<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1997.
REGISTRATION NO. 333-28685
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
VALASSIS COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 38-2760940
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
19975 VICTOR PARKWAY
LIVONIA, MICHIGAN 48152
(313) 591-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
BARRY P. HOFFMAN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL & SECRETARY
19975 VICTOR PARKWAY
LIVONIA, MICHIGAN 48152
(313) 591-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C> <C>
JOHN M. ALLEN, JR., ESQ. MARK THOMAN, ESQ. JONATHAN A. SCHAFFZIN, ESQ.
DEBEVOISE & PLIMPTON MCDERMOTT, WILL & EMERY CAHILL GORDON & REINDEL
875 THIRD AVENUE 50 ROCKEFELLER PLAZA 80 PINE STREET
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10020 NEW YORK, NEW YORK 10005
(212) 909-6000 (212) 547-5400 (212) 701-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the 'U.S.
Prospectus') and one to be used in a concurrent international offering outside
the United States and Canada (the 'International Prospectus'). The U.S.
Prospectus and the International Prospectus are identical except for the front
and back cover pages, the sections entitled 'Underwriting,' 'Certain United
States Tax Consequences to Non-U.S. Holders' (the section entitled 'Certain
United States Tax Consequences to Non-U.S. Holders' appears only in the
International Prospectus) and 'Available Information' and certain
cross-references relating thereto. The form of U.S. Prospectus is included
herein and is followed by those pages to be used in the International Prospectus
which differ from, or are in addition to, those in the U.S. Prospectus. Each of
the alternate pages for the International Prospectus included herein is labeled
'Alternate Page for International Prospectus.'
<PAGE>
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 11, 1997
PROSPECTUS
13,000,000 SHARES
[LOGO]
COMMON STOCK
--------------------
All of the 13,000,000 shares (the 'Shares') of Common Stock of Valassis
Communications, Inc. ('Valassis' or the 'Company') offered hereby are being sold
by Conpress International (Netherlands Antilles) N.V., a Netherlands Antilles
private limited liability company (the 'Selling Stockholder'). See 'Principal
and Selling Stockholders.' The Company will not receive any of the proceeds from
the sale of Shares by the Selling Stockholder. Of the 13,000,000 Shares being
offered hereby, 10,400,000 shares are being offered in the United States and
Canada (the 'U.S. Offering') by the U.S. Underwriters and 2,600,000 shares are
being offered outside the United States and Canada (the 'International Offering'
and, together with the U.S. Offering, the 'Offerings') by the International
Managers. The price to public and the underwriting discount per share are
identical for both Offerings and the closings of both Offerings are conditioned
upon one another. See 'Underwriting.'
Following the Offerings, the Selling Stockholder is expected to own
approximately 17.9% of the Company's outstanding shares of Common Stock (or, if
the Underwriters' over-allotment options are exercised in full, approximately
13.0% of the Company's outstanding shares of Common Stock).
The Common Stock of the Company is traded on the New York Stock Exchange
('NYSE') under the symbol 'VCI.' On June 10, 1997, the last reported sale price
of the Common Stock on the NYSE was $27 1/4 per share. See 'Price Range of
Common Stock and Dividend Policy.'
SEE 'RISK FACTORS' BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) STOCKHOLDER(2)
<S> <C> <C> <C>
Per Share............................................ $ $ $
Total(3)............................................. $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the International Managers (collectively, the
'Underwriters') against certain liabilities, including liabilities under the
Securities Act of 1933. See 'Underwriting.'
(2) Excludes estimated expenses of $ payable by the Selling Stockholder and
$ payable by the Company.
(3) The Selling Stockholder has granted to the U.S. Underwriters and the
International Managers 30-day options to purchase an aggregate of 1,560,000
and 390,000 additional shares of Common Stock, respectively, solely to cover
over-allotments, if any. If all such additional shares are purchased, the
total Price to Public, Underwriting Discount and Proceeds to Selling
Stockholder will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, and subject to the approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of Shares will be made in New York, New York, on or about
, 1997.
------------------------
MERRILL LYNCH & CO. MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC. DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
------------------------
The date of this Prospectus is , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
<PAGE>
[Company logo and photos of coupons]
Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock. Such
transactions may include stabilizing, the purchase of Common Stock to cover
syndicate short positions and the imposition of penalty bids. For a description
of these activities, see 'Underwriting.'
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, including 'Risk Factors' and the consolidated financial statements
and notes thereto, appearing elsewhere in this Prospectus or incorporated by
reference herein. Unless the context otherwise indicates, references in this
Prospectus to the 'Company' or 'Valassis' are to Valassis Communications, Inc.
and its subsidiaries. Unless otherwise indicated, the information contained in
this Prospectus assumes no exercise of the Underwriters' over-allotment options.
THE COMPANY
GENERAL
Valassis is a leading print media company in the consumer promotion
industry. The Company generates most of its revenues by printing and publishing
cents-off coupons and other consumer purchase incentives primarily for package
goods manufacturers. Package goods manufacturers use cents-off coupons to
increase market share, build brand equity, attract new users and promote new
products. The Company is one of the United States' largest printers and
publishers of these coupons.
Most of the consumer purchase incentives published by the Company are
featured in multi-participant (referred to in the industry as 'cooperative')
free-standing inserts ('FSIs') which are four-color promotional booklets printed
at the three facilities owned by the Company. On 46 publishing dates in 1996,
the Company's cooperative FSIs were inserted in the Sunday edition of over 400
newspapers with a combined average paid circulation of approximately 56.5
million.
Manufacturers issued a reported 306 billion cents-off coupons during 1996,
between 80% to 90% of which were distributed using FSIs. The Company printed and
published approximately 76.1 billion cooperative FSI pages, or over 46% of the
Company-estimated 165 billion cooperative FSI pages printed and distributed
nationally during 1996. Cooperative FSI sales during the year ended December 31,
1996 and the first quarter of 1997 were $504.1 million and $141.4 million, or
approximately 76.5% and 74.4%, respectively, of the Company's total revenues.
The Company's Valassis Impact Promotions ('VIP') division was established
in 1989 in response to growing customer demand for solo customized promotions.
VIP offers customized design, printing and distribution services primarily for
solo promotional programs. The division specializes in producing turnkey
promotions for franchise and retail marketers, such as fast food chains,
allowing orders to be placed on a national, regional or local basis. VIP sales
during the year ended December 31, 1996 and the first quarter of 1997 were $89.4
million and $25.2 million, or approximately 13.6% and 13.3%, respectively, of
the Company's total revenues.
In addition to its FSI and VIP divisions, the Company arranges for the
publication of its customers' consumer promotions directly on the pages of
newspapers through its run-of-press ('ROP') division, which has the capacity to
place promotions in major newspapers throughout the United States. ROP sales
during the year ended December 31, 1996 and the first quarter of 1997 were $25.5
million and $10.7 million, or approximately 3.9% and 5.6%, respectively, of the
Company's total revenues. The Company further expanded its product line in 1994
by introducing newspaper-delivered sampling products, giving manufacturers the
ability to reach up to 50 million households in one day. Valassis' sampling
sales during the year ended December 31, 1996 and the first quarter of 1997 were
$14.3 million and $5.8 million, or approximately 2.2% and 3.0%, respectively, of
the Company's total revenues.
The Company had total revenues and net earnings of $659.1 million and $42.9
million, respectively, in 1996. Total revenues in the first three months of 1997
were $190.0 million, compared to $180.5 million in the first three months of
1996. Net earnings in the first quarter of 1997 were $22.3 million, versus $10.5
million for the same period in 1996.
3
<PAGE>
<PAGE>
BUSINESS STRATEGY
The Company's strategy is to capitalize on the strong cash flow
characteristics of its core FSI division and to maintain stable growth in
profitability in that division. In order to accomplish the foregoing, the
Company's strategy is to improve pricing of its FSI product and to continue its
commitment to minimize costs through the use of computerized information systems
and state-of-the-art production facilities, while providing high levels of
product quality and customer service. The Company seeks to leverage its
expertise in consumer promotion to develop further its growing VIP and sampling
product lines. The Company will continue to develop and offer to its customers
other products and services which complement its FSI expertise.
The Company has entered into strategic acquisitions in the past in order to
increase or protect market share, enter new markets for its traditional business
lines or facilitate development of new product lines. The Company anticipates
that it will continue to investigate opportunities for strategic acquisitions
which management believes will enhance stockholder value.
BACKGROUND OF THE COMPANY
The Company is the successor to a business founded in 1970 and operated
under the names George F. Valassis & Company and GFV Communications, Inc. In
December 1986, the assets of this business were acquired by Valassis Inserts,
Inc. ('Valassis Inserts'), a corporation indirectly owned by Consolidated Press
Holdings Limited ('CPH'), an affiliate of the Selling Stockholder. In March
1992, the Company, which was the direct parent of Valassis Inserts, sold
22,100,000 shares of Common Stock to the public. In March 1993, Valassis Inserts
was merged into the Company, its corporate parent.
The Company's principal executive offices are located at 19975 Victor
Parkway, Livonia, Michigan 48152, and its telephone number is (313) 591-3000.
THE SELLING STOCKHOLDER AND RELATED TRANSACTIONS
The Selling Stockholder, Conpress International (Netherlands Antilles)
N.V., is a Netherlands Antilles private limited liability company indirectly
owned by CPH, a private Australian holding company indirectly owned by Kerry
F.B. Packer and his family.
With the completion of the Company's initial public offering in March 1992,
CPH's indirect ownership of the Company was reduced to 49%. During 1996, the
Company's Board of Directors authorized the repurchase of up to 5,000,000 shares
of Common Stock. In connection with the Company's share repurchase program and
as approved by the stockholders of the Company at its 1996 Annual Meeting of
Stockholders, the Company entered into an agreement (the 'Option Agreement'),
pursuant to which the Selling Stockholder has the option to sell to the Company
a number of shares of Common Stock up to the number of shares purchased by the
Company on the open market in any given month at a price equal to the average
price paid by the Company to the other stockholders during such month. During
1996, the Company repurchased 1,330,800 shares of Common Stock, but no
repurchase options were exercised under the Option Agreement and such options
have expired pursuant to the terms thereof. Through June 11, 1997, the Company
repurchased an additional 2,052,400 shares of Common Stock at an average price
of $20.83 per share, including 1,026,200 shares pursuant to repurchase options
under the Option Agreement, which were exercised in full. Following the
Offerings, the Selling Stockholder will own 7,173,800 shares of Common Stock, or
approximately 17.9% of the Company's outstanding shares of Common Stock
(5,223,800 shares or approximately 13.0% of the Company's outstanding shares of
Common Stock if the Underwriters' over-allotment options are exercised in full).
See 'Capitalization,' 'Principal and Selling Stockholders' and 'Underwriting.'
Conditioned on the consummation of the Offerings, the Selling Stockholder
has agreed to pay, or cause one of its affiliates (other than the Company) to
pay, a special cash bonus in the aggregate amount of 1.5% of the gross proceeds
of the Offerings (estimated at $5.3 million, based upon an assumed offering
price of $27 1/4 per share, the last reported sale price of the Common Stock on
the NYSE on June 10, 1997 and assuming no exercise of the Underwriters'
over-allotment options). Not more than
4
<PAGE>
<PAGE>
50% of such amount shall, at the discretion of David A. Brandon, the Company's
Chief Executive Officer, be allocated to Mr. Brandon, and the balance shall be
allocated by Mr. Brandon among other employees of the Company. Because the
special cash bonus is to be paid by the Selling Stockholder or its affiliates
(other than the Company), it will not require any use of the Company's cash. For
accounting purposes, however, such special cash bonus will be charged against
the results of operations in the accounts of the Company upon consummation of
the Offerings. In the event of any future sales by the Selling Stockholder of
its shares of Common Stock, the Selling Stockholder has agreed to the same
special cash bonus arrangement.
After the consummation of the Offerings, Graham A. Cubbin and James D.
Packer (both of whom are affiliated with the Selling Stockholder) intend to
resign from the Company's Board of Directors, and Brian M. Powers, Chief
Executive Officer of CPH, intends to resign as Chairman of the Company's Board
of Directors but remain as a director of the Company. It is expected that David
A. Brandon will be appointed Chairman of the Board of Directors.
The Company and the Selling Stockholder have entered into a registration
rights agreement providing the Selling Stockholder with certain demand and
'piggyback' registration rights with respect to its remaining shares of Common
Stock after the Offerings. See 'Principal and Selling Stockholders -- Certain
Transactions and Relationships.'
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholder:
U.S. Offering................................................ 10,400,000 shares
International Offering....................................... 2,600,000 shares
Total................................................... 13,000,000 shares
Common Stock to be outstanding before and after the Offerings..... 40,108,867 shares(1)
Common Stock to be owned by the Selling Stockholder after the
Offerings....................................................... 7,173,800 shares(2)
The Company will not receive any proceeds
from the sale of Shares offered hereby. See
'Use of Proceeds.'
Use of Proceeds...................................................
New York Stock Exchange symbol.................................... VCI
</TABLE>
- ------------
(1) Excludes approximately 2,993,814 shares of Common Stock subject to
outstanding options granted by the Company under certain stock option plans,
of which 2,598,498 were exercisable as of April 30, 1997.
(2) Assumes that the over-allotment options in an aggregate amount of 1,950,000
shares granted to the Underwriters are not exercised. If such over-allotment
options are exercised in full, the Selling Stockholder will own 5,223,800
shares of Common Stock after the Offerings.
5
<PAGE>
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth summary consolidated financial information
of the Company for the periods indicated below. In July 1994, the Company
elected to change its year-end from June 30 to December 31, resulting in a
six-month transitional period ended December 31, 1994. The summary consolidated
financial information is derived from the Company's consolidated financial
statements and notes thereto. Information for the three months ended March 31,
1997 and 1996 is derived from unaudited interim financial statements which
reflect, in the opinion of the Company, all adjustments, which include only
normal recurring adjustments, necessary for a fair presentation of the financial
data for such periods. Results for interim periods are not necessarily
indicative of results for the full year. The Company is expected to incur a
charge against results of operations in respect of a special cash bonus to be
paid by the Selling Stockholder or its affiliates (other than the Company) to
certain employees in connection with the Offerings. See 'Principal and Selling
Stockholders -- Certain Transactions and Relationships.' This table should be
read in conjunction with the Company's consolidated financial statements and
notes thereto which have been incorporated herein by reference. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED SIX MONTHS
MARCH 31, DECEMBER 31, ENDED
-------------------- -------------------------- DECEMBER 31,
1997 1996 1996 1995 1994
--------- --------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................. $ 189,959 $ 180,533 $ 659,108 $ 613,752 $ 279,034
Earnings before
extraordinary loss...... 22,298 10,460 42,902 9,574 1,923
Net earnings per share
before extraordinary
loss.................... $ .53 $ .24 $ 1.00 $ .22 $ .04
Weighted average common
and common equivalent
shares.................. 41,870 43,304 42,889 43,302 43,300
OTHER DATA:
Operating earnings(2)..... $ 46,763 $ 27,723 $ 110,677 $ 63,065 $ 23,695
Depreciation and
amortization............ 4,332 4,018 15,198 18,984 9,722
Capital expenditures...... 5,786 1,575 7,104 6,530 9,173
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets.............. $ 267,976 $ 252,939 $ 273,734 $ 258,932 $ 234,330
Total debt................ 384,483 408,066 403,155 416,034 417,927
Total stockholders'
deficit................. (291,274) (298,767) (286,594) (309,274) (319,032)
<CAPTION>
YEAR ENDED
JUNE 30,
------------------------------
1994 1993 1992(1)
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................$ 542,609 $ 661,378 $ 684,029
Earnings before
extraordinary loss...... 5,173 81,934 74,416
Net earnings per share
before extraordinary
loss....................$ .12 $ 1.89 $ 1.62
Weighted average common
and common equivalent
shares.................. 43,300 43,300 43,300
OTHER DATA:
Operating earnings(2).....$ 36,590 $ 175,087 $ 165,244
Depreciation and
amortization............ 23,959 25,384 35,654
Capital expenditures...... 4,069 4,039 4,192
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets..............$ 239,709 $ 275,165 $ 292,718
Total debt................ 419,000 418,741 493,481
Total stockholders'
deficit................. (316,779) (321,952) (385,700)
</TABLE>
- ------------
(1) Net earnings per share before extraordinary loss and weighted average common
and common equivalent shares for the fiscal year ended June 30, 1992 give
effect to the concurrent consummation, in March 1992, of (i) the Company's
public offerings of 22,100,000 shares of Common Stock, $150 million
aggregate principal amount of 8 3/8% Senior Notes Due 1997, $120 million
aggregate principal amount of 8 7/8% Senior Notes Due 1999 and $150 million
aggregate principal amount of 9 3/8% Senior Subordinated Notes Due 1999, and
(ii) the Company's then-existing senior secured bank credit facility, and
the application of the proceeds therefrom, as if such transactions had
occurred at the beginning of the period presented. 1992 results include a
charge against results of operations of $8.0 million in respect of a
nonrecurring special cash bonus for certain employees paid by CPH or one of
its subsidiaries (other than the Company) in connection with the Company's
March 1992 initial public offering of Common Stock.
(2) Operating earnings represent earnings from continuing operations before
interest expense and income taxes. Operating earnings include
write-downs/sale of business of $16,870 in the year ended December 31, 1995
and minority income of $12, $1,374, $262 and $43 for the years ended
December 31, 1996 and 1995, the six months ended December 31, 1994, and the
three months ended March 31, 1996, respectively, and minority loss of $10
for the three months ended March 31, 1997.
RISK FACTORS
Prior to making an investment, prospective purchasers of the Shares should
consider carefully the specific risk factors set forth under 'Risk Factors,' as
well as the other information set forth or incorporated by reference in this
Prospectus.
6
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
The forward-looking statements contained in this Prospectus constitute
'forward-looking statements' within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve unknown
risks and uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following: a
new competitor in the Company's core FSI business and subsequent price
competition; an increase in the Company's paper costs; new technology that would
make FSIs less attractive; a shift in customer preference for different
promotional materials, promotional strategies, or coupon delivery modes; or
general business and economic conditions.
RISK FACTORS
Prospective investors should consider carefully the following risk factors,
together with the other information set forth or incorporated by reference in
this Prospectus, before purchasing the Common Stock offered hereby.
COMPETITION
The Company currently competes in the cooperative FSI business principally
with News America FSI, Inc., a company controlled by The News Corporation
Limited. This competitor has substantially greater financial resources than
those of the Company. If existing competitors attempted to significantly
increase market share or other competitors were to enter the market, management
believes that such competitors would be forced to compete with the Company
primarily on the basis of price. In addition, if more FSI programs were
published as a result, the number of pages per FSI program published by the
Company could decrease from current levels causing an increase in the Company's
cost and the average price per page paid by customers could decrease. A decrease
in the number of pages per FSI program and the average price per page could have
a material adverse effect on the Company's financial performance. Several times
in the past, new competitors have attempted to establish themselves in the FSI
market. In some instances, this has resulted in periods of intense price
competition. Future competition could have a similar negative impact on the
Company's financial performance. The Company also experiences competition with
respect to its VIP and ROP divisions. See 'Management's Discussion and Analysis
of Financial Condition and Results of Operations' and 'Business -- Competition.'
Although management believes that cooperative FSIs are currently the most
efficient means of distributing coupons to the public, the Company competes with
other media for the promotion and marketing dollars of its customers. It is
possible that alternative media or changes in promotional strategies could make
FSIs less attractive to the Company's customers or could cause a shift in their
preference to different promotional materials or coupon delivery modes.
COST OF PAPER
Paper constitutes one of the Company's primary cost components. In the last
two years, the Company's paper prices have experienced dramatic fluctuations,
increasing nearly 70% in 1995 before returning in 1997 to levels approximating
those in 1994. The Company has very limited ability to protect itself from such
fluctuations or to pass increased costs along to its customers. The Company
maintains on average less than 30 days of paper inventory. Significant increases
in the cost of paper could have a material adverse effect on the Company's
financial performance.
PRINCIPAL STOCKHOLDER
After the Offerings, the Selling Stockholder will own approximately 17.9%
of the outstanding Common Stock (approximately 13.0% if the Underwriters'
over-allotment options are exercised in full) and will, therefore, retain the
effective power to influence the Company's corporate policies. See 'Principal
and Selling Stockholders' and 'Description of Common Stock.' After the
consummation of
7
<PAGE>
<PAGE>
the Offerings, Graham A. Cubbin and James D. Packer (both of whom are affiliated
with the Selling Stockholder) intend to resign from the Company's Board of
Directors, and Brian M. Powers, Chief Executive Officer of CPH, intends to
resign as Chairman of the Company's Board of Directors but remain as a director
of the Company.
SHARES ELIGIBLE FOR FUTURE SALE; FUTURE SALES BY SELLING STOCKHOLDER
No prediction can be made as to the effect that future sales of shares, or
the availability of shares for future sale, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock (including shares issued upon the exercise of stock options), or
the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock.
All of the shares of Common Stock sold in the Offerings (including shares,
if any, sold if the Underwriters' over-allotment options are exercised) may be
freely traded without restriction under the Securities Act of 1933, as amended
(the 'Securities Act'), except for any shares purchased or held by an
'affiliate' of the Company, as that term is defined under Rule 144 promulgated
under the Securities Act. In addition to the Shares sold in the Offerings,
913,342 shares issuable upon the exercise of options (of which options covering
548,026 shares were exercisable as of April 30, 1997) will be eligible for sale
by holders without restrictions under the Securities Act. In addition, 2,080,472
shares issuable upon the exercise of options (of which options covering
2,050,472 shares will be exercisable immediately following the Offerings) will
be subject to the volume and manner of sale restrictions contained in Rule 144
unless sold pursuant to an effective registration under the Securities Act and
the sale restrictions imposed under the Purchase Agreements described in 'Shares
Eligible for Future Sale.' In addition, the remaining 7,173,800 shares held by
the Selling Stockholder (assuming no exercise of the Underwriters'
over-allotment options) will also be subject to the volume and manner of sale
restrictions contained in Rule 144 unless sold pursuant to an effective
registration under the Securities Act. The Selling Stockholder has been granted
certain registration rights in connection with the Offerings, pursuant to which
some or all of the Selling Stockholder's shares of Common Stock owned following
the Offerings may be registered for resale on the open market. See 'Principal
and Selling Stockholders.'
8
<PAGE>
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Company's Common Stock is traded on the NYSE under the symbol 'VCI.'
The following table sets forth the high and low reported sale prices for the
Common Stock as quoted by the NYSE for the periods indicated.
<TABLE>
<CAPTION>
CALENDAR PERIOD LOW HIGH
- -------------------------------------------------------------------------------------- --- ---
<S> <C> <C>
1995
First Quarter.................................................................... $14 1/2 $18 5/8
Second Quarter................................................................... 16 1/8 18 1/2
Third Quarter.................................................................... 14 17 1/4
Fourth Quarter................................................................... 13 5/8 17 7/8
1996
First Quarter.................................................................... $15 1/2 $17 5/8
Second Quarter................................................................... 14 5/8 19 3/8
Third Quarter.................................................................... 14 7/8 18 3/8
Fourth Quarter................................................................... 14 5/8 21 1/8
1997
First Quarter.................................................................... $18 1/4 $23
Second Quarter (through June 10, 1997)........................................... 21 1/8 28
</TABLE>
The last reported sale price for the Common Stock on the NYSE on June 10,
1997 was $27 1/4 per share. As of June 3, 1997, there were approximately 340
holders of record of Common Stock.
During 1996, the Company's Board of Directors authorized the repurchase of
up to 5,000,000 shares of Common Stock. Since that time, the Company has
repurchased 3,383,200 shares of Common Stock. See 'Principal and Selling
Stockholders -- Certain Transactions and Relationships.'
The Company suspended its policy of paying cash dividends on its Common
Stock in 1993. The terms of certain debt instruments (including the Company's
credit facility and the indentures related to its public debt securities)
restrict the payment of dividends. The declaration and timing of any dividends
in the future will be determined by the Company's Board of Directors, based on
its results of operations, financial condition, cash requirements, certain
corporate law requirements, applicable restrictive covenants and other factors.
9
<PAGE>
<PAGE>
USE OF PROCEEDS
All of the Shares offered hereby are being offered by the Selling
Stockholder. The Company will receive no proceeds from the Offerings.
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
subsidiaries at March 31, 1997 as derived from the Company's unaudited interim
financial statements. This table should be read in conjunction with the
Company's consolidated financial statements and notes thereto which have been
incorporated herein by reference.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
CASH AND CASH EQUIVALENTS........................................................ $ 60,901
------------
------------
SHORT-TERM DEBT.................................................................. --
LONG-TERM DEBT
Credit Facility(1).......................................................... --
8 7/8% Senior Notes Due 1999................................................ $ 6,142
9 3/8% Senior Subordinated Notes Due 1999................................... 123,457
9.55% Senior Notes Due 2003................................................. 254,884
------------
Total long-term debt................................................... 384,483
------------
STOCKHOLDERS' DEFICIT
Common Stock, par value $.01; 100,000,000 shares authorized; 41,452,342
shares outstanding at March 31, 1997...................................... 435
Additional paid-in capital.................................................. 42,891
Accumulated deficit......................................................... (284,257)
Less cost of treasury stock at cost (2,037,200 shares at March 31, 1997).... (35,873)
Common Stock repurchase commitment(2)....................................... (14,323)
Foreign currency translation adjustment..................................... (147)
------------
Total stockholders' deficit............................................ (291,274)
------------
Total capitalization.............................................. $ 93,209
------------
------------
</TABLE>
- ------------
(1) The Company has the ability, subject to certain limitations, to borrow an
aggregate amount of up to $40,000 under the Company's existing credit
facility for general corporate purposes. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'
(2) Represents amounts payable to the Selling Stockholder or its affiliates
(other than the Company) pursuant to repurchase options exercised under the
Option Agreement through March 31, 1997. As of June 1, 1997, the Common
Stock repurchase commitment under the Option Agreement was $21,376, all of
which was paid on June 11, 1997. See 'Principal and Selling
Stockholders -- Certain Transactions and Relationships.'
10
<PAGE>
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of the Company for the periods indicated below. In July 1994, the Company
elected to change its year-end from June 30 to December 31, resulting in a
six-month transitional period ended December 31, 1994. The selected consolidated
financial information is derived from the Company's consolidated financial
statements and notes thereto. Information for the three months ended March 31,
1997 and 1996 is derived from unaudited interim financial statements which
reflect, in the opinion of the Company, all adjustments, which include only
normal recurring adjustments, necessary for a fair presentation of the financial
data for such periods. Results for interim periods are not necessarily
indicative of results for the full year. The Company is expected to incur a
charge against results of operations in respect of a special cash bonus to be
paid by the Selling Stockholder or its affiliates (other than the Company) to
certain employees in connection with the Offerings. See 'Principal and Selling
Stockholders -- Certain Transactions and Relationships.' This table should be
read in conjunction with the Company's consolidated financial statements and
notes thereto which have been incorporated herein by reference. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED SIX MONTHS
MARCH 31, DECEMBER 31, ENDED
-------------------- -------------------------- DECEMBER 31,
1997 1996 1996 1995 1994
--------- --------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Net sales............. $ 189,307 $ 179,996 $ 656,602 $ 609,969 $ 277,944
Other................. 652 537 2,506 3,783 1,090
--------- --------- ------------ ------------ ------------
189,959 180,533 659,108 613,752 279,034
Costs and expenses:
Cost of products
sold................ 123,607 134,290 473,123 466,120 223,456
Selling, general and
administrative...... 17,035 16,496 67,139 59,445 27,473
Amortization of
intangible assets... 2,544 2,067 8,181 9,626 4,672
Interest expense...... 10,099 10,263 39,625 40,451 19,623
Minority interests.... 10 (43) (12) (1,374) (262)
Write-downs/sale of
business(2)......... -- -- -- 16,870 --
--------- --------- ------------ ------------ ------------
153,295 163,073 588,056 591,138 274,962
Earnings (loss) before
income taxes and
extraordinary loss...... 36,664 17,460 71,052 22,614 4,072
Income taxes.............. 14,366 7,000 28,150 13,040 2,149
--------- --------- ------------ ------------ ------------
Earnings before
extraordinary loss...... 22,298 10,460 42,902 9,574 1,923
Extraordinary loss(3)..... -- -- -- -- (4,176)
--------- --------- ------------ ------------ ------------
Net earnings (loss)....... $ 22,298 $ 10,460 $ 42,902 $ 9,574 $ (2,253)
--------- --------- ------------ ------------ ------------
--------- --------- ------------ ------------ ------------
Net earnings per share
before extraordinary
loss.................... $ .53 $ .24 $ 1.00 $ .22 $ .04
Net earnings (loss) per
share................... .53 .24 1.00 .22 (.05)
OTHER DATA:
Operating earnings(4)..... $ 46,763 $ 27,723 $ 110,677 $ 63,065 $ 23,695
Depreciation and
amortization............ 4,332 4,018 15,198 18,984 9,722
Capital expenditures...... 5,786 1,575 7,104 6,530 9,173
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital........... $ (1,102) $ 11,084 $ 16,361 $ 6,281 $ (21,377)
Total assets.............. 267,976 252,939 273,734 258,932 234,330
Total debt................ 384,483 408,066 403,155 416,034 417,927
Total stockholders'
deficit................. (291,274) (298,767) (286,594) (309,274) (319,032)
<CAPTION>
YEAR ENDED
JUNE 30,
-------------------------------
1994 1993 1992(1)
---------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Net sales.............$ 539,737 $ 660,167 $ 669,292
Other................. 2,872 1,211 14,737
---------- --------- ---------
542,609 661,378 684,029
Costs and expenses:
Cost of products
sold................ 432,492 427,187 428,873
Selling, general and
administrative...... 62,625 48,334 70,497
Amortization of
intangible assets... 10,902 10,770 19,415
Interest expense...... 38,217 39,907 37,728
Minority interests.... -- -- --
Write-downs/sale of
business(2)......... -- -- --
---------- --------- ---------
544,236 526,198 556,513
Earnings (loss) before
income taxes and
extraordinary loss...... (1,627) 135,180 127,516
Income taxes.............. (6,800) 53,246 53,100
---------- --------- ---------
Earnings before
extraordinary loss...... 5,173 81,934 74,416
Extraordinary loss(3)..... -- -- --
---------- --------- ---------
Net earnings (loss).......$ 5,173 $ 81,934 $ 74,416
---------- --------- ---------
---------- --------- ---------
Net earnings per share
before extraordinary
loss....................$ .12 $ 1.89 $ 1.62
Net earnings (loss) per
share................... .12 1.89 --
OTHER DATA:
Operating earnings(4).....$ 36,590 $ 175,087 $ 165,244
Depreciation and
amortization............ 23,959 25,384 35,654
Capital expenditures...... 4,069 4,039 4,192
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital...........$ (15,309) $(55,675) $ (99,696)
Total assets.............. 239,709 275,165 292,718
Total debt................ 419,000 418,741 493,481
Total stockholders'
deficit................. (316,779) (321,952) (385,700)
</TABLE>
- ------------
(1) Net earnings per share before extraordinary loss for the fiscal year ended
June 30, 1992 gives effect to the concurrent consummation, in March 1992, of
(i) the Company's public offerings of 22,100,000 shares of Common Stock,
$150 million aggregate principal amount of 8 3/8% Senior Notes Due 1997,
$120 million aggregate principal amount of 8 7/8% Senior Notes Due 1999 and
$150 million aggregate principal amount of 9 3/8% Senior Subordinated Notes
Due 1999, and (ii) the Company's then-existing senior secured bank credit
facility, and the application of the proceeds therefrom, as if such
transactions had occurred at the beginning of the period presented. 1992
results include a charge against results of operations of $8.0 million in
respect of a nonrecurring special cash bonus for certain employees, paid by
CPH or one of its subsidiaries (other than the Company) in connection with
the Company's March 1992 initial public offering of Common Stock.
(2) Write-downs/sale of business represents the aggregate pre-tax loss resulting
from the sale of Valcheck (as defined), the discontinuation of the Company's
in-store electronic sign network and the write-down of the goodwill recorded
as a result of the purchase of Valassis of Canada in accordance with FAS
121 -- Impairment of Long-Lived Assets, all during 1995.
(3) Extraordinary loss represents the loss, net of applicable income tax benefit
of $2,694, resulting from the retirement through acquisition by tender offer
of $256.6 million in debt of the Company in November 1994.
(4) Operating earnings represent earnings from continuing operations before
interest expense and income taxes. Operating earnings include
write-downs/sale of business of $16,870 in the year ended December 31, 1995
and minority income of $12, $1,374, $262 and $43 for the years ended
December 31, 1996 and 1995, the six months ended December 31, 1994, and the
three months ended March 31, 1996, respectively, and minority loss of $10
for the three months ended March 31, 1997.
11
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements under the caption 'Management's Discussion and Analysis
of Financial Condition and Results of Operations' constitute 'forward-looking
statements' within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks and
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following: a
new competitor in the Company's core FSI business and consequent price
competition; an increase in the Company's paper costs; new technology that would
make FSIs less attractive; a shift in customer preference for different
promotional materials, promotional strategies or coupon delivery modes; or
general business and economic conditions.
GENERAL
The Company derives revenues primarily from the sale of space in
promotional materials printed on the Company's printing presses. The Company's
prime cost components include paper, payments to newspapers for insertion of
promotional materials (media), printing costs (including labor) and shipping.
As a result of the acquisition of the Company by an affiliate of CPH in
1986, the Company incurred approximately $332.0 million in debt. The acquisition
included significant amounts of tangible and intangible assets. As a
consequence, the Company's results of operations include a significant level of
noncash expenses related to the amortization of intangible assets, including
goodwill.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, certain income
and expense items from continuing operations and the percentages that such items
bear to revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31,
-------------------------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994
------------------ ------------------ ------------------ ------------------ ------------------
% OF % OF % OF % OF % OF
ACTUAL REVENUES ACTUAL REVENUES ACTUAL REVENUES ACTUAL REVENUES ACTUAL REVENUES
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(UNAUDITED) (DOLLARS IN MILLIONS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FSI sales..................... $141.4 74.4% $145.2 80.5% $504.1 76.5% $480.7 78.3% $446.3 79.3%
VIP sales..................... 25.2 13.3% 18.6 10.3% 89.4 13.6% 76.8 12.5% 61.7 11.0%
ROP sales..................... 10.7 5.6% 3.8 2.1% 25.5 3.9% 19.4 3.2% 38.3 6.8%
Other......................... 12.7 6.7% 12.9 7.1% 40.1 6.0% 36.9 6.0% 16.5 2.9%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Revenues...................... 190.0 100.0% 180.5 100.0% 659.1 100.0% 613.8 100.0% 562.8 100.0%
Cost of products sold......... 123.6 65.1% 134.3 74.4% 473.1 71.8% 466.1 75.9% 451.6 80.2%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Gross profit.................. 66.4 34.9% 46.2 25.6% 186.0 28.2% 147.7 24.1% 111.2 19.8%
Selling, general and
administrative expenses..... 17.0 8.9% 16.5 9.1% 67.1 10.2% 59.5 9.7% 69.9 12.4%
Amortization of intangibles... 2.6 1.4% 2.0 1.1% 8.2 1.2% 9.6 1.5% 10.2 1.8%
Minority interest............. -- -- -- -- -- -- (1.4) (.2)% (.3) --
Write-downs/sale of
business.................... -- -- -- -- -- -- 16.9 2.8% -- --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Operating earnings............ 46.8 24.6% 27.7 15.4% 110.7 16.8% 63.1 10.3% 31.4 5.6%
Interest expense.............. 10.1 5.3% 10.2 5.7% 39.6 6.0% 40.5 6.6% 39.3 7.0%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings (loss) before income
taxes and extraordinary
loss........................ 36.7 19.3% 17.5 9.7% 71.1 10.8% 22.6 3.7% (7.9) (1.4)%
Income taxes.................. 14.4 7.6% 7.0 3.9% 28.2 4.3% 13.0 2.1% (11.7) (2.1)%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings before extraordinary
loss........................ $ 22.3 11.7% $ 10.5 5.8% $ 42.9 6.5% $ 9.6 1.6% $ 3.8 .7%
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
12
<PAGE>
<PAGE>
FIRST THREE MONTHS OF 1997 COMPARED TO FIRST THREE MONTHS OF 1996
Total revenues increased 5.3% from $180.5 million for the first quarter of
1996 to $190.0 million for the first quarter of 1997. FSI revenues were down
2.6% from $145.2 million for the first quarter of 1996 to $141.4 million for the
first quarter of 1997. This decline was due primarily to the first quarter of
1997 having one less FSI publishing date than the first quarter of 1996.
Management expects FSI page volume to be relatively flat in 1997 based on the
Company's performance thus far in 1997, existing bookings and tentative
reservations for space in the balance of the year. VIP sales were up 35.5% to
$25.2 million for the first quarter of 1997, as compared to $18.6 million for
the first quarter of 1996. This increase reflected the continued strong demand
by core customers as well as additional sales from new customers. VIP sales do
not typically track quarter-to-quarter and do not require the same level of
advance bookings; however, management anticipates VIP will continue to
experience growth in 1997. ROP sales rose significantly during the first quarter
of 1997 to $10.7 million, from $3.8 million for the first quarter of 1996. Like
VIP sales, ROP sales do not necessarily track quarter-to-quarter, and the first
quarter increase in 1997 was primarily driven by one-time events in the
pharmaceutical category. The ROP division is not expected to be a strong growth
area, but has been experiencing an increased demand in certain product
categories.
Gross profit margin rose to 34.9% in the first quarter of 1997, from 25.6%
in the first quarter of 1996. This was primarily the result of the decline in
paper prices from the prior year and, to a lesser extent, media efficiencies
caused by higher average page counts in the first quarter of 1997.
Selling, general and administrative expenses increased slightly to $17.0
million for the first quarter of 1997 from $16.5 million for the first quarter
of 1996. Management expects selling, general and administrative expenses in the
remainder of 1997 to remain consistent with those experienced in the first
quarter.
Interest expense was down for the first quarter of 1997, reflecting the
decrease in aggregate outstanding indebtedness following the early retirement of
debt during the final three quarters of 1996 and the first quarter of 1997.
Included in interest expense for the quarter ended March 31, 1997 was $378,000
representing premiums paid to repurchase debt. Amortization expense increased as
the $470,000 of goodwill on the books of the Company's French subsidiary was
written off during the first quarter of 1997 as the result of management's
decision to discontinue operations in France.
Net earnings were $22.3 million for the first quarter of 1997, as compared
to $10.5 million for the first quarter of 1996. These improved results were due
to strong VIP and ROP sales, together with a 34% decline in paper costs from the
first quarter of 1996. Management believes paper costs should remain relatively
stable during the remainder of 1997.
Traditionally, the first quarter is the Company's strongest quarter with
respect to volumes and earnings. Results for 1996 did not follow this pattern,
as later quarters were significantly impacted by rapidly declining paper prices.
