Document:

Exhibit 10.37

 

RESTRICTED STOCK AGREEMENT

 

VERTIS
HOLDINGS, INC.

1999 EQUITY AWARD PLAN

 

GRANTEE:  DOUG MANN

 

NO. OF
SHARES:  7,500

 

This Agreement (the “Agreement”),
approved by Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”),
evidences the award of  7,500 restricted
shares (each, an “Award Share,” and
collectively, the “Award Shares”) of the Common
Stock of Vertis Holdings, Inc., a Delaware corporation (the “Company”), granted to you, Doug
Mann, effective as of   February 23,
2007 (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.

 

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 

 

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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 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 FEBRUARY 23, 2007 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.

 

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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.

 

(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 

 

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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.

 

(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 

 

5

 

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.

 

(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 

 

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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.

 

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.

 

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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.

 

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:

 

8

 

(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.

 

9

 

GLOSSARY

 

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

 

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

 

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

 

(d)   “Cause”
generally means your insubordination, dishonesty, incompetence, moral
turpitude, other misconduct of any kind or the refusal to perform your duties
or responsibilities for any reason other than illness or incapacity, in each
case as determined by the Board in good faith. 
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.

 

10

 

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

 

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

 

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

 

(o)   “Service”
means your employment or other service relationship with the Company and its
Affiliates.  Service will be considered
to have ceased with the Company if, after a sale, merger or other corporate
transaction, the trade, business or entity with which you are employed 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.

 

11

 

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

 

	
   

  	
  VERTIS HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ John V. Howard Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: 

  	
  February 28, 2007

  

 

	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Anthony DiNovi

  
	
   

  	
   

  	
   

  
	
   

  	
  Date: 

  	
  March 7, 2007

  

 

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:   Doug Mann

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Dolores Selby

  	
   

  	
  /s/ Doug Mann

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
  February 23, 2007

  

 

Enclosure:  Vertis Holdings, Inc. 1999 Equity Award
Plan

 

12

 

STOCK POWER

 

                FOR
VALUE RECEIVED, the undersigned, Doug Mann, hereby sells, assigns and transfers
unto Vertis Holdings, Inc., a Delaware corporation (the “Company”), or its
successor, 7,500 shares of common stock, par value $0.01 per share, of the
Company standing in my name on the books of the Company, represented by
Certificate No. ____________, which is attached hereto, and hereby
irrevocably constitutes and appoints
______________________________________________________ as my attorney-in-fact
to transfer the said stock on the books of the Company with full power of
substitution in the premises.

 

WITNESS:

 

___________________________                                 ____________________________________

 

                                                                                                                Dated:
______________________________

 

 

IMPORTANT TAX INFORMATION

 

INSTRUCTIONS REGARDING SECTION 83(b) ELECTIONS

 

1.              An 83(b) Election is irrevocable.

 

2.              If you want to make an 83(b) Election, an 83(b) Election Form must
be filed with the Internal Revenue Service within 30 days of the date
the Restricted Stock is granted to you; no exceptions to this rule are
made.

 

3.              You must provide a copy of the 83(b) Election Form to the
Corporate Secretary or other designated officer of the Company.  This copy should be provided to the Company
at the same time that you file your 83(b) Election Form with the
Internal Revenue Service. In addition, you must pay over to the Company the
amount of the withholding taxes by check at the time or your 83(b) Election.

 

4.              In addition to making the filing under Item 2 above, you must attach a
copy of your 83(b) Election Form to your tax return for the taxable
year in which you received the Restricted Stock.

 

5.              If you make an 83(b) Election and later forfeit the Restricted
Stock, you will not be entitled to a refund of any tax you paid as a result of
having made the 83(b) Election.  You
may, however, recognize a capital loss upon forfeiture.

 

6.              You must consult your personal tax advisor before making an 83(b) Election.  The attached election forms are intended as
samples only, they must be tailored to your circumstances and may not be relied
upon without consultation with a personal tax advisor.

 

 

SECTION 83(b) ELECTION FORM

 

Election Pursuant to Section 83(b) of
the Internal Revenue Code

to Include Property in Gross
Income in Year of Transfer

 

The undersigned hereby makes
an election pursuant to Section 83(b) of the Internal Revenue Code
with respect to the property described below and supplies the following
information in accordance with the regulations promulgated thereunder:

 

1.             The name, address, and taxpayer identification number of
the undersigned are:

 

                ______________________________

                ______________________________

                ______________________________

 

                ___-__-____

 

2.             The property with respect to which the election is made
is _____________ shares of Common Stock, par value $.01 per share, of Vertis
Holdings, Inc., a Delaware corporation (the “Company”).

