Document:

Exhibit 10.2

 

MANAGEMENT
SUBSCRIPTION AGREEMENT

 

MANAGEMENT SUBSCRIPTION
AGREEMENT (this “Agreement”), dated as of November 24, 1999, by and among Big
Flower Holdings Inc., a Delaware corporation (the “Company,” which term shall,
in the context of employment with the Company, also refer to any subsidiaries thereof,
Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”) and Dean D. Durbin (the “Purchaser”),
who is presently an officer, member of management or key employee of the
Company.

 

WHEREAS, the Company has
previously issued options (the “BFH Options”) to purchase common stock, par
value $.01 per share, of the Company to certain officers, members of
management, key employees, consultants and advisors of the Company and certain
of its subsidiaries, and the Company may issue to the Purchaser and to certain
other officers, members of management and key employees of the Company and
certain of its subsidiaries, (the “Other Purchasers”) Rights (as hereinafter
defined) to acquire shares of common stock, $.01 par value, of the Company (the
“Common Stock”) upon the acceptance by the Company of an offer (the “Offer”) by
the Purchaser and by Other Purchasers to surrender and exchange such Purchaser’s
or such Other Purchasers’ BFH Options (or a portion thereof), as the case may
be, for such Rights, on the terms and conditions set forth herein;

 

WHEREAS, in addition to the
surrender and exchange of BFH Options for Rights, the Purchaser (and the Other
Purchasers) may be given the opportunity to subscribe for and acquire from the
Company, and the Company will sell to the Purchaser, up to the number of shares
of Common Stock of the Company (the “Shares”) set forth on Schedule I hereto,
on the terms and conditions set forth herein;

 

WHEREAS, to the extent the
Purchaser elects to borrow the Share Purchase Price (as hereinafter defined)
from the Company, upon the Company’s agreement to loan funds to the Purchaser,
the Purchaser will enter into a Promissory Note (the “Note”), the form of which
is attached as Exhibit B hereto, and the Securities Pledge Agreement (as
hereinafter defined); and

 

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

 

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

 

1.                             Certain Definitions.

 

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

 

 

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

 

Allotment. The term “Allotment” shall have the meaning
ascribed to it in Section 7.1.

 

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

 

Closing. The term “Closing” shall have the meaning
ascribed to it in Section 2.2(a).

 

Closing Date. The term “Closing Date” shall have the
meaning ascribed to it in Section 2.2(a).

 

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

 

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

 

Disability. The term “Disability” of the Purchaser
shall mean the inability of the Purchaser to perform substantially Purchaser’s
duties and responsibilities to the Company or any subsidiary of 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 (x) last
day of such three-month period or (y) the day on which the Purchaser submits to
the Company medical evidence of such Disability reasonably satisfactory to the
Company.

 

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

 

Fair Market Value. The term “Fair Market Value” used in
connection with the value of Rights or Shares shall mean, with respect to such
Rights or Shares, the fair market value thereof as determined by the Board of
Directors of the Company in its reasonable discretion after considering any
valuations of the Company or any subsidiary of the Company which have been
received by the Company or any subsidiary of the Company or the trustee of any
benefit plan of the Company or any subsidiary of the Company during the
preceding 12 months; provided, however, that if there is a
Minimum Public Float, the term “Fair Market Value” shall mean (x) the average
of the daily closing prices, or the average of the daily bid and asked prices
(as the case may be), per share of Common Stock for the 20 trading days
immediately preceding the date of termination of the Purchaser’s employment
with the Company multiplied by (y) the number of shares of Common Stock
(including Rights to purchase shares of Common Stock) being purchased and sold.

 

2

 

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

 

Memorandum.
The term “Memorandum” shall have the meaning ascribed to it in Section 2.1.

 

Merger.
The term “Merger” shall mean the Merger of BFH Merger Corp. with and into the
Company as contemplated by the Merger Agreement.

 

Merger
Agreement. The term “Merger Agreement” shall mean that
certain Amended and Restated Agreement and Plan of Merger dated as of October
11, 1999, between BFH Merger Corp. and the Company, as amended and supplemented
from time to time.

 

Minimum Public
Float. The term “Minimum Public Float” shall mean the
circumstances existing when (i) the consummation of one or more public
offerings registered pursuant to the Securities Act of shares of Common Stock
if, upon such consummation, the aggregate number of shares of Common Stock held
by the public 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.

 

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

 

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

 

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

 

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

 

Participants. The
term “Participants” shall have the meaning ascribed to it in Section 7.1.

 

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

 

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

 

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

 

Purchaser’s
Donee’s Estate. The term “Purchaser’s Donee’s Estate”
shall have the meaning ascribed to it in Section 4.2(d).

 

Purchaser’s
Donee. The term “Purchaser’s Donee” shall have the
meaning ascribed to it in Section 4.2(d).