CALENDAR 1996 COMPARED TO CALENDAR 1995
Net earnings increased 347% to $42.9 million in 1996 from $9.6 million in
1995. This increase was due primarily to improved pricing in the core business
of FSIs. In addition, 1995 earnings included an after-tax charge of $12.5
million due to the discontinuance of the Company's in-store marketing business
and the write-down of goodwill of Valassis of Canada.
Revenues for calendar 1996 were $659.1 million, up 7.4% from $613.8 million
in calendar 1995. FSI revenue increased 4.9% to $504.1 million in 1996,
reflecting higher FSI pricing. FSI page volume was down slightly during 1996 as
the result of fewer publishing dates; however, the Company's FSI market share
increased (based on Company-estimated number of FSI pages published) during the
second half of 1996. VIP revenue increased significantly during 1996, rising to
$89.4 million in 1996, as compared to $76.8 million in 1995. This 16.4% increase
was due principally to increased promotional activity by core customers and new
customers, as well as strong demand for VIP's expanded product line. ROP revenue
rose 31.4% from the 1995 level to $25.5 million in 1996 as the result of
increased activity by retail accounts and the pharmaceutical industry. Revenue
from other businesses also increased, particularly in the area of sampling due
to the introduction of a new sampling product. Management expects this growth in
its sampling business to continue in 1997.
13
<PAGE>
<PAGE>
Gross profit as a percentage of revenue increased to 28.2% in 1996,
compared to 24.1% in 1995. The increase was primarily attributable to improved
FSI pricing. Paper costs began to fall during 1996, after dramatic increases in
1995; however, the average cost for 1996 was up slightly from the 1995 average.
The declining paper prices experienced throughout 1996 are expected to have an
even greater positive effect in 1997, to the extent that lower costs are
experienced throughout the entire year.
Selling, general and administrative expenses increased to $67.1 million in
1996, as compared to $59.5 million in 1995. The 1996 increase reflected
additional selling costs associated with higher revenues and a full year of
operations for Valassis of Canada, the Company's Canadian subsidiary, acquired
in March 1995. Moreover, 1995 expenses were reduced by the effect of a $1.0
million insurance refund.
Interest expense was down in 1996 to $39.6 million from $40.5 million in
1995. The Company purchased $13.0 million and $2.0 million in principal amount
of its public subordinated debt in 1996 and 1995, respectively.
CALENDAR 1995 COMPARED TO CALENDAR 1994
Net earnings increased to $9.6 million in 1995 from $3.8 million (before an
extraordinary loss of $4.2 million) in the comparable year ended December 31,
1994. This increase was due primarily to improved pricing in the core business
of FSIs as the negative impact of a 1993-1994 industry price war began to
lessen. See 'Business -- Competition.' Earnings for 1995 were negatively
affected, however, due to dramatic increases in the cost of paper, as well as
the after-tax charges associated with the discontinuance of the Company's
in-store marketing business and the write-down of goodwill of Valassis of
Canada.
Revenues for calendar 1995 were $613.8 million, up 9.1% from $562.8 million
in calendar 1994. This increase was primarily attributable to higher FSI pricing
in 1995. FSI revenue rose 7.7% to $480.7 million in 1995. Although price
recovery was substantial, pages produced were down nearly 7% as a result of
decreased market share and fewer publishing dates in 1995 versus 1994. VIP
revenue increased significantly, rising to $76.8 million in 1995 from $61.7
million in 1994. This growth reflected expanded printing capacity, increased
spending by traditional customers and new product offerings. ROP revenue
declined in 1995 to $19.4 million compared with $38.3 million in 1994. This
decrease was due principally to the loss of a large contract which expired in
early 1995. New businesses, including sampling and international ventures,
contributed $35.6 million to 1995 revenue, compared with $13.5 million in 1994.
This increase was primarily due to the acquisition of Valassis of Canada in 1995
and growth in the sampling division.
Gross profit as a percentage of revenue increased to 24.1% in 1995,
compared with 19.8% in 1994. The increase was due principally to higher pricing,
partially offset by unprecedented increases in the cost of paper, the Company's
largest cost component. Improved media and printing efficiencies were also
experienced in 1995, due to increased book sizes.
Selling, general and administrative expenses decreased to $59.5 million in
1995, compared with $69.9 million in 1994. Expenses in this category for 1994
included a one-time charge of $14.0 million to settle a lawsuit with Sullivan
Marketing, Inc.
Interest expense increased slightly to $40.5 million in 1995 from $39.3
million in 1994. Debt refinancings at the end of 1994 resulted in extended
maturities and a higher interest rate. During 1995, $2.0 million in principal
amount of public debt was extinguished, through an open-market purchase of
subordinated debt.
The assets of Valcheck Company ('Valcheck') (a partnership owned 80%
indirectly by the Company and 20% by a third party, that was engaged in the
marketing and printing of personal checks), were sold in May of 1995, resulting
in a pre-tax loss of $1 million. Valcheck accounted for $6.2 million and $3.9
million of revenue in 1995 and 1994, respectively.
In 1995, the Company decided to discontinue its in-store electronic sign
network resulting in a pre-tax charge of $9.7 million to restate the assets to
net realizable value. In addition, the goodwill recorded as a result of the
purchase of Valassis of Canada was written down in accordance with the
requirements of FAS 121 -- Impairment of Long-Lived Assets, resulting in a
charge of $6.2 million. There was no income tax effect related to this
write-down of goodwill. Based on the competitive climate, the
14
<PAGE>
<PAGE>
Canadian economy and changes in the mail order business at the time of the
write-down, the projected future cash flows from the acquired business were not
sufficient to justify the carrying value of the intangible assets. Valassis of
Canada generated a pre-write-down net loss of $1.5 million in its nine months of
operations in 1995, with $12.7 million of revenue.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity requirements arise mainly from its working capital
needs, primarily accounts receivable and inventory, and debt service
requirements. The Company does not offer financing to its customers. FSI
customers are billed for 75% of each order eight weeks in advance of the
publication date and are billed for the balance immediately prior to the
publication date. The Company inventories its work in progress at cost while it
accrues progress billings as a current liability at full sales value. Although
the Company receives considerable payments from its customers prior to
publication of committed promotions, revenue is recognized only upon publication
dates. Therefore, the progress billings on the balance sheet include any profits
in the related receivables, and accordingly, the Company can operate with low,
or even negative, working capital.
Cash flow from operating activities increased from $10.6 million for the
quarter ended March 31, 1996 to $37.9 million for the quarter ended March 31,
1997. This increase was mainly due to increased earnings and other positive
working capital changes.
From January 1, 1997 to April 30, 1997, the Company applied $12.7 million
of cash toward the early retirement of long-term debt and $7.3 million in cash
to satisfy scheduled principal amounts. During the first half of 1997, the
Company also applied $42.8 million to repurchase Common Stock, $21.4 million of
which was purchased by the Company under the Option Agreement. See 'Principal
and Selling Stockholders -- Certain Transactions and Relationships.'
The Company also had the ability as of March 31, 1997 to incur $40.0
million of additional indebtedness under its existing credit facility.
The Company has scheduled principal prepayments on indebtedness of $128.5
million on March 15, 1999 and $255.0 million on December 1, 2003. The Company
intends to use cash generated by operations to meet interest and principal
repayment obligations, for general corporate purposes, to reduce its
indebtedness and from time to time repurchase stock through the Company's stock
repurchase program.
On May 30, 1997, Valcheck exercised a put option for $5.00 per share in
connection with 500,000 shares of common stock of Artistic Greetings, Inc. it
received as partial consideration for its sale of its check business in 1995.
Accordingly, it expects to receive $2.5 million in the near future, 20% of which
is owed to a third party investor in Valcheck.
Management believes the Company will generate sufficient funds from
operations and will have sufficient lines of credit available to meet currently
anticipated liquidity needs, including interest and required principal payments
on indebtedness.
CAPITAL EXPENDITURES
The Company owns three printing facilities. Capital expenditures were $7.1
million and $5.8 million for the year ended December 31, 1996 and the quarter
ended March 31, 1997, respectively. Included in 1997 capital expenditures are a
new printing press to accommodate the growth in the VIP business and costs
associated with the relocation of the corporate headquarters. Management expects
future capital expenditure requirements of approximately $7.0 million for the
final three quarters of 1997 and approximately $5.0 million to $12.0 million in
each of the next three years to meet increased capacity needs and to replace or
rebuild equipment as required. It is expected that such capital expenditures
will be financed from funds provided by operations.
INFLATION
The results of operations and financial condition are presented based upon
historical cost. While it is difficult to accurately measure the impact of
inflation because of the nature of the estimates required, management believes
that the effect of inflation on the results of the Company's operations and
financial condition has not been significant.
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BUSINESS
OVERVIEW
The Company is a leading print media company in the consumer promotion
industry. The Company generates most of its revenues by printing and publishing
cents-off coupons and other consumer purchase incentives primarily for package
goods manufacturers. Package goods manufacturers use cents-off coupons to
increase market share, build brand equity, attract new users and promote new
products. The Company is one of the United States' largest printers and
publishers of these coupons.
Most of the consumer purchase incentives published by the Company are
featured in cooperative FSIs, which are four-color promotional booklets printed
at the three facilities owned by the Company. On 46 publishing dates in 1996,
the Company's cooperative FSIs were inserted in the Sunday edition of over 400
newspapers with a combined average paid circulation of approximately 56.5
million. FSI sales represented approximately 76.5% and 74.4% of the Company's
revenues for 1996 and the first quarter of 1997, respectively.
The Company's VIP division was established in 1989 in response to growing
customer demand for solo customized promotions. VIP offers customized design,
printing and distribution services primarily for solo promotional programs. The
division specializes in producing turnkey promotions for franchise and retail
marketers, such as fast food chains, allowing orders to be placed on a national,
regional or local basis.
In addition to its FSI and VIP divisions, the Company arranges for the
publication of its customers' consumer promotions directly on the pages of
newspapers through its ROP division, which has the capacity to place promotions
in major newspapers throughout the United States.
The Company further expanded its product line in 1994 by introducing
newspaper-delivered sampling products ('Newspac' and 'Newspouch'). In 1995, the
Company acquired a Canadian consumer promotion and direct response merchandising
company which it operates as Valassis of Canada. The Company previously engaged
in a joint venture in Mexico and purchased a majority interest in a French
promotion company, although both investments have since been liquidated.
International operations accounted for approximately 3% of the Company's total
revenues in 1996 and the first quarter of 1997.
BUSINESS STRATEGY
The Company's strategy is to capitalize on the strong cash flow
characteristics of its core FSI division and to maintain stable growth in
profitability in that division. In order to accomplish the foregoing, the
Company's strategy is to improve pricing of its FSI product and to continue its
commitment to minimize costs through the use of computerized information systems
and state-of-the-art production facilities, while providing high levels of
product quality and customer service. The Company seeks to leverage its
expertise in consumer promotion to develop further its growing VIP and sampling
product lines. The Company will continue to develop and offer to its customers
other products and services which complement its FSI expertise.
The Company has entered into strategic acquisitions in the past in order to
increase or protect market share, enter new markets for its traditional business
lines or facilitate development of new product lines. The Company anticipates
that it will continue to investigate opportunities for strategic acquisitions
which management believes will enhance stockholder value.
FREE-STANDING INSERTS (FSIs)
The Company's FSIs are distributed 46 to 48 times per year, depending upon
the number of Sundays in any particular year that the Company considers viable
publishing dates (generally, any non-holiday weekend). The Company printed and
published approximately 76.1 billion cooperative FSI pages during the year ended
December 31, 1996, representing over 46% of the Company-estimated 165 billion
cooperative FSI pages printed and distributed nationally. During that period,
the Company's cooperative FSIs were inserted in the Sunday edition of over 400
newspapers with a combined average paid circulation of 56.5 million. Cooperative
FSI sales during the year ended December 31, 1996 and the
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first quarter of 1997 were $504.1 million and $141.4 million, or approximately
76.5% and 74.4%, respectively, of the Company's total revenues.
Many sales are made significantly in advance of program dates. The Company
typically announces its annual publication schedule approximately 18 months in
advance of the first publication date and customers may reserve categories at
any time thereafter. Account managers work closely with customers to select
their FSI publication dates from the Company's schedule and coordinate all
aspects of FSI printing and publication. The Company's proprietary order entry
and ad placement software allows it to produce as many different FSI versions as
customers require, typically over 270 different layout versions per publication
date. By offering different versions in different markets, the Company offers
its customers greater flexibility to target precise geographic areas or tailor
promotional offers to particular markets by varying coupon values, promotion
copy and terms of the promotional offer.
No single customer accounted for more than 10% of FSI sales during the year
ended December 31, 1996 with the top ten customers accounting for approximately
33% of FSI sales during the same period.
REMNANT SPACE
At the end of the selling cycle for each cooperative FSI program, there is
generally space in the booklet that has not been sold. This space, which
typically accounts for approximately 20% of an FSI program, is referred to as
'remnant space' and is sold at a discount, primarily to direct mail marketers,
who place themselves on a waiting list for space that may become available.
Remnant space sales are included in total cooperative FSI sales for financial
reporting purposes.
The Company selects direct mail marketers as remnant space customers on the
basis of a number of factors, including price, circulation, reputation and
credit-worthiness. Remnant space customers are subject to being 'bumped' in
favor of a regular price customer in need of space at the last minute.
VALASSIS IMPACT PROMOTIONS (VIP)
VIP offers its customers specialty print promotion products in multiple,
customized formats such as die-cuts, posters and calendars, as well as
traditional FSI formats. Because these promotions feature only one manufacturer
(referred to as 'solos'), the customer has the ability to create a completely
individualized promotion. While VIP does, on occasion, produce printed material
for direct mail programs or for shipment to store locations, its primary product
is newspaper-delivered promotions. VIP offers customers the flexibility to run
promotions any day of the year in newspapers throughout the United States. VIP
specializes in producing turnkey promotions for franchise and retail marketers
(e.g., fast food chains), allowing orders to be placed on a national, regional
or local basis.
To enhance the value of VIP, the Company recently developed Media Targeting
Segmentation Systems, a detailed geographical targeting product which allows
Valassis to deliver promotions for customers to specific zip codes or zones
based upon the ability of the newspaper to provide zoned delivery. This
enhancement allows, for example, a fast food franchisee to target a radius
around its stores for a specific promotion.
VIP sales during the year ended December 31, 1996 and the first quarter of
1997 were $89.4 million and $25.2 million, or approximately 13.6% and 13.3%,
respectively, of the Company's total revenues. VIP sales are subject to greater
volatility than either FSI or ROP sales due to the current limited number of VIP
customers. VIP customers are made up of package goods manufacturers, fast food
chain accounts, food brokers and food retailers. VIP customers include retailers
who are generally excluded from the cooperative format. The top three customers
accounted for approximately 40% of VIP sales for the year ended December 31,
1996, with the top ten customers accounting for approximately 68% of total VIP
sales.
RUN-OF-PRESS (ROP)
The Company arranges for the publication of ROP promotions in either a
cooperative or solo format. Cooperative programs, which group the promotions of
several customers together, are sold on a product exclusive basis, and usually
run each week when a newspaper runs its food section. Solo programs (featuring a
single advertiser) offer the marketer the flexibility to run in newspapers
throughout the United States (including newspapers targeted to specific
demographic groups) on any day of the year and in any section of the newspaper.
The Company's total ROP sales during the year
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ended December 31, 1996 and the first quarter of 1997 were $25.5 million and
$10.7 million, or approximately 3.9% and 5.6%, respectively, of the Company's
total revenues.
Media (newspaper placement fees) is the major cost component of ROP
distribution, accounting for virtually all of the Company's total direct ROP
costs during the year ended December 31, 1996 and the first quarter of 1997.
Management believes that its customers use the Company to place ROP because of
the Company's ability to negotiate favorable media rates, its well-developed
production and placement capabilities, and its capacity to execute integrated
FSI and ROP programs.
ROP customers include primarily package goods manufacturers, and their
advertising and promotion agencies. The top four customers accounted for 62% of
ROP sales for the year ended December 31, 1996, with the top ten customers
accounting for approximately 83% of the total ROP sales during the same period.
VALASSIS SAMPLING
In 1994 Valassis introduced a newspaper-delivered sampling product that
gives manufacturers the ability to reach up to 50 million households in one day.
Samples can either be machine inserted into newspapers (Newspac), placed in a
polybag alongside the newspaper, or pre-sealed in a pouch that forms part of the
polybag (Newspouch).
Valassis' sampling sales during the year ended December 31, 1996 and the
first quarter of 1997 were $14.3 million and $5.8 million, or approximately 2.2%
and 3.0%, respectively, of the Company's total revenues. One customer accounted
for 27% of sampling sales for the year ended December 31, 1996, with the top 10
customers accounting for approximately 92% of total sampling sales during 1996.
BACKGROUND OF THE COMPANY
The Company is the successor to a business founded in 1970 and operated
under the names George F. Valassis & Company and GFV Communications, Inc.
Valassis produced its first FSI in 1972. In December 1986, the assets of this
business were acquired by Valassis Inserts, a corporation indirectly owned by
CPH, an affiliate of the Selling Stockholder. In March 1992, the Company, which
was the direct parent of Valassis Inserts, sold 22,100,000 shares of Common
Stock to the public. In March 1993, Valassis Inserts was merged into the
Company, its corporate parent.
VALASSIS OF CANADA
In March 1995, Valassis acquired a Canadian consumer promotion and direct
response merchandising company which it operates as Valassis of Canada. Valassis
of Canada faced several challenges in 1995, including an industry price/market
share battle, a relatively poor Canadian economy, and mail order volume decline.
Since then, the Company has streamlined or repositioned existing products,
dropped unprofitable offerings, and added new products and services to better
meet the needs of its customers.
DISPOSITIONS
In April 1997, the Company decided to discontinue the operations of
Valassis France, its French subsidiary specializing in couponing programs and
customized consumer print promotions. This resulted in a net write-off of
goodwill of $470,000 at March 31, 1997.
The Company had a 50% joint venture interest in Valassis de Mexico but
decided to exit this business in 1997. The disposal of this business involved
minimal costs and did not have a material effect on the Company's earnings or
financial position.
The Company sold the assets of its personal check direct marketing
division, Valcheck, in 1995. In addition, a decision was made at the end of 1995
to discontinue the in-store electronic sign network, Valassis In-Store
Marketing. The assets of Valassis In-Store Marketing were subsequently sold in
April 1996. The Company believes that neither of these product lines
demonstrated the profit potential necessary to warrant continued investment and
marketing support.
COMPETITION
The Company currently competes in the cooperative FSI business principally
with News America FSI, Inc., a company controlled by The News Corporation
Limited. This competitor has substantially
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greater financial resources than those of the Company. The Company competes for
business primarily on the basis of price, category availability, frequency and
availability of publication dates, and customer service and sales relationships.
In addition, the Company competes with in-store advertising and other forms of
coupon delivery.
Several times in the past, new competitors have attempted to establish
themselves in the FSI market. In some instances, this has resulted in periods of
intense price competition. Furthermore, an increase in the number of FSI
programs published may lead to a decrease in the number of pages per FSI program
published by the Company and the average price per page paid by customers with a
consequent material adverse effect on the Company's financial performance. The
Company's results for the fiscal year ended June 30, 1994 and the year ended
December 31, 1994 were severely impacted by business booked under competitive
pricing conditions, which accompanied the efforts of Sullivan Marketing, Inc. to
enter the FSI market. Sullivan Marketing, Inc. withdrew from the FSI market in
February 1994. Some FSI price recovery took place during 1995 with further
increases in FSI prices in 1996.
Although management believes that cooperative FSIs are currently the most
efficient means of distributing coupons to the public, the Company competes with
other media for the promotion and marketing dollars of its customers. It is
possible that alternative media or changes in promotional strategies could make
free-standing inserts less attractive to the Company's customers or could cause
a shift in their preference to different promotional materials or coupon
delivery modes.
The VIP division also competes with News America FSI, Inc. for package
goods and fast food business and with commercial printers. VIP continues to add
new services and product formats to meet the needs of an expanding customer
base.
The Company competes with several newspaper network groups in the ROP
market. As there are no significant capital investments associated with that
business, other competitors could easily enter the ROP market. An increase in
the number of ROP competitors could result in a loss of market share for the
Company's ROP division.
EMPLOYEES
At December 31, 1996, the Company had approximately 1,200 employees.
Approximately 407 of these employees are on the Company's sales, sales
operations and marketing staff; approximately 700 are involved in manufacturing;
approximately 27 are on its management information systems staff; and
approximately 66 are involved with administration. None of the Company's
employees are represented by a labor union. The Company considers labor
relations with employees to be good and has not experienced any interruption of
its operations due to labor disagreements.
PROPERTIES
The principal executive offices of the company are located in a newly
constructed and leased office building in Livonia, Michigan. The Company also
leases sales offices in Seal Beach, California; Schaumburg, Illinois; Atlanta,
Georgia; Dallas, Texas; Boston, Massachusetts; Minneapolis, Minnesota; Wilton,
Connecticut; and various other localities.
The Company owns three printing facilities. The Livonia printing facility
consists of approximately 225,000 square feet and includes VIP, printing and
warehouse facilities. The Company's printing facilities in Durham, North
Carolina and Wichita, Kansas, consist of approximately 110,000 square feet and
138,000 square feet, respectively. In addition, the Company leases a facility in
Plymouth, Michigan which houses its pre-press operations. These facilities
generally have sufficient capacity to handle present volumes although, during
periods of unusual demand, the Company may require services of a contract
printer. Total operating lease rentals for the year ended December 31, 1996 was
$3.2 million.
Pursuant to the terms of the Company's credit facility, substantially all
of the Company's assets and properties are subject to a security interest in
favor of the banks that are parties to such credit facility.
LEGAL PROCEEDINGS
The Company is involved in various routine litigation arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material effect on the Company's
financial position.
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PRINCIPAL AND SELLING STOCKHOLDERS
Set forth below is the number of shares of Common Stock beneficially owned
by the Selling Stockholder as of the date of this Prospectus and the number of
shares of Common Stock beneficially owned as of April 30, 1997 by the Company's
five most highly compensated executive officers, each director of the Company
and all directors and executive officers of the Company as a group, and each
other 5% holder of the Company's Common Stock (after giving effect to the
repurchase of 1,026,200 shares of Common Stock by the Company from the Selling
Stockholder pursuant to the Option Agreement, which repurchase was completed on
June 11, 1997).
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERINGS OFFERINGS(12)
----------------------- ---------------------
NAME NUMBER(1) PERCENT NUMBER PERCENT
- --------------------------------------------------------------- ---------- -------- --------- -------
<S> <C> <C> <C> <C>
Conpress International (Netherlands Antilles) N.V.(2).......... 20,173,800 50.3% 7,173,800 17.9%
Kerry F.B. Packer(2)........................................... 20,173,800 50.3% 7,173,800 17.9%
James D. Packer(2)(3).......................................... 20,173,800 50.3% 7,173,800 17.9%
The Goldman Sachs Group, L.P.(4)............................... 4,225,420 10.5% 4,225,420 10.5%
Richard N. Anderson(5)......................................... 195,680 * 195,680 *
David A. Brandon(6)............................................ 1,416,131 3.4% 1,416,131 3.4%
Graham A. Cubbin............................................... 0 * 0 *
Mark C. Davis(7)............................................... 2,878 * 2,878 *
Barry P. Hoffman(8)............................................ 171,258 * 171,258 *
Jon M. Huntsman, Jr. .......................................... 2,628 * 2,628 *
Brian M. Powers................................................ 0 * 0 *
Robert L. Recchia(9)........................................... 173,471 * 173,471 *
Alan F. Schultz(10)............................................ 211,213 * 211,213 *
Faith Whittlesey............................................... 3,378 * 3,378 *
All executive officers and directors as a group (11
persons)(11)................................................. 22,350,437 53.0% 9,350,437 22.2%
</TABLE>
- ------------
* Less than 1.0%.
The address of Conpress International (Netherlands Antilles) N.V. is c/o
2nd Floor, Block A, Russell Court, Saint Stephen's Green, Dublin 2, Ireland. The
address of Kerry F.B. Packer, Graham A. Cubbin, James D. Packer and Brian M.
Powers is Consolidated Press Holdings Limited, 54-58 Park Street, Sydney,
N.S.W., Australia 2000. The address of The Goldman Sachs Group, L.P. is 85 Broad
Street, New York, New York 10004. The address of Mark C. Davis is Chase Bank,
270 Park Avenue, New York, New York 10017. The address of Faith Whittlesey is
Mountain Lake, PO Box 3651, Lake Wales, Florida 33859. The address of Jon M.
Huntsman, Jr. is 200 Eagle Gate Tower, Salt Lake City, Utah 84111. The address
of all other persons listed above is 19975 Victor Parkway, Livonia, Michigan
48152.
(1) Unless otherwise noted, each beneficial owner of more than 5% of the Common
Stock, director and executive officer has sole voting and investment power
with respect to the shares shown as beneficially owned by him or her.
(2) The Selling Stockholder is 100% indirectly owned by Consolidated Press
International Limited, which in turn is 100% owned (54.3% directly and
45.7% indirectly) by CPH. CPH is 100% owned (52.35% directly and 47.65%
indirectly) by Cairnton Holdings Pty Ltd., of which Consolidated Press
International Holdings Limited ('CPIHL') owns 99.2%. Kerry F.B. Packer is
the indirect beneficial owner of CPIHL. James D. Packer, a director and the
son of Kerry F.B. Packer, may be deemed to have an indirect beneficial
interest in the same shares reported by Kerry F.B. Packer. James D. Packer
does not have sole voting or investment power over such shares.
Additionally, these shares of Common Stock have been pledged to Westpac
Custodian Nominees Limited ('Westpac') pursuant to stock pledge agreements.
Westpac also may be deemed to be the indirect beneficial owner of such
shares. It is a condition of the Offerings that the Shares are released
from the pledges pursuant to such stock pledge agreements.
(footnotes continued on next page)
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(footnotes continued from previous page)
(3) All such shares are owned by the Selling Stockholder, which James D. Packer
may be deemed to beneficially own through a series of beneficially owned
entities. However, James D. Packer does not have sole voting or investment
power over such shares.
(4) This information is based upon a Schedule 13G filed with the Commission on
February 10, 1997, which indicates that voting and investment power is
shared with respect to 2,943,420 of such shares.
(5) Number of shares includes the right to acquire 174,526 shares of Common
Stock within 60 days upon the exercise of outstanding options.
(6) Number of shares includes the right to acquire 1,367,368 shares of Common
Stock.
(7) Until March, 1996, Mr. Davis was a Managing Director of Salomon Brothers
Inc which acted as an underwriter in connection with the Company's initial
public offering in 1992 and the Company's refinancing of its public debt in
November 1994.
(8) Number of shares includes the right to acquire 159,526 shares of Common
Stock.
(9) Number of shares includes the right to acquire 159,526 shares of Common
Stock.
(10) Number of shares includes the right to acquire 189,526 shares of Common
Stock within 60 days upon the exercise of outstanding options.
(11) Number of shares includes currently exercisable options to purchase
2,050,472 shares of Common Stock pursuant to the Company's 1992 Long-Term
Incentive Plan, as amended. In accordance with Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), the
2,050,472 shares of Common Stock for which the Company's directors and
executive officers as a group hold options exercisable within 60 days have
been added to the total number of issued and outstanding shares of Common
Stock solely for the purpose of calculating the percentage of such total
number of issued and outstanding shares of Common Stock beneficially owned
by such directors and executive officers as a group.
(12) Assumes no exercise of the over-allotment options covering 1,950,000 shares
of Common Stock granted to the Underwriters by the Selling Stockholder. If
the over-allotment options are exercised in full, the Selling Stockholder
will own approximately 13.0% of the Company's Common Stock after giving
effect to the Offerings.
------------------------
CERTAIN TRANSACTIONS AND RELATIONSHIPS
The Selling Stockholder, Conpress International (Netherlands Antilles)
N.V., is a Netherlands Antilles private limited liability company indirectly
owned by CPH, a private Australian holding company indirectly owned by Kerry F.
B. Packer (whose son, James D. Packer, is a director of the Company) and his
family. With the completion of the Company's initial public offering in March
1992, CPH's indirect ownership of the Company was reduced to 49%. During 1996,
the Company's Board of Directors authorized the repurchase of up to 5,000,000
shares of Common Stock. In connection with the Company's share repurchase
program and as approved by the stockholders of the Company at its 1996 Annual
Meeting of Stockholders, the Company entered into the Option Agreement, pursuant
to which the Selling Stockholder has the option to sell to the Company a number
of shares of Common Stock up to the number of shares purchased by the Company on
the open market in any given month at a price equal to the average price paid by
the Company to the other stockholders during such month. During 1996, the
Company repurchased approximately 1,330,800 shares of Common Stock, but no
repurchase options were exercised under the Option Agreement and such options
have expired pursuant to the terms thereof. Through June 11, 1997, the Company
repurchased an additional 2,052,400 shares of Common Stock at an average price
of $20.83 per share, including 1,026,200 shares pursuant to repurchase options
under the Option Agreement, which were exercised in full. Following the
Offerings, the Selling Stockholder will own 7,173,800 shares of Common Stock, or
approximately 17.9% of the Company's outstanding shares of Common Stock
(5,223,800 shares or approximately 13.0% of the Company's outstanding shares of
Common Stock if the Underwriters' over-allotment options are exercised in full).
See 'Capitalization' and 'Underwriting.'
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Conditioned on the consummation of the Offerings, the Selling Stockholder
has agreed to pay, or cause one of its affiliates (other than the Company) to
pay, a special cash bonus in the aggregate amount of 1.5% of the gross proceeds
of the Offerings (estimated at $5.3 million, based upon an assumed offering
price of $27 1/4 per share, the last reported sale price of the Common Stock on
the NYSE on June 10, 1997 and assuming no exercise of the Underwriters'
over-allotment options). Not more than 50% of such amount shall, at the
discretion of David A. Brandon, the Company's Chief Executive Officer, be
allocated to Mr. Brandon, and the balance shall be allocated by Mr. Brandon
among other employees of the Company. Because the special cash bonus is to be
paid by the Selling Stockholder or its affiliates (other than the Company), it
will not require any use of the Company's cash. For accounting purposes,
however, such special cash bonus will be charged against the results of
operations in the accounts of the Company upon consummation of the Offerings. In
the event of any future sales by the Selling Stockholder of its shares of Common
Stock, the Selling Stockholder has agreed to the same special cash bonus
arrangement.
After the consummation of the Offerings, Graham A. Cubbin and James D.
Packer (both of whom are affiliated with the Selling Stockholder) intend to
resign from the Company's Board of Directors, and Brian M. Powers, Chief
Executive Officer of CPH, intends to resign as Chairman of the Company's Board
of Directors but remain as a director of the Company. It is expected that David
A. Brandon will be appointed Chairman of the Board of Directors.
The Company and the Selling Stockholder have entered into a registration
rights agreement providing the Selling Stockholder with certain demand and
'piggyback' registration rights with respect to its remaining shares of Common
Stock after the Offerings. Pursuant to the registration rights agreement, the
Company has agreed to file the Registration Statement (as defined) and to use
all reasonable efforts to cause the Registration Statement to be declared
effective as soon as possible. The Selling Stockholder will also have the right
to two additional demand registrations for its remaining shares of Common Stock
and unlimited 'piggyback' registrations (whereby the Selling Stockholder can
include shares of Common Stock owned by it in registered offerings initiated by
the Company). In connection with any future exercise of such registration
rights, subject to certain conditions and exceptions, the Company and the
Selling Stockholder have agreed not to effect any public sale or distribution of
securities of the Company similar to those proposed to be registered during the
10-day period prior to the effective date of the applicable registration
statement or during the period beginning on such effective date and ending on
the later of the completion of the distribution of such securities pursuant to
such offering and 90 days (or such longer period as may be requested by the
managing underwriter in connection with any particular demand registration)
after such effective date. In the registration rights agreement, the Selling
Stockholder has agreed to pay the expenses, other than the fees and expenses of
counsel to the Company, incident to any demand registration thereunder, and the
Company has agreed to pay the expenses, other than underwriting discounts or
commissions, associated with any piggyback registration of shares of Common
Stock owned by the Selling Stockholder. The final terms of the registration
rights agreement will be approved by a special committee of the Company's Board
of Directors consisting solely of disinterested directors. Pursuant to the
registration rights agreement, the Company has agreed to indemnify the Selling
Stockholder against certain liabilities, including liabilities under the
Securities Act.
SHARES ELIGIBLE FOR FUTURE SALE
No prediction can be made as to the effect that future sales of shares, or
the availability of shares for future sale, will have on the market price of the
Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock (including shares issued upon the exercise of stock options), or
the perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock.
All of the shares of Common Stock sold in the Offerings (including shares,
if any, sold if the Underwriters' over-allotments are exercised), may be freely
traded without restriction under the Securities Act, except for any shares
purchased or held by an 'affiliate' of the Company, as that term is defined
under Rule 144 promulgated under the Securities Act. In addition to the Shares
sold in the Offerings, 913,342 shares issuable upon the exercise of options (of
which options covering 548,026 shares were exercisable as of April 30, 1997)
will be eligible for sale by holders without restrictions
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under the Securities Act. In addition, 2,080,472 shares issuable upon the
exercise of options (of which options covering 2,050,472 shares will be
exercisable immediately following the Offerings) will be subject to the volume
and manner of sale restrictions contained in Rule 144 unless sold pursuant to an
effective registration under the Securities Act and the sale restrictions
imposed under the Purchase Agreements (as defined) and described in the third
paragraph below. The remaining 7,173,800 shares held by the Selling Stockholder
(assuming no exercise of the Underwriters' over-allotment options) will also be
subject to the volume and manner of sale restrictions contained in Rule 144
unless sold pursuant to an effective registration under the Securities Act. The
Selling Stockholder has been granted certain registration rights in connection
with the Offerings, pursuant to which some or all of the Selling Stockholder's
shares of Common Stock owned following the Offerings may be registered for
resale on the open market. See 'Principal and Selling Stockholders.'
In general, under Rule 144, as currently in effect, any person (including
any affiliate) that has held its shares of Common Stock for at least 12 months
is entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of one percent of the then-outstanding shares of Common
Stock of the Company or the average weekly trading volume during the four
calendar weeks preceding such sale. Under Rule 144(k), a person who is not
deemed an affiliate and who has beneficially owned shares for at least two years
is entitled to sell such shares at any time under Rule 144 without regard to the
volume limitations described above. As defined in Rule 144, an 'affiliate' of an
issuer is a person that directly, or indirectly through the usage of one or more
intermediaries, controls, is controlled by, or is under common control with,
such issuer. The foregoing is not intended to be a complete description of Rule
144 or of the rights of any affiliate to sell shares of Common Stock.
The Company and the Selling Stockholder have agreed not to sell, offer to
sell, grant any option for the sale of or otherwise dispose of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock (except for the shares offered hereby and other than sales pursuant
to the Option Agreement) for a period of 120 days after the date of this
Prospectus without the prior written consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated ('Merrill'), subject to certain limited exceptions included
in the Purchase Agreements. Certain management employees have also agreed not to
sell, offer to sell, grant any options for the sale of or otherwise dispose of
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock for a period of 120 days after the date of this
Prospectus without the prior written consent of Merrill, subject to certain
limited exceptions included in the Purchase Agreements. See 'Underwriting.'
The Company is unable to estimate the number of shares that may be sold in
the future by its existing stockholders or the effect, if any, that sales by
such stockholders will have on the market price of the Common Stock prevailing
from time to time. Sales of substantial amounts of Common Stock, including
pursuant to a demand registration conducted for the benefit of the Selling
Stockholder, could adversely affect prevailing market prices.
23
<PAGE>
<PAGE>
DESCRIPTION OF COMMON STOCK
The following description of the Company's Common Stock does not purport to
be complete and is qualified in its entirety by reference to applicable Delaware
law and to the provisions of the Company's Restated Certificate of Incorporation
and Amended By-Laws.
COMMON STOCK
Holders of shares of Common Stock are entitled to one vote per share on all
matters to be voted upon by stockholders. Holders of Common Stock are entitled
to receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefor, and to share ratably in the assets of the
Company legally available for distribution to stockholders in the event of
liquidation or dissolution. See 'Price Range of Common Stock and Dividend
Policy.' Holders of the Common Stock have no preemptive rights and no
subscription or redemption privileges. The Common Stock does not have cumulative
voting rights, which means that the holder or holders of more than half of the
shares voting for the election of directors can elect all the directors then
being elected.
All the outstanding shares of Common Stock, including the shares of Common
Stock to be sold in the Offerings made hereby, are fully paid and
non-assessable.
The Transfer Agent and Registrar for the Common Stock is The Bank of New
York.
LIMITATIONS ON TRANSACTIONS WITH AFFILIATES
The Certificate of Incorporation of the Company effectively prohibits any
Significant Transaction (defined below) between the Company or any subsidiary of
the Company and any Interested Stockholder, which could have an adverse effect
on the interests of stockholders of the Company other than any Interested
Stockholder, unless the transaction is approved by the affirmative vote of a
majority of the holders (other than Interested Stockholders) of the outstanding
shares of the Company's Common Stock.
An Interested Stockholder is defined as CPH and all entities (other than
the Company) which control, are controlled by, or are under common control with,
CPH ('CPH Affiliates'), so long as (and only so long as) CPH and the CPH
Affiliates collectively beneficially own more than 25% of the outstanding shares
of the Company's Common Stock. Following the Offerings, CPH will not be an
Interested Stockholder.
'Significant Transaction' is defined as (i) any merger or consolidation of
the Company or a subsidiary with an Interested Stockholder; (ii) any transaction
(or series of related transactions) involving the payment of more than $10
million, or the transfer of assets valued at more than $10 million, by the
Company or a subsidiary to an Interested Stockholder (other than payments or
transfers to all holders of Common Stock on a pro rata basis or to all holders
of other equity or debt securities of the Company or a subsidiary substantially
in accordance with the terms thereof, and other than payments or transfers
pursuant to an offer made to all holders of Common Stock or all holders of other
equity or debt securities of the Company or a subsidiary on the same terms, and
other than transactions of a kind normally occurring in the ordinary course of
business of the Company or a subsidiary on terms no less favorable to the
Company or such subsidiary than the terms of comparable transactions with
unrelated third parties); (iii) any issuance or sale of stock by the Company or
a subsidiary to an Interested Stockholder (other than issuances or sales to all
holders of Common Stock on a pro rata basis or pursuant to an offer made to all
such holders on the same terms, and other than issuances or sales upon exercise
of any conversion, exchange or purchase right set forth in an instrument or
security held by an Interested Stockholder before becoming an Interested
Stockholder or distributed to all holders of the Common Stock pro rata or issued
or sold pursuant to an offer made to all such holders on the same terms); and
(iv) any receipt by an Interested Stockholder of the direct or indirect benefit
of any loans, advances, assumptions of guarantees or indebtedness, or pledges of
assets by the Company or a subsidiary.
