the Agreement shall not be assignable (except by will or the laws
of descent and distribution).  This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

 

 

15

 

(b)           This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns.

 

(c)           The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the Company
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would have been required to perform it if
no such succession had taken place. As used in this Agreement, the term “Company”
shall mean both the Company as defined above and any such successor.

 

10.           MISCELLANEOUS.

 

(a)           This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Maryland, without
reference to principles of conflict of laws. 
The captions of this Agreement are not part of the provisions hereof and
shall have no force or effect.  This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.

 

(b)           All notices and other communications
under this Agreement shall be in writing and shall be given by hand delivery to
the other party, by overnight courier or by certified mail, return receipt
requested, postage prepaid, addressed as follows:

 

	
  If
  to the Executive:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  If
  to the Company:

  	
   

  
	
  Vertis, Inc.

  	
   

  
	
  250
  W. Pratt Street, 18th Floor

  	
   

  
	
  Baltimore,
  Maryland 21201

  	
   

  
	
  Attention:
  Chief Legal Officer

  	
   

  
	
   

  	
   

  
	
  with
  a copy to:

  	
   

  
	
   

  	
   

  
	
  Thomas
  H. Lee Partners

  	
   

  
	
  75
  State Street

  	
   

  
	
  Suite 2600

  	
   

  
	
  Boston,
  Massachusetts 02109

  	
   

  
	
  Attention:

  	
  Anthony
  J. DiNovi

  
	
   

  	
  Scott
  M. Sperling

  
	
   

  	
  Soren
  Oberg

  
	
  Fax:
  (617) 227-3514

  	
   

  
			

 

 

16

 

or
to such other address as either party furnishes to the other in writing in
accordance with this Section 10(b).

 

(c)           Notwithstanding any other provision
of this Agreement, the Company may withhold from amounts payable under this
Agreement all federal, state, local and foreign taxes that are required to be
withheld by applicable laws or regulations.

 

(d)           The Executive’s or the Company’s
failure to insist upon strict compliance with any provisions of, or to assert
any right under, this Agreement shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this Agreement.

 

(e)           Except as set forth in this Section l0(e),
as of the Effective Date, this Agreement shall constitute the entire
understanding of the parties with respect to subject matter herein and
supercedes any other agreement or other understanding, whether oral or written,
express or implied, between them to the extent that such agreements or
understandings contain provisions addressed herein.

 

(f)            This Agreement shall terminate upon
the termination of the Executive’s employment, except that terms of this Agreement
which must survive the termination of this Agreement in order to be effectuated
(including the provisions of Sections 5, 6, 7 and 8) shall survive.  Upon the termination of the Executive’s
employment, Executive consents to the notification by the Company to the
Executive’s new employer of Executive’s obligations under this Agreement.

 

(g)           The Executive is not required to seek
other employment or to attempt in any way to mitigate or reduce any amounts
payable to the Executive by the Company pursuant to Section 5 hereof.  Except with respect to alternative medical,
dental, prescription and vision care insurance obtained from a subsequent
employer, the amount of any payment or benefit provided for in this Agreement
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by the Executive to the Company, or otherwise.

 

(h)           This Agreement may be executed in
several counterparts, each of which shall be deemed an original and which
together shall constitute but one and the same instrument.

 

 

17

 

IN
WITNESS WHEREOF, the Executive and the Company have executed this Agreement
under seal, as of the day and year first above written.

 

	
   

  	
  VERTIS,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  John V. Howard, Jr.

  
	
   

  	
  Name:
  

  	
  John
  V. Howard, Jr.

  
	
   

  	
  Title:
  

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  VERTIS
  HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  John V. Howard, Jr.

  
	
   

  	
  Name:
  

  	
  John
  V. Howard, Jr.

  
	
   

  	
  Title:
  

  	
  Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Barry Kohn

  
	
   

  	
  Barry
  Kohn

  

 

 

18

 

EXHIBIT
A

 

Solely
for purposes of illustration and clarification of the provisions of Section 5(e),
and not in limitation thereof, the following examples are provided. The bonus
formula under the annual cash incentive compensation plan in effect for the
fiscal year in the examples below is 75% of Base Salary payable upon 100%
achievement of targeted performance for the fiscal year; the Company’s bonus
plan for the year sets forth that reduced amounts are payable for achievement
between 90% and 99% of targeted performance (for each 1 % above 90%, the
Executive would earn 10% of targeted bonus, until 100% achievement yields 100%
payout of targeted bonus) but no bonus is payable for achievement at or below
90%.

 

Example
1: Assume that (A) actual performance against interim quarterly targeted
performance through June 30th is 100%; (B) actual performance against
targeted performance through December 31st is 85%; (C) Executive’s
employment is terminated under circumstances described in Section 5(d) on
July 1st; and (D) Executive’s Base Salary on the Date of
Termination is $100,000. The Pro-rata Bonus payable to Executive is $37,500
determined as follows:

 

Pro-rata
Bonus = (182 days employed through Date of Termination/ 365) 

x 100% achievement x (75% x $100,000 Base Salary)

 

Example
2: Assume the same facts as Example 1, except that Executive’s employment is
terminated under circumstances described in Section 5(a) or 5(b). The
Pro-rata Bonus payable to Executive is zero because actual performance for the
completed fiscal year in which the Date of Termination occurs is below the 91 %
minimum threshold required for a payout under the plan.

 

Example
3: Assume the same facts as Example 2, except that the actual performance
against targeted performance through December 31st 95%. The
Pro-rata Bonus payable to Executive is $18,750 determined as follows:

 

Pro-rata
Bonus = (182 days employed through Date of Termination/ 365) 

x 50% x (75% x $100,000 Base Salary)

 

 

19

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