 

Purchaser’s
Estate. The term “Purchaser’s Estate” shall have the
meaning ascribed to it in Section 4.2(b).

 

Purchaser’s
Group. The term “Purchaser’s Group” shall have the
meaning ascribed to it in Section 5.1.

 

Purchaser’s
Trust. The term “Purchaser’s Trust” shall have the
meaning ascribed to it in Section 4.2(c).

 

Retirement.
The term “Retirement” shall mean, with respect to the Purchaser, the Purchaser’s
retirement as an employee of the Company as determined by the applicable policy
of the Company or subsidiary of the Company which employs the Purchaser or, if
no such policy exists, then upon the Purchaser reaching age 65, provided that
the Purchaser has at least three years of continuous service with the Company
or such subsidiary following the Closing Date.

 

Rights.
The term “Rights” shall mean the right to receive Common Stock pursuant to the
terms set forth herein.

 

Rights
Consideration. The term “Rights Consideration” shall
have the meaning ascribed to it in Section 2.1(b).

 

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

 

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

 

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

 

Securities
Pledge Agreement. The term “Securities Pledge
Agreement” shall mean the agreement, substantially in the form of Exhibit B
hereto, or any other agreement to which the Purchaser and the Company are
parties and pursuant to which the Purchaser has pledged the Shares as
collateral for a loan by the Company, the proceeds of which loan are used to fund
the Share Purchase Price.

 

Share Purchase
Price. The term “Share Purchase Price” shall have the
meaning ascribed to it in Section 2.1(a).

 

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

 

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

 

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

 

Tag-A long
Transfer. The term “Tag-Along Transfer” shall have the
meaning ascribed to it in Section 7.1.

 

Third Party.
The term “Third Party” shall mean any person or entity excluding each of the
following: (a) the Purchaser, the Other Purchasers and their respective
Permitted Transferees; (b) the Company, and its subsidiaries or affiliates; and
(c) the principal beneficial owners of the Company and their respective
affiliates.

 

Transfer.
The term “Transfer,” when used with respect to the Shares, the Rights or shares
of Common Stock issuable upon exercise of Rights, shall mean any sale,
transfer, assignment, pledge, hypothecation, encumbrance or other disposition
thereof.

 

Transfer Date.
The term “Transfer Date” shall have the meaning ascribed to it in Section 7.1.

 

Trust. The term “Trust”
shall have the meaning ascribed to it in Section 2.1.

 

Violation. The term “Violation”
shall have the meaning ascribed to it in Section 6.1.

 

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2.         Purchase
of Shares and Grant of Rights.

 

2.1       (a)           Purchase of Shares. Upon the terms and subject to the
conditions set forth in this Agreement and, if applicable, the Note and the
Securities Pledge Agreement, the Purchaser, in reliance upon (i) this
Agreement, (ii) the Confidential Private Placement Memorandum, dated November
12, 1999, and the attachments
thereto (the “Memorandum”), relating to the issuance and sale of the Shares and
the Rights, and (iii) other information provided to the Purchaser upon such
Purchaser’s request (all of which the Purchaser has received and reviewed),
hereby subscribes for and agrees to purchase, and the Company hereby agrees to
issue and sell to the Purchaser, on the Closing Date, that number of Shares set
forth under the column “Shares” on Schedule I hereto (which number may be zero;
if such number is zero, then provisions of this Section 2.1 (a) shall be of no
force and effect) at a price of $31.50 per Share (the aggregate amount to be
received by the Company for such Shares is referred to herein as the “Share
Purchase Price”). The Share Purchase Price will be payable in cash in full at
the Closing. The Purchaser acknowledges and agrees that the Shares, to the
extent pledged as collateral under the Securities Pledge Agreement, will remain
in the possession of the Company until the conditions contained in the
Securities Pledge Agreement have been satisfied or waived.

 

(b)        Grant of Rights. Upon the terms and subject to the
conditions set forth in this Agreement, the Purchaser, in reliance upon (i)
this Agreement, (ii) the Memorandum, (iii) the Offer to Surrender, the form of
which is attached hereto as Exhibit A, and (iv) other information provided to
the Purchaser upon such Purchaser’s request (all of which the Purchaser has
received and reviewed), hereby irrevocably Offers to surrender and exchange the
number of Purchaser’s BFH Options (or portions thereof) as set forth under the
column “BFH Options Surrendered” on Schedule I hereto (the “Rights
Consideration”; this number of BFH Options may be zero; if such number is zero,
then the provisions of this Section 2. l(b) shall be of no force and effect) for
that number of Rights as determined in accordance with the Offer to Surrender.
Purchaser acknowledges and agrees that such Offer must be accepted by the
Company in compliance with the terms set forth in the Offer to Surrender for
the Offer to be effective. Each Right shall entitle the Purchaser to one share
of Common Stock upon the occurrence of a Liquidation Event. The Purchaser
acknowledges and agrees that the Company shall issue that number of shares of
Common Stock (as determined by the Company in accordance with Section 2.2
hereof) equal to the Aggregate Spread (as defined in the Offer to Surrender) of
the BFH Options surrendered, to an irrevocable trust (the “Trust”), which
assets will be subject to the claims of the Company’s creditors. The Purchaser
shall have no security interest in the Trust or its assets and shall have the
status of an unsecured creditor of the Company with respect to the Company’s
obligation to issue the shares of Common Stock to the Purchaser upon the
occurrence of a Liquidation Event. The shares of Common Stock deposited in the
Trust will be issued and outstanding as of the Closing Date, and will be
beneficially owned by the Trust. Until the occurrence of a Liquidation Event,
all actions with respect to the shares of Common Stock deposited in the Trust,
including, without limitation, the voting thereof, will be performed solely by
the Trust, without any communication with, notice to, or approval of the holder
of the Rights.

