Document:

Exhibit 10.12

FIRST AMENDMENT

THIS FIRST AMENDMENT
(this “Amendment”), is dated September 5, 2006, and relates to that
certain Receivables Funding and Administration Agreement, dated as of November
25, 2005 (as amended, restated, supplemented or otherwise modified from time to
time, the “Funding Agreement”), among Vertis Receivables II, LLC, a
Delaware limited liability company (“Borrower”), the financial
institutions from time to time party thereto (each a “Lender” and
collectively, the “Lenders”), General Electric Capital Corporation, a
Delaware corporation, as administrative agent for the Lenders (the “Administrative
Agent”), and is hereby made by Borrower, the Administrative Agent, and the
Lenders. Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Funding Agreement.

W I T N E S S E T H:

WHEREAS, Borrower has
advised the Lenders and the Administrative Agent that Webcraft, LLC, a Delaware
limited liability company (“Webcraft”) has agreed to sell certain assets
used in the development, marketing, sale and production of multi-sensory
sampling devices and renditions, including, without limitation, fragrance,
cosmetics and toiletries-related sampling, labels, scent strips and single use
packaging for fragrances, cosmetics and toiletries (which business is
hereinafter referred to as the “Fragrance Business”) pursuant to that
certain Asset Purchase Agreement (the “FB Purchase Agreement”) among
Vertis, Inc., a Delaware corporation (“Vertis”) and Webcraft as “Seller”
thereunder and Spice Acquisition Corp., a Delaware corporation (the “FB
Purchaser”), dated September 5, 2006 (the transactions relating thereto,
the “Sale Transaction”);

WHEREAS, prior to the
date hereof, and continuing until the “Closing Date” (as defined in the FB
Purchase Agreement), Webcraft has sold and will continue to sell Receivables
arising out of the Fragrance Business to Borrower (the “FB Receivables”)
and after the Closing Date will continue to sell Receivables (other than those
arising out of the Fragrance Business) as provided in the Related Documents;

WHEREAS, the parties
hereto have agreed as follows:

(a)           contemporaneously with the
effectiveness of the Sale Transaction, all Transferred Receivables constituting
FB Receivables shall no longer constitute “Eligible Receivables”;

(b)           as a result of the foregoing, a
Funding Excess shall exist and Borrower shall be required to pay the amount of
such Funding Excess in cash to Administrative Agent pursuant to Section 2.08(b)
and 2.08(d);

(c)           if such Funding Excess is not paid as
and when required pursuant to Section 2.08(b) and 2.08(d), then Administrative
Agent has the authority pursuant to Section 9.01(b) to direct the sale of the
FB Receivables; and

(d)           in order to effectuate the provisions
of the Funding Agreement and Related Documents and the orderly disposition of
Transferred Receivables as required to repay the Loans, notwithstanding any
timing differentials between the occurrence of the 

foregoing pursuant to the Funding Agreement,
the Administrative Agent and the Lenders shall on the Effective Date (as
defined in Section 3 below), direct the sale of the FB Receivables to
the FB Purchaser by the Borrower, and the Borrower will effectuate such sale by
the execution and delivery of a quit-claim assignment agreement with the FB
Purchaser in form and substance satisfactory to Administrative Agent (a copy of
which is attached hereto as Exhibit A, the “FB Quitclaim”, such
quit-claim transaction, the “Quitclaim Transaction”);

WHEREAS, subject to the terms
and conditions set forth herein, in connection with the consummation of the
Sale Transaction and the Quitclaim Transaction, the Administrative Agent  and Lenders have agreed to consent to the
Quitclaim Transaction;

WHEREAS, the
Administrative Agent, the Lenders, and Borrower are willing to amend the
Funding Agreement to reflect the foregoing and grant the requested consent on
the terms and conditions set forth herein;

NOW, THEREFORE, in
consideration of the foregoing premises, the parties hereto agree as follows:

1.             Consent and Amendments as of Effective Date.  As of the “Effective Date” (as defined in Section
3 below):

(a)           All Transferred Receivables
constituting FB Receivables shall no longer be deemed “Eligible Receivables”.

