Document:

EXHIBIT 10.50

 

October 13, 2004

 

Mr. Joe M. Scott

20 Belvedere Court

Richfield, CT 
06877

 

Dear Joe,

 

It gives me great pleasure to confirm our offer to join
what we believe is one of the most successful and dynamic organizations in
targeted advertising, media, and marketing solutions. You have an extraordinary
opportunity to participate in the growth and challenge offered by Vertis, Inc.
As you might imagine, this opportunity provides a truly unique and rewarding
experience for our staff, and we believe that you will make an outstanding
addition to the team.

 

Following are the terms of our offer:

 

1.               Specifically, you will
join Vertis Inc. in the position of Senior Vice President, Sales-North
America.  In that capacity, you will
report to Herbert W. Moloney, III, Chief Operating
Officer – North America.  In brief, you
are responsible for growing top line revenue for the North America Operations.

 

2.               Your start date will be
mutually determined, however we are hoping that you
will be able to join us on or before November 1, 2004.

 

3.               Your office will be
located at 250 W. Pratt Street, Baltimore, MD 
21201.

 

4.               Your starting base
salary will be $300,000 annualized.  This
will be distributed in an amount of $11,538 bi-weekly on Fridays.

 

5.               You will receive an automobile allowance of
$990 per month or $11,880 annually.

 

6.               You will participate in
a Sales Executive Compensation Plan.  The
details of this Plan are outlined in greater detail in Attachment A to this
letter.  You understand that the amounts
set forth in Attachment A are based upon currently
forecasted numbers for 2004 and growth assumptions that will be refined and
finalized as part of the 2005 budget process. Therefore, the numbers and the incentive targets set forth in Attachment A are subject to
change based on the final budget process. 
However, the methodology for calculating the incentive shall not change.

 

7.               As an element of your
compensation, the Company intends to grant to you 5,000 shares of the Company’s
restricted common stock under the Vertis Holdings, Inc. equity plan, subject to
approval by the Company’s Board of Directors at it’s
next meeting.  These shares of restricted
stock will be subject to the Company’s standard vesting provisions and
restrictions on transfer.  These
provisions will be more fully set forth in a Restricted Stock Agreement, to be
entered into upon the award of the shares.

 

8.               If the Company
terminates your employment for any reason other than for Cause, then you will
receive severance pay, in the form of payroll continuation of your annual base
salary as of your date of separation, for a period of twelve (12) months, less
all legally required deductions.  “Cause”
shall mean (i) gross negligence or willful misconduct by you in connection with
the performance of your duties that is materially injurious to the Company,
monetarily or otherwise, (ii) the conviction of you by a court of competent
jurisdiction for felony criminal conduct or (iii) material violation by you of
the non-disclosure of confidential information or non-solicitation provisions
of your Business Responsibility Agreement.

 

 

9.               You will be eligible to
participate in the company’s Deferred Compensation Plan.  The details of this Plan will be provided to
you by TBG Financial.

 

10.         To assist you and your family transition to
the Maryland area, the company will provide you with a program of comprehensive
relocation benefits.  You will be
forwarded the Executive Relocation Policy.

 

11.         Your performance will be reviewed annually. Merit
increases will be based on performance and in accordance with the company’s
current policy and procedures.

 

12.         You will be eligible for coverage under our group
health, life insurance and disability plans on the first day of the month
following or coinciding with your start date providing you have submitted a
HIPAA certificate from your previous employer. 
Our health insurance plans provide coverage for most medical, dental and
vision expenses.  Several coverage
options are available allowing you to select the program that best meets your
needs.  Benefit brochures and more
detailed and specific information will be provided to you under separate cover.

 

13.         You will be eligible to participate in our 401K
Plan within 15 days of your hire date. 
This program is administered by Putnam Investments, and you will have an
array of investment options from which to choose.

 

14.         You will be eligible immediately for all Vertis holidays, which are:

 

Thanksgiving Day

Day After Thanksgiving

Christmas Eve Day

Christmas Day

New Year’s Day

Memorial Day

Independence Day

Labor Day

 

As a senior member of management, your personal time off
will be covered under our Executive Leave policy, which provides you up to 4
weeks of compensated leave yearly (leaves cannot be accumulated from year to
year).  Your leaves will need to be
approved by me and coordinated with our company operations.

 

15.         Vertis requires that all employees take and pass a pre-employment
controlled substance screening prior to the beginning of employment. Therefore,
this offer is contingent upon the laboratory results of that test. Details
containing our testing procedures will be provided under separate cover.

 

16.         As appropriate for your position in senior management, this offer is
contingent upon the successful completion and results of comprehensive
reference and background checks.

 

Due to the highly sensitive nature of our business, we
require all professional and or management personnel to sign a Business
Responsibility Agreement.

 

Additionally, federal requirements state that, at the time of your employment, you
must provide documentation establishing your identity and legal right to work
in the United States. Therefore, this offer is contingent on this validation.