 

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(c)        Limitation
on the Company’s Obligations. Notwithstanding the foregoing, the Company
shall have no obligation to issue, sell or deliver any Rights or Shares to the Purchaser
if (i) the Purchaser is not a full-time employee of the Company on the Closing
Date, (ii) the Purchaser is a resident of a jurisdiction in which such
issuance, sale or delivery to such Purchaser would constitute a violation of
the securities or “blue sky” laws of such jurisdiction or (iii) any of the
representations or warranties of the Purchaser set forth in Section 3 of this Agreement
are not true and correct in all respects as of the date hereof and as of the
Closing Date or the Purchaser shall have failed to perform and comply with in
full all of the covenants and agreements contained in this Agreement and, if
applicable, the Securities Pledge Agreement that are required to be performed
or complied with by the Purchaser at or prior to the Closing Date.

 

(d)        Redemption
Upon Exchange Offer. At any time that the Company offers to the Purchaser
to exchange the Securities for securities in the subsidiary by which the Purchaser
is employed, the Purchaser shall have the right, on one occasion, during the
10-day period after commencement of such offer to exchange, to sell to the
Company any or all of the Rights and Shares then held by the Purchaser or the
Purchaser’s Group at a price per Security equal to (x) the Aggregate Spread (as
defined in the Offer) of the BFH Options (or portion thereof) surrendered
pursuant to the Offer divided by the number of Rights originally subscribed for
under this Agreement, in the case of the Rights, and (y) $31.50, in the case of
Shares, The Company shall be required to purchase such Rights and Shares at
such price, subject to Section 6 hereof.

 

2.2         The
Closing. (a) The closing (the “Closing”) of the purchase and sale of the
Shares and the surrender and exchange of BFH Options for Rights shall take
place at the offices of the Company on any business day selected by the Company
following the Effective Time (as defined in the Merger Agreement), as more
fully described in the Memorandum, or at such other time and place as the
parties may agree (the “Closing Date”); provided, however, that the Company
shall have the right to terminate this Agreement at any time prior to the
Closing. If the Company terminates this Agreement prior to the Closing, the
Company shall promptly notify the Purchaser and shall return to the Purchaser
any funds tendered as payment of the Share Purchase Price without interest.

 

(b)          At the Closing (if the
Purchaser is purchasing Shares), the Company and the Purchaser shall execute
and deliver, if applicable, the Securities Pledge Agreement, and the Company
shall deliver certificates representing the number of Shares set forth in
Section 2.1 (a) hereof to the Purchaser (or the Company shall retain or
otherwise deliver such certificates in accordance with the terms of the
Securities Pledge Agreement), and the Purchaser shall deliver to the Company a
certified or bank cashier’s check payable to the Company in the amount of the Share
Purchase Price and, if applicable, the Note.

 

(c)           At the Closing (if the
Purchaser is surrendering and exchanging BFH Options for Rights), upon
acceptance by the Company of the Purchaser’s Offer, the Company shall deliver
to the Trust that number of shares of Common Stock equal to the Aggregate
Spread as determined in accordance with the Offer to Surrender and the
Purchaser shall deliver to the

 

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Company the BFH Options as set forth in the
Offer to Surrender (previously delivered to the Company) in satisfaction of the
Rights Consideration.

 

2.3       Representations
and Warranties of the Company. The Company represents and warrants to the
Purchaser as follows:

 

(a)         the
Company has full corporate power and authority to execute and deliver this
Agreement and the Securities Pledge Agreement and to perform its obligations hereunder
and thereunder, and upon the Closing Date, this Agreement and the Securities
Pledge Agreement will be, duly authorized, executed and delivered by the
Company and when executed and delivered by the Purchaser, this Agreement and
the Securities Pledge Agreement will be valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, liquidation, reorganization, moratorium and other laws affecting
the rights of creditors generally and subject to the exercise of judicial
discretion in accordance with general principles of equity (whether applied by
a court of law or equity);

 

(b)        the
Securities to be issued to the Purchaser, when issued in accordance with this
Agreement will be duly and validly issued and fully paid and nonassessable; and

 

(c)         the
execution, delivery and performance of this Agreement and the Securities Pledge
Agreement by the Company will not conflict with the Company’s Certificate of Incorporation
or Bylaws or result in any material breach of any terms or provisions of, or constitute
a material default under, any material contract, agreement or instrument to
which the Company is a party or by which the Company is bound.