(b)           The Administrative Agent and the
Lenders hereby direct, and consent to, the Quitclaim Transaction, and Borrower
shall enter into the Quitclaim Transaction and use the proceeds thereof to pay
on the Effective Date any Funding Excess resulting from the amendment described
in clause (a) above.

(c)           Any collections received in a
Lockbox, Collection Account or Concentration Account with respect to FB
Receivables on and after the Effective Date shall be deemed “Unrelated Amounts”.
Borrower shall identify to Administrative Agent such Unrelated Amounts within
one Business Day of deposit therein, and Administrative Agent agrees that upon
such notice Administrative Agent shall (i) until the 90th day after the Effective Date, remit such
amounts to the FB Purchaser as directed by Servicer and (ii) after the 90th day after the Effective Date, address such
Unrelated Amounts as otherwise provided in the Related Documents.

(d)           No later than 5:00 p.m. (New York
time) on each Tuesday, Borrower shall deliver a report identifying any
collections received by Borrower, Webcraft, any other Originator or Servicer
from FB Receivables during the previous calendar week (including a total of
such amounts identified pursuant to clause (c) above), prepared as of
the last day of such week.

(e)           On each Settlement Date until the 90th day after the Closing Date, Borrower shall
provide (or cause Servicer to so provide) a written report to 

Administrative Agent certifying that no
collections from FB Receivables have been remitted to the Agent Account about
which Administrative Agent has not been advised.

(f)            Borrower agrees that it will, on or
before the close of business on the fifth Business Day after the “Closing Date”
(as defined in the FB Purchase Agreement), cause Servicer to send written
notice to each Obligor of FB Receivables to remit payment to a deposit account
other than a Collection Account or Concentration Account (and a lockbox other
than a Lockbox) and a Person other than Borrower, Servicer and Webcraft. Should
notwithstanding such instructions any collections from FB Receivables be
remitted to Servicer, Webcraft, Borrower, any Originator, any Collection
Account, Concentration Account or Lockbox, Borrower shall exercise commercially
reasonable efforts to cause FB Purchaser to renotify such Obligors regarding
the proper direction of payments. The parties hereto agree that a failure to
send such notices by the date set forth in the first sentence of this clause
(f) shall not be subject to any grace period set forth in Section 8.01 of
the Funding Agreement.

(g)           The Administrative Agent, on behalf
of the Lenders, hereby releases all security interests with respect to all of
the Administrative Agent’s right, title and interest in and to the FB
Receivables.

2.             Representations and Warranties. As of the
Effective Date, Borrower hereby represents and warrants to Administrative Agent
and the Lenders that (i) all of the representations and warranties of such
Person in the Related Documents are true and correct in all material respects
on and as of such date as though made to each such Person on and as of such
date (other than representations and warranties which expressly speak as of a
different date, which representations shall be made only on such date), (ii)
each of the recitals accurately describes the transactions described therein in
all respects, and (iii) as of such date, no Incipient Termination Event,
Termination Event, Incipient Servicer Termination Event or Event of Servicer
Termination Event has occurred and is continuing (it being agreed and
understood by all parties that the Sale Transaction, Quitclaim Transaction and
any Funding Excess created thereby but remedied in accordance with Section
3(c) below do not constitute any of the foregoing types of events).

3.             Effective Date. 
The “Effective Date” shall occur upon the satisfaction of the
following conditions precedent:

(a)           The Administrative Agent shall have
received counterparts hereof executed by each Person for which a signature
block is attached hereto.

(b)           Each of the representations and
warranties contained in this Amendment which speaks as of the Effective Date
shall be true and correct in all respects on and as of the Effective Date.

(c)           Borrower shall have delivered to the
Administrative Agent on or prior to the Effective Date a Daily Report giving pro forma effect to the foregoing
amendment and consent, and from the amount received from the proceeds of the
Quitclaim Transaction, Borrower shall have paid to the Administrative Agent, in

immediately available funds, an amount equal
to the amount, if any, of Funding Excess created by the foregoing amendment and
consent.

(d)           The Administrative Agent shall have
received an execution copy of the FB Purchase Agreement and the FB Quitclaim
executed and delivered by all parties thereto in form and substance reasonably
satisfactory to Administrative Agent.