 

 

We understand that you are not a party to any employment
contract or agreement which restricts your ability to devote the full range of
your skills and knowledge to Vertis Inc., or your right to engage in
competition with your present employer after the termination of your
employment. If this understanding is incorrect, please notify us
immediately.  Accordingly, our offer is
contingent upon our receipt and review of any such agreement.

 

Furthermore, should you accept this offer; there is no
expressed or implied contract of employment between you and Vertis Inc. You
will be employed for no particular period of time; you have the right to
terminate your employment at any time for any reason, and the company has a
similar right.

 

The terms of this offer of employment extended to you
are outlined in this letter and any additions or other changes must also be in
writing.

 

Please acknowledge your receipt of this offer and
agreement with the terms outlined above by signing the attached copy of this
letter and returning it to me.

 

I am sure you realize that this position offers you the
opportunity to enhance your already considerable skills. I am certain you will
find your new role challenging, rewarding and satisfying. We look forward to
having you on the Vertis, Inc. team.

 

 

Sincerely,

 

 

	
  /S/ Donald E. Roland

  	
   

  
	
   

  
	
   

  
	
  Donald E. Roland

  
	
  President and Chief Executive Officer

  
	
   

  
	
   

  
	
  Acknowledged:   /S/ Joe M.
  Scott

  
	
   

  
	
  Date:EXHIBIT 10.51

 

RESTRICTED STOCK AGREEMENT

 

VERTIS HOLDINGS, INC.

1999 EQUITY AWARD PLAN

 

GRANTEE:  JOE M. SCOTT

 

NO. OF SHARES:    5,000

 

This Agreement
(the “Agreement”), approved by
Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”),
evidences the award of 5,000 restricted shares (each, an “Award
Share,” and collectively, the “Award
Shares”) of the Common Stock of Vertis Holdings, Inc., a
Delaware corporation (the “Company”),
granted to you, Joe M.  Scott, effective
as of  November 1, 2004 (the “Grant Date”), pursuant to the Vertis
Holdings, Inc. 1999 Equity Award Plan (the “Plan”)
and conditioned upon your agreement to the terms described below.  All of the provisions of the Plan are
expressly incorporated into this Agreement.

 

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

 

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

 

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

 

(a)                                  a
Liquidity Event;

(b)                                 your
death; or

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

 

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

 

3.                                       Termination
of Employment or Service.

 

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

 

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

 

4.                                       Restrictions
on Transfer.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

4.3                                 The provisions of Sections 4.1 and
4.2(b) shall not apply to the following transfers; provided, however,
that no transfer of Award Shares pursuant to this Section 4.3 (other than a
transfer to the Company) shall be given effect on the books of the Company
unless and until the Permitted Transferee (as defined below) executes an
agreement in writing with the parties hereto pursuant to which he, she, or it
agrees to be bound by all of the terms and conditions of this Agreement to the
same extent as the parties hereto; provided, further, that no
transfer will be permitted if the Company determines that, in its sole
discretion, such transfer is, or is reasonably likely to be, in violation of
applicable federal or state securities laws:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.                                       Stock
Certificates.  You will be reflected
as the owner of record of the Award Shares as of the Grant Date on the Company’s
books.  The Company will hold the share
certificates for safekeeping, or otherwise retain the Award Shares in
uncertificated book entry form, until the Award Shares become vested and
nonforfeitable

 

2

 

and until they may be
transferred freely without restriction under this Agreement.  Until the Award Shares become vested and
nonforfeitable, any share certificates representing such shares will include a
legend in substantially the following form, in addition to any other legends
that may be required under federal or state securities laws.

 

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

 

THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND THE
OTHER TERMS AND CONDITIONS SET FORTH IN A CERTAIN RESTRICTED STOCK AGREEMENT
DATED NOVEMBER 1, 2004, AS AMENDED FROM TIME TO TIME, BETWEEN THE COMPANY AND
THE REGISTERED OWNER OF THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST), AND
SUCH AGREEMENT IS AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE
SECRETARY OF THE COMPANY.

 

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

 

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

 

7.                                       Tag-Along and Drag-Along Rights.

 

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

 

3

 

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

 

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

 

(ii)                                  subject to Section 7.1(c), you and
your Permitted Transferees shall be entitled to sell up to a Pro Rata Portion
(as defined below) of your Award Shares (the “Tag
Shares”) at the same price and on the same terms as the shares
of Common Stock proposed to be sold by the Sponsor in such Tag-Along Sale in
accordance with the terms set forth in this Section 7.1.

 

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

 

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

 

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

 

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

 

4

 

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

 

(e)                                  If at the termination of the Tag-Along
Response Notice Period you and your Permitted Transferees, if any, shall not
have exercised its or their Tag-Along Right by providing the Sponsor with a
Tag-Along Response Notice, such Executive and such Executive’s Permitted
Transferees shall be deemed to have waived its or their Tag-Along Right with
respect to transferring its or their Tag Shares pursuant to such Tag-Along
Sale.

