Exhibit 10.1

 

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$870,000,000

CREDIT AGREEMENT

among

VALASSIS COMMUNICATIONS, INC.

as Borrower,

The Several Lenders

from Time to Time Parties Hereto,

BANK OF AMERICA, N.A.,

as Syndication Agent,

THE ROYAL BANK OF SCOTLAND PLC,

JPMORGAN CHASE BANK, N.A. and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Co-Documentation Agents,

and

BEAR STEARNS CORPORATE LENDING INC.,

as Administrative Agent and Collateral Agent

Dated as of March 2, 2007

 

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BEAR, STEARNS & CO. INC. and

BANC OF AMERICA SECURITIES LLC,

as Joint Lead Arrangers

and

BEAR, STEARNS & CO. INC. and

BANC OF AMERICA SECURITIES LLC,

as Joint Bookrunners

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TABLE OF CONTENTS

 

          Page

SECTION 1.

   DEFINITIONS    1

1.1

   Defined Terms    1

1.2

   Conversion to Dollars    29

1.3

   Other Definitional Provisions    29

SECTION 2.

   AMOUNT AND TERMS OF TERM COMMITMENTS    30

2.1

   Term Commitments    30

2.2

   Procedure for Term Loan Borrowing    31

2.3

   Repayment of Term Loans    31

SECTION 3.

   AMOUNT AND TERMS OF REVOLVING COMMITMENTS    32

3.1

   Revolving Commitments    32

3.2

   Procedure for Revolving Loan Borrowing    32

3.3

   Swingline Commitment    33

3.4

   Procedure for Swingline Borrowing; Refunding of Swingline Loans    34

3.5

   Commitment Fees, etc    35

3.6

   Termination or Reduction of Revolving Commitments    36

3.7

   L/C Commitment    36

3.8

   Letter of Credit Amounts    36

3.9

   Procedure for Issuance of Letter of Credit    36

  3.10

   Fees and Other Charges    38

  3.11

   L/C Participations    38

  3.12

   Reimbursement Obligation of the Borrower    39

  3.13

   Obligations Absolute    39

  3.14

   Letter of Credit Payments    40

  3.15

   Applications    40

  3.16

   Incremental Facilities    40

  3.17

   Reliance on Notices    41

  3.18

   Alternate Currency Revolving Loans; Intra-Lender Issues    41

SECTION 4.

      47

4.1

   Optional Prepayments    47

4.2

   Mandatory Prepayments and Commitment Reductions    47

4.3

   Conversion and Continuation Options    48

4.4

   Limitations on Eurodollar Tranches    49

4.5

   Interest Rates and Payment Dates    49

4.6

   Computation of Interest and Fees    50

4.7

   Inability to Determine Interest Rate    51

4.8

   Pro Rata Treatment and Payments    51

4.9

   Requirements of Law    53

  4.10

   Taxes    54

 

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TABLE OF CONTENTS

(continued)

 

          Page

  4.11

   Indemnity    56

  4.12

   Change of Lending Office    57

  4.13

   Replacement of Lenders    57

  4.14

   Evidence of Debt    57

  4.15

   Illegality    58

SECTION 5.

   REPRESENTATIONS AND WARRANTIES    59

5.1

   Financial Condition    59

5.2

   No Change    60

5.3

   Corporate Existence; Compliance with Law    60

5.4

   Power; Authorization; Enforceable Obligations    60

5.5

   No Legal Bar    60

5.6

   Litigation    61

5.7

   No Default    61

5.8

   Ownership of Property; Liens    61

5.9

   Intellectual Property    61

  5.10

   Taxes    61

  5.11

   Federal Regulations    61

  5.12

   Labor Matters    62

  5.13

   ERISA    62

  5.14

   Investment Company Act; Other Regulations    62

  5.15

   Subsidiaries    63

  5.16

   Use of Proceeds    63

  5.17

   Environmental Matters    63

  5.18

   Accuracy of Information, etc    64

  5.19

   Security Documents    65

  5.20

   Solvency    65

  5.21

   Deposit and Disbursement Accounts    65

  5.22

   Regulation H    66

  5.23

   Certain Documents    66

  5.24

   Foreign Assets Control Regulations    66

  5.25

   Anti-Terrorism Laws    66

SECTION 6.

   CONDITIONS PRECEDENT    67

6.1

   Conditions to Initial Extension of Credit    67

6.2

   Conditions to Each Extension of Credit    71

SECTION 7.

   AFFIRMATIVE COVENANTS    71

7.1

   Financial Statements    71

7.2

   Certificates; Other Information    72

7.3

   Payment of Obligations    74

7.4

   Maintenance of Existence; Compliance    74

7.5

   Maintenance of Property; Insurance    74

 

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TABLE OF CONTENTS

(continued)

 

          Page

7.6

   Inspection of Property; Books and Records; Discussions    74

7.7

   Notices    74

7.8

   Environmental Laws    75

7.9

   Interest Rate Protection    75

  7.10

   Additional Collateral, etc    76

  7.11

   Existing Target Indebtedness    77

  7.12

   Dissolution Subsidiaries    77

  7.13

   Further Assurances    78

SECTION 8.