24
<PAGE>
<PAGE>
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Section 203 of the Delaware General Corporation Law ('Section 203')
prohibits certain persons ('interested stockholders') from engaging in a
'business combination' with a Delaware corporation for three years following the
date such persons become interested stockholders. Interested stockholders
generally include (i) persons who are the beneficial owners of 15% or more of
the outstanding voting stock of the corporation and (ii) persons who are
affiliates or associates of the corporation and who hold 15% or more of the
corporation's outstanding voting stock at any time within three years before the
date on which such a person's status as an interested stockholder is determined.
Subject to certain exceptions, a 'business combination' includes, among other
things (i) mergers or consolidations, (ii) the sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets having an aggregate market value
equal to 10% or more of either the aggregate market value of all assets of the
corporation determined on a consolidated basis or the aggregate market value of
all the outstanding stock of the corporation, (iii) transactions that result in
the issuance or transfer by the corporation of any stock of the corporation to
the interested stockholder, except pursuant to a transaction that effects a pro
rata distribution to all stockholders of the corporation, (iv) any transaction
involving the corporation that has the effect of increasing the proportionate
share of the stock of any class or series, or securities convertible into the
stock of any class or series, of the corporation that is owned directly or
indirectly by the interested stockholder or (v) any receipt by the interested
stockholder of the benefit (except proportionately as a stockholder) of any
loans, advances, guarantees, pledges or other financial benefits provided by or
through the corporation.
Section 203 does not apply to a business combination if (i) before a person
becomes an interested stockholder, the board of directors of the corporation
approves the transaction in which the interested stockholder became an
interested stockholder or approves the business combination, (ii) upon
consummation of the transaction that resulted in the interested stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (other than certain excluded shares) or (iii) following a
transaction in which the person became an interested stockholder, the business
combination is (a) approved by the board of directors of the corporation and (b)
authorized at a regular or special meeting of stockholders (and not by written
consent) by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock of the corporation not owned by the interested
stockholder.
25
<PAGE>
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
'U.S. Purchase Agreement'), the Selling Stockholder has agreed to sell to each
of the underwriters named below (the 'U.S. Underwriters'), and each of the U.S.
Underwriters, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Morgan Stanley & Co. Incorporated, Bear, Stearns & Co. Inc. and Donaldson,
Lufkin & Jenrette Securities Corporation are acting as representatives (the
'U.S. Representatives'), severally has agreed to purchase, the aggregate number
of shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITERS OF SHARES
----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................................
Morgan Stanley & Co. Incorporated...............................................
Bear, Stearns & Co. Inc. .......................................................
Donaldson, Lufkin & Jenrette Securities Corporation.............................
----------
Total............................................................. 10,400,000
----------
----------
</TABLE>
The Company and the Selling Stockholder have also entered into a purchase
agreement (the 'International Purchase Agreement' and, together with the U.S.
Purchase Agreement, the 'Purchase Agreements') with Merrill Lynch International,
Morgan Stanley & Co. International Limited, Bear, Stearns International Limited,
and Donaldson, Lufkin & Jenrette Securities Corporation (collectively, the
'International Managers' and, together with the U.S. Underwriters, the
'Underwriters'). Subject to the terms and conditions set forth in the
International Purchase Agreement, the Selling Stockholder has agreed to sell to
the International Managers, and the International Managers severally have agreed
to purchase, an aggregate of 2,600,000 shares of Common Stock.
In each Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth in such Purchase Agreement, to
purchase all of the shares of Common Stock being sold pursuant to such Purchase
Agreement if any of the shares of Common Stock being sold pursuant to such
Purchase Agreement are purchased. Under certain circumstances under the Purchase
Agreements, the commitments of non-defaulting Underwriters may be increased.
Each Purchase Agreement provides that the Selling Stockholder is not obligated
to sell, and the Underwriters named therein are not obligated to purchase, the
shares of Common Stock under the terms of such Purchase Agreement unless all of
the shares of Common Stock to be sold pursuant to such Purchase Agreement are
contemporaneously sold. The sale of shares to the U.S. Underwriters and the sale
of shares to the International Managers are conditioned upon each other.
The U.S. Representatives have advised the Selling Shareholder that the U.S.
Underwriters propose initially to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $ per
share. The U.S. Underwriters may allow, and such dealers may reallow, a discount
not in excess of $ per share on sales to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The public offering price per share of Common Stock and the underwriting
discount per share of Common Stock are identical for both Offerings.
The Selling Stockholder has granted to the U.S. Underwriters and the
International Managers options to purchase up to an aggregate of 1,560,000 and
390,000 shares of Common Stock, respectively, at the public offering price, less
the underwriting discount. Such options, which will expire 30 days after the
date of this Prospectus, may be exercised solely to cover over-allotments. To
the extent that the Underwriters exercise such options, each of the Underwriters
will have a firm commitment, subject to certain conditions, to purchase
approximately the same percentage of the option shares that the number of shares
to be purchased initially by that Underwriter bears to the 13,000,000 shares of
Common Stock initially purchased by the Underwriters.
26
<PAGE>
<PAGE>
The Selling Stockholder has been informed that the Underwriters have
entered into an agreement (the 'Intersyndicate Agreement') providing for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and the International Managers are permitted to sell shares of
Common Stock to each other.
The Company and the Selling Stockholder have agreed not to sell, offer to
sell, grant any options for the sale of or otherwise dispose of any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock (except for the shares offered hereby and other than sales pursuant
to the Option Agreement) for a period of 120 days after the date of this
Prospectus without the prior written consent of Merrill, subject to certain
limited exceptions included in the Purchase Agreements. Certain management
employees have also agreed not to sell, offer to sell, grant any options for the
sale of or otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock for a period of
120 days after the date of this Prospectus without the prior written consent of
Merrill, subject to certain limited exceptions included in the Purchase
Agreements. See 'Shares Eligible for Future Sale.'
The Selling Stockholder has been informed that, under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or resell shares of Common Stock
to persons who are non-U.S. or non-Canadian persons, or to persons they believe
intend to resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any bank, broker, or dealer to whom they sell shares
of Common Stock will not offer to sell or resell shares of Common Stock to U.S
persons or to Canadian persons or to persons they believe intend to resell to
U.S. persons or Canadian persons, except in the case of transactions pursuant to
the Intersyndicate Agreement which, among other things, permits the Underwriters
to purchase from each other and to offer to resell such number of shares of
Common Stock as the selling Underwriter or Underwriters and the purchasing
Underwriter or Underwriters may agree.
The Company and the Selling Stockholder have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
The Common Stock is traded on the NYSE.
Certain of the Underwriters have been engaged from time to time, and may in
the future be engaged, to perform investment banking and other advisory-related
services to the Company and its affiliates, including the Selling Stockholder,
in the ordinary course of business. In connection with rendering such services
in the past, such Underwriters have received customary compensation, including
reimbursement of related expenses.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission (the 'Commission') may limit the ability of
the Underwriters and any selling group members to bid for and purchase the
Common Stock. As an exception to these rules, the Underwriters are permitted to
engage in certain transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Underwriters may
reduce that short position by purchasing shares of Common Stock in the open
market. The Underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment options described above.
The U.S. Representatives and the International Managers may also impose a
penalty bid on certain Underwriters and selling group members. This means that
if the U.S. Representatives or the International Managers purchase shares of
Common Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group members who sold
those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The
27
<PAGE>
<PAGE>
imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
28
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such materials can be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material may also be inspected and
copied at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Commission maintains a Website that contains reports, proxy and information
statements and other information regarding reporting companies under the
Exchange Act, including the Company, at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act, with respect to the Shares
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are omitted or contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-10991) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, including portions incorporated therein of the Company's
definitive Proxy Statement for the 1997 Annual Meeting of Stockholders.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. The description of the Common Stock contained in the Registration
Statement on Form 8-A under the Exchange Act dated January 23, 1992.
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company,
19975 Victor Parkway, Livonia, Michigan 48152, attention: Secretary, telephone:
313-591-3000.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
29
<PAGE>
<PAGE>
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by
McDermott, Will & Emery, New York, New York. Debevoise & Plimpton has acted as
counsel to the Selling Stockholder in connection with the Offerings and also
acts and may hereafter act as counsel to the Selling Stockholder and its
affiliates, including the Company. The Company has been separately advised by
McDermott, Will & Emery, New York, New York, as to matters between the Company
and the Selling Stockholder relating to the Offerings. Certain legal matters in
connection with the Offerings will be passed upon for the Underwriters by Cahill
Gordon & Reindel (a partnership including a professional corporation), New York,
New York.
EXPERTS
The consolidated financial statements of Valassis Communications, Inc.
incorporated in this Prospectus by reference from Valassis Communications,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1996 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
30
<PAGE>
<PAGE>
[Map with caption: "Valassis' extensive newspaper database can identify
marketing areas for clients, enabling them to run promotions according
to their own defined sales areas, around key franchisees or retail
outlets, or by target audience."]
[Photograph of factory with caption: "Valassis is able to print and publish
promotional publications nationwide and, at the same time, create multiple
versions which target specific geographic areas."]
[Photograph of computerized workplace and photograph of coupons with caption:
"The Valassis sales team has established relationships with over 3,000
marketers. A consultative selling approach and diverse product offerings enable
Valassis to create competitive marketing solutions."]
[Photograph of employee manual and book entitled "The 100 Best Companies to Work
For in America" with caption: "Valassis has been independently recognized as one
of the 100 best companies to work for in America."]
<PAGE>
<PAGE>
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................... 3
Summary Consolidated Financial Information................................................................. 6
Forward-Looking Statements................................................................................. 7
Risk Factors............................................................................................... 7
Price Range of Common Stock and Dividend Policy............................................................ 9
Use of Proceeds............................................................................................ 10
Capitalization............................................................................................. 10
Selected Consolidated Financial Information................................................................ 11
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 12
Business................................................................................................... 16
Principal and Selling Stockholders......................................................................... 20
Shares Eligible for Future Sale............................................................................ 22
Description of Common Stock................................................................................ 24
Underwriting............................................................................................... 26
Available Information...................................................................................... 29
Incorporation of Certain Documents by Reference............................................................ 29
Legal Matters.............................................................................................. 30
Experts.................................................................................................... 30
</TABLE>
13,000,000 SHARES
[LOGO]
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1997
_____________________________________ _____________________________________
<PAGE>
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 11, 1997
PROSPECTUS
13,000,000 SHARES
[LOGO]
COMMON STOCK
------------------------
All of the 13,000,000 shares (the 'Shares') of Common Stock of Valassis
Communications, Inc. ('Valassis' or the 'Company') offered hereby are being sold
by Conpress International (Netherlands Antilles) N.V., a Netherlands Antilles
private limited liability company (the 'Selling Stockholder'). See 'Principal
and Selling Stockholders.' The Company will not receive any of the proceeds from
the sale of Shares by the Selling Stockholder. Of the 13,000,000 Shares being
offered hereby, 2,600,000 shares are being offered outside the United States and
Canada (the 'International Offering') by the International Managers and
10,400,000 shares are being offered in the United States and Canada (the 'U.S.
Offering' and, together with the International Offering, the 'Offerings') by the
U.S. Underwriters. The price to public and the underwriting discount per share
are identical for both Offerings and the closings of both Offerings are
conditioned upon one another. See 'Underwriting.'
Following the Offerings, the Selling Stockholder is expected to own
approximately 17.9% of the Company's outstanding shares of Common Stock (or, if
the Underwriters' over-allotment options are exercised in full, approximately
13.0% of the Company's outstanding shares of Common Stock).
The Common Stock of the Company is traded on the New York Stock Exchange
('NYSE') under the symbol 'VCI.' On June 10, 1997, the last reported sale price
of the Common Stock on the NYSE was $27 1/4 per share. See 'Price Range of
Common Stock and Dividend Policy.'
SEE 'RISK FACTORS' BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) STOCKHOLDER(2)
<S> <C> <C> <C>
Per Share............................................ $ $ $
Total(3)............................................. $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the International Managers (collectively, the
'Underwriters') against certain liabilities, including liabilities under the
Securities Act of 1933. See 'Underwriting.'
(2) Before deducting estimated expenses of $ payable by the Selling
Stockholder and $ payable by the Company.
(3) The Selling Stockholder has granted to the International Managers and the
U.S. Underwriters 30-day options to purchase an aggregate of 390,000 and
1,560,000 additional shares of Common Stock, respectively, solely to cover
over-allotments, if any. If all such additional shares are purchased, the
total Price to Public, Underwriting Discount and Proceeds to Selling
Stockholder will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, and subject to the approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of Shares will be made in New York, New York, on or about
, 1997.
------------------------
MERRILL LYNCH INTERNATIONAL MORGAN STANLEY DEAN WITTER
BEAR, STEARNS INTERNATIONAL LIMITED DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
------------------------
The date of this Prospectus is , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL
PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
JURISDICTION.
<PAGE>
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
CERTAIN UNITED STATES TAX
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a general discussion of certain United States Federal
income and estate tax consequences of the ownership and disposition of Common
Stock by a person other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State or (iii) an
estate or trust whose income is includable in gross income for United States
Federal income tax purposes regardless of its source (referred to hereinafter as
a 'non-U.S. holder').
The discussion is based on provisions of the Internal Revenue Code of 1986,
as amended, and administrative and judicial interpretations as of the date
hereof, all of which are subject to change, possibly with retroactive effect.
Furthermore, this discussion does not consider specific facts and circumstances
that may be relevant to a particular holder's tax position. Prospective
purchasers are urged to consult a tax adviser with respect to the United States
Federal income and estate tax consequences of owning and disposing of Common
Stock, as well as any tax consequences under the laws of any other taxing
jurisdiction.
INCOME TAX
Dividends. Generally, dividends paid to a non-U.S. holder of Common Stock
will be subject to U.S. Federal income tax. Except in the case of dividends that
are effectively connected with the holder's conduct of a trade or business
within the United States, this tax is imposed and withheld at the rate of 30% of
the amount of the dividend, unless reduced by an applicable income tax treaty.
Currently, dividends paid to an address in a foreign country are presumed to be
paid to a resident of such country in determining the applicability of a treaty
for such purposes. However, the United States Internal Revenue Service (the
'IRS') has issued proposed regulations which, if adopted, would require a non-
U.S. holder to provide certain certifications under penalties of perjury in
order to obtain treaty benefits.
Except as may be otherwise provided in an applicable income tax treaty,
dividends which are effectively connected with the non-U.S. holder's conduct of
a trade or business within the United States are subject to tax at ordinary
Federal income tax rates, which tax is not collected by withholding (except as
described below under 'Backup Withholding and Information Reporting'). All or
part of any effectively connected dividends received by a foreign corporation
may also, under certain circumstances, be subject to an additional 'branch
profits' tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. Non-U.S. holders of Common Stock must comply with
certain certification and disclosure requirements to claim an exemption from
withholding under the rules described in this paragraph.
A non-U.S. holder that is eligible for a reduced rate of U.S. withholding
tax pursuant to a tax treaty may obtain a refund of any excess amounts withheld
by filing an appropriate claim for refund with the IRS.
Disposition of Common Stock. Generally, non-U.S. holders will not be
subject to United States Federal income tax (or withholding thereof) in respect
of gain recognized on a disposition of Common Stock unless (i) the gain is
effectively connected with the non-U.S. holder's conduct of a trade or business
within the United States (in which case the 'branch profits' tax described above
may also apply if the holder is a foreign corporation), (ii) in the case of a
non-U.S. holder who is a nonresident alien individual and holds the Common Stock
as a capital asset, such holder is present in the United States for 183 or more
days in the taxable year of the sale and certain other conditions are met or
(iii) the Company is or has been a 'United States real property holding
corporation' for Federal income tax purposes (which the Company does not believe
it has been or is currently) and the non-U.S. holder has held directly or
constructively more than 5% of the outstanding Common Stock within the five-year
period ending on the date of the disposition.
26
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
ESTATE TAX
If an individual non-U.S. holder owns, or is treated as owning, Common
Stock at the time of his or her death, such stock will be subject to U.S.
Federal estate tax imposed on the estates of nonresident aliens, in the absence
of a contrary provision contained in any applicable tax treaty.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Dividends. Generally, dividends paid on Common Stock to a non-U.S. holder
at an address outside the United States will be exempt from backup withholding
tax and U.S. information reporting requirements (but not from regular
withholding tax discussed above).
Broker Sales. Payments of proceeds from the sale of Common Stock by a
non-U.S. holder made to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding. However, certain
foreign offices, including the foreign offices of a U.S. broker, are subject to
information reporting unless the holder certifies its non-U.S. status under
penalties of perjury or otherwise establishes its entitlement to an exemption.
Payments of proceeds from the sale of Common Stock by a non-U.S. holder to or
through a U.S. office of a broker are currently subject to both information
reporting and backup withholding at a rate of 31% unless the holder certifies
its status as a non-U.S. holder under penalties of perjury or otherwise
establishes an exemption.
A non-U.S. holder may obtain a refund of any excess amounts withheld under
the backup withholding rules by filing the appropriate claim or refund with the
IRS.
27
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<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions set forth in an international purchase
agreement among the Company, the Selling Stockholder and each of the
International Managers (as defined below) (the 'International Purchase
Agreement'), the Selling Stockholder has agreed to sell to each of the
underwriters named below (the 'International Managers'), and each of the
International Managers severally has agreed to purchase, the aggregate number of
shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGER SHARES
- --------------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International......................................................
Morgan Stanley & Co. International Limited.......................................
Bear, Stearns International Limited..............................................
Donaldson, Lufkin & Jenrette Securities Corporation..............................
---------
Total.............................................................. 2,600,000
---------
---------
</TABLE>
The Company and the Selling Stockholder have also entered into a purchase
agreement (the 'U.S. Purchase Agreement' and, together with the International
Purchase Agreement, the 'Purchase Agreements') with Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated, Bear, Stearns &
Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation acting as
representatives (the 'U.S. Representatives'), and certain other underwriters
within the United States and Canada (collectively, the 'U.S. Underwriters' and,
together with the International Managers, the 'Underwriters'). Subject to the
terms and conditions set forth in the U.S. Purchase Agreement, the Selling
Stockholder has agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters severally have agreed to purchase, an aggregate of 10,400,000
shares of Common Stock.
In each Purchase Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth in such Purchase Agreement, to
purchase all of the shares of Common Stock being sold pursuant to such Purchase
Agreement if any of the shares of Common Stock being sold pursuant to such
Purchase Agreement are purchased. Under certain circumstances under the Purchase
Agreements, the commitments of non-defaulting Underwriters may be increased.
Each Purchase Agreement provides that the Selling Stockholder is not obligated
to sell, and the Underwriters named therein are not obligated to purchase, the
shares of Common Stock under the terms of such Purchase Agreement unless all of
the shares of Common Stock to be sold pursuant to such Purchase Agreement are
contemporaneously sold. The sale of Shares to the U.S. Underwriters and the sale
of Shares to the International Managers are conditioned upon each other.
The International Managers have advised the Selling Stockholder that the
International Managers propose to offer the shares of Common Stock to the public
at the public offering price set forth on the cover page of this Prospectus and
to certain dealers at such price less a concession not in excess of $ per
share. The International Managers may allow, and such dealers may reallow, a
discount not in excess of $ per share on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
The public offering price per share of Common Stock and the underwriting
discount per share of Common Stock are identical for both Offerings.
The Selling Stockholder has granted to the International Managers and the
U.S. Underwriters options to purchase up to an aggregate of 390,000 and
1,560,000 shares of Common Stock, respectively, at the public offering price,
less the underwriting discount. Such options, which will expire 30 days after
the date of this Prospectus, may be exercised solely to cover over-allotments.
To the extent that the Underwriters exercise such options, each of the
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage of the option shares that the number
of shares to be purchased initially by that Underwriter bears to the 13,000,000
shares of Common Stock initially purchased by the Underwriters.
The Selling Stockholder has been informed that the Underwriters have
entered into an agreement (the 'Intersyndicate Agreement') providing for the
coordination of their activities. Pursuant to the
28
<PAGE>
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Intersyndicate Agreement, the U.S. Underwriters and the International
Underwriters are permitted to sell shares of Common Stock to each other.
The Company and the Selling Stockholder have agreed not to sell, offer to
sell, grant any options for the sale of or otherwise dispose of any shares of
Common Stock or securities convertible into or exchangeable or exercisable for
Common Stock (except for the shares offered hereby and other than sales pursuant
to the Option Agreement) for a period of 120 days after the date of this
Prospectus without the prior written consent of Merrill, subject to certain
limited exceptions included in the Purchase Agreements. Certain management
employees have also agreed not to sell, offer to sell, grant any options for the
sale of or otherwise dispose of any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock for a period of
120 days after the date of this Prospectus without the prior written consent of
Merrill, subject to certain limited exceptions included in the Purchase
Agreements. See 'Shares Eligible for Future Sale.'
The Selling Stockholder has been informed that, under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or resell shares of Common Stock
to persons who are non-U.S. or non-Canadian persons or to persons they believe
intend to resell to persons who are non-U.S. or non-Canadian persons, and the
International Managers and any bank, broker, or dealer to whom they sell shares
of Common Stock will not offer to sell or resell shares of Common Stock to U.S.
persons or to Canadian persons or to persons they believe intend to resell to
U.S. persons or Canadian persons, except in the case of transactions pursuant to
the Intersyndicate Agreement which, among other things, permits the Underwriters
to purchase from each other and to offer to resell such number of shares of
Common Stock as the selling Underwriter or Underwriters and the purchasing
Underwriter or Underwriters may agree.
Each International Manager agrees that (a) it has not offered or sold and,
for a period of six months following consummation of the Offerings, will not
offer or sell any shares of Common Stock in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purpose of their
businesses or otherwise in circumstances which do not constitute an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (b) it has complied with and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Common Stock in, from or otherwise
involving the United Kingdom and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the sale of shares of Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or to a person to whom such document may
otherwise lawfully be issued or passed on.
Each International Manager acknowledges that no action has been or will be
taken in any jurisdiction by such International Manager or the Company that
would permit a public offering of shares of Common Stock, or possession or
distribution of this Prospectus, in preliminary or final form, in any
jurisdiction when, or in any circumstances in which, action for that purpose is
required, other than in the United States. Each International Manager will
comply with all applicable laws and regulations, and make or obtain all
necessary filings, consents or approvals, in each jurisdiction in which such
International Manager purchases, offers, sells or delivers shares of Common
Stock (including, without limitation, any applicable requirements relating to
the delivery of this Prospectus, in preliminary or final form), in each case at
such International Manager's own expense. In connection with sales of and offers
to sell shares of Common Stock made by such International Manager, such
International Manager will furnish to each person to whom any such sale or offer
is made a copy of this Prospectus (in preliminary or final form and as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto).
The Company and the Selling Stockholder have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.
The Common Stock is traded on the NYSE.
29
<PAGE>
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Certain of the Underwriters have been engaged from time to time, and may in
the future be engaged, to perform investment banking and other advisory-related
services to the Company and its affiliates, including the Selling Stockholder,
in the ordinary course of business. In connection with the rendering of such
services in the past, such Underwriters have received customary compensation,
including reimbursement of related expenses.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission (the 'Commission') may limit the ability of
the Underwriters and any selling group members to bid for and purchase the
Common Stock. As an exception to these rules, the Underwriters are permitted to
engage in certain transactions that stabilize the price of the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the Underwriters may
reduce that short position by purchasing shares of Common Stock in the open
market. The Underwriters may also elect to reduce any short position by
exercising all or part of the over-allotment options described above.
The International Managers and the U.S. Representatives may also impose a
penalty bid on certain Underwriters and selling group members. This means that
if the International Managers or the U.S. Representatives purchase shares of
Common Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Common Stock, they may reclaim the amount of the
selling concession from the Underwriters and selling group members who sold
those shares as part of the offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
30
<PAGE>
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Commission. Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the Commission's Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60611 and 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such materials can be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material may also be inspected and
copied at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
The Commission maintains a Website that contains reports, proxy and information
statements and other information regarding reporting companies under the
Exchange Act, including the Company, at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act, with respect to the Shares
offered hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement, certain items of which are omitted or contained in schedules and
exhibits to the Registration Statement as permitted by the rules and regulations
of the Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete;
with respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is hereby made to the Registration Statement.
------------------------
This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the Shares in any jurisdiction in which such offer or
solicitation is unlawful. There are restrictions on the offer and sale of the
Shares in the United Kingdom. All applicable provisions of the Public Offers of
Securities Regulations 1995, the Financial Services Act 1986 and the Companies
Act 1985 with respect to anything done by any person in relation to the Shares
in, from, or otherwise involving the United Kingdom must be complied with. See
'Underwriting.'
In this Prospectus, reference to 'dollars' and '$' are to United States
dollars.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 1-10991) with the
Commission pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996, including portions incorporated therein of the Company's
definitive Proxy Statement for the 1997 Annual Meeting of Stockholders.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
3. The description of the Common Stock contained in the Registration
Statement on Form 8-A under the Exchange Act dated January 23, 1992.
4. All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to the Company,
19975 Victor Parkway, Livonia, Michigan 48152, attention: Secretary, telephone:
313-591-3000.
31
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<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified shall not be deemed to
constitute a part of this Prospectus except as so modified, and any statement so
superseded shall not be deemed to constitute part of this Prospectus.
LEGAL MATTERS
The validity of the Shares will be passed upon for the Company by
McDermott, Will & Emery, New York, New York. Debevoise & Plimpton has acted as
counsel to the Selling Stockholder in connection with the Offerings and also
acts and may hereafter act as counsel to the Selling Stockholder and its
affiliates, including the Company. The Company has been separately advised by
McDermott, Will & Emery, New York, New York, as to matters between the Company
and the Selling Stockholder relating to the Offerings. Certain legal matters in
connection with the Offerings will be passed upon for the Underwriters by Cahill
Gordon & Reindel (a partnership including a professional corporation), New York,
New York.
EXPERTS
The consolidated financial statements of Valassis Communications, Inc.
incorporated in this Prospectus by reference from Valassis Communications,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1996 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon, included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
32
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<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY JURISDICTION
WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................................................... 3
Summary Consolidated Financial Information................................................................. 6
Forward-Looking Statements................................................................................. 7
Risk Factors............................................................................................... 7
Price Range of Common Stock and Dividend Policy............................................................ 9
Use of Proceeds............................................................................................ 10
Capitalization............................................................................................. 10
Selected Consolidated Financial Information................................................................ 11
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 12
Business................................................................................................... 16
Principal and Selling Stockholders......................................................................... 20
Shares Eligible for Future Sale............................................................................ 22
Description of Common Stock................................................................................ 24
Certain United States Tax Consequences to Non-U.S. Holders................................................. 26
Underwriting............................................................................................... 28
Available Information...................................................................................... 31
Incorporation of Certain Documents by Reference............................................................ 31
Legal Matters.............................................................................................. 32
Experts.................................................................................................... 32
</TABLE>
13,000,000 SHARES
[LOGO]
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
MERRILL LYNCH INTERNATIONAL
MORGAN STANLEY DEAN WITTER
BEAR, STEARNS
INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
, 1997
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee............................................................................ $124,866
NASD fee.................................................................................... 30,500
Blue Sky fees and expenses.................................................................. 5,000
Printing and engraving expenses.............................................................
Legal fees and expenses.....................................................................
Accounting fees and expenses................................................................
Miscellaneous...............................................................................
--------
Total............................................................................. $
--------
--------
</TABLE>
Certain of the expenses of the Offerings will be borne by the Selling
Stockholder or one of its affiliates (other than the Company) in accordance with
the registration rights agreement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
'Delaware Law') empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Restated Certificate of
Incorporation of the Company contains a provision to limit the personal
liability of the directors for violations of their fiduciary duty. This
provision eliminates each director's liability to the Company or its respective
stockholders for monetary damages except (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware Law or any amendment thereto or
successor provision thereto, or (iv) for any transaction from which a director
derived an improper personal benefit. The effect of this provision is to
eliminate the personal liability of directors for monetary damages for actions
involving a breach of their fiduciary duty of care, including any such actions
involving gross negligence.
The Company's Restated Certificate of Incorporation and the Amended and
Restated By-Laws provides for indemnification to its directors and such of its
officers, employees and agents as the Board of Directors may determine, from
time to time, to the fullest extent permited by Section 145 of the General
Corporation Law of the State of Delaware.
The Company has obtained directors and officers liability insurance
coverage. The policy insures directors and officers of the Company against loss
arising from claims made against such directors or officers by reason of certain
wrongful acts (as defined), such as errors, misstatements, misleading
statements, acts, omissions, negligence or breaches of duty, but does not insure
such persons against losses arising from claims made against such directors or
officers for the return of certain unauthorized remunerations, for violations of
Section 16(b) of the Securities Exchange Act of 1934, as amended, and for
violations of similar laws and certain other matters.
II-1
<PAGE>
<PAGE>
ITEM 16. EXHIBITS.
The File Number of Valassis Communications, Inc., the Registrant (the
'Company'), and for all Exhibits incorporated by reference is 1-10991.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 -- Form of U.S. Purchase Agreement`D'
-- Form of International Purchase Agreement`D'
3.1 -- Restated Certificate of Incorporation of Valassis Communications, Inc. (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement No. 33-45189)
3.2 -- Amended and Restated By-Laws of Valassis Communications, Inc. (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement No. 33-45189)
5.1 -- Opinion of McDermott, Will & Emery regarding the legality of the securities being registered`D'
10.1 -- Employment Agreement, dated January 20, 1992, among David A. Brandon, Valassis Communications, Inc.
and Valassis Inserts, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Registration
Statement No. 33-45189)
10.1(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of David A. Brandon dated
as of June 18, 1993 (incorporated by reference to Exhibit 10.4(a) to the Company's 1993 Form 10-K)
10.1(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of David A. Brandon dated
as of July 9, 1995 (incorporated by reference to Exhibit 10.5(b) to the Company's 1995 Form 10-K)
10.1(c) -- Amendment to Employment Agreement of David A. Brandon dated as of December 22, 1995 (incorporated by
reference to Exhibit 10.5(c) to the Company's 1995 Form 10-K)
10.2 -- Employment Agreement, dated January 20, 1992 among Robert L. Recchia, Valassis Communications, Inc.
and Valassis Inserts, Inc., including amendment dated February 11, 1992 (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement No. 33-45189)
10.2(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of Robert Recchia dated
January 2, 1996 (incorporated by reference to Exhibit 10.6(a) to the Company's 1995 Form 10-K)
10.2(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of Robert Recchia dated
January 3, 1997 (incorporated by reference to Exhibit 10.6(b) of the Company's 1996 Form 10-K)
10.3 -- Employment Agreement, dated January 20, 1992, among Barry P. Hoffman, Valassis Communications, Inc.
and Valassis Inserts, Inc., including amendment dated February 11, 1992 (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement No. 33-45189)
10.3(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of Barry P. Hoffman dated
December 19, 1995 (incorporated by reference to Exhibit 10.7(a) to the Company's 1995 Form 10-K)
10.4 -- 1992 Long-Term Incentive Plan, as amended (incorporated by reference to Exhibits 4.1 and 4.2 to the
Company's Form S-8 filed on February 17, 1993, No. 33-59670)
10.5 -- Valassis Inserts, Inc. Employees' 401(k) Retirement Savings Plan (incorporated by reference to Exhibit
10.8 to the Company's Registration Statement No. 33-45189)
10.5(a) -- First Amendment of the Valassis Communications, Inc. Employees' 401(k) Retirement Savings Plan
(incorporated by reference to Exhibit 10.9(a) to the Company's 1995 Form 10-K)
10.6 -- Valassis Inserts, Inc. Employees' Profit Sharing Plan (incorporated by reference to Exhibit 10.9 to
the Company's Registration Statement No. 33-45189)
10.6(a) -- First Amendment of the Valassis Communications, Inc. Employees' Profit Sharing Plan (incorporated by
reference to Exhibit 10.10(a) to the Company's 1995 Form 10-K)
10.7 -- Tax Sharing Agreement, dated as of December 31, 1991, among CII Holdings Group, Inc. and each of its
U.S. subsidiaries and Valassis Communications, Inc. (incorporated by reference to Exhibit 10.10 to the
Company's Registration Statement No. 33-45189)
10.8 -- Access Agreement, dated as of December 31, 1991, among Valassis Communications, Inc., Consolidated
Press Holdings Limited and certain of its affiliates (incorporated by reference to Exhibit 10.11 to the
Company's Registration Statement No. 33-45189)
10.9 -- Consolidated Federal Income Tax Liability Allocation Agreement, dated July 1, 1989, between Valassis
Communications, Inc. and certain subsidiaries (incorporated by reference to Exhibit 10.13 to the
Company's Registration Statement No. 33-45189)
</TABLE>
II-2
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.10 -- Valassis Inserts, Inc. Plant Employees Pension Plan (incorporated by reference to Exhibit 10.14 to the
Company's Registration Statement No. 33-45189)
10.11 -- Employment Agreement among Richard N. Anderson, Valassis Communications, Inc. and Valassis Inserts,
Inc. (incorporated by reference to Exhibit 10.16 to the Company's Registration No. 33-45189)
10.11(a) -- Amendment to Employment Agreement among Richard N. Anderson, Valassis Communications, Inc. and
Valassis Inserts, Inc. (incorporated by reference to Exhibit 10.15(a) to the Company's Form 10-K for
the transition period of July 1, 1994 to December 31, 1994)
10.11(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of Richard N. Anderson
dated December 15, 1995 (incorporated by reference to Exhibit 10.15(b) to the Company's 1995 Form 10-K)
10.12 -- Employment Agreement among Alan F. Schultz, Valassis Communications, Inc. and Valassis Inserts, Inc.
(incorporated by reference to Exhibit 10.17 to the Company's Registration Statement No. 33-45189)
10.12(a) -- Amendment to Employment Agreement among Alan F. Schultz, Valassis Communications, Inc. and Valassis
Inserts, Inc. (incorporated by reference to Exhibit 10.16(a) to the Form 10-K for the transition period
of July 1, 1994 to December 31, 1994)
10.12(b) -- Amendment to Employment Agreement and Non Qualified Stock Option of Alan F. Schultz dated December 19,
1995 (incorporated by reference to Exhibit 10.16(b) to the Company's 1995 Form 10-K)
10.13 -- Valassis Communications, Inc. Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.17
to the 1992 Form 10-K)
10.14 -- Valassis Communications, Inc. Non-Employee Directors' Stock Compensation Plan (incorporated by
reference to Exhibit 4.3 to the Company's Form S-8 filed on February 17, 1993, No. 33-59670)
10.15 -- Senior Executive Annual Bonus Plan (incorporated by reference to Exhibit A to the Company's Proxy
Statement dated October 24, 1994)
10.16 -- Conpress Stock Option Agreement (incorporated by reference to Exhibit 10.20 to the Company's June 30,
1996 Form 10-Q)
10.17 -- Lease for New Headquarters Building (incorporated by reference to Exhibit 10.21 to the Company's June
30, 1996 Form 10-Q)
10.18 -- Registration Rights Agreement between the Company and the Selling Stockholder`D'
10.19 -- Assignment of Stock Option Agreement dated June 5, 1997 among Conpress Cayman, LDC, Consolidated Press
International Limited, Conpress International (Netherlands Antilles) N.V. and Valassis Communications,
Inc.
10.20 -- Indenture between Valassis Communications, Inc. and The Bank of New York, as trustee, relating to the
9.55% Senior Notes due 2003 (incorporated by reference to Exhibit 4.1 to the Company's Form 10-K for
the transition period July 1, 1994 to December 31, 1994)
10.21 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York, as trustee, relating
to the 8 3/8% Senior Notes due 1997 (incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement No. 33-45285)
10.21(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by reference to Exhibit 10.1(a)
to the Company's 1993 Form 10-K)
10.22 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York, as trustee, relating
to the 8 7/8% Senior Notes due 1999 (incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement No. 33-45285)
10.22(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by reference to Exhibit 10.2(a)
to the Company's 1993 Form 10-K)
10.23 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York, as trustee, relating
to the 9 3/8% Senior Subordinated Notes due 1999 (incorporated by reference to Exhibit 4.2 to the
Company's Registration Statement No. 33-45285)
10.23(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by reference to Exhibit 3 to the
Company's Form 8-K dated as of March 31, 1993)
10.24 -- Credit Agreement dated as of March 6, 1992 (the 'Credit Facility'), among Valassis Communications,
Inc., the institutions named therein, the institutions named therein as issuing banks, Citicorp USA,
Inc., as agent and administrative agent, and Westpac Banking Corporation, as agent (incorporated by
reference to Exhibit 10.3 to the Company's Registration Statement No. 33-45189)
</TABLE>
II-3
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
10.24(a) -- Amended and Restated Amendment No. 1 to the Credit Facility, dated as of March 6, 1992 (incorporated
by reference to Exhibit 10.3(a) to the Company's Registration Statement No. 33-45189)
10.24(b) -- Amendment No. 2 to the Credit Facility, dated as of May 15, 1992 (incorporated by reference to Exhibit
10.3(b) to the Company's 1992 Form 10-K)
10.24(c) -- Amendment No. 3 to the Credit Facility, dated as of June 10, 1992 (incorporated by reference to
Exhibit 10.3(c) to the Company's 1992 Form 10-K)
10.24(d) -- Amendment No. 4 to the Credit Facility, dated as of August 24, 1992 (incorporated by reference to
Exhibit 10.3(d) to the Company's 1992 Form 10-K)
10.24(e) -- Amended and Restated Credit Agreement dated as of March 31, 1993 (incorporated by reference to Exhibit
10.3(e) to the Company's 1993 Form 10-K)
10.24(f) -- Amendment No. 1 to the Amended and Restated Credit Agreement dated as of July 26, 1993 (incorporated
by reference to Exhibit 10.3(f) to the Company's 1993 Form 10-K)
10.24(g) -- Amended and Restated Credit Agreement dated as of December 29, 1993 (incorporated by reference to
Exhibit 10.4(g) to the Company's 1994 Form 10-K)
10.24(h) -- Amendment No. 4 to the Amended and Restated Credit Agreement dated as of December 29, 1993
(incorporated by reference to Exhibit 10.4(h) to the Company's Form 10-K for the transition period July
1, 1994 to December 31, 1994)
10.25(a) -- Revolving Credit Agreement, dated as of August 11, 1995
10.25(b) -- First Amendment to Revolving Credit Agreement, dated as of December 15, 1996
10.25(c) -- Amendment No. 2 to Revolving Credit Agreement, dated as of May 20, 1996
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of McDermott, Will & Emery, included in the opinion of McDermott, Will & Emery, filed as
Exhibit 5.1`D'
24.1 -- Power of Attorney of Mark C. Davis
24.2 -- Power of Attorney of other Directors (included on page II-5 of initial filing of Registration
Statement on June 6, 1997)*
27 -- Financial Data Schedule (incorporated by reference to Exhibit 27 to the Company's March 31, 1997 Form
10-Q).
</TABLE>
- ------------
`D' To be filed by amendment
* Previously filed.
ITEM 17. UNDERTAKINGS.
(A) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(B) The undersigned registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared effective.
2. For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
<PAGE>
(C) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Livonia, State of Michigan on June 11,
1997.
VALASSIS COMMUNICATIONS, INC.