 

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

 

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

 

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

 

7.4.                              Drag-Along Rights. 
(a)  If the Sponsor and its
Affiliates propose to transfer all or any portion of the shares of Common Stock
beneficially owned by them to a Third Party (a “Drag-Along
Sale”), you and your Permitted Transferees shall, at the Sponsor’s
option and in the Sponsor’s sole discretion, upon your receipt of written
notice from the Sponsor, sell the Drag-Along Portion of your Award Shares to
such Third Party for the same consideration and otherwise on the same terms and
conditions on which the Sponsor and its Affiliates sell their shares of Common
Stock in such Drag-Along Sale (the “Drag-Along Rights”).

 

The “Drag-Along
Portion” of your Award Shares means, at any time, the number of
Award Shares beneficially owned by you and your Permitted Transferees,
multiplied by a fraction, the numerator of which is the number of shares of
Common Stock proposed to be sold on behalf of the Sponsor in such Drag-Along
Sale and the denominator of which is the total number of shares of Common Stock
then beneficially owned by the Sponsor.

 

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

 

5

 

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

 

7.5.                              Other
Responsibilities.  The delivery of any notices to, and the
obtaining of any consents from, any Permitted Transferee with respect to any
provision of this Agreement, including, but not limited to, Sections 7.1 and
7.4, shall be your sole responsibility, unless otherwise agreed to in writing
between such Permitted Transferee and the Sponsor.  Neither the Company nor the Sponsor shall be
liable to any Permitted Transferee for your failure to deliver a notice to, or
obtain a consent from, any Permitted Transferee with respect to any provision
of this Agreement, including, but not limited to, Sections 7.1 and 7.4.

 

7.6.                              Sales
to Principal Beneficial Owners.  The Sponsor and its Affiliates shall not
transfer all or any portion of the shares of Common Stock beneficially owned by
them to a Principal Beneficial Owner, other than an Affiliate of the Sponsor,
unless such Principal Beneficial Owner agrees to be bound by this Section 7 as
if it were the Sponsor.  To the extent
that the Sponsor and its Affiliates transfer any shares of Common Stock to a
Principal Beneficial Owner other than an Affiliate of the Sponsor, you and your
Permitted Transferees agree that such Principal Beneficial Owner shall receive
the benefits set forth in Sections 7.4 and 7.5 hereof as if such Principal
Beneficial Owner were the Sponsor.

 

8.                                       Tax Withholding and Tax Election.

 

8.1 Tax Withholding. The Company shall have the right
to deduct from any compensation or any other payment of any kind (including
upon approval of the Board of Directors of the Company, withholding the
delivery of shares of Commons Stock) due you the amount of any federal, state,
local or foreign taxes required by law to be withheld which arise in connection
with the Award Shares; provided, however, that the value of the shares of
Common Stock withheld may not exceed the statutory minimum withholding amount
required by law. In lieu of such deduction, the Company may require you to make
a cash payment to the Company equal to the amount required to be withheld. If
you do not make such payment when requested, the Company may refuse to issue
any Common Stock certificate under this Agreement until arrangements
satisfactory to the Administrator for such payment have been made.

 

8.2                                 Tax Election. 
You hereby acknowledge that you have been advised by the Company to seek
independent tax advice from your own advisors regarding the availability and
advisability of making an election under Section 83(b) of the Code, and
that any such election, if made, must be made within 30 days of the Grant
Date.  You expressly acknowledge that you
are solely responsible for filing any such Section 83(b) election with the
appropriate governmental authorities, irrespective of the fact that such
election is also delivered to the Company. 
You may not rely on the Company or any of its officers, directors or
employees for tax or legal advice regarding this award.  You acknowledge that you have sought tax and
legal advice from your own advisors regarding this award or have voluntarily
and knowingly foregone such consultation. 
You must pay over to the Company by check the amount of any and all
applicable withholding taxes at the time that you make a Section 83(b)
election.

 

9.                                       Adjustments for Corporate
Transactions and Other Events.

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

250 W. Pratt Street, 18th
Floor

Baltimore, Maryland 21201

Attention:  General Counsel

Fax No.:  (410) 528-9287

 

with a copy to the Sponsor, at the address set forth
below:

 

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

 

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

 

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

c/o Thomas H. Lee Company

75 State
Street, Suite 2600

Boston, MA 02109

Attention: Anthony J. DiNovi

Fax No.:
(617) 227-3514

 

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

 

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

 

21.                                 Severability. 
The invalidity, illegality or unenforceability of one or more of the
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

 

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

 

8

 

GLOSSARY

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

(m)       “Principal Beneficial Owner”
means any of the Sponsor, CLI/THLEF IV Vertis LLC, Evercore Capital Partners
L.P., CLI Associates LLC, J.P. Morgan Partners (BHCA), L.P., Wachovia Capital
Partners, LLC (formerly First Union Capital Partners, LLC), and Cadogan
Capital, LLC and their respective Affiliates and successors.

 

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

 

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

 

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

 

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

 

10

 

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

 

 

	
   

  	
  VERTIS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ John V. Howard

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ Anthony J. DiNovi

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

 

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

 

	
  WITNESS:

  	
  GRANTEE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [ Witness]

  	
   

  	
  /S/ Joe Scott

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
						

 

Enclosure:  Vertis Holdings, Inc. 1999 Equity Award Plan

 

11

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