(e)           The “Closing Date” pursuant to the FB
Purchase Agreement shall have occurred, and the Sale Transaction and the
Quitclaim Transaction shall have been consummated.

4.             Reference to and Effect on the Related Documents.

(a)           As applicable, on and after the
Effective Date, each reference in the Funding Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import, and each reference in the other Related
Documents to the Funding Agreement, shall mean and be a reference to the
Funding Agreement as modified hereby.

(b)           Except as specifically amended or
consented to above, all of the terms of the Funding Agreement and all other
Related Documents remain unchanged and in full force and effect.

(c)           The execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right,
power or remedy of any Lender or of Administrative Agent under any of the
Related Documents, nor constitute an amendment, other than as set forth herein,
or waiver of any provision of any of the Related Documents, nor obligate any
Lender or Administrative Agent to agree to similar consents in the future.

(d)           This Amendment shall constitute a
Related Document.

5.             Costs and Expenses.  Borrower agrees to pay upon demand in
accordance with the terms of Section 12.04 of the Funding Agreement all
reasonable costs and expenses of the Administrative Agent in connection with
the preparation, negotiation, execution and delivery of this Amendment,
including, without limitation, the reasonable fees, expenses and disbursements
of Sidley Austin LLP, counsel for the Administrative Agent with respect to any
of the foregoing.

6.             Miscellaneous. 
The headings herein are for convenience of reference only and shall not
alter or otherwise affect the meaning hereof.

7.             Counterparts. 
This Amendment may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each of which when so
executed and delivered by facsimile shall be an original, but all of which
shall together constitute one and the same instrument.

8.             GOVERNING LAW. 
THIS AMENDMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE 

GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES) EXCEPT TO THE EXTENT
THAT THE PERFECTION, EFFECT OF PERFECTION OR PRIORITY OF THE INTERESTS OF THE
ADMINISTRATIVE AGENT IN THE RECEIVABLES OR REMEDIES HEREUNDER OR THEREUNDER, IN
RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

*              *              *

 

IN WITNESS WHEREOF,
Borrower, the Administrative Agent, and the Lenders, have caused this Amendment
to be executed by their respective officers thereunto duly authorized as of the
date first above written.

	
  

  	
   

  	
  VERTIS RECEIVABLES II, LLC 

  
	
   

  	
   

  	
  as the Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ JOHN V. HOWARD, JR.

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John V. Howard, Jr

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Secretary

  
						

 

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GENERAL ELECTRIC CAPITAL

  
	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
  as Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ SUSAN
  TIMMERMAN

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Susan Timmerman

  
	
   

  	
   

  	
   

  	
  Duly Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  Commitment: $130,000,000

  	
   

  	
  GENERAL ELECTRIC CAPITAL

  
	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
  as the Lender and Swing Line Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ Susan
  Timmerman

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Susan Timmerman

  
	
   

  	
   

  	
   

  	
  Duly Authorized Signatory

  
						

 

	
  ACKNOWLEDGED & AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  

  	
   

  	
  VERTIS, INC.

  
	
   

  	
   

  	
  as Servicer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /S/ John V.
  Howard, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  Name: John V. Howard, Jr.

  
	
   

  	
   

  	
   

  	
  Title:   Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

Exhibit A

Quitclaim
Agreement

SEE ATTACHED

 

ACCOUNTS RECEIVABLE ASSIGNMENT

THIS ACCOUNTS RECEIVABLE
ASSIGNMENT (the “Accounts Receivable Assignment”) is entered into as of
September 8, 2006 by and between VERTIS RECEIVABLES II, LLC (“Assignor”)
and SPICE ACQUISITION CORP (“Assignee”).