By: DAVID A. BRANDON*
____________________________________
DAVID A. BRANDON
CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed below by the following
persons in the capacities indicated on June 11, 1997.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------------------ ---------------------------------------------------------------------
<C> <S>
BRIAN M. POWERS* Chairman of the Board of Directors
- ------------------------------------------
BRIAN M. POWERS
DAVID A. BRANDON* President and Chief Executive Officer, Director
- ------------------------------------------ (Principal Executive Officer)
DAVID A. BRANDON
GRAHAM A. CUBBIN* Director
- ------------------------------------------
GRAHAM A. CUBBIN
/s/ MARK C. DAVIS Director
- ------------------------------------------
MARK C. DAVIS
JON M. HUNTSMAN, JR.* Director
- ------------------------------------------
JON M. HUNTSMAN, JR.
JAMES PACKER* Director
- ------------------------------------------
JAMES PACKER
ROBERT L. RECCHIA* Chief Financial Officer and Director
- ------------------------------------------ (Principal Financial and Accounting Officer)
ROBERT L. RECCHIA
ALAN F. SCHULTZ* Chief Operating Officer and Director
- ------------------------------------------
ALAN F. SCHULTZ
FAITH WHITTLESEY* Director
- ------------------------------------------
FAITH WHITTLESEY
*By: /S/ BARRY P. HOFFMAN
BARRY P. HOFFMAN
ATTORNEY-IN-FACT
</TABLE>
II-6
<PAGE>
<PAGE>
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as 'D'
<PAGE>
<PAGE>
EXHIBIT INDEX
The File Number of Valassis Communications, Inc., the Registrant (the
'Company'), and for all Exhibits incorporated by reference is 1-10991.
<TABLE>
<CAPTION>
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<C> <S> <C>
1.1 -- Form of U.S. Purchase Agreement`D'
-- Form of International Purchase Agreement`D'
3.1 -- Restated Certificate of Incorporation of Valassis Communications, Inc.
(incorporated by reference to Exhibit 3.1 to the Company's Registration Statement
No. 33-45189)
3.2 -- Amended and Restated By-Laws of Valassis Communications, Inc. (incorporated by
reference to Exhibit 3.2 to the Company's Registration Statement No. 33-45189)
5.1 -- Opinion of McDermott, Will & Emery regarding the legality of the securities being
registered`D'
10.1 -- Employment Agreement, dated January 20, 1992, among David A. Brandon, Valassis
Communications, Inc. and Valassis Inserts, Inc. (incorporated by reference to
Exhibit 10.4 to the Company's Registration Statement No. 33-45189)
10.1(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
David A. Brandon dated as of June 18, 1993 (incorporated by reference to Exhibit
10.4(a) to the Company's 1993 Form 10-K)
10.1(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
David A. Brandon dated as of July 9, 1995 (incorporated by reference to Exhibit
10.5(b) to the Company's 1995 Form 10-K)
10.1(c) -- Amendment to Employment Agreement of David A. Brandon dated as of December 22,
1995 (incorporated by reference to Exhibit 10.5(c) to the Company's 1995 Form
10-K)
10.2 -- Employment Agreement, dated January 20, 1992 among Robert L. Recchia, Valassis
Communications, Inc. and Valassis Inserts, Inc., including amendment dated
February 11, 1992 (incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement No. 33-45189)
10.2(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
Robert Recchia dated January 2, 1996 (incorporated by reference to Exhibit 10.6(a)
to the Company's 1995 Form 10-K)
10.2(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
Robert Recchia dated January 3, 1997 (incorporated by reference to Exhibit 10.6(b)
of the Company's 1996 Form 10-K)
10.3 -- Employment Agreement, dated January 20, 1992, among Barry P. Hoffman, Valassis
Communications, Inc. and Valassis Inserts, Inc., including amendment dated
February 11, 1992 (incorporated by reference to Exhibit 10.6 to the Company's
Registration Statement No. 33-45189)
10.3(a) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
Barry P. Hoffman dated December 19, 1995 (incorporated by reference to Exhibit
10.7(a) to the Company's 1995 Form 10-K)
10.4 -- 1992 Long-Term Incentive Plan, as amended (incorporated by reference to Exhibits
4.1 and 4.2 to the Company's Form S-8 filed on February 17, 1993, No. 33-59670)
10.5 -- Valassis Inserts, Inc. Employees' 401(k) Retirement Savings Plan (incorporated by
reference to Exhibit 10.8 to the Company's Registration Statement No. 33-45189)
10.5(a) -- First Amendment of the Valassis Communications, Inc. Employees' 401(k) Retirement
Savings Plan (incorporated by reference to Exhibit 10.9(a) to the Company's 1995
Form 10-K)
10.6 -- Valassis Inserts, Inc. Employees' Profit Sharing Plan (incorporated by reference
to Exhibit 10.9 to the Company's Registration Statement No. 33-45189)
</TABLE>
<PAGE>
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<TABLE>
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<C> <S> <C>
10.6(a) -- First Amendment of the Valassis Communications, Inc. Employees' Profit Sharing
Plan (incorporated by reference to Exhibit 10.10(a) to the Company's 1995 Form
10-K)
10.7 -- Tax Sharing Agreement, dated as of December 31, 1991, among CII Holdings Group,
Inc. and each of its U.S. subsidiaries and Valassis Communications, Inc.
(incorporated by reference to Exhibit 10.10 to the Company's Registration
Statement No. 33-45189)
10.8 -- Access Agreement, dated as of December 31, 1991, among Valassis Communications,
Inc., Consolidated Press Holdings Limited and certain of its affiliates
(incorporated by reference to Exhibit 10.11 to the Company's Registration
Statement No. 33-45189)
10.9 -- Consolidated Federal Income Tax Liability Allocation Agreement, dated July 1,
1989, between Valassis Communications, Inc. and certain subsidiaries (incorporated
by reference to Exhibit 10.13 to the Company's Registration Statement No.
33-45189)
10.10 -- Valassis Inserts, Inc. Plant Employees Pension Plan (incorporated by reference to
Exhibit 10.14 to the Company's Registration Statement No. 33-45189)
10.11 -- Employment Agreement among Richard N. Anderson, Valassis Communications, Inc. and
Valassis Inserts, Inc. (incorporated by reference to Exhibit 10.16 to the
Company's Registration No. 33-45189)
10.11(a) -- Amendment to Employment Agreement among Richard N. Anderson, Valassis
Communications, Inc. and Valassis Inserts, Inc. (incorporated by reference to
Exhibit 10.15(a) to the Company's Form 10-K for the transition period of July 1,
1994 to December 31, 1994)
10.11(b) -- Amendment to Employment Agreement and Non Qualified Stock Option Agreement of
Richard N. Anderson dated December 15, 1995 (incorporated by reference to Exhibit
10.15(b) to the Company's 1995 Form 10-K)
10.12 -- Employment Agreement among Alan F. Schultz, Valassis Communications, Inc. and
Valassis Inserts, Inc. (incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement No. 33-45189)
10.12(a) -- Amendment to Employment Agreement among Alan F. Schultz, Valassis Communications,
Inc. and Valassis Inserts, Inc. (incorporated by reference to Exhibit 10.16(a) to
the Form 10-K for the transition period of July 1, 1994 to December 31, 1994)
10.12(b) -- Amendment to Employment Agreement and Non Qualified Stock Option of Alan F.
Schultz dated December 19, 1995 (incorporated by reference to Exhibit 10.16(b) to
the Company's 1995 Form 10-K)
10.13 -- Valassis Communications, Inc. Employee Stock Purchase Plan (incorporated by
reference to Exhibit 10.17 to the 1992 Form 10-K)
10.14 -- Valassis Communications, Inc. Non-Employee Directors' Stock Compensation Plan
(incorporated by reference to Exhibit 4.3 to the Company's Form S-8 filed on
February 17, 1993, No. 33-59670)
10.15 -- Senior Executive Annual Bonus Plan (incorporated by reference to Exhibit A to the
Company's Proxy Statement dated October 24, 1994)
10.16 -- Conpress Stock Option Agreement (incorporated by reference to Exhibit 10.20 to
the Company's June 30, 1996 Form 10-Q)
10.17 -- Lease for New Headquarters Building (incorporated by reference to Exhibit 10.21
to the Company's June 30, 1996 Form 10-Q)
10.18 -- Registration Rights Agreement between the Company and the Selling Stockholder`D'
10.19 -- Assignment of Stock Option Agreement dated June 5, 1997 among Conpress Cayman,
LDC, Consolidated Press International Limited, Conpress International (Netherlands
Antilles) N.V. and Valassis Communications, Inc.
10.20 -- Indenture between Valassis Communications, Inc. and The Bank of New York, as
trustee, relating to the 9.55% Senior Notes due 2003 (incorporated by reference to
Exhibit 4.1 to the Company's Form 10-K for the transition period July 1, 1994 to
December 31, 1994)
</TABLE>
<PAGE>
<PAGE>
<TABLE>
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- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
10.21 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York,
as trustee, relating to the 8 3/8% Senior Notes due 1997 (incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement No. 33-45285)
10.21(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by
reference to Exhibit 10.1(a) to the Company's 1993 Form 10-K)
10.22 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York,
as trustee, relating to the 8 7/8% Senior Notes due 1999 (incorporated by
reference to Exhibit 4.3 to the Company's Registration Statement No. 33-45285)
10.22(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by
reference to Exhibit 10.2(a) to the Company's 1993 Form 10-K)
10.23 -- Form of Indenture between Valassis Communications, Inc. and The Bank of New York,
as trustee, relating to the 9 3/8% Senior Subordinated Notes due 1999
(incorporated by reference to Exhibit 4.2 to the Company's Registration Statement
No. 33-45285)
10.23(a) -- First Supplemental Indenture dated as of March 31, 1993 (incorporated by
reference to Exhibit 3 to the Company's Form 8-K dated as of March 31, 1993)
10.24 -- Credit Agreement dated as of March 6, 1992 (the 'Credit Facility'), among
Valassis Communications, Inc., the institutions named therein, the institutions
named therein as issuing banks, Citicorp USA, Inc., as agent and administrative
agent, and Westpac Banking Corporation, as agent (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement No. 33-45189)
10.24(a) -- Amended and Restated Amendment No. 1 to the Credit Facility, dated as of March 6,
1992 (incorporated by reference to Exhibit 10.3(a) to the Company's Registration
Statement No. 33-45189)
10.24(b) -- Amendment No. 2 to the Credit Facility, dated as of May 15, 1992 (incorporated by
reference to Exhibit 10.3(b) to the Company's 1992 Form 10-K)
10.24(c) -- Amendment No. 3 to the Credit Facility, dated as of June 10, 1992 (incorporated
by reference to Exhibit 10.3(c) to the Company's 1992 Form 10-K)
10.24(d) -- Amendment No. 4 to the Credit Facility, dated as of August 24, 1992 (incorporated
by reference to Exhibit 10.3(d) to the Company's 1992 Form 10-K)
10.24(e) -- Amended and Restated Credit Agreement dated as of March 31, 1993 (incorporated by
reference to Exhibit 10.3(e) to the Company's 1993 Form 10-K)
10.24(f) -- Amendment No. 1 to the Amended and Restated Credit Agreement dated as of July 26,
1993 (incorporated by reference to Exhibit 10.3(f) to the Company's 1993 Form
10-K)
10.24(g) -- Amended and Restated Credit Agreement dated as of December 29, 1993 (incorporated
by reference to Exhibit 10.4(g) to the Company's 1994 Form 10-K)
10.24(h) -- Amendment No. 4 to the Amended and Restated Credit Agreement dated as of December
29, 1993 (incorporated by reference to Exhibit 10.4(h) to the Company's Form 10-K
for the transition period July 1, 1994 to December 31, 1994)
10.25(a) -- Revolving Credit Agreement, dated as of August 11, 1995
10.25(b) -- First Amendment to Revolving Credit Agreement, dated as of December 15, 1996
10.25(c) -- Amendment No. 2 to Revolving Credit Agreement, dated as of May 20, 1996
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
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NUMBER DESCRIPTION OF DOCUMENT NUMBERING SYSTEM
- --------- ------------------------------------------------------------------------------------ -------------------
<C> <S> <C>
23.1 -- Consent of Ernst & Young LLP
23.2 -- Consent of McDermott, Will & Emery, included in the opinion of McDermott, Will &
Emery, filed as Exhibit 5.1`D'
24.1 -- Power of Attorney of Mark C. Davis
24.2 -- Power of Attorney of other Directors (included on page II-5 of initial filing of
Registration Statement on June 6, 1997)*
27 -- Financial Data Schedule (incorporated by reference to Exhibit 27 to the Company's
March 31, 1997 Form 10-Q).
</TABLE>
- ------------
`D' To be filed by amendment
* Previously filed.
<PAGE>
<PAGE>
Exhibit 10.19
Conpress Cayman, LDC
Consolidated Press International Limited
Conpress International (Netherlands Antilles) N.V.
June 5, 1997
Valassis Communications, Inc.
19975 Victor Parkway
Livonia, MI 48152
Stock Option Agreement
Dear Sirs:
We refer to the Stock Option Agreement, dated as of May 9, 1996, among
Valassis Communications, Inc., Conpress Cayman, LDC, and Consolidated Press
International Limited (the 'Agreement'). Capitalized terms herein have the
meanings given them in the Agreement.
As we have previously discussed, Conpress is planning to dispose of a
substantial portion of its holdings of the common stock, par value $.01 per
share, of Valassis in a registered public offering in the United States. In
connection therewith, it has been contemplated that all of the Valassis shares
owned by Conpress would be transferred to Conpress International (Netherlands
Antilles) N.V. ('CINA'). In connection with such transfer, it has also been
planned to transfer all of the rights and obligations of Conpress and CPIL under
the Agreement to CINA, and for CINA to assume all of such obligations and be
entitled to all of such rights of Conpress and CPIL under such Agreement.
Moreover, in conjunction with the proposed public offering, CINA plans to cause
the Company to consummate the repurchase by the Company of certain Valassis
shares pursuant to the Agreement. Accordingly, the parties hereto agree as
follows:
All of the rights and obligations of Conpress and CPIL under the Agreement
are hereby sold, assigned and transferred, for good and valuable consideration,
to CINA and CINA hereby assumes all the obligations of Conpress and CPIL under
such Agreement, and shall be entitled to all of the rights and benefits of
Conpress and CPIL thereunder. Without limiting the foregoing, all rights and
obligations of Conpress and CPIL with respect to its exercise of its rights
under the
<PAGE>
<PAGE>
Agreement as to a total of 1,026,200 Valassis shares are hereby transferred to
CINA, which shall be deemed to have properly exercised such rights in the first
instance.
The provisions of this letter shall become effective, as of the date
hereof, upon execution of this letter by all of the parties hereto.
If you agree with the foregoing, kindly sign and return to us, by
telecopier followed by 'hard copy', a counterpart of this letter.
Very truly yours,
CONPRESS CAYMAN, LDC
By: /s/ P.G. BEER
...................................
For and on behalf of
Conpress Investments B.V. and
Conpress International
(Netherlands Antilles) N.V.
CONSOLIDATED PRESS INTERNATIONAL
LIMITED
By: /s/ P.G. BEER
...................................
Director
CONPRESS INTERNATIONAL
(NETHERLANDS ANTILLES) N.V.
By: /s/ P.G. BEER
...................................
Director
Accepted and agreed to as of the
date first above written.
VALASSIS COMMUNICATIONS, INC.
By: /s/ Barry P. Hoffman
......................
<PAGE>
<PAGE>
VALASSIS COMMUNICATIONS, INC.
REVOLVING CREDIT AGREEMENT
DATED AS OF AUGUST 11, 1995
COMERICA BANK, AS AGENT
<PAGE>
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. DEFINITIONS................................................................................... 1
1.1 "Account(s)"....................................................................... 1
1.2 "Account Debtor"................................................................... 1
1.3 "Advance(s)"....................................................................... 1
1.4 "Affiliate"........................................................................ 1
1.5 "Agent"............................................................................ 1
1.6 "Agent's Fees"..................................................................... 1
1.7 "Alternate Base Rate".............................................................. 2
1.8 "Applicable Fee Percentage"........................................................ 2
1.9 "Applicable Interest Rate"......................................................... 2
1.10 "Banks"............................................................................ 2
1.11 "Borrowing Base and Covenant Compliance
Report".......................................................................... 2
1.12 "Business Day"..................................................................... 2
1.13 "Capital Expenditures"............................................................. 2
1.14 "Change of Ownership".............................................................. 2
1.15 "Change of Control"................................................................ 2
1.16 "Collateral"....................................................................... 3
1.17 "Collateral Documents"............................................................. 3
1.18 "Company Collateral Documents"..................................................... 3
1.19 "Consolidated"..................................................................... 3
1.20 "Consolidated Net Worth"........................................................... 3
1.21 "Core Business".................................................................... 3
1.22 "Debt"............................................................................. 3
1.23 "De Minimis Matters"............................................................... 4
1.24 "Default".......................................................................... 4
1.25 "Dollar" or "Dollars".............................................................. 4
1.26 "EBITDA"........................................................................... 4
1.27 "Eligible Account"................................................................. 4
1.28 "ERISA"............................................................................ 6
1.29 "ERISA Affiliate".................................................................. 6
1.30 "Eurocurrency-based Advance"....................................................... 6
1.31 "Eurocurrency-based Rate".......................................................... 6
1.32 "Eurocurrency-Interest Period"..................................................... 7
1.33 "Eurocurrency Lending Office"...................................................... 7
1.34 "Event of Default"................................................................. 7
1.35 "Facility Fee"..................................................................... 7
</TABLE>
- i -
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<PAGE>
TABLE OF CONTENTS
-----------------
(Continued)
<TABLE>
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<S> <C> <C>
1.36 "Federal Funds Effective Rate"..................................................... 7
1.37 "Fees"............................................................................. 7
1.38 "Fixed Charge Coverage Ratio"...................................................... 8
1.39 "Financial Statements"............................................................. 8
1.40 "Foreign Employee Benefit Plan".................................................... 8
1.41 "Funded Debt"...................................................................... 8
1.42 "GAAP"............................................................................. 8
1.43 "Governmental Obligations"......................................................... 8
1.44 "Gross-up"......................................................................... 8
1.45 "Guaranties"....................................................................... 8
1.46 "Hazardous Material"............................................................... 9
1.47 "Hazardous Material Law(s)"........................................................ 9
1.48 "Hereof", "hereto", "hereunder".................................................... 9
1.49 "Indebtedness"..................................................................... 9
1.50 "Indentures"....................................................................... 10
1.51 "Interest Expense"................................................................. 10
1.52 "Intangible Assets"................................................................ 10
1.53 "Interest Period".................................................................. 10
1.54 "Internal Revenue Code"............................................................ 10
1.55 "Investment"....................................................................... 10
1.56 "Joint Venture".................................................................... 11
1.57 "Lien"............................................................................. 11
1.58 "Loan Documents"................................................................... 11
1.59 "Majority Banks"................................................................... 11
1.60 "Margin"........................................................................... 11
1.61 "Maximum Subsidiary Investment Amount"............................................. 12
1.62 "Moody's".......................................................................... 12
1.63 "Moody's Rating"................................................................... 12
1.64 "Mortgages"........................................................................ 12
1.65 "Net Income"....................................................................... 12
1.66 "Notes"............................................................................ 12
1.67 "Pension Plan(s)".................................................................. 12
1.68 "Percentage"....................................................................... 12
1.69 "Permitted Acquisitions"........................................................... 13
1.70 "Permitted Encumbrances"........................................................... 14
1.71 "Permitted Investments"............................................................ 15
1.72 "Permitted Merger(s)".............................................................. 16
1.73 "Permitted Subordinated Indebtedness".............................................. 17
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1.74 "Permitted Transfer(s)"............................................................ 17
1.75 "Person"........................................................................... 18
1.76 "Prime Rate"....................................................................... 18
1.77 "Prime-based Advance".............................................................. 18
1.78 "Prime-based Rate"................................................................. 18
1.79 "Prior Agreement".................................................................. 18
1.80 "Prior Lenders".................................................................... 18
1.81 "Prior Notes"...................................................................... 18
1.82 "Rating Agency".................................................................... 18
1.83 "Request for Advance".............................................................. 18
1.84 "Revolving Credit"................................................................. 18
1.85 "Revolving Credit Aggregate Commitment"............................................ 18
1.86 "Revolving Credit Maturity Date"................................................... 19
1.87 "S&P".............................................................................. 19
1.88 "S&P Rating"....................................................................... 19
1.89 "Security Agreements".............................................................. 19
1.90 "Senior Debt to Cash Flow Ratio"................................................... 19
1.91 "Senior Indentures"................................................................ 19
1.92 "Senior Notes"..................................................................... 19
1.93 "Stock Pledges".................................................................... 19
1.94 "Subordinated Indenture"........................................................... 20
1.95 "Subordinated Notes"............................................................... 20
1.96 "Subsidiaries Collateral Documents"................................................ 20
1.97 "Subsidiary(ies)".................................................................. 20
1.98 "Tax Payments"..................................................................... 20
1.99 "UCC".............................................................................. 20
1.100 "Wholly-Owned Subsidiary".......................................................... 20
1.101 "Wichita Bonds".................................................................... 21
2. REVOLVING CREDIT.............................................................................. 21
2.1 Revolving Credit Commitment........................................................ 21
2.2 Accrual of Interest and Maturity................................................... 21
2.3 Requests for Advances and Requests for
Refundings and Conversions of Advances........................................... 21
2.4 Disbursement of Advances........................................................... 23
2.5 Prime-based Advance in Absence of Election or
Upon Default..................................................................... 24
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2.6 Facility Fee....................................................................... 24
2.7 Reduction of Indebtedness; Revolving Credit
Aggregate Commitment............................................................. 24
2.8 Revolving Credit as Renewal; Application of
Advances Thereafter.............................................................. 24
2.9 Extension of Revolving Credit Maturity
Date............................................................................. 25
2.10 Optional Reduction or Termination of
Revolving Credit Aggregate Commitment............................................ 25
3. MARGIN ADJUSTMENTS; INTEREST PAYMENTS......................................................... 26
3.1 Margin Adjustments................................................................. 26
3.2 Prime-based Interest Payments...................................................... 26
3.3 Eurocurrency-based Interest Payments............................................... 27
3.4 Interest Payments on Conversions................................................... 27
3.5 Interest on Default................................................................ 27
3.6 Prepayment......................................................................... 27
4. CONDITIONS.................................................................................... 28
4.1 Execution of Notes and this Agreement.............................................. 28
4.2 Corporate Authority................................................................ 28
4.3 Company Collateral Documents....................................................... 28
4.4 Subsidiaries Collateral Documents.................................................. 29
4.5 Licenses, Permits, Etc............................................................. 29
4.6 Representations and Warranties -- All
Parties.......................................................................... 30
4.7 Opinion of Counsel................................................................. 30
4.8 No Default; No Material Adverse Change............................................. 30
4.9 Company's Certificate.............................................................. 30
4.10 Other Documents and Instruments.................................................... 30
4.11 Continuing Conditions.............................................................. 30
5. REPRESENTATIONS AND WARRANTIES................................................................ 31
5.1 Corporate Authority................................................................ 31
5.2 Due Authorization - Company........................................................ 31
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5.3 Due Authorization - Subsidiaries................................................... 32
5.4 Title to Collateral - Company...................................................... 32
5.5 Title to Collateral - Subsidiaries................................................. 32
5.6 Encumbrances....................................................................... 32
5.7 Capital Stock; Shareholders; Subsidiaries.......................................... 32
5.8 Investments in Non-Subsidiaries.................................................... 32
5.9 Taxes.............................................................................. 33
5.10 No Defaults........................................................................ 33
5.11 Enforceability of Agreement and Loan
Documents -- Company............................................................. 33
5.12 Enforceability of Loan Documents --
Subsidiaries..................................................................... 33
5.13 Compliance with Laws............................................................... 33
5.14 Non-contravention -- Company....................................................... 33
5.15 Non-contravention -- Subsidiaries.................................................. 34
5.16 No Litigation -- Company........................................................... 34
5.17 No Litigation -- Subsidiaries...................................................... 34
5.18 Consents, Approvals and Filings, Etc............................................... 34
5.19 Agreements Affecting Financial Condition........................................... 35
5.20 No Investment Company or Margin Stock.............................................. 35
5.21 ERISA.............................................................................. 35
5.22 Conditions Affecting Business or
Properties....................................................................... 36
5.23 Environmental and Safety Matters................................................... 36
5.24 Accuracy of Information............................................................ 37
5.25 Foreign Employee Benefit Plans..................................................... 37
6. AFFIRMATIVE COVENANTS......................................................................... 38
6.1 Preservation of Existence, Etc..................................................... 38
6.2 Keeping of Books................................................................... 38
6.3 Reporting Requirements............................................................. 38
6.4 Net Worth.......................................................................... 40
6.5 Fixed Charge Coverage Ratio........................................................ 40
6.6 Senior Debt to Cash Flow Ratio..................................................... 41
6.7 EBITDA............................................................................. 41
6.8 Taxes.............................................................................. 41
6.9 Inspections........................................................................ 41
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6.10 Further Assurances; Financing Statements........................................... 42
6.11 Compliance with Leases............................................................. 42
6.12 Indemnification.................................................................... 42
6.13 Governmental and Other Approvals................................................... 42
6.14 Insurance.......................................................................... 43
6.15 Compliance with Laws............................................................... 43
6.16 Compliance with ERISA.............................................................. 44
6.17 ERISA Notices...................................................................... 44
6.18 Foreign Employee Benefit Plans..................................................... 45
6.19 Notices re Other Debt.............................................................. 45
6.20 Rating Change...................................................................... 45
6.21 Wichita Bonds...................................................................... 45
7. NEGATIVE COVENANTS............................................................................ 45
7.1 Capital Structure and Redemptions.................................................. 45
7.2 Business Purposes.................................................................. 46
7.3 Mergers or Dispositions............................................................ 46
7.4 Indebtedness....................................................................... 46
7.5 Liens.............................................................................. 47
7.6 Acquisitions....................................................................... 47
7.7 Dividends.......................................................................... 47
7.8 Investments........................................................................ 48
7.9 Accounts Receivable................................................................ 49
7.10 Transactions with Affiliates....................................................... 49
7.11 No Further Negative Pledges........................................................ 49
7.12 Permitted Subordinated Indebtedness................................................ 49
7.13 Sale and Leaseback................................................................. 49
7.14 Corporate Documents................................................................ 50
7.15 Fiscal Year........................................................................ 50
7.16 Senior Notes....................................................................... 50
7.17 Maximum Subsidiary Investment Amount............................................... 50
8. DEFAULTS...................................................................................... 50
8.1 Events of Default.................................................................. 50
8.2 Exercise of Remedies............................................................... 52
8.3 Rights Cumulative.................................................................. 53
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8.4 Waiver by Company of Certain Laws.................................................. 53
8.5 Waiver of Defaults................................................................. 53
8.6 Deposits and Accounts.............................................................. 53
9. PAYMENTS, RECOVERIES AND COLLECTIONS.......................................................... 54
9.1 Payment Procedure.................................................................. 54
9.2 Application of Proceeds of Collateral.............................................. 55
9.3 Pro-rata Recovery.................................................................. 56
9.4 Deposits and Accounts.............................................................. 56
10. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS.............................................. 56
10.1 Reimbursement of Prepayment Costs.................................................. 56
10.2 Agent's Eurocurrency Lending Office................................................ 57
10.3 Circumstances Affecting Eurocurrency-based
Rate Availability................................................................ 57
10.4 Laws Affecting Eurocurrency-based Advance
Availability..................................................................... 58
10.5 Increased Cost of Eurocurrency-based
Advances......................................................................... 58
10.6 Other Increased Costs.............................................................. 59
11. AGENT......................................................................................... 60
11.1 Appointment of Agent............................................................... 60
11.2 Deposit Account with Agent......................................................... 60
11.3 Scope of Agent's Duties............................................................ 60
11.4 Successor Agent.................................................................... 61
11.5 Loans by Agent..................................................................... 62
11.6 Credit Decisions................................................................... 62
11.7 Agent's Fees....................................................................... 62
11.8 Authority of Agent to Enforce Notes and This
Agreement........................................................................ 62
11.9 Indemnification.................................................................... 62
11.10 Knowledge of Default............................................................... 63
11.11 Agent's Authorization; Action by Banks............................................. 63
11.12 Enforcement Actions by the Agent................................................... 64
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12. MISCELLANEOUS................................................................................. 64
12.1 Restatement of Prior Agreement..................................................... 64
12.2 Accounting Principles.............................................................. 64
12.3 Consent to Jurisdiction............................................................ 65
12.4 Law of Michigan.................................................................... 65
12.5 Interest........................................................................... 65
12.6 Closing Costs and Other Costs...................................................... 66
12.7 Notices............................................................................ 66
12.8 Further Action..................................................................... 67
12.9 Successors and Assigns; Participations;
Assignments...................................................................... 67
12.10 Indulgence......................................................................... 67
12.11 Counterparts....................................................................... 67
12.12 Amendment and Waiver............................................................... 68
12.13 Taxes and Fees..................................................................... 68
12.14 Confidentiality.................................................................... 68
12.15 Withholding Taxes.................................................................. 69
12.16 Release of Collateral.............................................................. 70
12.17 Power of Attorney.................................................................. 70
12.18 WAIVER OF JURY TRIAL............................................................... 71
12.19 Complete Agreement; Conflicts...................................................... 71
12.20 Severability....................................................................... 71
12.21 Table of Contents and Headings..................................................... 72
12.22 Construction of Certain Provisions................................................. 72
12.23 Independence of Covenants.......................................................... 72
12.24 Reliance on and Survival of Various
Provisions....................................................................... 72
12.25 Effective Upon Execution........................................................... 72
12.26 Payment of Fees.................................................................... 72
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EXHIBITS
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A FORM OF BORROWING BASE AND COVENANT COMPLIANCE REPORT
B FORM OF REVOLVING CREDIT NOTE
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C PERCENTAGES
D FORM OF REQUEST FOR ADVANCE
E WICHITA, KANSAS LEGAL DESCRIPTION
SCHEDULES
1.8 Pricing Matrix
1.72 Additional Permitted Encumbrances
5.7 Subsidiaries
5.8 Joint Ventures
5.16 Litigation - Company
5.17 Litigation - Subsidiaries
5.21 Pension Plans
5.23 Environmental Matters
5.24 Unrealized or Anticipated losses
7.4 Additional Permitted Indebtedness
7.8 Additional Permitted Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("Agreement") is made as of the 11th day of
August, 1995, by and among Comerica Bank, Westpac Banking Corporation, The
Long-Term Credit Bank of Japan, Ltd. Chicago Branch (individually, a "Bank", and
collectively the "Banks"), Comerica Bank, as agent for the Banks (in such
capacity, "Agent"), and Valassis Communications, Inc., a Delaware corporation
("Company").
COMPANY, AGENT AND BANKS AGREE:
1. DEFINITIONS
For the purposes of this Agreement the following terms will have the
following meanings:
1.1 "Account(s)" shall mean any account or account receivable as
defined under the UCC, including without limitation, with respect to any Person,
any right of such Person to payment for goods sold or leased or for services
rendered.
1.2 "Account Debtor" shall mean the party who is obligated on or under
any Account.
1.3 "Advance(s)" shall mean a borrowing requested by Company and made
by Banks under Section 2.1 of this Agreement, including without limitation any
readvance, refunding or conversion of such borrowing pursuant to Section 2.3
hereof, and shall include, as applicable, a Eurocurrency-based Advance and/or
Primebased Advance.
1.4 "Affiliate" shall mean, with respect to any Person, any other
Person or group acting in concert in respect of the first Person that, directly
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with such first Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person or group of Persons, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of management and policies of such
Person, whether
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through the ownership of voting securities or by contract or otherwise.
1.5 "Agent" shall mean Comerica Bank, in its capacity as agent
hereunder, or any successor agent appointed in accordance with Section 11.4
hereof.
1.6 "Agent's Fees" shall mean those agency and other fees and expenses
required to be paid by Company to Agent under Section 11.7 hereof.
1.7 "Alternate Base Rate" shall mean, for any day, an interest rate per
annum equal to the Federal Funds Effective Rate in effect on such day, plus
one-half of one percent (1/2%).
1.8 "Applicable Fee Percentage" shall mean, as of any date of
determination thereof, the applicable percentage used to calculate the Facility
Fee due and payable hereunder, determined (based on the Company's Moody's Rating
and S&P Rating) by reference to the appropriate columns in the pricing matrix
attached to this Agreement as SCHEDULE 1.8.
1.9 "Applicable Interest Rate" shall mean the Eurocurrencybased Rate or
the Prime-based Rate, applicable to an Advance (in the case of a
Eurocurrency-based Advance, for the relevant Interest Period), as selected by
Company from time to time subject to the terms and conditions of this Agreement.
1.10 "Banks" shall mean Comerica Bank, Westpac Banking Corporation, The
Long Term Credit Bank of Japan, Ltd. Chicago Branch and their successors or
assigns.
1.11 "Borrowing Base and Covenant Compliance Report" shall mean the
report to be furnished by Company to the Agent, in the form of attached EXHIBIT
"A" and certified by the chief financial officer of Company pursuant to Section
6.3, hereof (or in such officer's absence, a responsible senior officer), in
which report Company shall set forth, among other things, a report as to its
Eligible Accounts and detailed calculations and the resultant ratios or
financial tests with respect to the financial covenants contained in Sections
6.4, 6.5, 6.6 and 6.7 of this Agreement.
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1.12 "Business Day" shall mean (i) with respect to Eurodollar-based
Advances, any day on which commercial banks are open for domestic business in
Detroit, London and New York and (ii) in all other instances, any day on which
commercial banks are open for domestic business in Detroit and New York.
1.13 "Capital Expenditures" shall mean for any period of determination,
without duplication, any amounts paid or accrued during such period which in
accordance with GAAP would be classified as capital expenditures on a balance
sheet.
1.14 "Change of Ownership" shall mean an event or series of events that
occurs at any time by which Kerry F.B. Packer ceases to be the beneficial owner,
directly or indirectly, of at least 42% of the voting stock of Company.
1.15 "Change of Control" shall mean an event or series of events by
which (i) any Person (other than Kerry F.B. Packer, James Packer or any Person
in which either Kerry F. B. Packer or James Packer had the ability to control
the management or policies of such Person), who as of the date hereof does not
have the power to elect a majority of the Board of Directors of Company,
acquires the power to vote sufficient number of shares of voting stock of
Company to enable such Person to elect a majority of the Board of Directors of
Company; or (ii) with respect to each Subsidiary, Company shall own, directly or
indirectly, less than 51% of the issued and outstanding capital stock of such
Subsidiary unless such change in ownership is the result of a Permitted Merger.
1.16 "Collateral" shall mean all property or rights in which a security
interest, mortgage, lien or other encumbrance for the benefit of the Banks is or
has been granted or arises or has arisen, under or in connection with this
Agreement, the other Loan Documents or otherwise.
1.17 "Collateral Documents" shall mean the Company Collateral Documents
and the Subsidiaries Collateral Documents.
1.18 "Company Collateral Documents" shall mean the Security Agreements,
the Stock Pledges, the Mortgages, and all other security documents executed and
delivered by Company to the Agent, in accordance with the terms and conditions
of this Agreement, as
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the same may be amended, restated, supplemented or replaced from time to time.
1.19 "Consolidated" or "Consolidating" shall mean, when used with
reference to any financial term in this Agreement, the aggregate for two or more
Persons of the amounts signified by such term for all such persons determined on
a consolidated basis in accordance with GAAP. Unless otherwise specified herein,
references to Consolidated or Consolidating financial statements or data of
Company includes consolidation with its Subsidiaries in accordance with GAAP.
1.20 "Consolidated Net Worth" shall mean, as at any date of
determination, shareholders' equity as of such date as determined in accordance
with GAAP.
1.21 "Core Business" shall mean (i) with respect to Company and its
Subsidiaries (other than VCI Properties, Inc.), sales promotion and related
activities and (ii) with respect to VCI Properties, Inc., leasing and subleasing
real property located at 52 Vanderbilt Avenue, New York, New York.
1.22 "Debt" shall mean, as of any applicable date of determination, all
items of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities on a
balance sheet of such Person; provided, however that for purposes of calculating
the aggregate Debt of Company and its Subsidiaries, the direct and indirect and
absolute and contingent obligations of Company and its Subsidiaries (whether
direct or contingent) shall be determined without duplication.
1.23 "De Minimis Matters" shall mean environmental or other matters,
the existence of which and any liability which may result therefrom, would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the financial condition or businesses of the Company and its
Subsidiaries (taken as a whole) or on the ability of the Company and
Subsidiaries (taken as a whole) to pay their Debts, as such Debts become due.
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1.24 "Default" shall mean any event which with the giving of notice or
the passage of time, or both, would constitute an Event of Default under this
Agreement.
1.25 "Dollar" or "Dollars" and the sign "$" shall mean lawful money of
the United States of America.
1.26 "EBITDA" shall mean, for any period of determination, on a
Consolidated basis for the Company and its Subsidiaries, the sum of the amounts
for such period of (i) Net Income, plus (ii) the amount deducted in determining
Net Income representing amortization expense of assets, plus (iii) Interest
Expense, plus (iv) the amount deducted in determining Net Income representing
all income taxes, plus (v) the amount deducted in determining Net Income
representing depreciation of assets, plus (vi) extraordinary losses (and any
unusual losses arising in or outside of the ordinary course of business not
included in extraordinary losses determined in accordance with GAAP which have
been included in the determination of Net Income) minus (vii) extraordinary
gains (and any unusual gains arising in or outside of the ordinary course of
business not included in extraordinary gains determined in accordance with GAAP
which have been included in the determination of Net Income).
1.27 "Eligible Account" shall mean an Account (excluding interest and
service charges) arising in the ordinary course of Company's or any of its
Subsidiaries' business which meets each of the following requirements:
(a) it is not owing more than ninety (90) days after the date of the
original invoice or other writing evidencing such Account;
(b) it arises from the sale or lease of goods and such goods have
been, or will be, shipped or delivered within sixty (60) days
from the date of the original invoice with respect thereto, to
the Account Debtor under such Account; or it arises from
services rendered and such services have been, or will be,
performed within sixty (60) days from the date of the original
invoice with respect thereto;
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(c) it is evidenced by an invoice, dated not later than the date of
shipment or performance, rendered to such Account Debtor or some
other evidence of billing acceptable to Agent;
(d) it is not evidenced by any note, trade acceptance, draft or
other negotiable instrument or by any chattel paper, unless such
note or other document or instrument previously has been
endorsed and delivered by Company or one of its Subsidiaries, as
applicable, to Agent;
(e) to the best of Company's knowledge, it is a valid, legally
enforceable obligation of the Account Debtor thereunder, and is
not subject to any offset, counterclaim or other defense on the
part of such Account Debtor or to any claim on the part of such
Account Debtor denying liability thereunder in whole or in part;
(f) it is not subject to any sale of accounts to any Person, any
rights of offset, assignment, lien or security interest
whatsoever other than to Agent for the benefit of the Banks;
(g) it is not owing by a Subsidiary or Affiliate of Company or its
Subsidiaries, nor by an Account Debtor which (i) does not
maintain its chief executive office in the United States of
America or Canada, (ii) is not organized under the laws of the
United States of America or Canada, or any state or province
thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality or
other instrumentality thereof;
(h) it is not an account owing by the United States of America or
any state or political subdivision thereof, or by any
department, agency, public body corporate or other
instrumentality of any of the foregoing, unless all necessary
steps are taken to comply with the Federal Assignment of Claims
Act of 1940, as amended, or with any comparable state law, if
applicable, and all other necessary steps are taken to perfect
Agent's security interest in such account;
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(i) it is not owing by an Account Debtor for which Company or any of
its Subsidiaries has received a notice of (i) the death of the
Account Debtor, any general partner of an Account Debtor which
is a limited partnership or any partner of an Account Debtor
which is a general partnership or co-partnership, (ii) the
dissolution, liquidation, termination of existence, insolvency
or business failure of the Account Debtor, (iii) the appointment
of a receiver for any part of the property of the Account
Debtor, or (iv) an assignment for the benefit of creditors, the
filing of a petition in bankruptcy, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against
the Account Debtor; and
(j) it is not owing by any Account Debtor whose obligations Agent,
acting in its reasonable discretion or at the request of
Majority Banks, shall have notified Company are not deemed to
constitute Eligible Accounts.
