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NON-QUALIFIED STOCK OPTION AGREEMENT
October 21, 1998
Mr. Barry P. Hoffman
Executive Vice President and General Counsel
Valassis Communications, Inc.
19975 Victor Parkway
Livonia, MI 48152
Dear Barry:
This Agreement confirms the grant of a Non-Qualified Stock Option
to you effective as of September 15, 1998 (the "Effective Date")
under the Valassis Communications, Inc. Amended and Restated 1992
Long-Term Incentive Plan (the "Plan"), upon the following terms
and conditions:
1. GRANT OF OPTION. Pursuant to action of the
Compensation/Stock Option Committee of the Board of Directors (the
"Committee") under the Plan, Valassis Communications, Inc. (the
"Company") hereby grants to you a Non-Qualified Stock Option
(hereinafter called the "Option") to purchase, subject to the
terms and conditions hereinafter set forth, an aggregate 100,000
Common Shares of the Company at a per share purchase price equal to
thirty-two and five-eighths dollars ($32.625) (the "Purchase
Price"). The number of shares under the Option and the Purchase
Price thereof shall be adjusted by the Committee, and you shall be
entitled to such adjustment, upon the occurrence of any event
described in Section 8 of the Plan. An equitable adjustment shall
be determined by the Committee in good faith.
2. TIMES OF EXERCISE AND TERM OF THE OPTION.
(a)Subject to Paragraph 3 hereof, the Option may not
be exercised in any event for the first six months following the
Effective Date.
(b)Subject to Subsection 2(a) above, the Option shall
become exercisable by you according to the vesting schedule set
forth below at such time that the closing sales price per Common
Share on the New York Stock Exchange is equal to or exceeds the
following targets:
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October 21, 1998
Page 2
Percentage of Shares Subject to
OPTION THAT BECOME EXERCISABLE FAIR MARKET VALUE TARGET
33.333% $42.00
33.333% $47.00
33.334% $52.00
Notwithstanding Subsections 2(a) and 2(b) above, all Common Shares
with respect to which the Option is not then exercisable shall be
come fully exercisable upon (i) termination of your employment by
the Company other than for Cause, as defined in your Employment
Agreement; (ii) termination of your employment for Good Reason, as
defined in your Employment Agreement; or (iii) a Change in Control.
If fewer than the number of Common Shares then available for
purchase pursuant to the Option are purchased at any time under
this Agreement, you may purchase the remaining Common Shares at any
subsequent time during the term of the Option. The Option shall
expire in its entirety on the fourth anniversary of the Effective
Date (the "Option Expiration Date") subject to earlier
termination as hereinafter provided. The Option shall not be
exercised for fractional shares. Notation of any partial exercise
will be made by the Company on Schedule 1 hereto.
3. CERTAIN EXERCISE REQUIREMENTS. The Option is
exercisable by you only while you are in the employ of the Company
or an Affiliate, except that:
Upon termination of your employment (i) by reason of death or
Disability; or (ii) by the Company other than for Cause, the Option
shall become immediately exercisable with respect to all Common
Shares thereunder as of the date of such termination and shall be
exercisable by you (or your beneficiary, in the case of your death)
for a period of six months following the date of such termination,
but in no event beyond the Option Expiration Date; and
Upon termination of your employment by the Company for Cause, or by
you, the Option, to the extent exercisable as of the date of such
termination (taking into account any acceleration of exercisability
under Paragraph 2(c)), shall be exercisable by you for a period of
six months following the date of such termination, but in no event
beyond the Option Expiration Date.
4. METHOD OF EXERCISE AND PAYMENT. Exercise of the Option
shall be by written notice, in a form substantially as attached to
this Agreement as Schedule A, delivered or mailed to the Secretary
of the Company at its principal office specifying the number of
Common Shares as to which the Option is being exercised and
identifying the Option by date of grant. Such notice shall be
accompanied by the full amount of the Option exercise price for
the Common Shares to be purchased in cash or by certified check or
by delivery of whole Common Shares owned by you ("Optionee
Stock") in full or partial payment of the exercise price. You
will receive a credit against the purchase price of the Common
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October 21, 1998
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Shares as to which the Option is being exercised equal to the Fair
Market Value as defined in the Plan of such Optionee Stock as of
the close of the business day immediately preceding the date of
delivery of the notice of election to exercise the Option. Any
Common Shares of Optionee Stock being delivered must be accompanied
by a duly executed assignment to the Company in blank or with stock
powers attached, together with a written representation that such
Common Shares of Optionee Stock are owned by you free and clear of
all liens, claims and encumbrances and such other representations
as the Company shall determine. Only whole Common Shares of
Optionee Stock with a Fair Market Value up to, but not exceeding,
the Purchase Price of the Common Shares as to which the Option is
being exercised will be accepted hereunder. Delivery of the Common
Shares of Optionee Stock may be made at the office of the Company
or at the offices of the transfer agent appointed for the transfer
of Common Shares of the Company. The Committee may, in its
discretion, refuse to accept any tendered payment in the form of
Common Shares in which case it shall deliver the tender back to you
and notify you of its refusal. In order to preserve your rights
under any Option, you must, within three business days after such
notification, tender to the Company the cash or certified check
required to pay for the Common Shares with respect to which such
Option is being exercised.
It shall be a condition to the Company's obligation to deliver
Common Shares upon exercise of any portion of the Option that you
pay, or make provisions satisfactory to the Company for the payment
of any taxes which the Company is obligated to withhold or collect
with respect to such exercise or otherwise with respect to the
Option.
5. SECURITIES LAW REQUIREMENTS. The Company shall use
its best efforts to register the Common Shares covered by this
Agreement (including to qualify them for sale under any state law)
under the Securities Act of 1933, as amended (the "Act"), unless
the disposition thereof is exempt from the registration
requirements of the Act.
6. INCORPORATION OF PLAN PROVISIONS. This Agreement is
made pursuant to the Valassis Communications Inc. Amended and
Restated 1992 Long-Term Incentive Plan and is subject to all the
terms and provisions of such Plan as if the same were fully set
forth herein. Capitalized terms not otherwise defined herein shall
have the meanings set forth for such terms in the Plan.
7. SHAREHOLDER RIGHTS. You shall not be, nor have any
of the rights or privileges of, a holder of Common Shares in
respect of any Common Shares purchasable upon the exercise of the
Option, including any rights regarding voting or payment of
dividends, unless and until a certificate representing such Shares
has been delivered to you.
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October 21, 1998
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8. MISCELLANEOUS. This Agreement: (a) shall be binding
upon and inure to the benefit of any successor of the Company and
your successors, assigns and estate, including your executors,
administrators and trustees; (b) shall be governed by the laws of
the State of Delaware and any applicable laws of the United States;
and (c) may not be amended except in writing.
It is your intent and that of the Company that this Non-Qualified
Stock Option is not classified as an Incentive Stock Option and
that any ambiguities in construction shall be interpreted in order
to effectuate such intent.
To confirm your acceptance of the foregoing, please sign and return
this Agreement to Barry P. Hoffman, Secretary, Valassis
Communications, Inc., 19975 Victor Parkway, Livonia, Michigan,
48152.
VALASSIS COMMUNICATIONS, INC.
By:\s\Robert L. Recchia
_________________________________
AGREED:
\s\Barry P. Hoffman
______________________________
Barry P. Hoffman
Date: October 21, 1998
______________________________
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