 

2.4         Representations
and Warranties of the Purchaser. The Purchaser represents and warrants to
the Company as follows:

 

(a)          the
Purchaser has all requisite power and authority to enter into this Agreement
and, if applicable, the Offer to Surrender, the Note and the Securities Pledge
Agreement, and to perform the obligations required to be performed by the
Purchaser hereunder and thereunder, and upon the Closing Date, this Agreement
and, if applicable, the Offer to Surrender, the Note and the Securities Pledge
Agreement, will be, duly executed and delivered by the Purchaser, and, the
Offer to Surrender is, and, when executed and delivered by the Company, this
Agreement, the Note and the Securities Pledge Agreement will be, valid and
binding obligations of the Purchaser enforceable against the Purchaser in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, liquidation, reorganization,
moratorium and other laws affecting the rights of creditors generally and
subject to the exercise of judicial discretion in accordance with general principles
of equity (whether applied by a court of law or equity);

 

8

 

(b)       the
Purchaser has received and, by execution hereof, has accepted the offer with
respect to the Securities in the state indicated on Schedule I; the address set
forth on Schedule I for the Purchaser is the address where the Purchaser is a
resident and domiciliary (not a temporary or transient resident); and the
Purchaser is a citizen of the United States or such other jurisdiction as set
forth on Schedule I and is not acquiring the Securities as an agent or otherwise
for any other person; and

 

(c)       if
the purchaser is a holder of BFH Options, the Purchaser has good and marketable
title to the BFH Options, which are free and clear of any and all liens, claims
or encumbrances of any nature whatsoever (whether absolute, accrued, contingent
or otherwise), and the BFH Options have been duly authorized for transfer as
contemplated in this Agreement and the Offer to Surrender.

 

3.           Investment
Representations of the Purchaser.

 

3.1        Investment
Intent. The Purchaser hereby represents and warrants that the Purchaser is
acquiring the Securities for investment solely for the Purchaser’s own account
and not with a view to, or for resale in connection with, the distribution or
other disposition thereof.

 

3.2        Additional
Investment Representations. The Purchaser further acknowledges and
represents and warrants that:

 

(a)          no Federal or state
agency has passed upon the Securities or made any finding or determination as
to the fairness of this investment;

 

(b)          the Purchaser
understands that the Securities are a speculative investment which involve a
high degree of risk of loss of the Purchaser’s investment therein, there are
substantial restrictions on the transferability of the Securities, and, on the
Closing Date and for an indefinite period following the Closing, there will be
no public market for the Securities and, accordingly, it may not be possible
for the Purchaser to liquidate the Purchaser’s investment in case of emergency,
if at all;

 

(c)          the Purchaser has
received and carefully reviewed (i) this Agreement, (ii) the Memorandum and
(iii) other information provided to the Purchaser upon such Purchaser’s
request, and the Purchaser understands and has taken cognizance of the risks
related to the purchase of the Securities, and no representations or warranties
have been made to the Purchaser concerning the Securities or the Company and
its prospects, subsidiaries or other matters except as set forth in this Agreement
and the Memorandum;

 

(d)          the Purchaser has been
given the opportunity to examine all documents and to ask questions of, and to
receive answers from, the Company concerning the terms and conditions of the
purchase of the Securities and to obtain any additional information requested
by the Purchaser;

 

9

 

(e)          the Purchaser is an
officer, member of management or key employee of the Company or one of its
subsidiaries and as such has a high level of familiarity with the business,
operations, financial condition and prospects of the Company and its
subsidiaries; and

 

(f)       the
Purchaser has sufficient available financial resources to provide adequately
for the Purchaser’s needs currently and in the future, including possible
personal contingencies, and can bear the economic risk of a complete loss of
the Purchaser’s investment hereunder (including the Note) without materially
affecting the Purchaser’s financial condition.

 

4.         Restrictions
on Transfer.

 

4.1       General
Restrictions on Transfer. (a) The Purchaser agrees that until a Liquidation
Event occurs neither the Purchaser nor any of the Purchaser’s Permitted
Transferees will Transfer any Rights or any Shares except as permitted by
Sections 4.2 or 5 hereof. Prior to recognizing or permitting any proposed
Transfer, the Company may require the Purchaser or any of the Purchaser’s
Permitted Transferees to deliver such opinions of counsel and other documents
as the Company deems reasonably necessary in connection with such proposed
Transfer. No Transfer of Shares or Rights in violation of this Agreement or the
Securities Pledge Agreement shall be made or recorded on the books of the
Company and any such Transfer shall be void and of no effect.