An Account which is at any time an Eligible Account, but which subsequently
fails to meet any of the foregoing requirements, shall forthwith cease to be an
Eligible Account.
1.28 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, or any successor act or code and the regulations in effect
from time to time thereunder.
1.29 "ERISA Affiliate" shall mean (i) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as the Company; (ii) a partnership or other
trade or business (whether or not incorporated) which is under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with the
Company; and (iii) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as the Company, any
corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
1.30 "Eurocurrency-based Advance" shall mean an Advance which bears
interest at the Eurocurrency-based Rate.
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1.31 "Eurocurrency-based Rate" shall mean, with respect to any
Eurocurrency-Interest Period, the per annum interest rate which is equal to the
sum of the Margin plus the quotient of:
(A) the per annum interest rate at which Dollar deposits are offered
to Agent's Eurocurrency Lending Office by other prime banks in
the eurodollar market in an amount comparable to the relevant
Eurocurrency-based Advance and for a period equal to the
relevant Eurocurrency- Interest Period at approximately 11:00
A.M. Detroit time two (2) Business Days prior to the first day
of such Eurocurrency-Interest Period, divided by
(B) an amount equal to one minus the stated maximum rate (expressed
as a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves) that is specified on the first day of such
Eurocurrency-Interest Period by the Board of Governors of the
Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirement with respect to
eurodollar funding (currently referred to as "eurocurrency
liabilities" in Regulation D of such Board) maintained by a
member bank of such System,
all as conclusively determined (absent manifest error) by the Agent, such sum to
be rounded upward, if necessary, to the nearest whole multiple of 1/16th of 1%.
1.32 "Eurocurrency-Interest Period" shall mean the Interest Period
applicable to a Eurocurrency-based Advance.
1.33 "Eurocurrency Lending Office" shall mean, (a) with respect to the
Agent, Agent's office located at Grand Cayman, British West Indies or such other
branch or branches of Agent, domestic or foreign, as it may hereafter designate
as a Eurocurrency Lending Office by notice to Company and the Banks, and (b) as
to each of the Banks, its office, branch or Affiliate located at its address set
forth on the signature pages hereof (or identified thereon as a Eurocurrency
Lending Office), or at such other office, branch or Affiliate of such Bank as it
may hereafter
8
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designate as its Eurocurrency Lending Office by notice to Company and Agent.
1.34 "Event of Default" shall mean each of the Events of Default
specified in Section 8.1 hereof.
1.35 "Facility Fee" shall mean the fee payable by Company to Agent for
distribution to the Banks based on their respective Percentages under Section
2.6 hereof.
1.36 "Federal Funds Effective Rate" shall mean, for any day, a
fluctuating interest rate per annum equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it, all as conclusively determined by the Agent, such sum
to be rounded upward, if necessary, to the nearest whole multiple of 1/16th of
1%.
1.37 "Fees" shall mean the Facility Fee, the Agent's Fees and the other
fees and charges payable by Company to the Banks or Agent hereunder.
1.38 "Fixed Charge Coverage Ratio" shall mean as of any date of
determination, a ratio (i) the numerator of which shall be the sum of the
amounts of (i) EBITDA for the four-quarter period ending on such date, minus
(ii) Company's and the Subsidiaries' Capital Expenditures for such period (minus
Capital Expenditures made pursuant to Section 7.4(g) hereof), minus (iii) cash
Tax Payments made during such period and (ii) the denominator of which shall be
the sum of the amount of (i) all principal payments due and paid on Funded Debt
during such period except (a) Funded Debt which, at the date of issuance or
incurrence thereof had a final maturity date of less than one year and (b) the
amount of voluntary prepayments on Advances allocated and actually paid during
such period plus (ii) Interest Expense for such period, plus (iii) dividends,
excluding dividends to Company or any Subsidiary, accrued or paid (without
duplication) during such period, all as determined on a Consolidated basis.
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1.39 "Financial Statements" shall mean all those balance sheets,
earnings statements and other financial data (whether of the Company, the
Subsidiaries or otherwise) which have been furnished by the Company or its
public accountants to the Agent or the Banks for the purposes of, or in
connection with, this Agreement and the transactions contemplated hereby.
1.40 "Foreign Employee Benefit Plan" shall mean any employee benefit
plan as defined in Section 3(3) of ERISA which is maintained or contributed to
for the benefit of the employees of Company, any of its Subsidiaries or any of
its ERISA Affiliates and is not covered by ERISA pursuant to ERISA Section
4(b)(4).
1.41 "Funded Debt" as of any date of determination shall mean all
indebtedness, obligations or other liabilities for borrowed money or evidenced
by debt securities, debentures, acceptances, notes or other similar instruments.
1.42 "GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect on the date hereof, consistently applied,
subject to the provisions of Section 12.2 hereof.
1.43 "Governmental Obligations" means noncallable direct general
obligations of the United States of America or obligations the payment of
principal of and interest on which is unconditionally guaranteed by the United
States of America.
1.44 "Gross-up" shall have the meaning set forth in Section 9.1(d)
hereof.
1.45 "Guaranties" shall mean collectively (unless the context indicates
otherwise), those joinder agreements or guaranties (each in form satisfactory to
Agent and the Banks) delivered by Wholly-Owned Subsidiaries at any time before
or after the date hereof and by any Person at the time it becomes a Subsidiary
of Company from time to time subsequent hereto, for the benefit of the Banks and
Agent, pursuant to this Agreement, as amended, restated, supplemented or
replaced from time to time.
1.46 "Hazardous Material" shall mean and include any hazardous, toxic
or dangerous waste, substance or material defined as such in (or for purposes
of) the Hazardous Material Laws.
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1.47 "Hazardous Material Law(s)" shall mean all laws, codes,
ordinances, rules, regulations, orders, decrees and directives issued by any
federal, state, provincial, local, foreign or other governmental or
quasi-governmental authority or body (or any agency, instrumentality or
political subdivision thereof) pertaining to hazardous material or toxic or
dangerous waste, substances or material on or about any facilities owned, leased
or operated by Company or any of its Subsidiaries, or any portion thereof
including, without limitation, those relating to soil, surface, subsurface
ground water conditions and the condition of the ambient air; and any state and
local laws and regulations pertaining to such material and/or asbestos; any
so-called "superfund" or "superlien" law; and any other federal, state,
provincial, foreign or local statute, law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning, any hazardous, toxic or dangerous waste, substance or
material, as now or at any time hereafter in effect.
1.48 "Hereof", "hereto", "hereunder" and similar terms shall refer to
this Agreement in its entirety and not to any particular paragraph or provision
of this Agreement.
1.49 "Indebtedness" shall mean all indebtedness and liabilities
(including without limitation interest, fees and other charges) arising under
this Agreement or the other Loan Documents, whether direct or indirect, absolute
or contingent, of Company and/or any Subsidiary to the Banks or to the Agent, in
any manner and at any time, whether evidenced by the Notes, or arising any of
the other Loan Documents, due or hereafter to become due, now owing or that may
hereafter be incurred by Company and/or Subsidiary to, or acquired by, the Banks
or by Agent, and any judgments that may hereafter be rendered on such
indebtedness or any part thereof, with interest according to the rates and terms
specified, or as provided by law, and any and all consolidations, amendments,
renewals, replacements, substitutions or extensions of any of the foregoing;
provided, however that for purposes of calculating the Indebtedness outstanding
under the Notes or any of the Loan Documents, the direct and indirect and
absolute and contingent obligations of the Company and/or its Subsidiaries
(whether direct or contingent) shall be determined without duplication.
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1.50 "Indentures" shall mean the Senior Indentures and the Subordinated
Indenture.
1.51 "Interest Expense" shall mean for any period, total interest
expense, whether paid or accrued (including the interest component of Capital
Leases), and all commissions, fees and discounts with respect to letters of
credit and other Debt of Company and its Subsidiaries on a Consolidated basis,
but excluding interest expense not payable in cash (including amortization of
discount), all as determined in accordance with GAAP.
1.52 "Intangible Assets" shall mean with respect to any Person, assets
of such Person having no physical existence and that, in conformity with GAAP,
should be classified as intangible assets, including, without limitation,
patents, patent rights, trademarks, trade names, copyrights, franchises,
licenses, customer lists, organizational expenses and goodwill.
1.53 "Interest Period" shall mean with respect to a Eurocurrency-based
Advance, one (1), two (2), three (3) or six (6) months (or any lesser or greater
period of time agreed to in advance by Company, Agent and the Banks) as selected
by Company pursuant to Section 2.3 hereof, provided, however, that any
Eurocurrency-Interest Period which commences on the last Business Day of a
calendar month (or on any day for which there is no numerically corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day or, if such next succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day, and no
Interest Period which would end after the Revolving Credit Maturity Date shall
be permitted with respect to any Advance.
1.54 "Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated thereunder.
1.55 "Investment" shall mean, as of any date of determination, any loan
or advance by Company or any of its Subsidiaries to, or any other loan, advance
or investment by Company or any of its Subsidiaries in, any Person (including
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without limitation, any Subsidiary of Company or any Joint Venture), whether
such loan, advance or investment shall be in the nature of an investment in
shares of stock or other capital or securities, general or limited partnership
or joint venture interests, evidences of indebtedness or otherwise. The amount
of any Investment, as of any date of determination, shall be the aggregate
original principal or capital amount thereof less all returns of principal or
equity thereon as of such date (and otherwise without adjustment by reason of
the financial condition of such other Person) and shall, if made by the transfer
or exchange of property other than cash, be deemed to have been made in an
original principal or capital amount equal to the fair market value of such
property at the time such Investment was made.
1.56 "Joint Venture" shall mean any corporation, partnership,
association, joint stock company, business trust or other combined enterprise,
other than a Consolidated Subsidiary, in which (or to which) the Company or any
of its Subsidiaries has made a loan, investment or advance or has an ownership
stake or interest, whether in the nature of an equity capital interest or
otherwise.
1.57 "Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, trust receipt, conditional sale
or title retaining contract, financing statement or comparable notice or other
filing or recording, lessor's or lessee's interest under any lease,
subordination or any claim or right, or any other type of lien, charge,
encumbrance, preferential or priority arrangement or other claim or right,
whether based on common law or statute.
1.58 "Loan Documents" shall mean, collectively, this Agreement, the
Notes, the Collateral Documents, and any other documents, certificates,
instruments or agreements executed pursuant to or in connection with any such
document or this Agreement, as such documents may be amended, replaced,
supplemented or restated from time to time.
1.59 "Majority Banks" shall mean at any time the Banks holding not less
than fifty-one percent (51%) of the sum of the aggregate principal amount of the
Indebtedness then outstanding under the Notes (or, if no Indebtedness is then
outstanding, the Banks holding not less than fifty-one percent (51%) of the
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Revolving Credit Aggregate Commitment); provided, however, that in the event any
of the Banks (a "Non-Advancing Bank") shall have failed to fund its Percentage
of any Advance requested by Company which such Non-Advancing Bank is obligated
to fund under the terms of this Agreement and such failure to fund has not been
cured, then for so long as such failure continues, "Majority Banks" shall mean
the Banks (excluding all Non-Advancing Banks) holding not less than fifty-one
percent (51%) of the aggregate Percentage of Banks (excluding all Non-Advancing
Banks).
1.60 "Margin" shall mean, as of any date of determination thereof, the
applicable interest rate margin component of the Eurocurrency-based Rate,
determined in accordance with the provisions of Section 3.1 hereof (based on
Company's Moody's Rating and S&P Rating) by reference to the appropriate columns
in the pricing matrix attached to this Agreement as SCHEDULE 1.8.
1.61 "Maximum Subsidiary Investment Amount" shall mean (i) the sum of
(A) all cash Investments by Company now existing or hereafter made, or which the
Company is under a contract obligation to make, in any Subsidiary or Joint
Venture, (B) the amount of any guaranty obligations whether now existing or
hereafter incurred by Company in respect of obligations of any Subsidiary or
Joint Venture and (C) the fair market value of all assets of Company contributed
and/or sold since March 15, 1992 or hereafter contributed or sold to any
Subsidiary or Joint Venture, minus (ii) any cash dividends (but not intercompany
loans) received by Company in respect of the capital stock of its Subsidiaries
since March 15, 1992. For purposes of this definition, the amount of any
Investment, as of any date of determination, shall be the aggregate original
principal or capital amount thereof less all returns of principal or equity
thereon as of such date (and otherwise without adjustment by reason of the
financial condition of such other Person) and shall, if made by the transfer or
exchange of property other than cash, be deemed to have been made in an original
principal or capital amount equal to the fair market value of such property at
the time such Investment was made.
1.62 "Moody's" shall mean Moody's Investors Service, Inc. or any
successor thereto.
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1.63 "Moody's Rating" shall mean for any day, the rating of Company's
senior long-term unsecured and non-credit enhanced debt by Moody's in effect at
11:00 a.m. Detroit time on such day.
1.64 "Mortgages" shall mean any of the Collateral Documents (in form
substantially similar to that previously executed and delivered by Company to
Agent) pursuant to which Agent is granted a Lien for the benefit of Banks on
Company's or a Wholly-Owned Subsidiary's interest in real property.
1.65 "Net Income" shall mean for any period, the net earnings (or loss)
after taxes of the Borrower and its Subsidiaries on a Consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP.
1.66 "Notes" shall mean the revolving credit notes described in Section
2.1 hereof, made by Company to each of the Banks in the form annexed to this
agreement as EXHIBIT "B", as such notes may be amended or supplemented from time
to time, and any other notes issued in substitution, replacement or renewal
thereof from time to time.
1.67 "Pension Plan(s)" shall mean all employee pension benefit plans of
Company or its Subsidiaries, as defined in Section 3(2) of ERISA.
1.68 "Percentage" shall mean, with respect to any Bank, its percentage
share, as set forth on EXHIBIT "C", hereto, of the Revolving Credit, as may be
revised from time to time by Agent in accordance with Section 12.9(c) hereof.
1.69 "Permitted Acquisitions" shall mean any acquisition by the Company
or any Subsidiary of all or substantially all of the assets of another Person,
or of a division or line of business of another Person or fifty one percent
(51%) or more of the shares of stock or other ownership interests of another
Person which satisfies and/or is conducted in accordance with the following
requirements:
(i) each such stock acquisition shall, under GAAP, be required
to be consolidated by Company, and not treated by Company or any of its
Subsidiaries as an equity investment;
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(ii) on the date of any such acquisition, all necessary
governmental, quasi-governmental, agency, regulatory or similar
approvals of applicable jurisdictions (or the respective agencies,
instrumentalities or political subdivisions, as applicable, of such
jurisdictions) and all necessary non-governmental and other third-party
approvals which, in each case, are material to such acquisition have
been obtained and are in effect, and Company and its Subsidiaries are
in full compliance thereunder, and all necessary declarations,
registrations or other filings with any court, governmental or
regulatory authority, securities exchange or any other person have been
made;
(iii) if a stock acquisition, the acquisition target must be
principally engaged in a Core Business and, if an asset acquisition,
the assets so acquired must be used by Company or such Subsidiary in a
Core Business;
(iv) if a stock acquisition, the acquisition shall have been
approved by the Board of Directors of the acquisition target or all of
the shareholders whose stock is being acquired of such acquisition
target not later than the date any Request for Advance is delivered to
Bank in connection with an Advance to be used to pay all or a portion
of the acquisition consideration and as of such date, no claim or
challenge has been asserted or threatened by any shareholder, director,
officer or employee of the acquisition target or by any other person
which would reasonably be expected to have a material adverse effect on
Company and its Consolidated Subsidiaries (taken as a whole);
(v) not less than five (5) Business Days prior to the date of
such acquisition, the Company provides to Agent written notice of the
proposed acquisition;
(vi) both immediately before and immediately after such
acquisition, no Default or Event of Default (whether or not related to
such acquisition), has occurred and is continuing under this Agreement,
or any of the other Loan Documents as evidenced by a certificate of an
authorized officer of Company; and
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(vii) within ten (10) Business Days of any such acquisition,
Company shall have caused to be furnished, executed and delivered to
Agent as security for all Indebtedness of Company, in form and
substance similar to that previously executed and delivered by Company
to Agent and supported by appropriate resolutions in certified form
authorizing same, (A) the Subsidiaries Collateral Documents of the
Subsidiary(ies) so acquired and (B) a Stock Pledge by Company or a
Subsidiary, as the case may be, with respect to all of its stock in the
Subsidiary(ies) so acquired; and, if required or advisable under
applicable law to perfect the liens granted thereby, appropriate
financing statements, collateral and other documents covering such
Collateral executed and delivered by the appropriate parties, including
without limitation, original certificates evidencing any shares of
stock pledged to Agent, under the Collateral Documents delivered
pursuant to this subparagraph (vii).
1.70 "Permitted Encumbrances" shall mean, with respect to any Person:
(a) the liens and encumbrances granted under or established by
this Agreement or the other Loan Documents;
(b) liens for taxes, assessments and other governmental charges
not yet due and payable or which are being contested in good faith by
appropriate proceedings diligently pursued, provided that such
provision for the payment of all such taxes known to such Person has
been made on the books of such Person as may be required by GAAP;
(c) mechanics', materialmen's, carriers', warehousemen's and
similar liens and encumbrances arising in the ordinary course of
business and securing obligations of such Person that are not overdue
for a period of more than 60 days or are being contested in good faith
by appropriate proceedings diligently pursued, provided that in the
case of any such contest (i) any levy, execution or other enforcement
of such liens and encumbrances shall have been duly suspended; and (ii)
such provision for the payment of such liens and encumbrances has been
made on the books of such Person as may be required by GAAP;
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(d) liens arising in connection with worker's compensation,
unemployment insurance, old age pensions (subject to the applicable
provisions of this Agreement) and social security benefits and other
forms of governmental insurance or similar benefits which are not
overdue or are being contested in good faith by appropriate proceedings
diligently pursued, provided that in the case of any such contest (i)
any levy, execution or other enforcement of such liens shall have been
duly suspended; and (ii) such provision for the payment of such liens
has been made on the books of such Person as may be required by GAAP;
(e)(i) liens incurred in the ordinary course of business to
secure the performance of statutory obligations arising in connection
with progress payments or advance payments due under contracts with the
United States or any foreign government or any agency thereof entered
into in the ordinary course of business and (ii) liens incurred or
deposits made in the ordinary course of business to secure the
performance of statutory obligations, bids, leases, fee and expense
arrangements with trustees and fiscal agents and other similar
obligations (exclusive of obligations incurred in connection with the
borrowing of money, any lease-purchase arrangements or the payment of
the deferred purchase price of property), provided that full provision
for the payment of all such obligations set forth in clauses (i) and
(ii) has been made on the books of such Person as may be required by
GAAP;
(f) those existing liens and encumbrances of the Company or its
Subsidiaries identified in SCHEDULE 1.70, hereto;
(g) liens in the nature of any minor imperfections of title,
including but not limited to easements, covenants, rights-of-way or
other similar restrictions, which, either individually or in the
aggregate would not (i) materially adversely affect the present or
future use of the property to which they relate, or (ii) have a
material adverse effect on the sale or lease of such property, or (iii)
render title thereto unmarketable; and
(h) any interest or title of a lessor under any lease of
property to, or of any consignor of goods cosigned to, or
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of any creditor of any consignee in goods consigned to such consignee
by, Company or any of its Subsidiaries.
1.71 "Permitted Investments" shall mean:
(i) Governmental Obligations;
(ii) Obligations of a state of the United States, the District
of Columbia or any possession of the United States, or any political
subdivision thereof, which are described in Section 103(a) of the
Internal Revenue Code and are graded in any of the highest three (3)
major grades as determined by at least one nationally recognized rating
agency; or secured, as to payments of principal and interest, by a
letter of credit provided by a financial institution or insurance
provided by a bond insurance company which itself or its debt is rated
in the highest three (3) major grades as determined by at least one
Rating Agency;
(iii) Banker's acceptances, commercial accounts, certificates of
deposit, or depository receipts issued by a bank, trust company,
savings and loan association, savings bank or other financial
institution whose deposits are insured by the Federal Deposit Insurance
Corporation and whose reported capital and surplus equal at least
$50,000,000;
(iv) Commercial paper rated at the time of purchase within the
two highest classifications established by not less than two nationally
recognized rating agencies, and which matures within 270 days after the
date of issue;
(v) Preferred stock (bearing a AAA rating by S&P and Moody's)
issued by closed-end municipal bond funds;
(vi) tax-exempt variable rate demand bonds and/or auction reset
securities that (A) are backed by letters of credit, bond insurance or
surety bonds, (B) have a long-term rating of AA or better by S&P or
Moody's, (C) have a maturity date within one year after the date of
issue;
(vii) Secured repurchase agreements against obligations itemized
in paragraph (i) above, and executed by a bank or trust company or by
members of the association of
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primary dealers or other recognized dealers in United States government
securities, the market value of which must be maintained at levels at
least equal to the amounts advanced; and
(viii) Any fund or other pooling arrangement which exclusively
purchases and holds the investments itemized in (i) through (vi) above.
1.72 "Permitted Merger(s)" shall mean any merger of any Subsidiary into
Company, of any Subsidiary into any other Subsidiary (other than the merger of a
Wholly-Owned Subsidiary into a Subsidiary which is not a Wholly-Owned
Subsidiary) or of a Person into Company or a Wholly-Owned Subsidiary in
connection with a Permitted Acquisition which, in each case, satisfies and/or is
conducted in accordance with the following requirements:
(a) not less than five (5) Business Days nor more than
ninety (90) days prior to the commencement of such proposed
merger, Company provides written notice thereof to Agent along
with drafts of all material documents pertaining to such
proposed merger;
(b) (i) immediately following and as the direct result of
any such merger, the surviving or successor entity has succeeded
by operation of applicable law (as confirmed by an opinion(s) of
counsel in form and substance reasonably satisfactory to the
Majority Banks) to all of the obligations of the non-surviving
entity under this Agreement and the other Loan Documents, and to
all of the property rights of such non-surviving entity subject
to the applicable Loan Documents and (ii) in the case of a
merger of a Person into Company or a Wholly-Owned Subsidiary,
the Company or the Wholly-Owned Subsidiary, as applicable, is
the surviving entity;
(c) concurrently with such proposed merger, the surviving
entity involved in such merger shall execute or cause to be
executed, and provide or cause to be provided to Agent, for the
Banks, such documents and instruments (including without
limitation opinions of
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counsel, amendments, acknowledgments and consents) as reasonably
requested by the Majority Banks; and
(d) both immediately before and immediately after such
merger, no Default or Event of Default (whether or not related
to such restructuring), has occurred and is continuing under
this Agreement or any of the other Loan Documents.
1.73 "Permitted Subordinated Indebtedness" shall mean the Indebtedness
evidenced by the Subordinated Notes and any extension, renewal, refunding or
refinancing thereof, provided that any such extension, renewal, refunding or
refinancing is in an aggregate principal amount not greater than the principal
amount of the Subordinated Notes outstanding at the time thereof and is on terms
(including, without limitation, maturity, amortization, interest rate, premiums,
fees, covenants, events of default, remedies and subordination terms) not
materially less advantageous to the Company or materially adverse to the Banks
than the terms of the Subordinated Notes as of the date hereof.
1.74 "Permitted Transfer(s)" shall mean any (i) sale, assignment,
transfer or other disposition of inventory in the ordinary course of business,
(ii) prior to the occurrence of an Event of Default, the sale, assignment,
transfer or other disposition of worn-out or obsolete machinery or equipment the
aggregate value of which shall not exceed $750,000 during any fiscal year, (iii)
sale after the date hereof of other assets for consideration not less than fair
market value provided that (A) such sales do not exceed $10,000,000 in aggregate
fair market value, and (B) after the first $3,500,000 of such sales, at least
fifty percent (50%) of such sale price is paid in cash, and (iv) sale of
Permitted Investments.
1.75 "Person" shall mean an individual, corporation, partnership,
trust, incorporated or unincorporated organization, joint venture, joint stock
company, or a government or any agency or political subdivision thereof or other
entity of any kind.
1.76 "Prime Rate" shall mean the per annum rate of interest announced
by the Agent, at its main office from time to time as its "prime rate" (it being
acknowledged that such announced rate may not necessarily be the lowest rate
charged by the Agent, to any of
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its customers), which Prime Rate shall change simultaneously with any change in
such announced rate.
1.77 "Prime-based Advance" shall mean an Advance which bears interest
at the Prime-based Rate.
1.78 "Prime-based Rate" shall mean, for any day, that rate of interest
which is equal to the greater of (i) the Prime Rate, or (ii) the Alternate Base
Rate.
1.79 "Prior Agreement" shall mean that certain Amended and Restated
Credit Agreement dated December 29, 1993, by and among Company, the Prior
Lenders and Comerica Bank, as Agent, as amended to date.
1.80 "Prior Lenders" shall mean the financial institutions parties as
lenders under the Prior Agreement.
1.81 "Prior Notes" shall mean the promissory notes issued by Company
under the Prior Agreement.
1.82 "Rating Agency" shall mean Moody's, S&P or any other
nationally-recognized statistical rating organization which is acceptable to the
Agent.
1.83 "Request for Advance" shall mean a Request for Advance issued by
Company under Section 2.3 of this Agreement in the form annexed hereto as
EXHIBIT "D".
1.84 "Revolving Credit" shall mean the revolving credit loans to be
advanced from time to time to the Company by the Banks pursuant to Article 2
hereof, in an aggregate amount (subject to the terms hereof) not to exceed the
Revolving Credit Aggregate Commitment.
1.85 "Revolving Credit Aggregate Commitment" shall mean Forty Million
Dollars ($40,000,000), subject to reduction or termination under Section 2.10 or
8.2 hereof.
1.86 "Revolving Credit Maturity Date" shall mean August 1, 1998,
subject to extension pursuant to the terms of Section 2.9 hereof.
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1.87 "S&P" shall mean Standard and Poor's Ratings Group or any
successor thereto.
1.88 "S&P Rating" shall mean for any day, the rating of the Company's
senior long term unsecured and non-credit enhanced debt by S&P in effect at
11:00 a.m. Detroit time on such day.
1.89 "Security Agreements" shall mean the security agreements (in form
substantially similar to that previously executed and delivered by Company to
Agent) encumbering the Accounts, inventory, general intangibles (including
patents and trademarks), machinery, equipment and all other tangible and
intangible personal property of Company or a Wholly-Owned Subsidiary, now owned
or hereafter acquired, executed and delivered by Company or a Wholly-Owned
Subsidiary to the Agent any time before or after the date hereof as the same may
be amended, restated, supplemented or replaced from time to time.
1.90 "Senior Debt to Cash Flow Ratio" shall mean as of any date of
determination, a ratio, the numerator of which shall equal Funded Debt as of
such date minus the outstanding principal amount of any Permitted Subordinated
Indebtedness as of such date and the denominator of which shall equal EBITDA for
the four quarter period ending on such date.
1.91 "Senior Indentures" shall mean the Indentures between Company (as
successor by merger to Valassis Inserts, Inc.) and The Bank of New York,
Trustee, dated as of March 15, 1992 and the Indenture between Company and The
Bank of New York, as Trustee dated as of November 15, 1994, pursuant to which
the Senior Notes were issued, as such Indentures may be amended, restated,
supplemented or replaced from time to time.
1.92 "Senior Notes" shall mean the $150,000,000 principal amount of
Company's Senior Notes due 1997 and the $120,000,000 principal amount of
Company's Senior Notes due 1999, both issued on March 15, 1992 pursuant to the
Senior Indentures dated as of such date and the $255,000,000 principal amount of
Company's Senior Notes due 2003, issued on November 28, 1994 pursuant to the
Senior Indenture dated as of such date.
1.93 "Stock Pledges" shall mean any of the pledge agreements (in form
substantially similar to that previously executed and
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delivered by Company to Agent) pursuant to which Agent is granted a Lien for the
benefit of the Banks in stock of a Wholly-Owned Subsidiary and the interest of a
Wholly-Owned Subsidiary in a Subsidiary.
1.94 "Subordinated Indenture" shall mean the Indenture between Company
(as successor by merger to Valassis Inserts, Inc.) and The Bank of New York,
Trustee, dated as of March 15, 1992, pursuant to which the Subordinated Notes
were issued, as may be amended, restated, supplemented or replaced from time to
time.
1.95 "Subordinated Notes" shall mean the $150,000,000 principal amount
of Company's Senior Subordinated Notes due 1999, issued on March 15, 1992,
pursuant to the Subordinated Indenture.
1.96 "Subsidiaries Collateral Documents" shall mean the Security
Agreements, the Guaranties, the Stock Pledges, the Mortgages and all other
security documents executed and delivered by each of the Company's Subsidiaries
to the Agent in accordance with the terms and conditions of this Agreement, as
the same may be amended, restated, supplemented or replaced from time to time.
1.97 "Subsidiary(ies)" shall mean any corporation, association, joint
stock company, or business trust of which fifty one percent (51%) or more of the
outstanding voting stock or share capital is owned either directly or indirectly
by any Person or one or more of its Subsidiaries or by any Person and one or
more of its Subsidiaries, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by any
Person and/or its Subsidiaries. Unless otherwise specified to the contrary
herein, Subsidiary(ies) shall refer to the Company's Subsidiary(ies).
1.98 "Tax Payments" shall mean charges against income for federal and
state income taxes plus (or minus) any net decrease (or net increase) in
deferred and accrued income taxes.
1.99 "UCC" shall mean the Uniform Commercial Code, as in effect from
time to time in the State of Michigan.
1.100 "Wholly-Owned Subsidiary" shall mean any direct, wholly owned
Subsidiary of the Company with respect to which the following statements are
true: (i) such Subsidiary has guaranteed the
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Indebtedness unless (and only so long as) such guaranty is prohibited by the
terms of any of the Senior Indentures which remains in full force and effect,
without taking into account any amendments thereto executed after the date
hereof without the consent of the Majority Banks, (ii) the Agent has a first
priority Lien on all of the outstanding capital stock of such Subsidiary and all
or substantially all of the real and personal property of such Subsidiary as
security for the Indebtedness and such guaranty, if any, and (iii) the form of
such guaranty, if any, and collateral security is on terms and conditions
satisfactory to the Agent with such documentation and opinions of counsel as the
Agent may reasonably request.
1.101 "Wichita Bonds" shall have the meaning set forth on SCHEDULE 7.4
hereof.
2. REVOLVING CREDIT
2.1 Revolving Credit Commitment. Subject to the terms and conditions of
this Agreement, each Bank severally and for itself alone agrees to make Advances
of the Revolving Credit to Company from time to time on any Business Day during
the period from the effective date hereof until (but excluding) the Revolving
Credit Maturity Date in an aggregate amount not to exceed at any one time
outstanding each such Bank's Percentage of the Revolving Credit Aggregate
Commitment. All of such Advances hereunder shall be evidenced by the Notes,
under which advances, repayments and readvances may be made, subject to the
terms and conditions of this Agreement.
2.2 Accrual of Interest and Maturity. (a) The Notes, and all principal
and interest outstanding thereunder, shall mature and become due and payable in
full on the Revolving Credit Maturity Date, and each Advance evidenced by the
Notes from time to time outstanding hereunder shall, from and after the date of
such Advance, bear interest at its Applicable Interest Rate. The amount and date
of each Advance, its Applicable Interest Rate, its Interest Period (if any), and
the amount and date of any repayment shall be noted on Agent's records, which
records will be conclusive evidence thereof, absent manifest error; provided,
however, that any failure by the Agent to record any such information shall not
relieve Company of its obligation to repay the outstanding principal amount of
such Advance, all interest accrued thereon and
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any amount payable with respect thereto in accordance with the terms of this
Agreement and the other Loan Documents.
2.3 Requests for Advances and Requests for Refundings and Conversions
of Advances. Company may request an Advance, refund any Advance in the same type
of Advance or convert any Advance to any other type of Advance only after
delivery to Agent of a Request for Advance executed by an authorized officer of
Company, subject to the following and to the remaining provisions hereof:
(a) each such Request for Advance shall set forth the
information required on the Request for Advance form annexed hereto as
EXHIBIT "D", including without limitation:
(i) the proposed date of Advance, which must be a Business Day;
(ii) whether the Advance is a refunding or conversion of an
outstanding Advance; and
(iii) whether such Advance is to be a Prime-based Advance or a
Eurocurrency-based Advance, and, except in the case of a
Prime-based Advance, the first Interest Period applicable
thereto;
(b) each such Request for Advance shall be delivered to Agent by
11:00 a.m. (Detroit time) three (3) Business Days prior to the proposed
date of the Advance, except in the case of a Prime-based Advance, for
which the Request for Advance must be delivered by 10 a.m. (Detroit
time) on the proposed date of the Advance;
(c) the principal amount of such requested Advance, plus the
principal amount of all other Advances then outstanding hereunder shall
not exceed the lesser of (i) then applicable Revolving Credit Aggregate
Commitment and (ii) eighty percent (80%) of aggregate Eligible Accounts
of Company and its Subsidiaries;
(d) the principal amount of such Advance, plus the amount of any
other outstanding Indebtedness under this Agreement to be then combined
therewith having the same Applicable Interest Rate and Interest Period,
if any, shall be
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(i) with respect to Eurocurrency-based Advances, at least Five Million
Dollars ($5,000,000) or a larger integral multiple of One Million
Dollars ($1,000,000) and (ii) with respect to Prime-based Advances, at
least One Hundred Thousand Dollars or a larger multiple thereof, and at
any one time there shall not be in effect more than five (5) Interest
Periods; and
(e) each Request for Advance, once delivered to Agent, shall not
be revocable by Company, and shall constitute and include a
certification by the Company as of the date thereof that:
(i) both before and after the Advance, the obligations of the
Company and its Subsidiaries set forth in this Agreement and
the Loan Documents, as applicable, are valid, binding and
enforceable obligations of such parties;
(ii) to the best knowledge of Company all conditions to Advances
of the Revolving Credit (including, without limitation,
Section 4.8 hereof) have been satisfied;
(iii) both before and after the Advance, there is no Default or
Event of Default in existence; and
(iv) both before and after the Advance, the representations and
warranties contained in this Agreement and the Loan
Documents are true and correct in all material respects.
2.4 Disbursement of Advances.
(a) Upon receiving any Request for Advance from Company under
Section 2.3 hereof, Agent shall promptly notify each Bank by wire,
telecopy, telex or by telephone (confirmed by wire, telecopy or telex)
of the amount of such Advance to be made and the date such Advance is
to be made by said Bank pursuant to its Percentage of the Advance.
Unless such Bank's commitment to make Advances hereunder shall have
been suspended or terminated in accordance with this Agreement, (or
unless such Advance is a refunding or conversion of an Advance) each
Bank shall send the amount of its Percentage of
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the Advance in same day funds in Dollars to Agent at the office of
Agent located at One Detroit Center, Detroit, Michigan 48226 not later
than 2:00 p.m. (Detroit time) on the date of such Advance.
(b) Subject to submission of an executed Request for Advance by
Company without exceptions noted in the compliance certification
therein and to the other terms and conditions hereof, Agent shall make
available to Company the aggregate of the amounts so received by it
from the Banks under this Section 2.4, in like funds, not later than
4:00 p.m. (Detroit time) on the date of such Advance by credit to an
account of Company maintained with Agent or to such other account or
third party as Company may reasonably direct.
(c) Unless Agent shall have been notified by any Bank prior to
the date of any proposed Advance that such Bank does not intend to make
available to Agent such Bank's Percentage of such Advance, Agent may
assume that such Bank has made such amount available to Agent on such
date, as aforesaid and may, in its sole discretion and without
obligation to do so, in reliance upon such assumption, make available
to Company a corresponding amount. If such amount is not in fact made
available to Agent by such Bank in accordance with Section 2.4(a), as
aforesaid, Agent shall be entitled to recover such amount on demand
from such Bank. If such Bank does not pay such amount forthwith upon
Agent's demand therefor, the Agent shall promptly notify Company, and
Company shall pay such amount to Agent. Agent shall also be entitled to
recover from such Bank or from Company, as the case may be, interest on
such amount in respect of each day from the date such amount was made
available by Agent to Company to the date such amount is recovered by
Agent, at a rate per annum equal to:
(i) in the case of such Bank, the Federal Funds Effective Rate;
or
(ii) in the case of Company, the rate of interest then applicable
to the Advance.
The obligation of any Bank to make any Advance hereunder shall not be
affected by the failure of any other Bank to make any Advance
hereunder, and no Bank shall have any liability to the
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Company, the Agent, any other Bank, or any other party for another
Bank's failure to make any loan or Advance hereunder.
2.5 Prime-based Advance in Absence of Election or Upon Default. If, as
to any outstanding Eurocurrency-based Advance, Agent has not received payment on
the last day of the Interest Period applicable thereto, or does not receive a
timely Request for Advance meeting the requirements of Section 2.3 hereof with
respect to the refunding or conversion of such Advance, or, subject to Section
3.5 hereof, if on such day a Default or Event of Default shall have occurred and
be continuing, the principal amount thereof which is not then prepaid shall be
converted automatically to a Prime-based Advance and the Agent shall thereafter
promptly notify Company and the Banks of said action.
2.6 Facility Fee. From the date hereof to the Revolving Credit Maturity
Date, the Company shall pay to the Agent, for distribution to the Banks pro
rata, a Facility Fee equal to the Applicable Fee Percentage per annum times the
Revolving Credit Aggregate Commitment. The Facility Fee shall be payable
quarterly in advance commencing October 1, 1995, and on the first Business Day
of each calendar quarter thereafter and on the Revolving Credit Maturity Date,
and shall be computed on the basis of a year of three hundred sixty (360) days
and assessed for the actual numbers of days elapsed. Whenever any payment of the
Facility Fee shall be due on a day which is not a Business Day, the date for
payment thereof shall be extended to the next Business Day. Upon receipt of such
payment, Agent shall make prompt payment to each Bank of its share of the
Facility Fee based upon its respective Percentage. The Facility Fee shall not be
refundable under any circumstances.