WHEREAS, Vertis, Inc. and Webcraft, LLC and
certain of their Affiliates other than Assigor (collectively “Business Seller”),
are engaged in the business of the development,
marketing, sale and production of multi-sensory sampling devices and
renditions, including, without limitation, fragrance, cosmetics and
toiletries-related sampling, labels, scent strips and single use packaging for
fragrances, cosmetics and toiletries (the “Business”);

WHEREAS, Business Seller and Assignee, have
entered into that certain Asset Purchase Agreement as of September 5, 2006 (the
“Asset Purchase Agreement”) pursuant to which Business Seller has agreed
to sell to Assignee, as Purchaser thereunder, the Business and certain assets
used in or comprising the Business; and

WHEREAS, Assignor is the owner of accounts
receivable arising out of the Business, and collateral and supporting
obligations securing such accounts receivable (collectively, the “A/R Assets”),

NOW, THEREFORE

1.             In consideration of the payment made by Assignee in the
amount of $8,022,279 in immediately available funds remitted to Bank of
America, N.A., Account No. 3751970318, ABA No. 026009593, upon receipt of such
amount, the Assignor hereby sells, assigns, transfers and conveys, absolutely
and without recourse, all of its right, title and interest in, to and under all
of the A/R Assets.

2.             Assignor
covenants and agrees to execute and deliver, or cause to be executed and
delivered, any and all agreements, instruments, papers, or deeds, as may be
reasonably required by Assignee for the purpose of evidencing the vesting in
Assignee of the property, rights, title and interests of the Assignor sold
hereunder and the release of any liens created by Assignor, other than
Permitted Liens (as defined in the Asset Purchase Agreement).

3.             Assignor hereby authorizes Assignee to file a financing
statement in the form attached as Exhibit A hereto.  If Assignee causes a financing statement to
be filed, Assignee hereby agrees to cause such financing statement to be
terminated promptly following its receipt of payment from the obligors on the
A/R Assets transferred hereunder.

4.             Except as expressly stated herein, Assignor makes no
other representations, warranties or covenants. 
We refer you to the representations, warranties and covenants made by
Business Seller in the Asset Purchase Agreement with respect to the Assignor
and the A/R Assets.

 

5.             Wherever possible, each provision of this Accounts
Receivable Assignment shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Accounts
Receivable Assignment shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Accounts Receivable Assignment.

6.             THIS ACCOUNTS RECEIVABLE ASSIGNMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL
OBLIGATIONS LAWS BUT OTHERWISE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES),
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

7.             Assignee
hereby agrees that from and after the date hereof, until the date that is one
year and one day after all obligations of the Assignor under the Receivables
Funding and Administration Agreement (and all amendments and replacements
thereof) have terminated, it will not, directly or indirectly, institute or
cause to be instituted against the Assignor any bankruptcy case, insolvency or
dissolution proceedings.

 

IN WITNESS WHEREOF, the parties
have caused this Accounts Receivable Assignment to be executed by their
respective officers thereunto duly authorized, as of the day and year first
above written.

	
  VERTIS RECEIVABLES II, LLC, as

  
	
  Assignor

  
	
   

  
	
  By:

  	
  /S/ John V. Howard,
  Jr.

  	
   

  
	
  Name: 

  	
  John V. Howard, Jr.

  
	
  Title:

  	
  Secretary

  
	
   

  
	
   

  
	
  Agreed and accepted:

  
	
   

  
	
  SPICE ACQUISITION CORP., as Assignee

  
	
   

  
	
  By:

  	
  /S/ Paul
  Carousso

  	
   

  
	
  Name:

  	
  Paul Carousso

  
	
  Title:

  	
  SVP Finance

  
	
   

  
	
   

  
					

The undersigned, as
Administrative Agent on behalf of the lenders under that certain Receivables
Funding and Administration Agreement, dated as of November 25, 2005, among the
Assignor, the financial institutions identified as lenders therein, and General
Electric Capital Corporation, as Administrative Agent, consents and agrees to
the sale, assignment and conveyance provided for herein and hereby releases any
an all liens, security interests or other interests in the A/R Assets (and
proceeds thereof, other than the purchase price paid as provided herein)
conveyed hereunder, any and all such liens or security interest to attach to
the purchase price provided herein.