 

(b) The
provisions of this Sections 4.1 shall not apply to any Transfers of Common
Stock (i) in a registered public offering, (ii) in an open market sale pursuant
to Rule 144 under the Securities Act or (iii) after a Liquidation Event occurs.

 

4.2         Certain
Permitted Transfers of Securities. Notwithstanding Section 4.1 hereof, any
of the following Transfers of Securities shall be deemed to be in compliance
with this Agreement and no opinion of counsel as to the availability of an
exemption under the Securities Act will be required in connection therewith; provided,
however, that no Transfer of Securities pursuant to this Section 4.2 (other
than a Transfer to the Company) shall be given effect on the books of the
Company unless and until such Permitted Transferee agrees in writing with the
Company to become bound by all the terms of this Agreement; and provided,
further, that any such Transfer must comply with the terms of the
Securities Pledge Agreement, if applicable.

 

(a)          a Transfer made to the
Company, any subsidiary of the Company or any of their respective affiliates;

 

(b)          a Transfer upon the
death of the Purchaser to the Purchaser’s executors, administrators,
testamentary trustees, legatees or beneficiaries (the “Purchaser’s Estate”);

 

10

 

(c)       a
Transfer made in compliance with federal and all applicable state securities
laws to a trust, the beneficiaries of which include only the Purchaser and the Purchaser’s
spouse, siblings, or direct lineal ancestors or descendants (a “Purchaser’s
Trust”);

 

(d)          a Transfer made as a
gift to the Purchaser’s spouse or lineal descendants (a “Purchaser’s Donee”)
and, upon the death of a Purchaser’s Donee, to his or her executors,
administrators, testamentary trustees, legatees or beneficiaries (a “Purchaser’s
Donee’s Estate”); and

 

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

 

Each of the
foregoing persons described in subclauses (a) through (e) above are referred to
herein as a “Permitted Transferee.” Any Permitted Transferee may further
Transfer any Securities to any other Permitted Transferee of the Purchaser
(including Transfers back to the Purchaser); provided that no such
Transfer shall be made to a Permitted Transferee (or the Purchaser) hereunder
(whether by the Purchaser or another Permitted Transferee) unless and until
such Permitted Transferee (or, in the event of Transfers back to the Purchaser,
the Purchaser) shall agree in writing, in form and substance satisfactory to
the Company, to become bound by all the terms of this Agreement.

 

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

 

4.4          Discharge of
Indebtedness upon Transfer of Common Stock. Any Transfer of Shares by the
Purchaser, any Permitted Transferee of the Purchaser or any other person (other
than the Company or any of its respective subsidiaries or affiliates) who has acquired
Shares, directly or indirectly, from the Purchaser shall be void and of no
effect unless and until all outstanding indebtedness (including, but not
limited to, the obligations under or relating to the Note and the Securities
Pledge Agreement) of the Purchaser and the Purchaser’s Permitted Transferees
to, or guaranteed by, the Company or any of its subsidiaries or affiliates (including
interest accrued but unpaid thereon and all other fees, expenses and penalties
in connection therewith) shall have been paid and discharged in full and
evidence of same, reasonably acceptable to the Company, is presented by the
Purchaser to the Company.

 

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

 

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THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS
SUCH
TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF A MANAGEMENT  SUBSCRIPTION AGREEMENT
DATED AS OF NOVEMBER      , 1999 (A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WHICH WILL BE MAILED TO A
STOCKHOLDER WITHOUT CHARGE PROMPTLY AFTER RECEIPT BY THE COMPANY OF A WRITTEN
REQUEST THEREFOR FROM SUCH STOCKHOLDER).

 

THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION THEREUNDER OR
EXEMPTION THEREFROM.

 

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

 

5.           Certain Sales Upon Termination of Employment.

 

5.1        Put. (a) If the Purchaser’s employment with the Company is terminated by
either the Purchaser or the Company due to Retirement, Disability or death of
the Purchaser, and there is no Minimum Public Float at the time of such
Retirement, Disability or death, each of the Purchaser and the Purchaser’s
Permitted Transferees (hereinafter sometimes collectively referred to as the “Purchaser’s
Group”) shall have the right (subject to Section 6 hereof) for 90 days after
the date of termination of such employment, to sell to the Company, on one
occasion for the Purchaser’s Group, any or all of the Rights and the Shares
then held by the Purchaser’s Group at the price set forth in Section 5.3 and
the Company shall be required to purchase (subject to Section 6 hereof) such
Rights and Shares at such price.