 

3.             The date on which the property was transferred was
________________, the date on which the taxpayer received the property pursuant
to a grant of restricted stock.

 

4.             The taxable year to which this election relates is
calendar year 2007.

 

5.             The property is subject to restrictions in that the
property is not transferable and is subject to a substantial risk of forfeiture
until the taxpayer vests in the property. 
The taxpayer will vest in _____ shares of Common Stock (the “Shares”)
immediately prior to the first to occur of (i) a “liquidity event,” (ii) the
taxpayer’s death, or (iii) the taxpayer suffering a “disability” (as each
is defined in the restricted stock agreement evidencing the Shares), provided
the taxpayer is in the employ of the Company when the event triggering vesting
occurs.

 

6.             The fair market value at the time of transfer
(determined without regard to any restrictions other than restrictions which by
their terms will never lapse) of the property with respect to which this
election is being made is $________ per share; with a cumulative fair market
value of $______________.  The taxpayer
did not pay any amount for the property transferred.

 

7.             A copy of this statement was furnished to the Company,
for whom taxpayer rendered the services underlying the transfer of such
property.

 

8.             This election is made to the same effect, and with the
same limitations, for purposes of any applicable state statute corresponding to
Section 83(b) of the Internal Revenue Code.

 

The undersigned understands
that the foregoing election may not be revoked except with the consent of the
Commissioner of Internal Revenue.

 

Signed: 
_________________________________________________

 

Date:       __________________________

 

 

Letter for filing §83(b) Election
Form

 

[Date]

 

CERTIFIED MAIL

 

RETURN RECEIPT REQUESTED

 

Internal Revenue Service Center

	
   

  
	
   

  
	
   

  

 

(the Service Center to which individual income tax
return is filed)

 

                                Re:          83(b) Election
of ________________________________

                                                Social
Security Number:   _______________________

 

Dear Sir/Madam:

 

Enclosed is an election under
section 83(b) of the Internal Revenue Code of 1986 with respect to certain
shares of stock of Vertis Holdings, Inc. that were transferred to me on
___________________, 20__.

 

Please file this election.

 

Sincerely,

 

 

 

_________________________________

 

cc: Secretary of Vertis Holdings, Inc.Exhibit 10.38

 

 

RESTRICTED STOCK AGREEMENT

 

 

VERTIS HOLDINGS, INC.

1999 EQUITY AWARD PLAN

 

GRANTEE: MICHAEL T. DUBOSE

 

NO. OF SHARES:  600,000

 

 

This Agreement (the “Agreement”),
approved by Thomas H. Lee Equity Fund IV, L.P. (the “Sponsor”),
evidences the award of  600,000
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, Michael
T. DuBose, effective as of  January 7,
2008 (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.

 

 

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 

 

 

2

 

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 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 JANUARY 7, 2008 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.

 

 

3

 

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.

 

(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 

 

 

4

 

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.

 

(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 

 

 

5

 

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.

 

(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 

 

 

6

 

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.  The Company shall be
responsible for the reasonable cost of obtaining a valuation of the fair market
value of the Award Shares as of the date of transfer.  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.

 

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.

 

 

7

 

12.                                 The
Company’s Rights and Obligations.   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.

 

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:

 

 

8

 

(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 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.

 

 

9

 

GLOSSARY

 

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

 

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

 

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

 

(d)   “Cause”
generally means your insubordination, dishonesty, incompetence, moral
turpitude, other misconduct of any kind or the refusal to perform your duties
or responsibilities for any reason other than illness or incapacity, in each
case as determined by the Board in good faith. 
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.

 

 

10

 

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

 

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

 

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

 

(o)   “Service”
means your employment or other service relationship with the Company and its
Affiliates.  Service will be considered
to have ceased with the Company if, after a sale, merger or other corporate
transaction, the trade, business or entity with which you are employed 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.

 

 

11

 

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

 

	
   

  	
  VERTIS HOLDINGS, INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ John V. Howard, Jr.

  
	
   

  
	
   

  
	
   

  	
  Date: 

  	
  01/07/2008

  
	
   

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   /s/ Anthony DiNovi

  
	
   

  
	
   

  
	
   

  	
  Date: 

  	
  01/07/2008

  
				

 

                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:    Michael
  T. DuBose

  
	
   

  
	
       [Witness]

  	
   

  	
  /s/ Michael T.
  Dubose

  
	
   

  
	
   

  	
  Date: 

  	
  01/07/2008

  
				

 

Enclosure:  Vertis Holdings, Inc.
1999 Equity Award Plan

 

12

 

STOCK POWER

 

                FOR
VALUE RECEIVED, the undersigned, Michael T. DuBose, hereby sells, assigns and
transfers unto Vertis Holdings, Inc., a Delaware corporation (the “Company”),
or its successor, 600,000 shares of common stock, par value $0.01 per share, of
the Company standing in my name on the books of the Company, represented by
Certificate No._________________, which is attached hereto, and hereby irrevocably
constitutes and appoints _____________________________________________ as my
attorney-in-fact to transfer the said stock on the books of the Company with
full power of substitution in the premises.