 

	
  GENERAL ELECTRIC CAPITAL

  
	
  CORPORATION, as Administrative Agent

  
	
   

  
	
  By:

  	
  /S/ Susan
  Timmerman

  	
   

  
	
  Name: 

  	
  Susan Timmerman

  
	
  Title:

  	
  Duly Authorized SignatoryExhibit 10.41

	
  

  	
   

  	
  

  	
   

  	
  John V. Howard, Jr., Esq.

  	
  www.vertisinc.com

  
	
   TURN TO USTM

  	
   

  	
   

  	
  Chief Legal Officer and Secretary

  
	
   

  	
   

  	
   

  	
  250 W. Pratt Street, Suite 1800, Baltimore, MD 21201

  
	
   

  	
   

  	
   

  	
  D: 410.361.8347 F: 410.454.8460

  
	
   

  	
   

  	
   

  	
  jhoward@vertisinc.com

  

 

December 5, 2006

VIA OVERNIGHT DELIVERY

Dean D. Durbin

Dear Dean:

This letter (“Letter
Agreement”) confirms our agreement concerning your resignation as President,
Chief Executive Officer, and Director of Vertis Holdings, Inc., Vertis, Inc.
and their subsidiaries and affiliates (collectively “Vertis”) effective
November 28, 2006, and the special benefits that are being offered to you in
order to ensure a smooth transition. Although you are resigning your employment
with Vertis, Vertis agrees to honor the terms of your August 31, 2003
Employment Agreement, as amended (“Employment Agreement”), as though your
termination of employment is occurring under the provisions of Section 5(a) of
the Employment Agreement and will provide to you the severance benefits set
forth in the Employment Agreement for such terminations, as well as other
valuable consideration set forth below. Other than as specifically modified
below, your rights and obligations and all other provisions under your
Employment Agreement shall remain as set forth therein, including without
limitation the provisions of Section 5(d)(iii) thereof; provided, however,
that solely for purposes of the last sentence of Section 5(a) and Section
5(d)(iii), your employment will be considered to have terminated effective
November 28, 2006.

1.                              Resignation
and Termination of Employment.  Effective
November 28, 2006, you resign your position as President and Chief Executive
Officer of Vertis, as well as your position on any Board of Directors of
Vertis. Your employment with Vertis will continue, in the capacity of a
non-officer employee, until February 28, 2007 (the “Date of Termination”), at
which time your employment will terminate. Through the Date of Termination, you
will continue to receive your current base salary, less applicable withholding
taxes and lawful deductions, and except as provided below, you shall continue
to be eligible to participate in all Vertis retirement, health and welfare
benefit plans, including any medical, prescription, dental, disability, life
insurance, accidental death and travel accident insurance plans and programs
maintained by Vertis.

2.                              Transition
Period.  Until February 28, 2007,
you agree to make yourself available to respond to business-related inquiries
from Vertis’s officers, directors and/or shareholders.

3.                              Equity
Interests.  You are a party to
those certain agreements with Vertis known as the Amended and Restated
Management Subscription Agreement, dated as of August 31, 2003 (the “Management
Subscription Agreement”) and certain Restricted Stock Agreements

	
  

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  (INITIALS)

  

 

CONFIDENTIAL

dated as of May 20, 2004 and
March 6, 2006 respectively (collectively the “Restricted Stock Agreements”),
under which you are the beneficial owner of an equity stake in Vertis.

(a)                          Vertis hereby forever waives its call rights
(exclusive of any drag-along rights) against the shares of common stock and
other equity interests that are subject to the Management Subscription
Agreement and agrees to take all actions necessary to amend the Management
Subscription Agreement to provide for the continuation of the tag-along rights
that you (or, as applicable, your estate) enjoy with respect to the interests
subject to the Management Subscription Agreement beyond your termination of
employment with Vertis for any reason.

(b)                         Vertis agrees to take all actions necessary to
amend the Restricted Stock Agreements to provide as follows:

(i)                     On February 28, 2007, forty percent (40%) of
the then-unvested shares of common stock subject to the Restricted Stock
Agreements shall be forfeited immediately for no consideration,

(ii)                  with respect to the remaining sixty percent
(60%) of the shares of common stock subject to the Restricted Stock Agreements
that are unvested as of February 28, 2007 (the “Remaining Shares”),

(1)
thirty-three percent (33%) of the Remaining Shares shall be forfeited for no
consideration on February 28, 2011, if they have not earlier become vested and
nonforfeitable pursuant to the terms of the Restricted Stock Agreements, and

(2)
sixty-seven percent (67%) of the Remaining Shares shall be forfeited over the
twenty-four (24) month period that commences on February 28, 2007, with
one-twenty-fourth (1/24th) of such shares being forfeited on the last
day of March 2007, and an additional one-twenty-fourth (1/24th) of such shares being forfeited on the last day of each month
thereafter, until all such Remaining Shares shall have been forfeited if they
have not earlier become vested and nonforfeitable pursuant to the terms of the
Restricted Stock Agreements.