 

(b)          Each member of the Purchaser’s Group who
desires to sell any or all of its Shares or Rights shall, not later than 90
days after the date of termination of employment, send to the Company written
notice of the Purchaser’s Group’s intention to sell Shares or Rights pursuant
to this Section 5.1, specifying the number of Shares and Rights to be sold. The
closing of the purchase shall take place at the principal office of the Company
within 10 days after the giving of such notice as designated in writing by the
Company.

 

(c)          If the Purchaser or the Purchaser’s Permitted
Transferees do not exercise the put right pursuant to this Section 5.1, then
upon expiration of such 90-day period,

 

12

 

the Company shall have a call right with
respect to such Shares and Rights held by the Purchaser and the Purchaser’s
Group for a period of 30 days exercisable upon notice to the Purchaser or the
Purchaser’s Group that the Closing will take place at the principal office of
the Company within 10 days after the giving of such notice.

 

5.2      Call.
(a) Subject to Section 5.3, if the Purchaser’s employment with the Company is
terminated by either the Purchaser or the Company for any reason other than
Retirement, Disability or death of the Purchaser, the Company shall have the
right and option to purchase, for 90 days after the date of termination of such
employment, any or all of the Rights and the Shares then held by the Purchaser
and the Purchaser’s Group, at the price set forth in Section 5.3.

 

(b)          If the Company desires
to exercise its option to purchase any Shares or Rights pursuant to this
Section 5.2, the Company shall, not later than 90 days after the date of such
termination of employment, send to the Purchaser written notice of its
intention to purchase Shares and Rights pursuant to this Section 5.2,
specifying the number of Shares and Rights to be purchased. The closing of the
purchase shall take place at the principal office of the Company within 10 days
after the giving of such notice.

 

5.3         Purchase
Price to Be Paid by Company. The purchase price to be paid by the Company
upon exercise of a put or call right as set forth in Section 5.1 or 5.2 shall
be the Fair Market Value of such Rights or Shares determined as of the date the
notice of such exercise is first given; provided, however, that if the Employee
is terminated for cause (as defined in the Purchaser’s employment agreement
with the Company in effect at such time or as determined by the board of
directors of the entity by which the Purchaser is employed), then the purchase
price to be paid by the Company under Section 5.2 shall be the lesser of the
Fair Market Value and the original cost of such Securities paid by the
Purchaser hereunder (i.e.. the Rights Consideration in the case of Rights and
the Share Purchase Price in the case of Shares).

 

5.4         Obligation
to Sell. If there is more than one member of the Purchaser’s Group, the
failure of any one member thereof to perform its obligations hereunder shall
not excuse or affect the obligations of any other member thereof, and the
closing of the purchases from such other members by the Company shall not
excuse, or constitute a waiver of its rights against, the defaulting member.

 

6.            Certain
Limitations on the Company’s Obligations to Purchase Common Stock or Rights.

 

6.1          Limitation
on Purchases. (a) The Company shall not be obligated to purchase any Shares
or any Rights at any time pursuant to Section 2.1(d), 4 or 5 hereof, regardless
of whether it has delivered a. notice
of its election to purchase any such Shares or Rights, to the extent that the
purchase of such Shares or Rights (together with any other purchases of Common
Stock, Other Rights or other securities of the Company pursuant to Section 2,1
(d), 4 or 5 hereof, or pursuant to the Other Purchasers’ Agreements, of which
the Company has at such time been given or has given notice) would (i) conflict
with or result in a

 

13

 

violation of, any law, rule, regulation, policy,
guideline, order, writ, injunction, decree or judgment promulgated or entered
by any federal, state, local or foreign court or governmental authority
applicable to the Company or any of its subsidiaries or any of its or their
properties or assets or (ii) result in a default (or require the consent of any
Third Party in order to avoid a default) under any material contract, deed,
mortgage, trust, financing or credit agreement, arrangement or agreement of the
Company or any of its subsidiaries (any of such results described in (i) or
(ii) being sometimes hereinafter referred to as a “Violation”). The Company
shall purchase such Shares or Rights as promptly as practicable upon
determining that such purchase would not be a Violation.

 

(b)       If at any time consummation of all purchases
by the Company of Shares, Rights, Other Rights and other securities of the
Company pursuant to Section 2.1(d), 4 or 5 hereof, or pursuant to the Other
Purchasers’ Agreements, is prohibited pursuant to Section 6.1 (a), then the
Company shall purchase from the members of the Purchaser’s Group desiring or
obligated to sell to the Company the Shares or Rights pursuant to this
Agreement and from the other persons having the right or obligation to sell the
Shares, the Rights, Other Rights and other securities of the Company pursuant
to this Agreement, or pursuant to the Other Purchasers’ Agreements, the maximum
number of Shares and Rights, Other Rights and other securities which it is able
to purchase without a Violation resulting. If any Violation would result from
the purchase of any Shares, Rights, Other Rights or other securities of the
Company, the Board of Directors of the Company, in its sole discretion, may
determine priorities among members of the Purchaser’s Group and the other
persons having the right or obligation to sell Shares, Rights, Other Rights or
other securities of the Company, as the case may be, taking into account
contractual obligations and relative hardship and such other factors as it
deems relevant, and, without limiting the generality of the foregoing, may
purchase from any such member or person less than all the Shares, Rights, Other
Rights or other securities of the Company which such member or person has
elected or is obligated to sell to the Company or the Company is obligated to
purchase.