2.7 Reduction of Indebtedness; Revolving Credit Aggregate Commitment.
If at any time and for any reason the aggregate principal amount of Advances
hereunder to Company shall exceed the amount set forth in Section 2.3(c),
Company shall immediately reduce any pending request for an Advance on such day
by the amount of such excess and, to the extent any excess remains thereafter,
immediately repay an amount of the Indebtedness equal to such excess. Company
acknowledges that, in connection with any repayment required hereunder, it shall
also be responsible for the reimbursement of any prepayment or other costs
required under Section 10.1 hereof; provided, however, that Company shall, in
order to reduce any such prepayment costs and expenses, first
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prepay such portion of the Indebtedness then carried as a Primebased Advance, if
any.
2.8 Revolving Credit as Renewal; Application of Advances Thereafter.
The Notes issued by the Company shall constitute renewal and replacement
evidence of all present indebtedness of Company to the Prior Lenders outstanding
as of the date hereof under the Prior Agreement, and the notes issued pursuant
thereto. Thereafter, Advances shall be available, subject to the terms hereof,
to fund working capital needs or other general corporate purposes of the
Company. The Prior Notes shall be returned to Company promptly after the closing
of this Agreement and the transactions contemplated hereunder.
2.9 Extension of Revolving Credit Maturity Date. (a) Provided that no
Default or Event of Default has occurred and is continuing, Company may, by
written notice to Agent and each Bank (which notice shall be irrevocable and
which shall not be deemed effective unless actually received by Agent and each
Bank) more than ninety (90) days prior to the Revolving Credit Maturity Date
then in effect, request that the Banks extend the Revolving Credit Maturity Date
then in effect to a date that is one year later than the Revolving Credit
Maturity Date then in effect (each such request, a "Request"). Each Bank shall,
not later than thirty (30) calendar days following the date of its receipt of
the Request, give written notice to the Agent stating whether such Bank is
willing to extend the Revolving Credit Maturity Date as requested. If Agent has
received the aforesaid written approvals of such Request from each of the Banks,
then, effective upon the date of Agent's receipt of all such written approvals
from the Banks, as aforesaid, the Revolving Credit Maturity Date shall be so
extended for an additional one year period, the term Revolving Credit Maturity
Date shall mean such extended date and Agent shall promptly notify the Company
that such extension has occurred.
(b) If (i) any Bank gives the Agent written notice that it is unwilling
to extend the Revolving Credit Maturity Date as requested or (ii) any Bank fails
to provide written approval to Agent of such a Request within thirty (30)
calendar days of the date of such Bank's receipt of the Request, then (w) the
Banks shall be deemed to have declined to extend the Revolving Credit Maturity
Date, (x) the then-current Revolving Credit Maturity Date shall remain in effect
(with no further right on the part of
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Company to request extensions thereof under this Section 2.9), and (y) the
commitments of the Banks to make Advances of the Revolving Credit hereunder
shall terminate on the Revolving Credit Maturity Date then in effect, and Agent
shall promptly notify Company thereof.
2.10 Optional Reduction or Termination of Revolving Credit Aggregate
Commitment. The Company may, upon at least five (5) Business Days' prior written
notice to Agent, permanently reduce the Revolving Credit Aggregate Commitment in
whole at any time, or in part from time to time, without premium or penalty,
provided that: (i) each partial reduction of the Revolving Credit Aggregate
Commitment shall be in an aggregate amount equal to at least Five Million
Dollars ($5,000,000) or a larger integral multiple of One Million Dollars
($1,000,000); (ii) each reduction shall be accompanied by the payment of the
Facility Fee, if any, accrued to the date of such reduction; (iii) the Company
shall prepay in accordance with the terms hereof the amount, if any, by which
the aggregate unpaid principal amount of Advances exceeds the amount of the
Revolving Credit Aggregate Commitment, taking into account the aforesaid
reductions thereof, together with accrued but unpaid interest on the principal
amount of such prepaid Advances to the date of prepayment; and (iv) if the
termination or reduction of the Revolving Credit Aggregate Commitment requires
the prepayment of a Eurocurrency-based Advance, the termination or reduction may
be made only on the last Business Day of the then current Interest Period
applicable to such Advance (subject to the provisions of Section 10.1 hereof).
Reductions of the Revolving Credit Aggregate Commitment and any accompanying
prepayments of the Notes shall be distributed by Agent to each Revolving Credit
Bank in accordance with such Bank's Percentage thereof, and will not be
available for reinstatement by or readvance to the Company. Any reductions of
the Revolving Credit Aggregate Commitment hereunder shall reduce each Bank's
portion thereof proportionately (based upon the applicable Percentages), and
shall be permanent and irrevocable. Any payments made pursuant to this Section
shall be applied first to outstanding Prime-based Advances under the Revolving
Credit and then to Eurocurrency-based Advances.
3. MARGIN ADJUSTMENTS; INTEREST PAYMENTS
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3.1 Margin Adjustments. Adjustments in the Margin applicable to
Eurocurrency-based Advances, based on Company's Moody's Rating and S&P Rating,
shall be implemented as follows:
(i) Such Margin adjustments shall be given prospective effect
only, effective as to each Eurocurrency-based Advance
outstanding hereunder upon the effective date of change in
the Moody's Rating or S&P Rating, as the case may be, in
each case with no retroactivity or claw-back.
(ii) Such Margin adjustments under this Section 3.1 shall be made
irrespective of, and in addition to, any other interest rate
adjustments hereunder.
3.2 Prime-based Interest Payments. Interest on the unpaid balance of
all Prime-based Advances from time to time outstanding shall accrue from the
date of such Advances until paid, at a per annum interest rate equal to the
Prime-based Rate, and shall be payable in immediately available funds monthly
commencing on the first Business Day of the month next succeeding the month
during which the initial Advance is made and on the first Business Day of each
month thereafter. Interest accruing at the Prime-based Rate shall be computed on
the basis of a 360 day year and assessed for the actual number of days elapsed,
and in such computation effect shall be given to any change in the interest rate
resulting from a change in the Prime-based Rate on the date of such change in
the Prime-based Rate.
3.3 Eurocurrency-based Interest Payments. Interest on each
Eurocurrency-based Advance having a related Eurocurrency-Interest Period of 3
months or less shall accrue at its Eurocurrency-based Rate and shall be payable
in immediately available funds on the last day of the Interest Period applicable
thereto. Interest shall be payable in immediately available funds on each
Eurocurrencybased Advance outstanding from time to time having a
EurocurrencyInterest Period of 6 months or longer, at intervals of 3 months
after the first day of the applicable Interest Period, and shall also be payable
on the last day of the Interest Period applicable thereto. Interest accruing at
the Eurocurrency-based Rate shall be computed on the basis of a 360 day year and
assessed for the actual
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number of days elapsed from the first day of the Interest Period applicable
thereto to, but not including, the last day thereof.
3.4 Interest Payments on Conversions. Notwithstanding anything to the
contrary in Sections 3.2 and 3.3 above, all accrued and unpaid interest on any
Advance refunded or converted pursuant to Section 2.3 hereof shall be due and
payable in full on the date such Advance is refunded or converted.
3.5 Interest on Default. Notwithstanding anything to the contrary set
forth in Sections 3.2 and 3.3 above, in the event and so long as any Event of
Default shall exist under this Agreement, interest shall be payable daily on the
principal amount of all Advances from time to time outstanding (and on all other
monetary obligations of Company hereunder and under the other Loan Documents) at
a per annum rate equal to the Applicable Interest Rate (and, with respect to
Eurocurrency-based Advances, calculated on the basis of the maximum Margin
chargeable hereunder, whether or not otherwise applicable) in respect of each
such Advance, plus, in the case of Eurocurrency-based Advances, three percent
(3%) per annum for the remainder of the then existing Interest Period, if any,
and at all other such times and for all Prime-based Advances, at a per annum
rate equal to the Prime-based Rate, plus three percent (3%).
3.6 Prepayment. Company may prepay all or part of the outstanding
balance of any Prime-based Advance(s) (subject to not less than one (1) Business
Day's notice to Agent) at any time, provided that the amount of any partial
prepayment shall be at least Five Hundred Thousand Dollars ($500,000) and the
aggregate balance of Prime-based Advance(s) remaining outstanding under the
Notes shall be at least Five Hundred Thousand Dollars ($500,000). Company may
prepay all or part of any Eurocurrency-based Advance (subject to not less than
three (3) Business Days' notice to Agent) only on the last day of the Interest
Period applicable thereto (subject to the provisions of Section 10.1 hereof),
provided that the amount of any such partial prepayment shall be at least Five
Hundred Thousand Dollars ($500,000), and the unpaid portion of such Advance
which is refunded or converted under Section 2.3 hereof shall be at least Five
Million Dollars ($5,000,000). Any prepayment made in accordance with this
Section shall be without premium, penalty or prejudice to Company's right to
reborrow under the terms of this Agreement and shall not cause any reduction in
the
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Revolving Credit Aggregate Commitment. Any other prepayment of all or any
portion of the Revolving Credit, whether by acceleration, mandatory or required
prepayment or otherwise, shall be subject to Section 10.1 hereof, but otherwise
without premium, penalty or prejudice.
4. CONDITIONS
A. The obligations of Banks to make the initial Advance under this
Agreement are subject to the following conditions:
4.1 Execution of Notes and this Agreement. Company shall have executed
and delivered to Agent for the account of each Bank, the Notes and this
Agreement (including all schedules, exhibits, certificates, opinions, Financial
Statements and other documents to be delivered pursuant hereto), and, as
applicable, the Loan Documents, and such Notes, this Agreement, and the other
Loan Documents shall be in full force and effect.
4.2 Corporate Authority. Agent shall have received, with a counterpart
thereof for each Bank: (i) certified copies of resolutions of the Board of
Directors of Company evidencing approval of the form of this Agreement, the
other Loan Documents and the Notes and authorizing the execution and delivery
thereof and the borrowing of Advances hereunder and of each of Company and its
Subsidiaries evidencing approval of its entering into the Collateral Documents;
and (ii) (A) certified copies of Company's and each of its Subsidiaries'
articles of incorporation and bylaws or other constituent documents certified as
true and complete as of a recent date by the appropriate official of the
jurisdiction of incorporation of each such entity and (B) a certificate of good
standing from the state or other jurisdictions of Company's and each of its
Subsidiaries' incorporation, and from every state or other jurisdiction in which
either Company or any of its Subsidiaries is qualified to do business, if issued
by such jurisdictions, subject to the limitations (as to qualification and
authorization to do business) contained in Section 5.1 hereof.
4.3 Company Collateral Documents. As security for all Indebtedness of
Company to the Banks hereunder, Company shall have furnished, executed and
delivered to the Agent, or caused to be furnished, executed and delivered to the
Agent, prior to or concurrently with the initial borrowing hereunder, in form
and
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substance satisfactory to the Agent and the Banks and supported by appropriate
resolutions in certified form authorizing same, the Company Collateral Documents
pursuant to which Company grants to Agent, for the benefit of the Banks, a
security interest in all of its real and personal property, including without
limitation, patents and trademarks, and all shares of the issued and outstanding
stock of each Subsidiary directly owned by Company or other ownership interest
in any Joint Venture directly owned by Company. In addition, if required or
advisable under applicable law to perfect the liens granted thereby, the Agent
shall have received, concurrently with or prior to the making of Advances
hereunder, appropriate financing statements, collateral and other documents
covering such Collateral executed and delivered by the appropriate parties,
including without limitation, original certificates evidencing any shares of
stock pledged to Agent on behalf of the Banks under the Company Collateral
Documents.
4.4 Subsidiaries Collateral Documents. As security for all Indebtedness
of Company to the Banks hereunder, each of Company's Subsidiaries shall have
furnished, executed, and delivered to the Agent, or caused to be furnished,
executed and delivered to the Agent, prior to or concurrently with the initial
borrowing hereunder, in form and substance satisfactory to Agent and the Banks
and supported by appropriate resolutions in certified form authorizing same, the
Subsidiaries Collateral Documents pursuant to which (i) each Wholly-Owned
Subsidiary grants Agent, for the benefit of the Banks, a security interest in
all of its real and personal property, including without limitation, patents and
trademarks, and all shares of the issued and outstanding stock of each
Subsidiary directly owned by such Wholly-Owned Subsidiary or other ownership
interest in each Joint Venture directly owned by such Wholly-Owned Subsidiary,
(ii) each of the other Subsidiaries grants to Agent, for the benefit of the
Banks, a security interest in all of the issued and outstanding stock of each
Subsidiary directly owned by such Subsidiary and the capital stock or other
ownership interest in each Joint Venture directly owned by such Subsidiary and
(iii) each Wholly-Owned Subsidiary guaranties the repayment of the Indebtedness
subject to the terms of this Agreement. In addition, if required or advisable
under applicable law to perfect the liens granted thereby, the Agent shall have
received, concurrently with the making of Advances hereunder, appropriate
financing statements, collateral and other documents covering such Collateral
executed and delivered by the appropriate
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parties, including without limitation, original certificates evidencing any
shares of stock pledged to Agent on behalf of the Banks under the Subsidiaries
Collateral Documents.
4.5 Licenses, Permits, Etc. The Agent shall have received, with a
counterpart for each Bank, copies of each authorization, license, permit,
consent, order or approval of, or registration, declaration or filing with, any
governmental authority or any securities exchange or other Person (including
without limitation any securities holder) obtained or made by the Company, any
of Company's Subsidiaries, or any other Person (as of the relevant date of
Advance or loan hereunder) in connection with the transactions contemplated by
this Agreement or the Loan Documents.
4.6 Representations and Warranties -- All Parties. The representations
and warranties made by Company, its Subsidiaries or any other party to any of
the Loan Documents (excluding the Agent and Banks) under this Agreement or any
of the Loan Documents, and the representations and warranties of any of the
foregoing which are contained in any certificate, document or financial or other
statement furnished at any time hereunder or thereunder or in connection
herewith or therewith shall have been true and correct in all material respects
when made and shall be true and correct in all material respects on and as of
the date of the making of any Advance hereunder except as may be affected by
subsequent transactions permitted by this Agreement.
4.7 Opinion of Counsel. Company and each of its Subsidiaries shall
furnish Agent prior to the initial Advance under this Agreement, and with signed
copies for each Bank, opinions of counsel to the Company and each of its
Subsidiaries, dated the date hereof, and covering such matters as required by
and otherwise satisfactory in form and substance to the Agent and each of the
Banks.
4.8 No Default; No Material Adverse Change. No Default or Event of
Default shall have occurred and be continuing, and there shall have been no
material adverse change in the financial condition, properties, business,
prospects of, results or operations of the Company and its Subsidiaries (taken
as a whole) from March 31, 1995 to the date of the making of the first Advance
hereunder.
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4.9 Company's Certificate. The Agent shall have received, with a signed
counterpart for each Bank, a certificate of a responsible senior officer of
Company dated the date of the making of Advances hereunder, stating that to the
best of his or her knowledge after due inquiry, the conditions of paragraphs 4.1
and 4.5 through 4.7, hereof have been fully satisfied.
4.10 Other Documents and Instruments. The Agent shall have received,
with a photocopy for each Bank, such other instruments and documents as each of
the Banks may reasonably request in connection with the making of loans
hereunder, and all such instruments and documents shall be satisfactory in form
and substance to the Banks in the exercise of their reasonable discretion.
4.11 Continuing Conditions. The obligations of the Banks to make
Advances or loans under this Agreement shall be subject to the continuing
conditions that all documents executed or submitted pursuant hereto shall be
satisfactory in form and substance (consistent with the terms hereof) to Agent
and its counsel and to each of the Banks; Agent and its counsel and each of the
Banks and their respective counsel shall have received all information, and such
counterpart originals or such certified or other copies of such materials, as
Agent or its counsel and each of the Banks and their respective counsel may
reasonably request; and all other legal matters relating to the transactions
contemplated by this Agreement (including, without limitation, matters arising
from time to time as a result of changes occurring with respect to any
statutory, regulatory or decisional law applicable hereto) shall be satisfactory
to counsel to Agent and counsel to each of the Banks in the exercise of their
reasonable discretion.
B. The obligations of Banks to make all other Advances under this
Agreement are subject to the conditions set forth in Sections 4.3, 4.4, 4.6,
4.8, 4.9, 4.10 and 4.11 hereof, provided, however, if an Advance is a refunding
or conversion of an Advance, such Advance shall not be subject to Section 4.9
hereof.
5. REPRESENTATIONS AND WARRANTIES
Company represents and warrants and such representations and warranties
shall be deemed to be continuing representations and warranties until the
Revolving Credit Maturity Date and thereafter
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until final payment in full of the Indebtedness and the performance by Company
of all of its other obligations under this Agreement:
5.1 Corporate Authority. Each of Company and its Subsidiaries is a
corporation duly organized and existing in good standing under the laws of the
applicable jurisdiction of organization, charter or incorporation; it is duly
qualified and authorized to do business as a corporation or foreign corporation
in each jurisdiction where the character of its assets or the nature of its
activities makes such qualification necessary, except where such failure to
qualify and be authorized to do business will not have a material adverse impact
on the financial condition of Company and its Subsidiaries (taken as a whole).
5.2 Due Authorization - Company. Execution, delivery and performance of
this Agreement, the Company Collateral Documents, the other Loan Documents (to
the extent applicable) and any other documents and instruments required under or
in connection with this Agreement or the other Loan Documents (or to be so
executed and delivered), and the issuance of the Notes by Company are within its
corporate powers, have been duly authorized, are not in contravention of law or
the terms of Company's Articles of Incorporation or Bylaws, and, except as have
been previously obtained or as referred to in Section 5.18, below, and except
for the filing of financing statements in connection with the Collateral
Documents, do not require the consent or approval, material to the transactions
contemplated by this Agreement or the Loan Documents, of any governmental body,
agency or authority not previously delivered under Section 4.5 hereof.
5.3 Due Authorization - Subsidiaries. Execution, delivery and
performance of the Subsidiaries Collateral Documents, the other Loan Documents
(to the extent applicable) and all other documents and instruments required of
Companies' Subsidiaries under or in connection with this Agreement or the Loan
Documents (or to be so executed and delivered) are within the corporate powers
of such Subsidiaries, have been duly authorized, are not in contravention of law
or the terms of any of the Subsidiaries' Articles of Incorporation or Bylaws,
and, except as have been previously obtained or as referred to in Section 5.18,
below, and except for the filing of financing statements in connection with the
Collateral Documents, do not require the consent or approval, material to the
transactions contemplated by this Agreement, and
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the Loan Documents, of any governmental body, agency or authority not previously
obtained and delivered to Agent under Section 4.5 hereof.
5.4 Title to Collateral - Company. Company has good and valid title to
the property pledged, mortgaged or otherwise encumbered or to be encumbered
under the Company Collateral Documents, subject to Liens permitted under Section
7.5 hereof.
5.5 Title to Collateral - Subsidiaries. Each of Company's Subsidiaries
has good and valid title to the property pledged, mortgaged or otherwise
encumbered or to be encumbered under the Subsidiaries Collateral Documents,
subject to Liens permitted under Section 7.5 hereof.
5.6 Encumbrances. There are no security interests in, liens, mortgages,
or other encumbrances on and no financing statements on file with respect to,
any of the property pledged, mortgaged or otherwise encumbered (or to be
encumbered) under the Collateral Documents, except Liens permitted under Section
7.5 hereof.
5.7 Capital Stock; Shareholders; Subsidiaries. As of the date hereof,
(a) all present Wholly-Owned Subsidiaries and other Subsidiaries of Company are
set forth in the attached SCHEDULE 5.7, along with the percentage of the
outstanding voting stock in each such Wholly-Owned or other such Subsidiary
owned by Company or by a Subsidiary of Company (and identifying that
Subsidiary); and (b) other than as disclosed on SCHEDULE 5.7, there are no
outstanding options, warrants or rights to purchase, nor any agreement for the
subscription, purchase or acquisition of, any shares of the capital stock of any
of Company's Subsidiaries.
5.8 Investments in Non-Subsidiaries. SCHEDULE 5.8 annexed hereto
contains a full and complete list of all Joint Ventures in which each of the
Subsidiaries has on ownership interest as of the date hereof, along with the
percentage voting stock or control of each such Subsidiary in the Joint
Ventures.
5.9 Taxes. Each of Company and its Subsidiaries has filed on or before
their respective due dates, all federal, state and foreign tax returns which are
required to be filed or has obtained extensions for filing such tax returns and
is not delinquent in
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filing such returns in accordance with such extensions and has paid all taxes
which have become due pursuant to those returns or pursuant to any assessments
received by any such party, as the case may be, to the extent such taxes have
become due, except to the extent such tax payments are being actively contested
in good faith by appropriate proceedings and with respect to which adequate
provision has been made on the books of Company as may be required by GAAP.
5.10 No Defaults. There exists no default under the provisions of any
instrument evidencing any Debt of the Company or any of its Subsidiaries which
is permitted hereunder or any Debt connected with any of the Permitted
Encumbrances, or of any agreement relating thereto.
5.11 Enforceability of Agreement and Loan Documents -Company. This
Agreement, each of the other Loan Documents to which Company is a party, and all
other certificates, agreements and documents executed and delivered by Company
under or in connection herewith or therewith have each been duly executed and
delivered by its duly authorized officers and constitute the valid and binding
obligations of Company, enforceable in accordance with their respective terms,
except as enforcement thereof may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the enforcement
of creditor's rights, generally and by general principles of equity.
5.12 Enforceability of Loan Documents -- Subsidiaries. The Loan
Documents to which each of the Subsidiaries is a party, and all certificates,
documents and agreements executed in connection therewith by the Subsidiaries
have each been duly executed and delivered by the respective duly authorized
officers of the Subsidiaries and constitute the valid and binding obligations of
the Subsidiaries, enforceable in accordance with their respective terms, except
as enforcement thereof may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting the enforcement of creditor's
rights, generally and by general principles of equity.
5.13 Compliance with Laws. Company and its Subsidiaries each has
complied with all applicable laws, including without limitation, Hazardous
Material Laws, to the extent that failure to
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comply therewith would have a material adverse effect upon Company and its
Subsidiaries (taken as a whole).
5.14 Non-contravention -- Company. The execution, delivery and
performance of this Agreement and the other Loan Documents are not in
contravention of the terms of any material indenture, agreement or undertaking
to which Company or any of its Subsidiaries is a party or by which it or its
properties are bound or affected.
5.15 Non-contravention -- Subsidiaries. The execution, delivery and
performance of those Loan Documents signed by the Subsidiaries, and any other
documents and instruments required under or in connection with this Agreement by
the Subsidiaries are not in contravention of the terms of any material
indenture, agreement or undertaking to which any Subsidiary or Company is a
party or by which it or its properties are bound or affected.
5.16 No Litigation -- Company. No litigation (including derivative
actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against the Company which might reasonably be expected to materially
and adversely affect the financial condition, operations, assets, business,
properties or prospects of Company, except as set forth in Schedule 5.16 hereto.
Except as set forth in Schedule 5.16, there is not outstanding against Company
any judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator nor is Company in
violation of any applicable law, regulation, ordinance, order, injunction,
decree or requirement of any governmental body or court where such violation
would reasonably be expected to have a material adverse effect on Company.
5.17 No Litigation -- Subsidiaries. No litigation (including derivative
actions), arbitration proceeding, labor controversy or governmental
investigation or proceeding is pending or, to the Company's knowledge,
threatened against any Subsidiary which might reasonably be expected to
materially and adversely affect the financial condition, operations, assets,
business, properties or prospects of Company and its Subsidiaries taken as a
whole, except as set forth in Schedule 5.17 hereto. Except as set forth in
Schedule 5.17, there is not outstanding against any Subsidiary any
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judgment, decree, injunction, rule, or order of any court, government,
department, commission, agency, instrumentality or arbitrator nor is any such
party in violation of any applicable law, regulation, ordinance, order,
injunction, decree or requirement of any governmental body or court where such
violation would reasonably be expected to have a material adverse effect on
Company and its Subsidiaries (taken as a whole).
5.18 Consents, Approvals and Filings, Etc. Except for the filing of
financing statements in connection with the Collateral Documents and except as
have been previously obtained, no authorization, consent, approval, license,
qualification or formal exemption from, nor any filing, declaration or
registration with, any court, governmental agency or regulatory authority or any
securities exchange or any other Person (whether or not governmental) is
required in connection with the execution, delivery and performance: (i) by
Company of this Agreement, any of the Loan Documents to which it is a party; and
(ii) by any Subsidiary, of any of the Loan Documents to which any Subsidiary is
a party, and (iii) by Company and the Subsidiaries, of the liens, pledges,
mortgages, security interests or other encumbrances granted, conveyed or
otherwise established (or to be granted, conveyed or otherwise established) by
or under this Agreement or the Loan Documents. All such authorizations,
consents, approvals, licenses, qualifications, exemptions, filings, declarations
and registrations which have previously been obtained or made, as the case may
be, are in full force and effect and are not the subject of any attack, or to
the knowledge of Company threatened attack by appeal or direct proceeding or
otherwise which would have a material adverse effect on the financial condition
of Company and its Subsidiaries (taken as a whole).
5.19 Agreements Affecting Financial Condition. Neither the Company nor
any of its Subsidiaries is party to any agreement or instrument or subject to
any charter or other corporate restriction which materially adversely affects
the financial condition or operations of the Company and its Subsidiaries (taken
as a whole).
5.20 No Investment Company or Margin Stock. Neither the Company nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities,
directly or
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indirectly, in the business of extending credit for the purpose of purchasing or
carrying margin stock. None of the proceeds of any of the Notes will be used by
the Company or any of its Subsidiaries to purchase or carry margin stock or will
be made available by the Company or any of its Subsidiaries in any manner to any
other Person to enable or assist such Person in purchasing or carrying margin
stock. Terms for which meanings are provided in Regulation U of the Board of
Governors of the Federal Reserve System or any regulations substituted therefor,
as from time to time in effect, are used in this paragraph with such meanings.
5.21 ERISA. Neither Company nor any of its Subsidiaries maintains or
contributes to any Pension Plan subject to Title IV of ERISA, except as set
forth on SCHEDULE 5.21 hereto; and there is no accumulated funding deficiency
within the meaning of ERISA, or any existing liability with respect to any of
the Pension Plans owed to the Pension Benefit Guaranty Corporation or any
successor thereto, and no "reportable event" or "prohibited transaction", as
defined in ERISA, has occurred with respect to any Pension Plan, and all such
Pension Plans are in material compliance with the requirements of the Internal
Revenue Code and ERISA (and, if applicable, any comparable foreign law
provisions).
5.22 Conditions Affecting Business or Properties. Neither the
respective businesses nor the properties of Company or any of its Subsidiaries
is affected by any fire, explosion, accident, strike, lockout or other dispute,
drought, storm, hail, earthquake, embargo, Act of God or other casualty which
materially adversely affects, or if such event or condition were to continue for
more than ten (10) additional days would reasonably be expected to materially
adversely affect the businesses or properties of Company and its Subsidiaries
(taken as a whole).
5.23 Environmental and Safety Matters. (a) Each of the Company and its
Subsidiaries is in compliance with all federal, state and local laws, ordinances
and regulations relating to safety and industrial hygiene or to the environment,
including without limitation all Hazardous Materials Laws in jurisdictions in
which the Company or its Subsidiaries owns or operates, or has owned or
operated, a facility or site, or arranges or has arranged for disposal or
treatment of hazardous substances, solid waste, or other wastes, accepts or has
accepted for transport any hazardous substances, solid wastes or other wastes or
holds or has held any
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interest in real property or otherwise, except for De Minimis Matters or as
otherwise disclosed on SCHEDULE 5.23 hereto, and as to such matters disclosed on
such Schedule, none will have a material adverse effect on the financial
condition or businesses of the Company and its Subsidiaries (taken as a whole).
(b) No demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise, arising under,
relating to or in connection with any applicable Hazardous Materials Laws is
pending or, to the best knowledge of Company, after due investigation,
threatened against the Company or any of its Subsidiaries, any real property in
which the Company or any of its Subsidiaries holds or has held an interest or
any past or present operation of the Company or any of its Subsidiaries, except
as disclosed on SCHEDULE 5.23 hereto, and as to such matters disclosed on such
Schedule, none will have a material adverse effect on the financial condition or
business of the Company and its Subsidiaries (taken as a whole).
(c) Neither the Company nor any of its Subsidiaries (i) is, to the best
knowledge of Company, after due investigation, the subject of any federal or
state investigation evaluating whether any remedial action is needed to respond
to a release of any toxic substances, radioactive materials, hazardous wastes or
related materials into the environment, (ii) has received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any applicable Hazardous
Materials Laws, or (iii) knows of any basis for any such investigation, notice
or violation, except as disclosed on SCHEDULE 5.23 hereto, and as to such
matters disclosed on such Schedule, none will have a material adverse effect on
the financial condition or business of Company and its Subsidiaries (taken as a
whole).
(d) No release, threatened release or disposal of hazardous waste,
solid waste or other wastes is occurring or, to the best knowledge of Company
after due investigation, has occurred on, under or to any real property in which
the Company or any of its Subsidiaries holds any interest or on which performs
any of its operations, in violation of any Hazardous Material Law except as
disclosed on SCHEDULE 5.23 hereto, and as to such matters disclosed on such
Schedule, none will have a material adverse effect on the
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financial condition or business of the Company and its Subsidiaries (taken as a
whole).
5.24 Accuracy of Information. Each of the Company's Financial
Statements previously furnished to Agent and the Banks prior to the date of this
Agreement, has been prepared in accordance with GAAP and is complete and correct
in all material respects and fairly presents the financial condition of Company
and the results of its operations for the periods covered thereby; since March
31, 1995 there has been no material adverse change in the financial condition of
Company and its Subsidiaries (taken as a whole); to the best knowledge of
Company, neither Company nor any of its Subsidiaries has any contingent
obligations (including any liability for taxes) not disclosed by or reserved
against in the March 31, 1995 balance sheets, as applicable, except as set forth
on SCHEDULE 5.24 hereof, and at the present time there are no unrealized or
anticipated losses from any present commitment of Company or any of its
Subsidiaries.
5.25 Foreign Employee Benefit Plans. Neither the Company nor any
Subsidiary is now maintaining or contributing to or has ever maintained or
contributed to any Foreign Employee Benefit Plan. Each Foreign Employee Benefit
Plan established after the date hereof is in compliance in all material respects
with all laws, regulations and rules applicable thereto and the respective
requirements of the governing documents for such plan. With respect to any
Foreign Employee Benefit Plan established after the date hereof and maintained
or contributed to by the Company, any of its Subsidiaries or any ERISA Affiliate
(other than a Foreign Pension Plan) reasonable reserves have been established
where required by ordinary accounting practices in the jurisdiction in which
such plan is maintained or, in the case of an ERISA Affiliate, the failure to
establish such reserves would not have or would not be reasonably likely to
have, a material adverse effect on Company and its Subsidiaries (taken as a
whole). There are no actions, suits or claims other than routine claims for
benefits pending or threatened against the Company, any of its Subsidiaries or
any ERISA Affiliate with respect to any Foreign Employee Benefit Plan
established after the date hereof or, in the case of an ERISA Affiliate, such
actions, suits or claims would not have or would not be reasonably likely to
have, a material adverse effect on Company and its Subsidiaries (taken as a
whole).
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6. AFFIRMATIVE COVENANTS
Company covenants and agrees that it will, and, as applicable, it will
cause each of its Subsidiaries, until the Revolving Credit Maturity Date and
thereafter until final payment in full of the Indebtedness and the performance
by the Company of all other obligations under this Agreement and the other Loan
Documents:
6.1 Preservation of Existence, Etc. Except as otherwise permitted under
this Agreement: (i) preserve and maintain its existence and such of its rights,
licenses, and privileges as are material to the business and operations
conducted by it; (ii) qualify and remain qualified to do business in each
jurisdiction in which such qualification is material to its business and
operations or ownership of its properties; (iii) continue to conduct and operate
its businesses substantially as conducted and operated during the present and
preceding fiscal years; (iv) at all times maintain, preserve and protect all of
its franchises and trade names and preserve all the remainder of its property
and keep the same in good repair, working order and condition, if the failure to
do so in any instance would have a material adverse effect on the financial
condition of Company and its Subsidiaries (taken as a whole); and (v) from time
to time make, or cause to be made, all necessary or appropriate repairs,
replacements, betterments and improvements thereto such that the businesses
carried on in connection therewith may be properly and advantageously conducted
at all times, if the failure to do so in any instance would have a material
adverse effect on the financial condition of Company and its Subsidiaries (taken
as a whole).
6.2 Keeping of Books. Keep proper books of record and account in which
full and correct entries shall be made of all of its financial transactions and
its assets and businesses so as to permit the presentation of Financial
Statements prepared in accordance with GAAP.
6.3 Reporting Requirements. Furnish Agent with copies for each Bank:
(a) as soon as possible, and in any event within three Business
Days after becoming aware of the occurrence of any Default or Event of
Default or any other event or occurrence which has or would reasonably
be expected to have a materially
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adverse effect upon the business, property or financial condition of
Company and its Subsidiaries (taken as a whole), or upon Company's or
any of its Subsidiaries' ability to comply with its obligations
hereunder or under any of the other Loan Documents, a written statement
of a responsible senior officer of the Company setting forth details of
such Default, Event of Default or other event or occurrence and the
action which the Company has taken or has caused to be taken or
proposes to take or cause to be taken with respect thereto;
(b) as soon as available, and in any event within one hundred
twenty (120) days after and as of the end of each of Company's fiscal
years, (i) audited Financial Statements of the Company on a
Consolidated basis containing the balance sheet of the Company and its
Consolidated Subsidiaries as of the close of each such fiscal year,
statements of income and retained earnings and a statement of cash
flows for each such fiscal year, and such Financial Statements to be
prepared in accordance with GAAP and certified by independent certified
public accountants of recognized standing selected by Company and
acceptable to the Majority Banks and containing unqualified opinions as
to the fairness of the statements therein contained; and (ii) a
Borrowing Base and Covenant Compliance Report;
(c) as soon as available, and in any event within forty-five
(45) days after and as of the end of each fiscal quarter of Company
(including the last quarter of each fiscal year), (i) the balance sheet
of the Company and its Consolidated Subsidiaries as of the end of such
quarter and related statements of income, retained earnings and cash
flows for the portion of the fiscal year through the end of such
period, each on a Consolidated basis certified by a responsible
financial officer of Company as to the consistency with prior financial
reports and accounting periods, and as to accuracy and fairness of
presentation and (ii) a Borrowing Base and Covenant Compliance Report;
(d) so long as there is any Indebtedness outstanding under this
Agreement, as soon as available, and in any event within thirty (30)
days after and as of the end of each month, including the last month of
each of Company's fiscal year, (i) the balance sheet of the Company and
its Consolidated
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Subsidiaries as of the end of such quarter and related statements of
income, retained earnings and cash flows for the portion of the fiscal
year through the end of such period, each on a Consolidated basis
certified by a responsible financial officer of Company as to the
consistency with prior financial reports and accounting periods, and as
to accuracy and fairness of presentation and (ii) a Borrowing Base and
Covenant Compliance Report (excluding completion of Part I thereof);
(e) promptly upon receipt thereof, copies of all reports and
management letters prepared with respect to Company or any of its
Subsidiaries by any independent certified public accountants in
connection with any annual, interim or other audit or review of the
books of Company or its Subsidiaries, irrespective of the party
requesting such an audit or review;
(f) to the extent not previously delivered, promptly upon
becoming available, a copy of all Financial Statements, reports,
notices, proxy statements and other communications sent by the Company
or any of its Subsidiaries to their stockholders, and all regular and
periodic reports filed by the Company or any of its Subsidiaries with
any securities exchange, the Securities and Exchange Commission, the
Corporations and Securities Bureau of the Department of Commerce of the
State of Michigan (excluding annual reports) or any governmental
authorities succeeding to any or all of the functions of said
commission or bureau;
(g) promptly, and in form and substance reasonably satisfactory
to Agent and the requesting Banks, such other information as Agent or
the Majority Banks (acting through Agent) may reasonably request from
time to time, including, without limitation, if requested by the
Majority Banks appraisals of the Collateral on a basis acceptable to
the Majority Banks and by an appraiser or appraisers acceptable to
them, and additional Borrowing Base and Covenant Compliance Reports.
6.4 Net Worth. Maintain at all times Consolidated Net Worth of not less
than the following during the periods set forth below:
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from the date hereof through September 29, 1995...................($310,000,000)
from September 30, 1995 through December 30, 1995.................($308,000,000)
from December 31, 1995 through March 30, 1996.....................($306,000,000)
from March 31, 1996 through June 29, 1996.........................($303,000,000)
from June 30, 1996 through September 29, 1996.....................($297,000,000)
from September 30, 1996 through December 30, 1996.................($293,000,000)
from December 31, 1996 through March 30, 1997.....................($288,000,000)
from March 31, 1997 through June 29, 1997.........................($283,000,000)
from June 30, 1997 through September 29, 1997.....................($278,000,000)
from September 30, 1997 through December 30, 1997.................($273,000,000)
from December 31, 1997 through March 30, 1998.....................($268,000,000)
from March 31, 1998 and thereafter................................($263,000,000)
6.5 Fixed Charge Coverage Ratio. Maintain as of the end of each fiscal
quarter of Company a Fixed Charge Coverage Ratio of not less than the following
as of the dates set forth below:
from the date hereof through September 29, 1995..................... 1.20 to 1.0
from September 30, 1995 through December 30, 1995................... 1.20 to 1.0
from December 31, 1995 through March 30, 1996....................... 1.20 to 1.0
from March 31, 1996 through June 29, 1996........................... 1.20 to 1.0
from June 30, 1996 through September 29, 1996....................... 1.20 to 1.0
from September 30, 1996 through December 30, 1996................... 1.25 to 1.0
from December 31, 1996 through March 30, 1997....................... 1.30 to 1.0
from March 31, 1997 through June 29, 1997........................... 1.35 to 1.0
from June 30, 1997 through September 29, 1997....................... 1.35 to 1.0
from September 30, 1997 through December 30, 1997................... 1.35 to 1.0
from December 31, 1997 through March 30, 1998....................... 1.35 to 1.0
from March 31, 1998 and thereafter.................................. 1.35 to 1.0
6.6 Senior Debt to Cash Flow Ratio. Maintain as of the end of each
fiscal quarter of Company a Senior Debt to Cash Flow Ratio of not more than the
following during the periods set forth below:
from the date hereof through June 29, 1995...........................5.90 to 1.0
from June 30, 1995 through September 29, 1995........................5.50 to 1.0
from September 30, 1995 through December 30, 1995....................5.25 to 1.0
from December 31, 1995 through March 30, 1996........................5.00 to 1.0
from March 31, 1996 through June 29, 1996............................4.75 to 1.0
from June 30, 1996 through September 29, 1996........................4.50 to 1.0
from September 30, 1996 through December 30, 1996....................4.25 to 1.0
from December 31, 1996 and thereafter................................4.00 to 1.0
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6.7 EBITDA. Maintain as of the end of each fiscal quarter of Company on
a year-to-date cumulative basis, EBITDA of not less than the following as of the
dates set forth below:
June 30, 1995...........................................$30,000,000
September 30, 1995......................................$45,000,000
December 31, 1995.......................................$60,000,000
March 31, 1996..........................................$16,500,000
June 30, 1996...........................................$33,000,000
September 30, 1996......................................$49,500,000
December 31, 1996.......................................$66,000,000
March 31, 1997..........................................$17,500,000
June 30, 1997...........................................$35,000,000
September 30, 1997......................................$52,500,000
December 31, 1997.......................................$70,000,000
March 31, 1998..........................................$19,000,000
June 30, 1998...........................................$38,000,000
6.8 Taxes. Pay and discharge all taxes and other governmental charges,
and all material contractual obligations calling for the payment of money,
before the same shall become overdue, unless and to the extent only that such
payment is being contested in good faith by appropriate proceedings and is
reserved for, as required by GAAP, on its balance sheet.