4.                              Indemnification.  Except to the extent inconsistent with Vertis’s certificate of
incorporation or bylaws, Vertis will indemnify you against any claim arising
out of your employment to the fullest extent permitted by law with respect to
your service as an employee, officer and director of Vertis and its
subsidiaries, which indemnification shall be provided following your
termination of employment for so long as you may have liability with respect to
your service as an employee, officer or director of Vertis. You will be covered
by a directors’ and officers’ insurance policy with respect to your acts as an
officer and director while employed by Vertis to the same extent as all other
Vertis officers and directors under such policies.

5.                              Releases and Covenants Not
to Sue.

(a)                          In keeping with our intent to provide for an
amicable separation, for yourself and your heirs and personal representatives,
you hereby release and forever discharge Vertis, and its subsidiaries,
affiliates, successors, benefit plans, directors, officers and employees (the “Vertis
Released Parties”), from and against all liability, damages, actions and claims
of any kind

	
  

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  (INITIALS)

  

 

 2
 

whatsoever, known and unknown, that you now have or
may have had, or thereafter claim to have, on behalf of yourself or any other
person or entity, at any time, arising out of, or relating in any way to, any
acts or omissions done or occurring in whole or in part prior to and including
the date of this Letter Agreement, including, but not limited to, all such
matters arising out of, or related in any way to, your employment or
termination of employment with Vertis. You expressly acknowledge and agree
that, to the maximum extent permitted by law, this Release includes, but is not
limited to, your release of any tort and contract claims and any claims under
Title VII of the Civil Rights Act of 1964, as amended, the Americans With
Disabilities Act, the Employee Retirement Income Security Act, the Age
Discrimination in Employment Act, and all other federal, state and local laws
pertaining to employment and/or employment discrimination. By signing this Letter
Agreement, you also expressly acknowledge and represent that you have suffered
no injuries or occupational diseases arising out of or in connection with your
employment with Vertis and have received all wages to which you were entitled
as an employee of Vertis.

(b)                         You agree
not to file, join in or prosecute any lawsuits or arbitrations against Vertis
or any of the other Vertis Released Parties, concerning any matter, act,
occurrence, or transaction which arose on or before the date of this Letter
Agreement. Although you are not precluded from filing a charge with the EEOC or
from participating in an EEOC investigation or proceeding, you expressly waive
your right to any monetary recovery or any other individual relief in
connection with any EEOC charge or other administrative action, to the maximum
extent permitted by law.

(c)                          Prior to
you receiving any payments under this Letter Agreement which are payable after
your termination of employment with Vertis, Vertis may require you to execute
an additional general release covering the period of time through your last day
of employment. The additional general release will be in a form substantially
similar to the form attached as Appendix A.

(d)                         Except as
provided in Section 5(e) below, Vertis hereby releases you, your heirs personal
representatives and estate, from and against all liability, damages, actions
and claims of any kind whatsoever, known and unknown, that Vertis now has or
may have had or hereafter claims to have had on behalf of Vertis or any other Person
claiming through Vertis at any time, arising out of or relating in any way to
any acts or omissions done or occurring in whole or in part prior to and
including the date of this Letter Agreement, including, but not limited to all
such matters of, or related in any way to Vertis’s employment of you (the “Vertis
Release”).