 

(c)         Any Shares or Rights which the Company is
obligated to purchase pursuant to Section 2.1(d), 4 or 5, but which
in accordance with Section 6.1 (a) or Section 6.2 hereof are not purchased at
the applicable time provided in Section 2.1(d), 4 or 5 hereof, shall be
purchased by the Company on the tenth day after such date or dates that the
Company learns that (after taking into account any purchases of Shares, Rights,
other Rights or other securities of the Company, to be made at such time
pursuant to the Other Purchasers’ Agreements or otherwise) it is no longer
permitted to defer purchasing such securities under Section 6.1 (a) hereof at
the relevant purchase price set forth in Section 2.1(d), 4 or 5 hereof, and the
Company shall give the Purchaser seven days prior notice of any such purchase.

 

6.2          Payment for Common Stock or Rights. The purchase price of Shares or Rights
purchased by the Company pursuant to Section 4 or 5 hereof will be paid (i)
first by the cancellation of indebtedness owing from the Purchaser or his
Permitted Transferees to the Company or any of its subsidiaries or affiliates
and interest accrued but unpaid thereon (so long as such indebtedness is
evidenced by a writing signed by the Purchaser or his Permitted

 

14

 

Transferees) and (ii) then, to the extent such
payment would not result in a Violation, by the Company’s delivery of a bank
cashier’s check or certified check for the remainder of the purchase price, if
any. The Company shall have the right set forth in the preceding clause (i)
whether or not the member of the Purchaser’s Group selling such Shares or
Rights is an obligor under any of the indebtedness referred to therein.

 

7.         Tag-Alone Rights.

 

7.1       Tag-Along Rights. After the occurrence of a Liquidation
Event, subject to Section 7.2, the Sponsor agrees that the Purchaser shall be
afforded the opportunity to participate in sales by the Sponsor to a Third
Party of all or substantially all of the shares of Common Stock of the Company
then held by the Sponsor and its affiliates (any such sale, a “Tag-Along
Transfer”). As soon as practicable after the time any Tag-Along Transfer is
proposed, but in any event at least 20 days prior to the Transfer Date (as
defined below), the Sponsor shall give written notice thereof to the Purchaser
identifying the proposed purchaser and stating the number of shares of Common
Stock proposed to be sold, the proposed offering price, the proposed date of
such Tag-Along Transfer (the “Transfer Date”) and any written material terms or
conditions of the proposed Tag-Along Transfer. If the Purchaser desires to
participate in the Tag-Along Transfer, the Purchaser shall give written notice
(the “Tag-Along Notice”) to the Sponsor not less than 10 days prior to the
Transfer Date setting forth the number of Shares that the Purchaser desires to
include in the Tag-Along Transfer. Failure to give the Tag-Along Notice at
least 10 days prior to the Transfer Date shall constitute an irrevocable
election by the Purchaser not to participate in the Tag-Along Transfer. The
total number of shares of Common Stock which the Sponsor is to include in the
Tag-Along Transfer (the “Allotment”) shall be apportioned among the Sponsor,
the Purchaser if he gives the Tag-Along Notice at least 10 days prior to the
Transfer Date, Other Purchasers giving Tag-Along Notices during such 10-day
period pursuant to Other Purchasers’ Agreements and any other persons entitled
to give (and giving on a timely basis) Tag-Along Notices pursuant to agreements
substantially similar to this Agreement (collectively, the “Participants”) in
accordance with the number of issued and outstanding Shares of Common Stock
each Participant holds at such time (without regard to any shares of Common
Stock issuable upon exercise of options, warrants, Rights or other rights of
any kind); provided that in no event will the Sponsor’s portion of the
Allotment be less than the number of shares of Common Stock constituting the
Allotment less the number of issued and outstanding shares which the
Participants (other than the Sponsor) have included in their Tag-Along Notices
(without regard to any shares issuable upon exercise of options, warrants,
Rights or other rights of any kind).

 

7.2          No Rights Following Termination of Employment. Notwithstanding any other provision of this
Agreement, the Purchaser shall have no rights under Section 7.1 following the
termination of the Purchaser’s employment with the Company or any of its
subsidiaries for any reason including (without limitation) death, Disability or
Retirement.

 

7.3          No Sponsor Liability. Neither the Sponsor nor any of its
affiliates shall have any personal liability to the Purchaser or any of the
Purchaser’s Permitted Transferees or the

 

15

 

Company or any of its subsidiaries under any
provision of this Agreement, including (without limitation) Section 7.1.