 

WITNESS:

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

 

IMPORTANT TAX INFORMATION

 

INSTRUCTIONS REGARDING SECTION 83(b) ELECTIONS

 

1.              An 83(b) Election is irrevocable.

 

2.              If you want to make an 83(b) Election, an 83(b) Election Form must
be filed with the Internal Revenue Service within 30 days of the date
the Restricted Stock is granted to you; no exceptions to this rule are
made.

 

3.              You must provide a copy of the 83(b) Election Form to the
Corporate Secretary or other designated officer of the Company.  This copy should be provided to the Company
at the same time that you file your 83(b) Election Form with the
Internal Revenue Service. In addition, you must pay over to the Company the
amount of the withholding taxes by check at the time or your 83(b) Election.

 

4.              In addition to making the filing under Item 2 above, you must attach a
copy of your 83(b) Election Form to your tax return for the taxable
year in which you received the Restricted Stock.

 

5.              If you make an 83(b) Election and later forfeit the Restricted
Stock, you will not be entitled to a refund of any tax you paid as a result of
having made the 83(b) Election.  You
may, however, recognize a capital loss upon forfeiture.

 

6.              You must consult your personal tax advisor before making an 83(b) Election.  The attached election forms are intended as
samples only, they must be tailored to your circumstances and may not be relied
upon without consultation with a personal tax advisor.

 

 

SECTION 83(b) ELECTION FORM

 

Election Pursuant to Section 83(b) of
the Internal Revenue Code

to Include Property in Gross
Income in Year of Transfer

 

The undersigned hereby makes
an election pursuant to Section 83(b) of the Internal Revenue Code
with respect to the property described below and supplies the following
information in accordance with the regulations promulgated thereunder:

 

1.             The name, address, and taxpayer identification number of
the undersigned are:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  -

  	
   

  	
  -

  	
   

  	
   

  
								

 

2.             The property with respect to which the election is made
is ____________________ shares of Common Stock, par value $.01 per share, of
Vertis Holdings, Inc., a Delaware corporation (the “Company”).

 

3.             The date on which the property was transferred was _______________________,
the date on which the taxpayer received the property pursuant to a grant of
restricted stock.

 

4.             The taxable year to which this election relates is
calendar year 2007.

 

5.             The property is subject to restrictions in that the
property is not transferable and is subject to a substantial risk of forfeiture
until the taxpayer vests in the property. 
The taxpayer will vest in _____ shares of Common Stock (the “Shares”)
immediately prior to the first to occur of (i) a “liquidity event,” (ii) the
taxpayer’s death, or (iii) the taxpayer suffering a “disability” (as each
is defined in the restricted stock agreement evidencing the Shares), provided
the taxpayer is in the employ of the Company when the event triggering vesting
occurs.

 

6.             The fair market value at the time of transfer
(determined without regard to any restrictions other than restrictions which by
their terms will never lapse) of the property with respect to which this
election is being made is $________ per share; with a cumulative fair market
value of $______________.  The taxpayer
did not pay any amount for the property transferred.

 

7.             A copy of this statement was furnished to the Company,
for whom taxpayer rendered the services underlying the transfer of such
property.

 

8.             This election is made to the same effect, and with the
same limitations, for purposes of any applicable state statute corresponding to
Section 83(b) of the Internal Revenue Code.

 

The undersigned understands
that the foregoing election may not be revoked except with the consent of the
Commissioner of Internal Revenue.

 

	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  

 

 

Letter for filing §83(b) Election
Form

 

 

[Date]

 

CERTIFIED MAIL

RETURN RECEIPT REQUESTED

 

Internal Revenue Service Center

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

(the Service Center to which individual income tax
return is filed)

 

	
   

  	
  Re:

  	
  83(b) Election of 

  	
   

  	
   

  
	
   

  	
   

  	
  Social Security Number:

  	
   

  	
   

  
						

 

 

Dear Sir/Madam:

 

Enclosed is an election under
section 83(b) of the Internal Revenue Code of 1986 with respect to certain
shares of stock of Vertis Holdings, Inc. that were transferred to me on
___________________, 20__.

 

Please file this election.

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

cc: Secretary of Vertis Holdings, Inc.

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