(e)                          Notwithstanding
anything in this Letter Agreement to the contrary, nothing in this Letter
Agreement, including, without limitation, the foregoing releases will
relinquish, diminish, or in any way affect (i) any rights or claims arising out
of this Letter Agreement, including any breach by Vertis or you, as applicable,
of this Letter Agreement; (ii) any right or claim you may have, if any, to
indemnification under Vertis’s (or as to any other entities for which you serve
as a director or officer, such entity’s) certificate of incorporation or
bylaws; (iii) any rights you may have as a holder of any equity interest in
Vertis or any rights or claims you may have, if any, under a Vertis benefit
plan, program or policy, except to the extent modified by this Letter
Agreement; (iv) any right to reimbursement for business expenses incurred
during the course of

	
  

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
  (INITIALS)

  

 

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your employment with Vertis and in accordance with
Vertis’s policies with respect to the reimbursement of business expenses; (v)
any right or claim you, Vertis or any other Vertis Released Party may have to
obtain contribution as permitted by applicable law in an instance in which both
you, on the one hand, and any of the Vertis or any other Vertis Released Party,
on the other hand, are held to be jointly liable; (vi) any rights or claims
that Vertis or any other Vertis Released Party may have against you based on, or
arising out of, any criminal conduct or intentional misconduct that you may
have engaged in of which Vertis is not currently aware or any act or omission
with respect to which Vertis would not have the power to indemnify you under
the provisions of Section 145 of the Delaware General Corporation Law regarding
indemnification of corporate officers and directors; or (vii) any rights or
claims that, as a matter of law, cannot be released or waived.

6.                              Additional
Disclosures and Notice of Rights.  You acknowledge, agree and understand that:

(a)                          under
this Letter Agreement you are waiving and releasing, among other claims, any
rights and claims that may exist under the Age Discrimination in Employment Act
(ADEA);

(b)                         the
waiver and release of claims set forth in Section 5 above does not apply to any
rights or claims that may arise under the ADEA after the date of execution of
this Letter Agreement;

(c)                          the
payments and other consideration that are being provided to you under this
Letter Agreement are of significant value and in addition to what you otherwise
would be entitled;

(d)                         you are
being advised in writing to consult with an attorney before signing this Letter
Agreement;

(e)                          you are
being given a period of at least twenty-one (21) days within which to review
and consider this Letter Agreement before signing it; and

(f)                            you
may revoke this Letter Agreement by providing written notice to Vertis within
seven (7) days following its execution. This Letter Agreement will not become
effective and enforceable until such seven (7) day period has expired, and you
therefore will not receive any consideration under this Letter Agreement until
after the revocation period has expired. Accordingly, the Effective Date of
this Letter Agreement will be the eighth (8th) day following your signing of this Letter Agreement.
Any notice of revocation of this Letter Agreement will not be effective unless
given in writing and received by Vertis via personal delivery, overnight
courier or certified U.S. Mail, return receipt requested, at the following
address: John V. Howard, Jr., General Counsel, 250 W. Pratt Street, 18th Floor Baltimore, Maryland 21201.

7.                              Dispute
Resolution.  The dispute
resolution provisions set forth in the Employment Agreement shall govern
disputes arising under or in connection with this Letter Agreement.

	
  

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

  	
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8.                              Successors.

(a)                          This
Letter Agreement is personal to you and without the prior written consent of
Vertis, your rights under this Letter Agreement shall not be assignable (except
by will or the laws of descent and distribution).

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

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

9.                              Miscellaneous.

(a)                          This
Letter Agreement incorporates by specific reference the Management Subscription
Agreement, Restricted Stock Agreements, and the provisions of your Employment
Agreement, except where specifically modified herein. Unless otherwise noted,
this Letter Agreement supersedes any and all other agreements or proposals,
written or oral, made by Vertis or any Released Party, or on their behalf to
you, including but not limited to, your Employment Agreement. This Letter
Agreement is the full and final understanding between you and Vertis. You agree
that there are no additional promises or terms among you and Vertis other than
those contained or referred to herein, and that this Letter Agreement shall not
be modified, waived or amended except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

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

(c)                          Your or
Vertis’s failure to insist upon strict compliance with any provisions of, or to
assert any right under, this Letter Agreement shall not be deemed to be a
waiver of such provision or right or of any other provision of or right under
this Letter Agreement.

	
  

  	
   

  	
   

  	
   

  
	
  

  	
   

  	
   

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

	
  

  	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ John V. Howard, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  John V. Howard, Jr.,

  On behalf of Vertis, Inc. and

  Vertis Holdings, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Dean D. Durbin

  	
   

  	
   

  	
   

  	
   

  
	
  Dean D. Durbin

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date: 

  	
  12/17/06

  	
   

  	
   

  	
   

  	
   

  
							

 

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