6.9 Inspections. Permit Agent and each Bank, through their authorized
attorneys, accountants and representatives to examine Company's and each of its
Subsidiaries' books, accounts, records, ledgers and assets and properties of
every kind and description (including any and all Collateral) wherever located
at all reasonable times during normal business hours, upon reasonable oral or
written request of Agent or such Bank, which shall include collateral audits at
Company's sole cost and expense (provided that prior to the occurrence of an
Event of Default, Company shall not be required to reimburse Agent or any Bank
for the cost of more than one collateral audit per year); and permit Agent and
each Bank or their authorized representatives, at reasonable times and
intervals, to visit all of their respective offices, discuss their respective
financial matters with their respective officers and independent certified
public accountants, and, by this provision, Company authorizes such accountants
to discuss the finances and affairs of Company and its Subsidiaries (provided
that Company is
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given an opportunity to participate in such discussions) and examine any of its
or their books and other corporate records.
6.10 Further Assurances; Financing Statements. Furnish to the Agent, at
Company's sole expense, upon Majority Banks' (or Agent's) request, in form
satisfactory to the Majority Banks, assignments, lien instruments or other
security instruments, consents, acknowledgments, subordinations and financing
statements covering any or all of the Collateral pledged, assigned, or
encumbered pursuant to the Collateral Documents, of every nature and
description, whether now owned or hereafter acquired (by Company or any of its
Subsidiaries), to the extent that the Agent may reasonably require, and execute
and deliver or cause to be executed and delivered such other documents or
instruments as the Agent may reasonably require to effectuate more fully the
purposes of this Agreement or the other Loan Documents.
6.11 Compliance with Leases. Comply with the material terms and
conditions of any leases covering any premises or real property wherein any of
the Collateral pledged, assigned or encumbered pursuant to the Collateral
Documents is located and any orders, ordinances, laws or statutes of any city,
state or other governmental department having jurisdiction with respect to such
premises or property, or the conduct of business thereon.
6.12 Indemnification. Indemnify and save Agent and each of the Banks
harmless from all loss, cost, damage, liability or expenses, including
reasonable attorneys' fees and disbursements, incurred by Agent and the Banks by
reason of an Event of Default, or, defending or protecting the security
interests or other liens granted hereby or under any of the Loan Documents or
the priority thereof or enforcing the obligations of Company or any of its
Subsidiaries under this Agreement or any of the other Loan Documents or in the
prosecution or defense of any action or proceeding concerning any matter growing
out of or connected with this Agreement or any of the Loan Documents, excluding,
however, any loss, cost, damage, liability or expenses arising solely as a
result of the gross negligence or willful misconduct of the party seeking to be
indemnified under this Section 6.12.
6.13 Governmental and Other Approvals. Apply for, obtain and/or
maintain in effect, as applicable, all authorizations, consents, approvals,
licenses, qualifications, exemptions, filings,
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declarations and registrations (whether with any court, governmental agency,
regulatory authority, securities exchange or otherwise) which are necessary in
connection with the execution, delivery and performance: (i) by Company, of this
Agreement and the other Loan Documents, and (ii) by any of Company's
Subsidiaries, of the Loan Documents and the liens, pledges, mortgages, security
interests or other encumbrances granted, conveyed or otherwise established (or
to be granted, conveyed or otherwise established) by or under the Loan
Documents.
6.14 Insurance. Maintain insurance coverage on its physical assets and
against other business risks in such amounts and of such types as are
customarily carried by companies similar in size and nature, and in the event of
acquisition of additional property, real or personal, or of occurrence of
additional risks of any nature, increase such insurance coverage in such manner
and to such extent as prudent business judgment and then current practice would
dictate; and in the case of all policies covering property subject to the
Collateral Documents, or property in which the Banks shall have a security
interest of any kind whatsoever, other than those policies protecting against
casualty liabilities to third parties, all such insurance policies shall conform
to the requirements set forth in the applicable Collateral Documents and shall
provide that the loss payable thereunder shall be payable to Company or a
Subsidiary, as applicable, and to the Agent (for application to the
Indebtedness); and with all said policies or copies thereof, including all
endorsements thereon and those required hereunder, to be deposited with the
Agent.
6.15 Compliance with Laws.
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders of any governmental authority, whether federal,
state, local or foreign (including without limitation Hazardous Materials Laws),
in effect from time to time.
(b) Conduct and complete, or cause to be conducted and completed,
all investigations, studies, sampling and testing, and all remedial, removal and
other actions necessary to clean-up and remove all Hazardous Materials on or
affecting any premises owned or occupied by Company or any of its Subsidiaries,
whether resulting from conduct of Company or any of its Subsidiaries or any
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other Person, if required by Hazardous Material Laws, all such actions shall be
taken in accordance with such laws, and the orders and directives of all
applicable federal, state and local governmental authorities; and
(c) Defend, indemnify and hold harmless Agent and each of the
Banks, and their respective employees, agents, officers and directors from and
against any and all claims, demands, penalties, fines, liabilities, settlements,
damages, costs or expenses of whatever kind or nature arising out of or related
to (i) the presence, disposal, release or threatened release of any Hazardous
Materials on, from or affecting any premises owned or occupied by Company or any
of its Subsidiaries, (ii) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Materials, (iii) any lawsuit or other proceeding brought or threatened,
settlement reached or governmental order or decree relating to such Hazardous
Materials, (iv) the cost of removal of all Hazardous Materials from all or any
portion of any premises owned by Company or its Subsidiaries, (v) the taking of
necessary precautions to protect against the release of Hazardous Materials on
or affecting any premises owned by Company or any of its Subsidiaries, (vi)
complying with all Hazardous Material Laws and/or (vii) any violation of
Hazardous Material Laws, including without limitation, reasonable attorneys and
consultants fees, investigation and laboratory fees, environmental studies
required by Agent or any Bank, but with respect to environmental studies only
following a violation of Hazardous Material Laws, (whether before or after the
occurrence of any Default or Event of Default hereunder), court costs and
litigation expenses; and, if so requested by Agent or any Bank, Company shall
execute, and shall cause the Subsidiaries to execute, separate indemnities
covering the foregoing matters. The obligations of Company under this Section
6.15 shall be in addition to any and all other obligations and liabilities the
Company may have to Agent or any of the Banks at common law or pursuant to any
other agreement.
6.16 Compliance with ERISA. Comply in all material respects with all
requirements imposed by ERISA as presently in effect or hereafter promulgated or
the Internal Revenue Code, including, but not limited to, the minimum funding
requirements of any Pension Plan.
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6.17 ERISA Notices. Promptly notify Agent and each of the Banks upon
the occurrence of any of the following events:
(a) the termination of any Pension Plan pursuant to Subtitle C
of Title IV of ERISA or otherwise;
(b) the appointment of a trustee by a United States District
Court to administer any Pension Plan;
(c) the commencement by the PBGC, or any successor thereto, of
any proceeding to terminate any Pension Plan;
(d) the failure of the Company or any Subsidiary to make any
payment in respect of any Pension Plan required under Section 412 of
the Internal Revenue Code;
(e) the withdrawal of the Company or any Subsidiary from any
Pension Plan, including, without limitation, any multiemployer plan; or
(f) the occurrence of a reportable event which is required to be
reported by the Company under the regulations, within the meaning of
Title IV of ERISA or a "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Internal Revenue Code) which could
have a material adverse effect on Company or any of its Subsidiaries.
6.18 Foreign Employee Benefit Plans. Establish, maintain and operate
all Foreign Employee Benefit Plans to comply with all material respects with all
laws, regulations and rules applicable thereto and the respective requirements
of the governing documents for such plans.
6.19 Notices re Other Debt. Deliver or cause to be delivered to Agent
within five (5) Business Days of receipt thereof a copy of each report, notice
or communication regarding potential or actual defaults delivered by or on
behalf of Company or any Subsidiary to the trustee under any of the Indentures
or to the holders of any instrument evidencing any Debt and each notice or
communication received by Company or any Subsidiary from any such trustee or
holder.
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6.20 Rating Change. Promptly notify Agent and each of the Banks of any
change in Company's Moody's Rating or S&P Rating and furnish Agent and each of
the Banks with a copy of any report issued by Moody's or S&P in connection
therewith.
6.21 Wichita Bonds. Within thirty (30) days of the redemption or
repurchase of the Wichita Bonds, cause the City of Wichita, Kansas to reconvey
to Company a fee simple interest in the real property located in Wichita,
Kansas, as more fully described on EXHIBIT "E" annexed hereto.
7. NEGATIVE COVENANTS
Company covenants and agrees that, until the Revolving Credit Maturity
Date and thereafter until final payment in full of the Indebtedness and the
performance by Company and the Subsidiaries of all other obligations under this
Agreement and the other Loan Documents, without the prior written consent of the
Majority Banks it will not, and will not permit the Subsidiaries (including
without limitation Subsidiaries acquired or created after the date hereof) to:
7.1 Capital Structure and Redemptions. Purchase, acquire or redeem any
of its capital stock (other than (i) redemptions of the capital stock of Company
not to exceed $100,000 in aggregate purchase price during any fiscal year of
Company, provided that such stock is purchased solely for the purpose of being
subsequently transferred to members of Company's Board of Directors who are not
Affiliates or employees of Company or the Company's Affiliates, as a component
of their annual compensation and is held by Company as treasury stock until used
for such purpose and (ii) purchases, acquisitions or redemptions of the capital
stock of Company not to exceed $2,000,000 in any fiscal year paid, provided that
such stock is purchased solely for use in connection with an employee benefit
plan or other employee incentive plan and is held by Company as treasury stock
until used for such purpose) or make any material change in its capital
structure other than the issuance of additional capital stock.
7.2 Business Purposes. Make any material changes in its business
objects or engage in business other than the Core Business.
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7.3 Mergers or Dispositions. Enter into any merger or consolidation,
except for Permitted Mergers, or sell, lease, transfer, relocate or dispose of
all, substantially all, or any material part of its assets, except for Permitted
Transfers.
7.4 Indebtedness. Subject to the provisions of Section 7.17 hereof,
become or remain obligated for any Debt, except for:
(a) the Indebtedness;
(b) Current unsecured trade, utility and non-extraordinary
accounts payable arising in the ordinary course of Company's or any
Subsidiary's business (including any such payables assumed by Company
or a Subsidiary in connection with a Permitted Acquisition) and other
Debt arising in the ordinary course of Company's or any Subsidiary's
business;
(c) existing Debt as set forth on SCHEDULE 7.4 annexed hereto;
(d) Debt in respect of taxes, assessment, governmental charges
and claims for labor, materials or supplies to the extent that payment
thereof is not required pursuant to Section 6.8 hereof;
(e) Debt incurred in connection with the making of Investments
permitted under Section 7.8(b) hereof or in connection with the making
of an Investment in the form of a loan to Company by a Subsidiary;
(f) Debt in respect of interest rate exchange, swap, collar or
cap or similar agreements providing interest rate protection and
foreign exchange contracts;
(g) Secured purchase money Debt (including capitalized leases)
not to exceed $10,000,000 in the aggregate at any time outstanding
incurred after the date hereof to finance the acquisition of fixed
assets, provided that (A) such Debt has a scheduled maturity and is not
due on demand and (B) immediately prior to and after giving effect to
the incurrence of such Debt no Default or Event of Default has occurred
and is continuing; and
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(h) Other unsecured Debt incurred after the date hereof not to
exceed $10,000,000 in the aggregate at any time, provided that (A) such
Debt has a scheduled maturity and is not due on demand and (B)
immediately prior to and after giving effect to the incurrence of such
Debt, no Default or Event of Default has occurred and is continuing.
7.5 Liens. Permit or suffer any Lien to exist on any of its properties,
real, personal or mixed, tangible or intangible, whether now owned or hereafter
acquired, except:
(a) in favor of Agent, as security for the Indebtedness;
(b) purchase money security interests in fixed assets to secure
the purchase money Debt permitted under Section 7.4(g) hereof, provided
that such security interest is (or was, to the extent such security
interest exists at the time of a Permitted Acquisition) created
substantially contemporaneously with the acquisition of such fixed
assets and does not extend to any property other than the fixed asset
so financed and provided further that the sum of all such purchase
money Debt outstanding at any time shall not exceed the aggregate
amount set forth in Section 7.4(g), hereof; and
(c) the Permitted Encumbrances.
7.6 Acquisitions. Subject to the provisions of Section 7.17 hereof,
purchase or otherwise acquire or become obligated for the purchase of all or
substantially all or any material portion of the assets or business interests of
any Person, firm or corporation, or any shares of stock (or other ownership
interests) of any corporation, trusteeship or association, or any business or
going concern, or in any other manner effectuate or attempt to effectuate an
expansion of present business by acquisition, except for Permitted Acquisitions
and Permitted Mergers.
7.7 Dividends. Declare or pay any dividends in cash or property on or
make any other distribution in cash or property with respect to any shares of
its capital stock or other equity interests, whether by reduction of
stockholders' equity or otherwise, except for (i) dividends and other
distributions by Subsidiaries to Company and (ii) so long as immediately prior
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thereto and after giving effect thereto no Default and Event of Default has
occurred and is continuing, cash dividends on the capital stock of Company in an
amount not to exceed $7,500,000 in the aggregate during any fiscal quarter of
Company.
7.8 Investments. Subject to the provisions of Section 7.17 hereof, make
or allow to remain outstanding any Investment in, or any loans or advances to,
any Person, firm, corporation or other entity or association, other than:
(a) Permitted Investments;
(b) Investments in Subsidiaries and Joint Ventures existing as
of the date of this Agreement or established subsequent to the
date hereof (in compliance with this Agreement), provided that (i)
within ten (10) days of making such Investment, the Agent has a
first priority Lien on the capital stock or other ownership
interest of Company or the Subsidiary making such Investment in
such Subsidiary or Joint Venture as security for the Indebtedness
and (ii) the form of such collateral security is on terms
substantially similar to the terms of the security documents
executed by Company in favor of Agent and satisfactory to Agent
and Agent has received such other documentation and opinions of
counsel as Agent may reasonably require in connection therewith;
(c) Permitted Acquisitions (excluding any Investments owned by
the target of the Permitted Acquisition not otherwise permitted by
Section 7.8(e) below);
(d) the Investments set forth on SCHEDULE 7.8, hereto;
(e) Investments in any Joint Venture owned by the target of a
Permitted Acquisition upon the effective date of such Permitted
Acquisition and not made in contemplation of such Permitted
Acquisition, which shall not exceed One Million Dollars
($1,000,000) in the aggregate outstanding at any time for all such
Investments
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(f) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business; and
(g) Investments in the form of non-cash consideration received
in connection with a Permitted Transfer in accordance with this
Agreement.
7.9 Accounts Receivable. Sell or assign any account, note or trade
acceptance receivable, except to Agent on behalf of the Banks or in the ordinary
course of business for collection.
7.10 Transactions with Affiliates. Enter into any transaction with any
of its or their stockholders or officers or its or their Affiliates, except in
the ordinary course of business and on terms not materially less favorable than
would be usual and customary in similar transactions between Persons dealing at
arm's length.
7.11 No Further Negative Pledges. Enter into or become subject to any
agreement (other than this Agreement, the Loan Documents or the Indentures) (i)
prohibiting the guaranteeing by the Company or any Subsidiary of any
obligations, (ii) prohibiting the creation or assumption of any Lien upon the
properties or assets of the Company or any Subsidiary, whether now owned or
hereafter acquired, or (iii) requiring an obligation to become secured (or
further secured) if another obligation is secured or further secured.
7.12 Permitted Subordinated Indebtedness. (i) Amend, supplement or
otherwise modify the Subordinated Indenture or the Subordinated Notes (each as
in effect as of the date hereof) or the terms of any other Permitted
Subordinated Indebtedness in any way that would be materially less advantageous
to the Company or materially adverse to the Banks, including, without
limitation, with respect to amount, maturity, amortization, interest rate,
premiums, fees, covenants, events of default, remedies and subordination
provisions; or (ii) declare or make any payment on the Permitted Subordinated
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Indebtedness except regularly scheduled payments of principal, interest and
premium, unless such payments are prohibited by the terms of the Permitted
Subordinated Indebtedness, and only so long as immediately prior to such payment
and after giving effect thereto, no Default or Event of Default has occurred and
is continuing; provided, however, Company may redeem or repurchase the Permitted
Subordination Indebtedness not to exceed $40,000,000 in aggregate principal
amount.
7.13 Sale and Leaseback. Become liable, directly or indirectly, with
respect to any lease of any real or personal property (i) which it or one of its
Subsidiaries sold or transferred or will sell or transfer to any other Person or
(ii) which it or one of its Subsidiaries intends to use for substantially the
same purpose as any other real or personal property which has been or will be
sold or transferred by it or one of its Subsidiaries to any other Person in
connection with such lease.
7.14 Corporate Documents. Amend, modify or otherwise change any of the
terms or provisions of any of its constituent documents (other than its bylaws,
in which case, any of the material terms or provisions thereof) as in effect on
the date hereof.
7.15 Fiscal Year. Change its fiscal year for accounting or tax purposes
from a period consisting of the twelve month period ending on December 31 of
each year.
7.16 Senior Notes. (i) Amend, supplement or otherwise modify the Senior
Indenture or the Senior Notes (each as in effect as of the date hereof) in any
way that would be materially less advantageous to the Company, including,
without limitation, with respect to amount, maturity, amortization, interest
rate, premiums, fees, covenants, events of default and remedies; or (ii)
purchase, redeem, prepay or repay any principal of, premium, if any, interest or
other amount payable in respect of the Senior Notes unless required to do so by
the terms of such Senior Notes except (A) the purchase, redemption, prepayment
or repayment from proceeds of any refunding or refinancing of the Senior Notes
permitted under Section 7.4(c) hereof and (B) the redemption of the balance of
the outstanding Senior Notes due 1997 and 1999, and in each case only so long as
immediately prior thereto and after giving effect thereto, no Default or Event
of Default has occurred and is continuing.
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7.17 Maximum Subsidiary Investment Amount. Allow the Maximum Subsidiary
Investment Amount to exceed Thirty Five Million Dollars ($35,000,000) in the
aggregate at any time.
8. DEFAULTS
8.1 Events of Default. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) non-payment when due of (i) the principal or interest under
any of the Notes issued hereunder in accordance with the terms thereof
or (ii) any Fees;
(b) non-payment of any money by Company under this Agreement or
by Company or any Subsidiary under any of the Loan Documents, other
than as set forth in subsection (a) above, within five (5) Business
Days after written notice from Agent that the same is due and payable;
(c) default in the observance or performance of any of the
conditions, covenants or agreements of Company set forth in Section
2.7, 6.1, 6.3 through 6.7 (both inclusive), 6.9, 6.10, 6.12, 6.14, 6.16
through 6.21 (both inclusive), or 7 (in its entirety);
(d) default in the observance or performance of any of the other
conditions, covenants or agreements set forth in this Agreement by
Company and continuance thereof for a period of thirty (30) consecutive
days;
(e) any representation or warranty made by Company or any
Subsidiary herein or in any instrument submitted pursuant hereto or by
any other party to the Loan Documents proves untrue or misleading in
any material adverse respect when made;
(f) default in the observance or performance of or failure to
comply with any of the conditions, covenants or agreements of Company
or any Subsidiary set forth in any of the other Loan Documents, and the
continuance thereof beyond any period of grace or cure specified in any
such document;
(g) default in the payment of or failure to comply with the
terms of any other obligation of Company or any of
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its Subsidiaries for Debt of Company or any of its Subsidiaries in
excess of Ten Million Dollars ($10,000,000) in the aggregate which
(taking into account applicable periods of notice or cure, if any),
would permit the holder or holders thereto to accelerate the Debt or
terminate its commitment thereunder;
(h) the rendering of any judgment(s) for the payment of money in
excess of the sum of Ten Million Dollars ($10,000,000) individually or
in the aggregate against Company or any of its Subsidiaries, and such
judgments shall remain unpaid, unvacated, unbonded or unstayed by
appeal or otherwise for a period of sixty (60) consecutive days, except
as covered by adequate insurance with a reputable carrier and to the
extent an action is pending in which an active defense is being made
with respect thereto; provided, however, if such judgment(s) are in
excess of Thirty Million Dollars ($30,000,000) in the aggregate, the
entry thereof shall immediately constitute an Event of Default
hereunder;
(i) the occurrence of an "reportable event", as defined in
ERISA, which is determined to constitute grounds for termination by the
Pension Benefit Guaranty Corporation of any Pension Plan maintained or
contributed to by or on behalf of the Company or any of its
Subsidiaries for the benefit of any of its employees or for the
appointment by the appropriate United States District Court of a
trustee to administer such Pension Plan and such reportable event is
not corrected and such determination is not revoked within sixty (60)
days after notice thereof has been given to the plan administrator of
such Pension Plan (without limiting any of Agent's or any Bank's other
rights or remedies hereunder), or the institution of proceedings by the
Pension Benefit Guaranty Corporation to terminate any such Pension Plan
or to appoint a trustee by the appropriate United States District Court
to administer any such Pension Plan;
(j) the Company or any of its Subsidiaries shall be dissolved or
liquidated (or any judgment, order or decree therefor shall be entered)
other than in connection with a Permitted Merger or; if a creditors'
committee shall have been appointed for the business of Company or any
of its Subsidiaries; or if Company or any of its Subsidiaries shall
have made a general assignment for the benefit of creditors or
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shall have been adjudicated bankrupt, or shall have filed a voluntary
petition in bankruptcy or for reorganization or to effect a plan or
arrangement with creditors or shall fail to pay its debts generally as
such debts become due in the ordinary course of business (except as
contested in good faith and for which adequate reserves are made in
such party's Financial Statements) or becomes the subject of an
involuntary petition in bankruptcy, or a reorganization, arrangement or
creditor composition proceeding which is not dismissed within sixty
(60) days of commencement thereof, or shall file an answer to a
creditor's petition or other petition filed against it, admitting the
material allegations thereof for an adjudication in bankruptcy or for
reorganization; or shall have applied for or permitted the appointment
of a receiver or trustee or custodian for any of its property or
assets; or such receiver, trustee or custodian shall have been
appointed for any of its property or assets (otherwise than upon
application or consent of Company or any of its Subsidiaries); or if an
order shall be entered approving any petition for reorganization of
Company or any of its Subsidiaries; or the Company or any of its
Subsidiaries shall take any action (corporate or other) authorizing or
in furtherance any of the actions described above in this subsection;
(k) the occurrence of a Change of Ownership or Change of
Control; or
(l) the revocation or attempted revocation of any Guaranty.
8.2 Exercise of Remedies. If an Event of Default has occurred and is
continuing hereunder: (v) the Agent shall, upon being directed to do so by the
Majority Banks, declare the Revolving Credit Aggregate Commitment (and any
commitment to increase the Revolving Credit Aggregate Commitment) terminated;
(w) the Agent shall, upon being directed to do so by the Majority Banks, declare
the entire unpaid principal Indebtedness, including the Notes, immediately due
and payable, without presentment, notice or demand, all of which are hereby
expressly waived by Company; (x) upon the occurrence of any Event of Default
specified in subsection 10.1(j), above, and notwithstanding the lack of any
declaration by Agent under preceding clause (w), the entire unpaid principal
Indebtedness, including the Notes, shall become automatically and immediately
due and payable, and the Revolving Credit Aggregate
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Commitment shall be automatically and immediately terminated; and (y) the Agent
shall, if directed to do so by the Majority Banks or the Banks, as applicable
(subject to the terms hereof), exercise any remedy permitted by this Agreement,
the other Loan Documents or law.
8.3 Rights Cumulative. No delay or failure of Agent and/or Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof, or the exercise of any other power, right
or privilege. The rights of Agent and Banks under this Agreement are cumulative
and not exclusive of any right or remedies which Banks would otherwise have.
8.4 Waiver by Company of Certain Laws. To the extent permitted by
applicable law, Company hereby agrees to waive, and does hereby absolutely and
irrevocably waive and relinquish the benefit and advantage of any valuation,
stay, appraisement, extension or redemption laws now existing or which may
hereafter exist, which, but for this provision, might be applicable to any sale
made under the judgment, order or decree of any court, on any claim for interest
on the Notes, or any security interest or mortgage contemplated by or granted
under or in connection with this Agreement. These waivers have been voluntarily
given, with full knowledge of the consequences thereof.
8.5 Waiver of Defaults. No Event of Default shall be waived by the
Banks except in a writing signed by an officer of the Agent in accordance with
Section 12.12 hereof. No single or partial exercise of any right, power or
privilege hereunder, nor any delay in the exercise thereof, shall preclude any
other or further exercise of their rights by Agent or the Banks. No waiver of
any Event of Default shall extend to any other or further Event of Default. No
forbearance on the part of the Agent or the Banks in enforcing any of their
rights shall constitute a waiver of any of their rights. Company expressly
agrees that this Section may not be waived or modified by the Banks or Agent by
course of performance, estoppel or otherwise.
8.6 Deposits and Accounts.
Upon the occurrence and during the continuance of any Event of Default,
each Bank may at any time and from time to time, without
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notice to the Company (any requirement for such notice being expressly waived by
the Company) set off and apply against any and all of the obligations of the
Company now or hereafter existing under this Agreement, whether owing to such
Bank or any other Bank or the Agent, any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Bank to or for the credit or the account of the Company
and any property of the Company from time to time in possession of such Bank,
irrespective of whether or not such deposits held or indebtedness owing by such
Bank may be contingent and unmatured and regardless of whether any Collateral
then held by Agent or any Bank is adequate to cover the Indebtedness. Promptly
following any such setoff, such Bank shall give written notice to Agent and to
Company of the occurrence thereof. The Company hereby grants to the Banks and
the Agent a lien on and security interest in all such deposits, indebtedness and
property as collateral security for the payment and performance of all of the
obligations of the Company under this Agreement. The rights of each Bank under
this Section 8.6 are in addition to the other rights and remedies (including,
without limitation, other rights of setoff) which such Bank may have.
9. PAYMENTS, RECOVERIES AND COLLECTIONS
9.1 Payment Procedure.
(a) All payments by Company of principal of, or interest on, the
Notes, or any other Indebtedness, shall be made on the date specified
for payment under this Agreement not later than 11:00 a.m. (Detroit
time) in immediately available funds to Agent, for the ratable account
of the Banks, at Agent's office located at One Detroit Center, Detroit,
Michigan 48226, (care of Agent's Eurocurrency Lending Office, for
Eurocurrency-based Advances). Upon receipt by the Agent of each such
payment, the Agent shall make prompt payment in like funds received to
each Bank as appropriate, or, in respect of Eurocurrency-based
Advances, to such Bank's Eurocurrency Lending Office.
(b) Unless the Agent shall have been notified by Company prior
to the date on which any payment to be made by Company is due that
Company does not intend to remit such payment, the Agent may, in its
sole discretion and without obligation to do so, assume that the
Company has remitted such
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payment when so due and the Agent may, in reliance upon such
assumption, make available to each Bank on such payment date an amount
equal to such Bank's share of such assumed payment. If Company has not
in fact remitted such payment to the Agent each Bank shall forthwith on
demand repay to the Agent the amount of such assumed payment made
available or transferred to such Bank, together with the interest
thereon, in respect of each day from and including the date such amount
was made available by the Agent to such Bank to the date such amount is
repaid to the Agent at a rate per annum equal to (i) for Prime-based
Advances, the Federal Funds Effective Rate (daily average), as the same
may vary from time to time, and (ii) with respect to Eurocurrency-based
Advances, Agent's aggregate marginal cost (including the cost of
maintaining any required reserves or deposit insurance and of any fees,
penalties, overdraft charges or other costs or expenses incurred by
Agent) of carrying such amount.
(c) Subject to the definition of Interest Period, whenever any
payment to be made hereunder shall otherwise be due on a day which is
not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in computing
interest, if any, in connection with such payment.
(d) Subject to the provisions of Sections 12.13 and 12.15
hereof, all payments to be made by Company hereunder shall be made
without set-off or counterclaim and without deduction for or on account
of any present or future withholding or other taxes of any nature
imposed by an governmental authority thereof or any federation or
organization of which such governmental authority may at the time of
payment be a member, unless Company is compelled by law to make payment
subject to such tax. In such event, Company shall
(i) pay to the Agent, for Agent's own account and/or, as the
case may be, for the account of the Banks, such additional
amount (the "Gross-Up") as may be necessary to ensure that the
Agent and the Banks receive a net amount equal to the full
amount which would have been receivable had payment not been
made subject to such tax; and
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(ii) remit such tax to the relevant taxing authorities
according to applicable law, and send to the Agent such
certificates or certified copy receipts as the Agent shall
reasonably require as proof of the payment by the Company
of any such taxes payable by the Company.
If Agent or any Bank receives a cash refund with respect to taxes paid
by Company pursuant to this Section 9.1(d), it shall promptly remit
such cash refund, in the amount received, to Company.
As used herein, the terms "tax", "taxes" and "taxation" include all
existing taxes, levies, imposts, duties, charges, fees, deductions and
withholdings and any restrictions or conditions resulting in a charge
together with interest thereon and fines and penalties with respect
thereto which may be imposed by reason of any violation or default with
respect to the law regarding such tax, assessed as a result of or in
connection with the transactions hereunder, or the payment and or
receipt of funds hereunder, or the payment or delivery of funds into or
out of any jurisdiction other than the United States (whether assessed
against Company, Agent or any of the Banks).
9.2 Application of Proceeds of Collateral. Notwithstanding anything to
the contrary in this Agreement, after an Event of Default, the proceeds of any
of the Collateral, together with any offsets, voluntary payments by Company or
any Subsidiary or others and any other sums received or collected in respect of
the Indebtedness, shall be applied, first, to the Notes (to the extent secured
by the Collateral in accordance with the Loan Documents) on a pro rata basis,
next, to any other Indebtedness on a pro rata basis, and then, if there is any
excess, to Company or the applicable Subsidiary as the case may be. The
application of such proceeds and other sums to the Notes shall be based on each
Bank's Percentage of the aggregate of the loans.
9.3 Pro-rata Recovery. If any Bank shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of offset or otherwise)
on account of principal of, or interest on, any of the Notes in excess of its
pro rata share of payments then or thereafter obtained by all Banks upon
principal of and interest on all Notes, such Bank shall purchase from the other
Banks such participations in the Notes held by them as shall be necessary to
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cause such purchasing Bank to share the excess payment or other recovery ratably
in accordance with the Percentage with each of them; provided, however, that if
all or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing holder, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
9.4 Deposits and Accounts. In addition to and not in limitation of any
rights of any Bank or other holder of any of the Notes under applicable law,
each Bank and each other such holder shall, upon acceleration of the
Indebtedness under the Notes and without notice or demand of any kind, have the
right to appropriate and apply to the payment of the Notes owing to it any and
all balances, credits, deposits, accounts or moneys of Company then or
thereafter with such Bank or other holder; provided, however, that any such
amount so applied by any Bank or other holder on any of the Notes owing to it
shall be subject to the provisions of Section 9.3, hereof.
10. CHANGES IN LAW OR CIRCUMSTANCES; INCREASED COSTS
10.1 Reimbursement of Prepayment Costs. If Company makes any payment of
principal with respect to any Eurocurrency-based Advance (or converts or
refunds, or attempts to convert or refund any such Advance) on any day other
than the last day of the Interest Period applicable thereto (whether
voluntarily, by acceleration, or otherwise), or if Company fails to borrow,
refund or convert any Eurocurrency-based Advance after notice has been given by
Company to Agent in accordance with the terms hereof requesting such Advance, or
if Company fails to make any payment of principal or interest in respect of a
Eurocurrency-based Advance when due, Company shall reimburse Agent and each
Bank, as the case may be on demand for any resulting loss, cost or expense
incurred by Agent and Banks, as the case may be as a result thereof, including,
without limitation, any such loss, cost or expense incurred in obtaining,
liquidating, employing or redeploying deposits from third parties, whether or
not Agent and Banks, as the case may be shall have funded or committed to fund
such Advance. Such amount payable by Company to Agent and Banks, as the case may
be may include, without limitation, an amount equal to the excess, if any, of
(a) the amount of interest which would have accrued on the amount so prepaid, or
not so borrowed, refunded or converted, for the period from the date of such
prepayment or of such failure to
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borrow, refund or convert, through the last day of the relevant Interest Period,
at the applicable rate of interest for said Advance(s) provided under this
Agreement, over (b) the amount of interest (as reasonably determined by Agent
and Banks, as the case may be) which would have accrued to Agent and Banks, as
the case may be on such amount by placing such amount on deposit for a
comparable period with leading banks in the interbank eurodollar market.
Calculation of any amounts payable to any Bank under this paragraph shall be
made as though such Bank shall have actually funded or committed to fund the
relevant Advance through the purchase of an underlying deposit in an amount
equal to the amount of such Advance and having a maturity comparable to the
relevant Interest Period; provided, however, that any Bank may fund any
Eurocurrency-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under this paragraph. Upon the written request of Company, Agent and
Banks shall deliver to Company a certificate setting forth the basis for
determining such losses, costs and expenses, which certificate shall be
conclusively presumed correct, absent manifest error.
10.2 Agent's Eurocurrency Lending Office. For any Advance to which the
Eurocurrency-based Rate is applicable, if Agent shall designate a Eurocurrency
Lending Office which maintains books separate from those of the rest of Agent,
Agent shall have the option of maintaining and carrying the relevant Advance on
the books of such Eurocurrency Lending Office.
10.3 Circumstances Affecting Eurocurrency-based Rate Availability. If
with respect to any Interest Period, Agent or any of the Banks (after
consultation with Agent) shall determine that, by reason of circumstances
affecting the interbank markets generally, deposits in eurodollars in the
applicable amounts are not being offered to the Agent or such Bank for such
Interest Period, then Agent shall forthwith give notice thereof to the Company.
Thereafter, until Agent notifies Company that such circumstances no longer
exist, the obligation of Banks to make Eurocurrency-based Advances, and the
right of Company to convert an Advance to or refund an Advance as a
Eurocurrency-based Advance shall be suspended, and the Company shall repay in
full (or cause to be repaid in full) the then outstanding principal amount of
each such Eurocurrency-based Advance covered hereby together with accrued
interest thereon, any amounts payable under Section 10.1, hereof, and all other
amounts payable hereunder on the last day of
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the then current Interest Period applicable to such Advance. Upon the date for
repayment as aforesaid and unless Company notifies Agent to the contrary within
two (2) Business Days after receiving a notice from Agent pursuant to this
Section, such outstanding principal amount shall be converted to a Prime-based
Advance as of the last day of such Interest Period.
10.4 Laws Affecting Eurocurrency-based Advance Availability. In the
event that any applicable law, rule or regulation (whether domestic or foreign)
now or hereafter in effect and whether or not currently applicable to any Bank
or the Agent or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof, or
compliance by the Agent or any of the Banks (or any of their respective
Eurocurrency Lending Offices) with any request or directive (whether or not
having the force of law) of any such authority, shall make it unlawful or
impossible for any of the Banks (or any of their respective Eurocurrency Lending
Offices) to honor its obligations hereunder to make or maintain any Advance with
interest at the Eurocurrency-based Rate, Agent shall so notify Company and the
right of Company to convert an Advance or refund an Advance as a
Eurocurrency-based Advance, shall be suspended and thereafter Company may select
as Applicable Interest Rates only those which remain available and which are
permitted to be selected hereunder, and if any of the Banks may not lawfully
continue to maintain an Advance to the end of the then current Interest Period
applicable thereto as a Eurocurrency-based Advance, Company shall immediately
prepay such Advance, together with interest to the date of payment, and any
amounts payable under Sections 10.1 with respect to such prepayment and the
applicable Advance shall immediately be converted to a Prime-based Advance and
the Prime-based Rate shall be applicable thereto.
10.5 Increased Cost of Eurocurrency-based Advances. In the event that
any applicable law, rule or regulation (whether domestic or foreign) now or
hereafter in effect and whether or not currently applicable to any Bank or the
Agent or any interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Agent or any of the Banks with any
request or directive (whether or not having the force of law) made by any such
authority, central bank or comparable agency after the date hereof:
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(a) shall subject the Agent or any of the Banks to any tax, duty
or other charge with respect to any Advance or any Note or shall change
the basis of taxation of payments to the Agent or any of the Banks of
the principal of or interest on any Advance or any Note or any other
amounts due under this Agreement in respect thereof (except for changes
in the rate of tax on the overall net income or revenues of the Agent
or of any of the Banks imposed by the United States of America or the
jurisdiction in which such Bank's principal executive office is
located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by the Agent or any of the Banks or shall impose on the Agent
or any of the Banks or the interbank markets any other condition
affecting any Advance or any of the Notes;
and the result of any of the foregoing is to increase the costs to the Agent or
any of the Banks of making, funding or maintaining any part of the Indebtedness
hereunder as a Eurocurrency-based Advance or to reduce the amount of any sum
received or receivable by the Agent or any of the Banks under this Agreement or
under the Notes in respect of a Eurocurrency-based Advance then Agent or Bank,
as the case may be, shall promptly notify the Company of such fact and demand
compensation therefor and, within fifteen (15) days after such notice, Company
agrees to pay to Agent or such Bank such additional amount or amounts as will
compensate Agent or such Bank or Banks for such increased cost or reduction. A
certificate of Agent or such Bank setting forth the basis for determining such
additional amount or amounts necessary to compensate or such Bank or Banks shall
be conclusively presumed to be correct save for manifest error.
10.6 Other Increased Costs. In the event that after the date hereof the
adoption of or any change in any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to any Bank or Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or Agent
with any guideline, request or directive of any such authority (whether or
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not having the force of law), including any risk based capital guidelines,
affects or would affect the amount of capital required or expected to be
maintained by such Bank or Agent (or any corporation controlling such Bank or
Agent) and such Bank or Agent, as the case may be, determines that the amount of
such capital is increased by or based upon the existence of such Bank's or
Agent's obligations or Advances hereunder and such increase has the effect of
reducing the rate of return on such Bank's or Agent's (or such controlling
corporation's) capital as a consequence of such obligations or Advances
hereunder to a level below that which such Bank or Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank or Agent to be material, then the Company shall pay to such Bank or
Agent, as the case may be, from time to time, upon request by such Bank or
Agent, additional amounts sufficient to compensate such Bank or Agent (or such
controlling corporation) for any increase in the amount of capital and reduced
rate of return which such Bank or Agent reasonably determines to be allocable to
the existence of such Bank's or Agent's obligations or Advances hereunder. A
statement as to the amount of such compensation, prepared in good faith and in
reasonable detail by such Bank or Agent, as the case may be, shall be submitted
by such Bank or by Agent to the Company, reasonably promptly after becoming
aware of any event described in this Section 10.6 and shall be conclusive,
absent manifest error in computation.