 

7.4     Termination of Tag-Along Rights. In addition to the provisions of Section 7.2, the provisions of Section 7.1 shall
not be applicable if (x) the Common Stock becomes publicly traded and there
exists a Minimum Public Float, (y) the Purchaser ceases to own Shares or Rights
or (z) the sale by the Sponsor involves less than all or substantially all of
the Common Stock owned by the Sponsor at the time of sale.

 

8.         Miscellaneous.

 

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

 

8.2        Binding Effect. The
provisions of this Agreement shall be binding upon the parties hereto and their
respective heirs, legal representatives, successors and assigns; provided,
however. that the Purchaser and the Purchaser’s Permitted Transferees shall
not assign any rights hereunder except as specifically permitted by the terms
of this Agreement. The Company may assign its rights under the put contained in
Section 5.1 or the call contained in Section 5.2 to any of its subsidiaries or
affiliates, or to the principal beneficial owners of the Company or any of
their Permitted Transferees or affiliates, provided that no such assignment shall
release the Company from its obligations thereunder. Neither this Agreement nor
any purchase or sale of Securities pursuant hereto shall create, or be
construed or deemed to create, any right to employment or continued employment
in favor of the Purchaser or any other person by the Company or any subsidiary
or affiliate of the Company.

 

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

 

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

 

16

 

8.5      Amendment.
This Agreement may be amended only by a written instrument duly signed by the
Company and the Purchaser.

 

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

 

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

 

3 East 54th Street 

New York, New York 10022 

Attention: General Counsel 

Fax No.:   
(212)521-1640

 

(b)        If
to the Purchaser or any of the Purchaser’s Permitted Transferees, to the
Purchaser at the address set forth on Schedule I hereto;

 

(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: General Counsel 

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).

 

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

 

8.8         Consent to Service of
Process. The Purchaser hereby irrevocably submits to the jurisdiction of
any New York state court sitting in the City of New York or any federal court
sitting in the City of New York in respect of any suit, action or proceeding
arising out of or relating to this Agreement, and irrevocably accepts for the
Purchaser and in respect of the Purchaser’s property, generally and
unconditionally, jurisdiction of the aforesaid courts. The Purchaser
irrevocably waives, to the fullest extent the Purchaser may effectively do so
under applicable law, trial by jury and any objection that the Purchaser may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an

 

17

 

inconvenient forum. Nothing herein shall
affect the right of the Company to serve process in any manner permitted by law
or to commence legal proceedings or otherwise proceed against Purchaser in any
other jurisdiction.

 

8.9       Integration.
This Agreement and the documents referred to herein or delivered pursuant
hereto which form a part hereof contain the entire understanding of the parties
with respect to the subject matter hereof. There are no restrictions,
agreements, promises, representations, warranties, conditions, covenants or
undertakings with respect to the subject matter hereof other than those
expressly set forth herein or in the Offer to Surrender. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter other than such agreements and understandings set
forth in the Offer to Surrender, the Note and the Securities Pledge Agreement.

 

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

 

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

 

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

 

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

 

8.14        Specific Performance.
Each of the parties hereto acknowledges and agrees that in the event of any
breach of this Agreement, the non-breaching party would be irreparably

 

18

 

harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto will waive the defense in any action
for specific performance that a remedy at law would be adequate and that the
parties hereto, in addition to any other remedy to which they may be entitled
at law or in equity, shall be entitled to compel specific performance of this
Agreement. The parties hereto consent to personal jurisdiction in any such
action brought in any such court and to service of process upon it or him in
the manner set forth in Section 8.6 hereof.

 

19

 

IN WITNESS WHEREOF, the parties have executed this Agreement as
of the dates set forth herein.

 

	
   

  	
  THE
  PURCHASER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Dean D. Durbin

  	
   

  
	
   

  	
  Name:
  

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Telephone
  No.

  	
   

  	
   

  
	
   

  	
  Social
  Security No.

  	
   

  	
   

  
	
  Accepted
  and Agreed to 

  	
   

  	
   

  
	
  as
  of November    , 1999

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE
  COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Big
  Flower Holdings, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For
  Purposes of Section 7 only 

  	
   

  	
   

  
	
  Accepted
  and Agreed to as of 

  	
   

  	
   

  
	
  November     , 1999

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  THE
  SPONSOR:

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

[Signature page to Big Flower Holdings, Inc. Management Subscription
Agreement]

 

20

 

SCHEDULE I

 

	
  Name and Address of

  Purchaser

  	
   

  	
  BFH Options

  Surrendered

  	
   

  	
  Rights

  	
   

  	
  Shares

  	
   

  
	
  Dean D.
  Durbin

  	
   

  	
  25,000

  	
   

  	
  6,002

  	
   

  	
  4,540

  	
   

  
	
   

  	
   

  	
  @

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
  23.9375

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]