11. AGENT
11.1 Appointment of Agent. Each Bank and the holder of each Note
irrevocably appoints and authorizes the Agent to act on behalf of such Bank or
holder under this Agreement and the Loan Documents and to exercise such powers
hereunder and thereunder as are specifically delegated to Agent by the terms
hereof and thereof, together with such powers as may be reasonably incidental
thereto, including without limitation the power to execute or authorize the
execution of financing or similar statements or notices, and other documents. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
Company. Each Bank agrees (which agreement shall survive any termination of this
Agreement) to reimburse Agent for all reasonable out-of-pocket expenses
(including house and outside
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attorneys' fees and disbursements) incurred by Agent hereunder or in connection
herewith or with an Event of Default or in enforcing the obligations of Company
under this Agreement or the Loan Documents or any other instrument executed
pursuant hereto, and for which Agent is not reimbursed by Company, pro rata
according to such Bank's Percentage. Agent shall not be required to take any
action under the Loan Documents, or to prosecute or defend any suit in respect
of the Loan Documents, unless indemnified to its satisfaction by the Banks
against loss, costs, liability and expense. If any indemnity furnished to Agent
shall become impaired, it may call for additional indemnity and cease to do the
acts indemnified against until such additional indemnity is given.
11.2 Deposit Account with Agent. Company hereby authorizes Agent, in
Agent's sole discretion, to charge its general deposit account(s), if any,
maintained with Agent for the amount of any principal, interest, or other
amounts or costs due under this Agreement when the same become due and payable
under the terms of this Agreement or the Notes.
11.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement or otherwise, have a fiduciary relationship with any
Bank (and no implied covenants or other obligations shall be read into this
Agreement against the Agent). Neither Agent nor any of its directors, officers,
employees or agents shall be liable to any Bank for any action taken or omitted
to be taken by it under this Agreement or any document executed pursuant hereto,
or in connection herewith or therewith with the consent or at the request of the
Majority Banks or in the absence of their own gross negligence or wilful
misconduct, nor be responsible for or have any duties to ascertain, inquire into
or verify (a) any recitals or warranties herein or therein, (b) the
effectiveness, enforceability, validity or due execution of this Agreement or
any document executed pursuant hereto or any security thereunder, (c) the
performance by Company of its obligations hereunder or thereunder, or (d) the
satisfaction of any condition hereunder or thereunder, including without
limitation the making of any Advance. Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegraph, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of a
proper person. Agent may treat the payee of any Note as the holder thereof.
Agent may employ agents and may
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consult with legal counsel (who may be counsel for Company), independent public
accountants and other experts selected by it and shall not be liable to the
Banks (except as to money or property received by them or their authorized
agents), for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
11.4 Successor Agent. Agent may resign as such at any time upon at
least thirty (30) days prior notice to Company and all Banks. If Agent at any
time shall resign or if the office of Agent shall become vacant for any other
reason, Majority Banks shall, by written instrument, appoint successor agent(s)
satisfactory to such Majority Banks, and, so long as no Default or Event of
Default has occurred and is continuing, to Company; provided, that Company shall
be entitled to deal with the Agent until receiving notice of appointment of a
successor agent. Such successor agent shall thereupon become the Agent
hereunder, as applicable, and shall be entitled to receive from the prior Agent
such documents of transfer and assignment as such successor Agent may reasonably
request. Any such successor Agent shall be a commercial bank organized under the
laws of the United States or any state thereof and shall have a combined capital
and surplus of at least $500,000,000. If a successor is not so appointed or does
not accept such appointment before the resigning Agent's resignation becomes
effective, the resigning Agent may appoint a temporary successor which is one of
the Banks to act until such appointment by the Majority Banks is made and
accepted or if no such temporary successor is appointed as provided above by the
resigning Agent, the Majority Banks shall thereafter perform all of the duties
of the resigning Agent hereunder until such appointment by the Majority Banks is
made and accepted. Such successor Agent shall succeed to all of the rights and
obligations of the resigning Agent as if originally named. The resigning Agent
shall duly assign, transfer and deliver to such successor Agent all moneys at
the time held by the resigning Agent hereunder after deducting therefrom its
expenses for which it is entitled to be reimbursed. Upon such succession of any
such successor Agent, the provisions of this Article 11 shall continue in effect
for the benefit of the resigning Agent in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
11.5 Loans by Agent. Comerica Bank and its successors and assigns, in
its capacity as a Bank hereunder, shall have the same
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rights and powers hereunder as any other Bank and may exercise or refrain from
exercising the same as though it were not the Agent. Comerica Bank and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to, and generally engage in any kind of banking, trust,
financial advisory or other business with Company (or the shareholders of
Company) as if it were not acting as Agent hereunder, and may accept fees and
other consideration therefor without having to account for the same to the
Banks.
11.6 Credit Decisions. Each Bank acknowledges that it has,
independently of Agent and each other Bank and based on the Financial Statements
of Company and such other documents, information and investigations as it has
deemed appropriate, made its own credit decision to extend credit hereunder from
time to time. Each Bank also acknowledges that it will, independently of Agent
and each other Bank and based on such other documents, information and
investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any document
executed pursuant hereto.
11.7 Agent's Fees. Commencing on January 2, 1996 and on the first
Business Day of each succeeding year until the Indebtedness has been repaid and
no commitment to fund any Advance hereunder is outstanding, Company shall pay to
Agent an annual agency fee and such other fees and charges as set forth in such
letter agreement between Company and Agent. The Agent's Fees described in this
Section 11.7 shall not be refundable under any circumstance.
11.8 Authority of Agent to Enforce Notes and This Agreement. Each Bank,
subject to the terms and conditions of this Agreement, authorizes the Agent with
full power and authority as attorney-in-fact to institute and maintain actions,
suits or proceedings for the collection and enforcement of the Notes and to file
such proofs of debt or other documents as may be necessary to have the claims of
the Banks allowed in any proceeding relative to Company, or any of its
Subsidiaries, or their respective creditors or affecting their respective
properties, and to take such other actions which Agent considers to be necessary
or desirable for the protection, collection and enforcement of the Notes, this
Agreement or the Loan Documents.
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11.9 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by Company, but without limiting any obligation of Company
to make such reimbursement), ratably according to their respective Percentages,
from and against any and all claims, damages, losses, liabilities, costs or
expenses of any kind or nature whatsoever (including, without limitation, fees
and disbursements of counsel) which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement, any
of the other Loan Documents or the transactions contemplated hereby or any
action taken or omitted by the Agent under this Agreement or any of the other
Loan Documents; provided, however, that no Bank shall be liable for any portion
of such claims, damages, losses, liabilities, costs or expenses resulting from
the Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including, without limitation, fees
and expenses of counsel) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Loan Documents, to the extent that the Agent is not
reimbursed for such expenses by Company, but without limiting the obligation of
Company to make such reimbursement. Each Bank agrees to reimburse the Agent
promptly upon demand for its ratable share of any amounts owing to the Agent by
the Banks pursuant to this Section. If the indemnity furnished to the Agent
under this Section shall, in the judgment of the Agent, be insufficient or
become impaired, the Agent may call for additional indemnity from the Banks and
cease, or not commence, to take any action until such additional indemnity is
furnished.
11.10 Knowledge of Default. It is expressly understood and agreed that
the Agent shall be entitled to assume that no Event of Default has occurred and
is continuing, unless the officers of the Agent immediately responsible for
matters concerning this Agreement shall have been notified in a writing
specifying such Event of Default and stating that such notice is a "notice of
default" by a Bank or by Company. Upon receiving such a notice, the Agent shall
promptly notify each Bank of such Event of Default and provide each Bank with a
copy of such notice. Agent shall also furnish the Banks, promptly upon receipt,
with copies of all other notices or
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other information required to be provided by Company under this Agreement.
11.11 Agent's Authorization; Action by Banks. Except as otherwise
expressly provided herein, whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make any
request, or to take any other action on behalf of the Banks (including without
limitation the exercise of any right or remedy hereunder or under the other Loan
Documents), the Agent shall be required to give such approval or consent, or to
make such request or to take such other action only when so requested in writing
by the Majority Banks or all of the Banks, as applicable hereunder. Action that
may be taken by Majority Banks or all of the Banks, as the case may be (as
provided for hereunder) may be taken (i) pursuant to a vote at a meeting (which
may be held by telephone conference call) as to which all of the Banks have been
given reasonable advance notice, or (ii) pursuant to the written consent of the
requisite Percentages of the Banks as required hereunder, provided that all of
the Banks are given reasonable advance notice of the requests for such consent.
11.12 Enforcement Actions by the Agent. Except as otherwise expressly
provided under this Agreement or in any of the other Loan Documents and subject
to the terms hereof, Agent will take such action, assert such rights and pursue
such remedies under this Agreement and the other Loan Documents as the Majority
Banks or all of the Banks, as the case may be (as provided for hereunder), shall
direct; provided, however, that the Agent shall not be required to act or omit
to act if, in the judgment of the Agent, such action or omission may expose the
Agent to personal liability or is contrary to this Agreement, any of the other
Loan Documents or applicable law. Except as expressly provided above or
elsewhere in this Agreement or the other Loan Documents, no Bank (other than the
Agent, acting in its capacity as agent) shall be entitled to take any
enforcement action of any kind under any of the Loan Documents.
12. MISCELLANEOUS
12.1 Restatement of Prior Agreement. This Agreement amends, restates
and replaces in its entirety the Prior Agreement.
12.2 Accounting Principles.
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(a) Where the character or amount of any asset or liability or
item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made
for the purposes of this Agreement, it shall be done, unless otherwise
specified herein, in accordance with GAAP. Furthermore, all Financial
Statements required to be delivered hereunder shall be prepared in
accordance with GAAP.
(b) If any change in the accounting principles used in the
preparation of the most recent financial statements referred to in
Section 6.3 hereof are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions)
and are adopted by Company with the agreement of its independent
certified public accountants and such changes result in a change in the
method of calculation of any of the covenants, standards or terms found
in Section 6 (in its entirety) or Section 7 (in its entirety), the
parties hereto agree to enter into negotiations in order to amend such
provisions so as to equitably reflect such changes with the desired
result that the criteria for evaluating compliance with such covenants,
standards and terms by the Company shall be the same after such changes
as if such changes had not been made; provided, however, no change in
GAAP that would affect the method of calculation of any of the
covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner
satisfactory to Majority Banks and the Company, to so reflect such
change in accounting principles.
12.3 Consent to Jurisdiction. Company and Banks hereby irrevocably
submit to the non-exclusive jurisdiction of any United States Federal, Michigan
state court sitting in Detroit or New York state court sitting in New York City
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents and Company and Banks hereby irrevocably agree that
all claims in respect of such action or proceeding may be heard and determined
in any such United States Federal, Michigan state court or New York state court.
Company irrevocably consents to the service of any and all process in any such
action or proceeding brought in any court in or of the State of Michigan or
State of New York by the delivery of copies of such process to Company at its
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address specified on the signature page hereto or by certified mail directed to
such address or such other address as may be designated by Company in a notice
to the other parties that complies as to delivery with the terms of Section
12.7. Nothing in this Section shall affect the right of the Banks and the Agent
to serve process in any other manner permitted by law or limit the right of the
Banks or the Agent (or any of them) to bring any such action or proceeding
against Company or any Subsidiary or any of its or their property in the courts
of any other jurisdiction. Company hereby irrevocably waives any objection to
the laying of venue of any such suit or proceeding in the above described
courts.
12.4 Law of Michigan. This Agreement and the Notes have been delivered
at Detroit, Michigan, and shall be governed by and construed and enforced in
accordance with the laws of the State of Michigan, except to the extent that the
Uniform Commercial Code, other personal property law or real property law of a
jurisdiction where Collateral is located is applicable and except as and to the
extent expressed to the contrary in any of the Loan Documents. Whenever possible
each provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
12.5 Interest. In the event the obligation of Company to pay interest
on the principal balance of the Notes is or becomes in excess of the maximum
interest rate which Company is permitted by law to contract or agree to pay,
giving due consideration to the execution date of this Agreement, then, in that
event, the rate of interest applicable with respect to each Bank's Percentage
shall be deemed to be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to have been payments in
reduction of principal and not of interest.
12.6 Closing Costs and Other Costs. Company agrees to pay, or reimburse
the Agent for payment of, on demand (a) all reasonable closing costs and
expenses, including, by way of description and not limitation, house and outside
attorney fees and advances, appraisal and accounting fees, and lien search fees
incurred by Agent (but not any of the other Banks) in connection with the
commitment, consummation and closing of the loans contemplated
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hereby or in connection with the administration of this Agreement or any
amendment, refinancing or restructuring of the credit arrangements provided
under this Agreement, (b) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement and the other Loan Documents and the consummation of
the transactions contemplated hereby, and any and all liabilities with respect
to or resulting from any delay in paying or omitting to pay such taxes or fees,
and (c) all reasonable costs and expenses of the Agent or any of the Banks
(including reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Default or
Event of Default or the enforcement of this Agreement, or the other Loan
Documents or in connection with any refinancing or restructuring of the
Indebtedness in the nature of a "work-out" or in any insolvency or bankruptcy
proceeding. All of said amounts required to be paid by Company, may, at Agent's
option, be charged by Agent as a Prime-based Advance against the Indebtedness.
12.7 Notices. Except as expressly provided otherwise in this Agreement,
all notices and other communications provided to any party hereto under this
Agreement or any other Loan Document shall be in writing and shall be given by
personal delivery, by mail, by reputable overnight courier, by telex or by
facsimile and addressed or delivered to it at its address set forth on the
signature pages hereof or at such other address as may be designated by such
party in a notice to the other parties that complies as to delivery with the
terms of this Section 12.7. Any notice, if personally delivered or if mailed and
properly addressed with postage prepaid and sent by registered or certified
mail, shall be deemed given when received or when delivery is refused; any
notice, if given to a reputable overnight courier and properly addressed, shall
be deemed given two (2) Business Days after the date on which it was sent,
unless it is actually received sooner by the named addressee; and any notice, if
transmitted by telex or facsimile, shall be deemed given when received
(answerback confirmed in the case of telexes and receipt confirmed in the case
of telecopies). Agent may, but shall not be required to, take any action on the
basis of any notice given to it by telephone, but the giver of any such notice
shall promptly confirm such notice in writing or by telex or facsimile, and such
notice will not be deemed to have been received until such confirmation is
deemed received in accordance with the provisions of this Section set forth
above. If such telephonic
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notice conflicts with any such confirmation, the terms of such telephonic notice
shall control.
12.8 Further Action. Company, from time to time, upon written request
of Agent will make, execute, acknowledge and deliver or cause to be made,
executed, acknowledged and delivered, all such further and additional
instruments, and take all such further action as may reasonably be required to
carry out the intent and purpose of this Agreement or the other Loan Documents,
and to provide for Advances under and payment of the Notes, according to the
intent and purpose herein and therein expressed.
12.9 Successors and Assigns; Participations; Assignments.
(a) This Agreement shall be binding upon and shall inure to the
benefit of Company, the Agent and the Banks, and their respective successors and
assigns.
(b) The foregoing shall not authorize any assignment by Company of
its rights or duties hereunder, and no such assignment shall be made (or
effective) without the prior written approval of the Banks.
(c) None of the Banks may assign or grant participations in its
rights or obligations hereunder or under the other Loan Documents without the
prior written approval of the Agent, and, so long as no Event of Default has
occurred and is continuing, the Company. Upon the consummation of any assignment
under this Section, Agent shall prepare and distribute to Company and each Bank,
a revised Exhibit "C" to this Agreement setting forth the applicable new
Percentages of the Banks (including the assignee Bank) taking into account such
assignment.
(d) Nothing in this Agreement, the other Loan Documents or the
Notes, expressed or implied, is intended to or shall confer on any Person other
than the respective parties hereto and thereto and their successors permitted
hereunder and thereunder any benefit or any legal or equitable right, remedy or
other claim under this Agreement, the Notes or the other Loan Documents.
12.10 Indulgence. No delay or failure of Agent and the Banks in
exercising any right, power or privilege hereunder shall affect such right,
power or privilege nor shall any single or partial exercise thereof preclude any
other or further exercise thereof,
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nor the exercise of any other right, power or privilege. The rights of Agent and
the Banks hereunder are cumulative and are not exclusive of any rights or
remedies which Agent and the Banks would otherwise have.
12.11 Counterparts. This Agreement may be executed in several
counterparts, and each executed copy shall constitute an original instrument,
but such counterparts shall together constitute but one and the same instrument.
12.12 Amendment and Waiver. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Company therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Banks or, if this Agreement expressly so
requires with respect to the subject matter thereof, by all Banks (and, with
respect to any amendments to this Agreement or the other Loan Documents, by
Company or the Subsidiaries which are signatories thereto), and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Banks, do any of the following:
(a) subject the Banks to any additional obligations, (b) reduce the principal
of, or interest on, the Notes or any Fees (other than the Agent's Fees) or other
amounts payable hereunder, (c) postpone any date fixed for any payment of
principal of, or interest on, the Notes or any Fees (other than the Agent's
Fees) or other amounts payable hereunder, (d) waive any Event of Default
specified in Sections 8.1(a) or (b) hereof, (e) subject to Section 12.16 hereof,
release or defer the granting or perfecting of a Lien in any Collateral or alter
the required priority of any Lien or terminate or modify any indemnity provided
to the Banks hereunder or under the Loan Documents, except as shall be otherwise
expressly provided in this Agreement or any other Loan Document, (f) take any
action which requires the signing of all Banks pursuant to the terms of this
Agreement or any other Loan Document, (g) change the aggregate unpaid principal
amount of the Notes which shall be required for the Banks or any of them to take
any action under this Agreement or any other Loan Document, or (h) change the
definition of "Majority Banks" or this Section 12.12; provided, however, that no
amendment, waiver, or consent shall, unless in writing and signed by the Agent
in addition to all the Banks, affect the rights or duties of the Agent under
this Agreement or any Loan Document. All references in this Agreement to "Banks"
or "the Banks" shall
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refer to all Banks, unless expressly stated to refer to Majority Banks.
12.13 Taxes and Fees. Should any documentary, stamp or similar tax
(other than a franchise tax or tax based upon the net income of any Bank or
Agent imposed by the jurisdiction in which such Bank or Agent have their
respective principal executive offices), or recording or filing fee become
payable in respect of this Agreement or any of the other Loan Documents (or the
execution, filing or recording thereof) or any amendment, modification or
supplement hereof or thereof, Company agrees to pay the same together with any
interest or penalties thereon and agrees to hold the Agent and the Banks
harmless with respect thereto.
12.14 Confidentiality. Each Bank agrees that it will not disclose
without the prior written consent of Company (other than to its employees, to
another Bank or to its auditors or counsel) any information with respect to
Company, which is furnished pursuant to this Agreement or any of the other Loan
Documents; provided that any Bank may disclose any such information (a) as has
become generally available to the public or has been lawfully obtained by such
Bank from any third party under no duty of confidentiality to Company, (b) as
may be required or appropriate in any report, statement or testimony submitted
to, or in respect to any inquiry, by, any municipal, state or federal regulatory
body having or claiming to have jurisdiction over such Bank, including the Board
of Governors of the Federal Reserve System of the United States, the Office of
the Comptroller of the Currency or the Federal Deposit Insurance Corporation or
similar organizations (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to comply with any
law, order, regulation or ruling applicable to such Bank, and (e) to any
permitted transferee or assignee or to any permitted participant of, or with
respect to, the Notes, as aforesaid so long as such transferee or assignee
agrees in writing to be bound by the terms and conditions of this Section 12.14.
Each Bank shall give notice to Company of any disclosure made by such Bank under
this Section unless such notice is prohibited by law, order, regulation or
ruling.
12.15 Withholding Taxes. If any Bank is not incorporated under the laws
of the United States or a state thereof, such Bank shall, prior to the effective
date of this Agreement in the case of
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the lenders which are Banks as of the date of this Agreement and prior to the
effective date of any assignment permitted under Section 12.9 hereof in the case
of any lender which becomes or Bank after the date hereof, deliver to the Agent
two executed copies of (i) Internal Revenue Service Form 1001 specifying the
applicable tax treaty between the United States and the jurisdiction of such
Bank's domicile which provides for the exemption from withholding on interest
payments to such Bank, (ii) Internal Revenue Service Form 4224 evidencing that
the income to be received by such Bank hereunder is effectively connected with
the conduct of a trade or business in the United States or (iii) other evidence
satisfactory to the Agent and Company that such Bank is exempt from United
States income tax withholding with respect to such income. Such Bank shall amend
or supplement any such form or evidence (and submit new forms or evidence upon
the expiration of any forms or other evidence previously delivered to Agent) as
required to insure that it is accurate, complete and non-misleading at all
times. Promptly upon notice from the Agent of any determination by the Internal
Revenue Service that any payments previously made to such Bank hereunder were
subject to United States income tax withholding when made, such Bank shall pay
to the Agent the excess of the aggregate amount required to be withheld from
such payments over the aggregate amount actually withheld by the Agent. In
addition, from time to time upon the reasonable request and at the sole expense
of the Company, each Bank and the Agent shall (to the extent it is able to do so
based upon applicable facts and circumstances), complete and provide the Company
with such forms, certificates or other documents as may be reasonably necessary
to allow the Company to make any payment under this Agreement or the other Loan
Documents without any withholding for or on the account of any tax under Section
9.1(d) hereof (or with such withholding at a reduced rate), provided that the
execution and delivery of such forms, certificates or other documents does not
adversely affect or otherwise restrict the right and benefits (including without
limitation economic benefits) available to such Bank or the Agent, as the case
may be, under this Agreement or any of the other Loan Documents, or under or in
connection with any transactions not related to the transactions contemplated
hereby. Notwithstanding any provision of this Section 12.15 or Section 12.9 to
the contrary, Company shall have no obligation to pay a Gross-Up with respect to
withholding tax paid by Company pursuant to Section 9.1(d) to the extent such
Gross-Up results from any agreement or certificate delivered pursuant to this
Section having been incorrect in any material respect when made.
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12.16 Release of Collateral. Agent shall be entitled (for and on behalf
of itself and the Banks) to release any Collateral which Company or any of the
Subsidiaries is permitted to sell or transfer under the terms of this Agreement,
without any further action or consent of the Banks but with notice to the Banks.
12.17 Power of Attorney. Company does hereby make, constitute and
appoint any officer or agent of Agent as its true and lawful attorney-in-fact,
with power, upon the occurrence of any Event of Default (exercisable only so
long as such Event of Default is continuing and with full power of
substitution), to endorse its name, or the names of any of its officers or
agents, upon any notes, checks, drafts, money orders, or other instruments of
payment (including payments payable under any policy of insurance) or Collateral
that may come into possession of the Agent in full or part payment of any
amounts owing to the Banks; to sign and endorse the name of Company, and/or any
of its officers or agents, upon any invoice, freight or express bill, bill of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts of the Company, and any
instrument or document relating thereto or to Company's rights therein; to
request from any insurance company providing insurance coverage in accordance
with Section 6.14 hereof to issue certificates of insurance, at Company's
expense, evidencing the loss payable provisions required under Section 6.14
hereof; to execute on behalf of Company any financing statements, amendments,
subordinations or other filings pursuant to this Agreement or any of the Loan
Documents, granting unto Agent, as the attorney-in-fact of Company, full power
to do any and all things necessary to be done in and about the Company's or any
Subsidiary's premises as fully and effectually as Company might or could do, and
hereby ratifying all that any said attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney described herein shall be deemed
coupled with an interest and shall be irrevocable until the Revolving Credit
Maturity Date and thereafter until payment in full of all the Indebtedness and
the performance by Company and the Subsidiaries of all other obligations under
this Agreement and the Loan Documents; Agent may, at any time after the
occurrence of an Event of Default, notify Account Debtors that Collateral has
been assigned to Agent on behalf of the Banks and that payments shall be made
directly to Agent. Upon request of the Agent, Company will so notify such
Account Debtors and will indicate on all billings to such Account Debtors that
their accounts must be paid to or as directed by Agent. The Agent acting
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on behalf of the Banks shall have full power to collect, compromise, endorse,
sell or otherwise deal with the Collateral or proceeds thereof in the name of
the Agent or in the name of Company, provided that Agent shall act in a
commercially reasonable manner. Company further shall cause the Subsidiaries to
provide powers of attorney to Agent on substantially the foregoing terms.
12.18 WAIVER OF JURY TRIAL. THE BANKS, THE AGENT AND THE COMPANY AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY
JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTION OF ANY OF THEM. NEITHER THE
BANKS, THE AGENT, NOR COMPANY SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS
SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY THE
BANKS AND THE AGENT OR COMPANY EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL OF
THEM.
12.19 Complete Agreement; Conflicts. This Agreement, the Notes, any
Requests for Advance hereunder, and the other Loan Documents contain the entire
agreement of the parties hereto, superseding all prior agreements, discussions
and understandings relating to the subject matter hereof, and none of the
parties shall be bound by anything not expressed in writing. In the event of any
conflict between the terms of this Agreement and the other Loan Documents, this
Agreement shall govern.
12.20 Severability. In case any one or more of the obligations of
Company under this Agreement, the Notes or any of the other Loan Documents shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining obligations of Company shall not in any way
be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of Company under this Agreement, the Notes or
any of the other Loan Documents in any other jurisdiction.
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12.21 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify or affect any of the terms or provisions hereof.
12.22 Construction of Certain Provisions. If any provision of this
Agreement or any of the other Loan Documents refers to any action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person, whether or not expressly specified in such provision.
12.23 Independence of Covenants. Each covenant hereunder shall be given
independent effect (subject to any exceptions stated in such covenant) so that
if a particular action or condition is not permitted by any such covenant
(taking into account any such stated exception), the fact that it would be
permitted by an exception to, or would be otherwise within the limitations of,
another covenant shall not avoid the occurrence of a Default or an Event of
Default.
12.24 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of Company or any party to
any of the Loan Documents made herein or in any of the Loan Documents or in any
certificate, report, Financial Statement or other document furnished by or on
behalf of Company or any Subsidiary in connection with this Agreement or any of
the other Loan Documents shall be deemed to have been relied upon by the Banks,
notwithstanding any investigation heretofore or hereafter made by any Bank or on
such Bank's behalf, and those covenants and agreements of Company set forth in
Sections 6.12, 6.15(c), 10.1, 10.6, and 12.6 hereof (together with any other
indemnities of Company or any Subsidiary contained elsewhere in this Agreement
or in any of the other Loan Documents) and of Banks set forth in Section 12.14
hereof shall, notwithstanding anything to the contrary contained in this
Agreement, survive the repayment in full of the Indebtedness and the termination
of the Revolving Credit Aggregate Commitment.
12.25 Effective Upon Execution. This Agreement shall become effective
upon the execution hereof by Banks, Agent and Company and the issuance by
Company of the Notes hereunder, and shall remain effective until the
Indebtedness has been repaid and discharged in full and no commitment to extend
any credit hereunder or under any
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of the other Loan Documents, whether optional or obligatory, remains
outstanding.
12.26 Payment of Fees. Concurrent with the execution and delivery of
this Agreement, Company shall pay to the Agent all costs and expenses required
hereunder to be paid to Agent upon execution of this Agreement.
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WITNESS the due execution hereof as of the day and year first above
written.
COMPANY: VALASSIS COMMUNICATIONS, INC.
By: /s/ Barry P. Hoffman
------------------------------------
Barry P. Hoffman
Its: Secretary
36111 Schoolcraft Road
Livonia, Michigan 48150
Attn: Barry P. Hoffman, Esq.
Telephone (313) 591-3000
Facsimile No. (313) 591-4460
AGENT: COMERICA BANK,
as Agent
By: /s/ Peter A. Loeffler
------------------------------------
Peter A. Loeffler
Its: First Vice President
One Detroit Center
500 Woodward Avenue
23rd Floor
Detroit, Michigan 48226
Attention: Peter A. Loeffler
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BANKS:
Operations Contact: COMERICA BANK
Comerica Bank
One Detroit Center By: /s/ Peter A. Loeffler
______________________________
500 Woodward Ave. Peter A. Loeffler
__________________ Its: First Vice President
Detroit, Michigan 48226 One Detroit Center
Attention:______________ 500 Woodward Avenue, 23rd Floor
Telephone No. (313) ________ Detroit, Michigan 48226
Attention: Peter A. Loeffler
Telephone: (313) 222-2976
Facsimile No. (313) 961-8516
Operations Contact:
WESTPAC BANKING CORPORATION WESTPAC BANKING CORPORATION
By: /s/ Craig L. Jones
______________________________
Craig L. Jones
335 Madison Avenue Its: Vice President
New York, NY 10017 335 Madison Avenue
Attention: Susan Wildstein New York, NY 10017
Telephone No. (212) 850-7936 Attention: Craig L. Jones
Facsimile No. (212) 687-5176 Telephone: (212) 850-7862
Facsimile No. (212) 850-7619
The Long-Term Credit Bank of THE LONG-TERM CREDIT BANK OF
Japan, Ltd. JAPAN, LTD. CHICAGO BRANCH
Chicago Branch By: /s/ Mark A. Thompson
______________________________
190 S. LaSalle Street
Suite 800 Its:_____________________________
Chicago, Illinois 60603 190 S. LaSalle Street
Attention: Will Schauble Suite 800
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Telephone No. (312) 704-5494 Chicago, IL 60603
Facsimile No. (312) 704-8717 Attention: Koji Sasayama
Telephone: (312) 704-5483
Facsimile No. (312) 704-8505
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FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT dated as of December 15, 1995, by and among Valassis
Communications, Inc., a Delaware corporation ('Company'), the Banks (as defined
below) and Comerica Bank, as agent for the Banks (in such capacity, 'Agent').
RECITALS
A. Company, Comerica Bank, Westpac Banking Corporation, the Long-Term
Credit Bank of Japan, Ltd. Chicago Branch (individually a 'Bank' and
collectively the 'Banks') and Agent entered into that certain Credit Agreement
dated August 11, 1995 ('Credit Agreement').
B. Company, Banks and Agent desire to amend the Credit Agreement to
increase the Maximum Subsidiary Investment Amount (as defined in the Credit
Agreement).
NOW, THEREFORE, the parties agree as follows:
1. Section 7.17 of the Credit Agreement is amended to read as follows:
'Maximum Subsidiary Investment Amount. Allow the Maximum Subsidiary
Investment Amount to exceed Fifty Million Dollars ($50,000,000) in the
aggregate at any time.'
2. The above amendment shall be effective as of December 15, 1995.
3. Except as expressly modified hereby, all of the terms and conditions of
the Credit Agreement shall remain in full force and effect.
4. This Amendment may be executed in counterparts and each executed copy
shall constitute an original instrument, but such counterparts shall together
constitute but one and the same instrument.
The parties execute this Amendment as of the date set forth above.
COMPANY: VALASSIS COMMUNICATIONS, INC.
By: /s/ Barry P. Hoffman
--------------------------
Barry P. Hoffman
Its: Secretary
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<PAGE>
AGENT: COMERICA BANK, as Agent
By: /s/ Peter A. Loeffler
--------------------------
Peter A. Loeffler
Its: First Vice President
BANKS: COMERICA BANK
By: /s/ Peter A. Loeffler
--------------------------
Peter A. Loeffler
Its: First Vice President
WESTPAC BANKING CORPORATION
By: /s/ Craig Jones
--------------------------
Its: Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., CHICAGO BRANCH
By: /s/ Mark A. Thompson
--------------------------
Mark A. Thompson
Its: Vice President and Deputy General Manager
2
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AMENDMENT NO. 2 TO REVOLVING CREDIT AGREEMENT
THIS AMENDMENT dated as of May 20, 1996, between Valassis Communications,
Inc. ('Company'), Comerica Bank, Westpac Banking Corporation and The Long-Term
Credit Bank of Japan, Ltd. (collectively, the 'Banks') and Comerica Bank, as
agent for the Banks (in such capacity, 'Agent').
RECITALS
A. Company, Banks and Agent entered into that certain Revolving Credit
Agreement dated as of August 11, 1995, as previously amended on December 15,
1995 ('Agreement').
B. Company, Banks and Agent desire to amend the Agreement as set forth
below.
NOW, THEREFORE, the parties agree as follows:
1. Section 6.4 of the Agreement is amended to read as follows:
'6.4 Net Worth. Maintain at all times Consolidated Net Worth of not
less than the following during the periods set forth below:
from December 31, 1995 through March 30, 1996:
($306,000,000) less the Net Worth Adjustment
from March 31, 1996 through June 29, 1996:
($303,000,000) less the Net Worth Adjustment
from June 30, 1996 through September 29, 1996:
($297,000,000) less the Net Worth Adjustment
from September 30, 1996 through December 30, 1996:
($293,000,000) less the Net Worth Adjustment
from December 31, 1996 through March 30, 1997:
($288,000,000) less the Net Worth Adjustment
from March 31, 1997 through June 29, 1997:
($283,000,000) less the Net Worth Adjustment
from June 30, 1997 through September 29, 1997:
($278,000,000) less the Net Worth Adjustment
from September 30, 1997 through December 30, 1997:
($273,000,000) less the Net Worth Adjustment
from December 31, 1997 through March 30, 1998:
($268,000,000) less the Net Worth Adjustment
from March 31, 1998 and thereafter:
($263,000,000) less the Net Worth Adjustment
'Net Worth Adjustment' shall mean as of any date of determination the
aggregate dollar amount paid by Company in
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redemptions of the capital stock of Company to such date under clause (iii) of
Section 7.1 hereof.'
2. Section 7.1 of the Agreement is amended to read as follows:
'7.1 Capital Structure and Redemptions. Purchase, acquire or redeem
any of its capital stock other than (i) redemptions of the capital stock of
Company not to exceed $100,000 in aggregate purchase price during any
fiscal year of Company, provided that such stock is purchased solely for
the purpose of being subsequently transferred to members of Company's Board
of Directors who are not Affiliates or employees of Company or the
Company's Affiliates, as a component of their annual compensation and it is
held by Company as treasury stock until used for such purpose, (ii)
purchases, acquisitions or redemptions of the Stock of Company not to
exceed $2,000,000 in any fiscal year paid, provided that such stock is
purchased solely for use in connection with an employee benefit plan or
other employee incentive plan and is held by Company as treasury stock
until used for such purpose, and (iii) other redemptions of the capital
stock of Company not to exceed 5,000,000 shares of the capital stock of
Company in the aggregate, provided that the aggregate amount of such
redemptions made by Company under this clause (iii) plus the aggregate
amount of dividends paid by Company in accordance with clause (ii) of
Section 7.7 of this Agreement shall not exceed the following amount during
the periods set forth below:
Fiscal year 1996 $40,000,000
Fiscal year 1997 $50,000,000
Fiscal year 1998 $50,000,000.'
3. Section 7.7 of the Agreement is amended to read as follows:
'7.7 Dividends. Declare or pay any dividends in cash or property on or
make any other distribution in cash or property with respect to any shares
of its capital stock or other equity interests, whether by reduction of
stockholders' equity or otherwise, except for (i) dividends and other
distributions by Subsidiaries to Company and (ii) so long as immediately
prior thereto and after giving effect thereto no Default and Event of
Default has occurred and is continuing, cash dividends on the capital stock
of Company in an amount not to exceed $7,500,000 in the aggregate during
any fiscal quarter of Company, provided that the aggregate amount paid by
Company in
2
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redemptions of the capital stock of Company under clause (iii) of Section
7.1 plus the aggregate amount of dividends paid by Company in accordance
with this clause (ii) shall not exceed the following amount during the
periods set forth below:
Fiscal year 1996 $40,000,000
Fiscal year 1997 $50,000,000
Fiscal year 1998 $50,000,000.'
4. Company hereby represents and warrants that, after giving effect to the
amendments contained herein, (a) execution, delivery and performance of this
Amendment and any other documents and instruments required under this Amendment
or the Agreement are within Company's corporate powers, have been duly
authorized, are not in contravention of law or the terms of Company's Articles
of Incorporation or Bylaws, and do not require the consent or approval of any
governmental body, agency, or authority; and this Amendment and any other
documents and instruments required under this Amendment or the Agreement, will
be valid and binding in accordance with their terms; (b) the continuing
representations and warranties of Company set forth in Sections 5.1 through 5.23
and 5.25 of the Agreement are true and correct on and as of the date hereof with
the same force and effect as if made on and as of the date hereof; (c) the
continuing representations and warranties of Company set forth in Section 5.24
of the Agreement are true and correct as of the date hereof with respect to the
most recent financial statements furnished to the Bank by Company in accordance
with Section 6.3 of the Agreement; and (d) no Default or Event of Default under
the Agreement, has occurred and is continuing as of the date hereof.
5. Except as expressly modified herein, all of the terms and conditions of
this Agreement shall remain in full force and effect. This Amendment may be
signed in counterparts.
COMERICA BANK, as Agent VALASSIS COMMUNICATIONS, INC.
By: /s/ Peter A. Loeffler By: /s/ Robert L. Recchia
------------------------ -----------------------------
Its: First Vice President Its: Chief Financial Officer
--------------------- ----------------------------
BANKS:
COMERICA BANK
By: /s/ Peter A. Loeffler
-------------------------------
Its: First Vice President
------------------------------
3
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WESTPAC BANKING CORPORATION
By: /s/ Craig Jones
-----------------------------
Its: Vice President
------------------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD. CHICAGO BRANCH
By: /s/ Mark A. Thompson
-----------------------------
Mark A. Thompson
Its: Vice President and Deputy General
Manager
------------------------------
4
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EXHIBIT 23.1
We consent to the reference to our firm under the caption 'Experts' in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-28685) and
related Prospectus of Valassis Communications, Inc. for the registration of
shares of its common stock and to the incorporation by reference therein of our
report dated February 10, 1997, with respect to the consolidated financial
statements and schedule of Valassis Communications, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Detroit, Michigan
June 9, 1997
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<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
The undersigned constitutes and appoints Barry P. Hoffman and Robert L.
Recchia, and any of them, with full power to act without the others, such
person's true and lawful attorneys-in-fact, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form S-3 of Valassis
Communications, Inc. (the 'Company') relating to the underwritten secondary
offering of shares of the Company's Common Stock, par value $.01 per share, and
any and all amendments thereto (including, without limitation, post-effective
amendments and any subsequent registration statements filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended), and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact, and each of them, full power and authority to do and
perform each and every act and thing necessary or desirable to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, thereby ratifying and confirming all that said attorneys-in-fact, or
any of them, or their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
<TABLE>
<C> <S>
/s/ MARK C. DAVIS
- ------------------------------------------
MARK C. DAVIS
</TABLE>
<PAGE>