   NEGATIVE COVENANTS    78

8.1

   Financial Condition Covenants    78

8.2

   Indebtedness    80

8.3

   Liens    82

8.4

   Fundamental Changes    84

8.5

   Disposition of Property    85

8.6

   Restricted Payments    86

8.7

   Capital Expenditures    87

8.8

   Investments    88

8.9

   Optional Payments and Modifications of Certain Debt Instruments    89

  8.10

   Transactions with Affiliates    90

  8.11

   Sales and Leasebacks    90

  8.12

   Hedge Agreements    90

  8.13

   Changes in Fiscal Periods    90

  8.14

   Negative Pledge Clauses    90

  8.15

   Clauses Restricting Subsidiary Distributions    91

  8.16

   Lines of Business    91

  8.17

   Amendments to Material Contracts and Acquisition Documents    91

SECTION 9.

   EVENTS OF DEFAULT    92

SECTION 10.

   THE AGENTS    96

10.1

   Appointment    96

10.2

   Delegation of Duties    96

10.3

   Exculpatory Provisions    96

10.4

   Reliance by Agents    97

10.5

   Notice of Default    97

10.6

   Non-Reliance on Agents and Other Lenders    97

10.7

   Indemnification    98

10.8

   Agent in Its Individual Capacity    98

10.9

   Successor Administrative Agent    98

  10.10

   Agents Generally    99

  10.11

   The Joint Lead Arrangers    99

 

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TABLE OF CONTENTS

(continued)

 

          Page

SECTION 11.

   MISCELLANEOUS    99

11.1

   Amendments and Waivers    99

11.2

   Notices    103

11.3

   No Waiver; Cumulative Remedies    104

11.4

   Survival of Representations and Warranties    104

11.5

   Payment of Expenses and Taxes    104

11.6

   Successors and Assigns; Participations and Assignments    105

11.7

   Adjustments; Set-off    108

11.8

   Counterparts    109

11.9

   Severability    109

  11.10

   Integration    109

  11.11

   GOVERNING LAW    109

  11.12

   Submission To Jurisdiction; Waivers    110

  11.13

   Acknowledgments    110

  11.14

   Releases of Guarantees and Liens    110

  11.15

   Confidentiality    111

  11.16

   WAIVERS OF JURY TRIAL    111

  11.17

   Delivery of Addenda    111

 

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SCHEDULES:

 

1.1

   Mortgaged Property

1.2

   Pro Forma Cost Savings

3.8

   Existing Letters of Credit

5.4

   Consents, Authorizations, Filings and Notices

5.6

   Litigation

5.10

   Tax Liens and Claims

5.12

   Labor Matters

5.15(a)

   Subsidiaries

5.15(b)

   Immaterial Subsidiaries

5.19(a)

   UCC Filing Jurisdictions

5.19(b)

   Mortgage Filing Jurisdictions

5.21(a)

   Deposit and Disbursement Accounts

5.21(b)

   Depository Banks and Deposit Accounts Subject to Control

7.1

   Web Addresses

7.12

   Dissolution Subsidiaries

8.2(d)

   Existing Indebtedness

8.3(f)

   Existing Liens

8.3(u)

   Additional Existing Liens

8.8

   Existing Investments

8.10

   Existing Affiliate Transactions

8.17

   Material Contracts

EXHIBITS:

 

A

   Form of Addendum

B

   Form of Assignment and Assumption

C

   Form of Compliance Certificate

D

   Form of Guarantee, Security and Collateral Agency Agreement

E

   Form of Prepayment Option Notice

F

   Form of Exemption Certificate

G-1

   Form of Delayed Draw Term Note

G-2

   Form of Tranche B Term Note

G-3

   Form of Revolving Note

G-4

   Form Swingline Note

H

   Form of Closing Certificate

I

   Pricing Grid

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CREDIT AGREEMENT, dated as of March 2, 2007 among (a) VALASSIS COMMUNICATIONS,
INC., a Delaware corporation (“Valassis” or “Borrower”), (b) the several banks
and other financial institutions or entities from time to time parties to this
Agreement (the “Lenders”), (c) BEAR, STEARNS & CO. INC., as joint bookrunner and
joint lead arranger (“Bear Stearns”), (d) BANC OF AMERICA SECURITIES LLC, as
joint bookrunner and as joint lead arranger (in such capacity, together with
Bear Stearns, collectively, the “Joint Lead Arrangers”), (e) BANK OF AMERICA,
N.A., as syndication agent (in such capacity, the “Syndication Agent”), (f) THE
ROYAL BANK OF SCOTLAND PLC, as co-documentation agent, JPMORGAN CHASE BANK,
N.A., as co-documentation agent, GENERAL ELECTRIC CAPITAL CORPORATION, as
co-documentation agent (in such capacity, collectively, the “Documentation
Agent”), and (g) BEAR STEARNS CORPORATE LENDING INC. (“BSCL”), as administrative
agent (in such capacity, the “Administrative Agent”) and as collateral agent for
the Lenders.

WHEREAS, the Borrower has requested that the Lenders extend revolving and term
credit facilities to the Borrower of up to Eight Hundred Seventy Million Dollars
($870,000,000) in the aggregate to provide (a) working capital financing for the
Borrower, (b) funds for other general corporate purposes of the Borrower and
(c) funds for other purposes permitted hereunder, including, without limitation,
the Acquisition (as defined below); and for these purposes, the Lenders are
willing to make certain loans and other extensions of credit to the Borrower of
up to such amount upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, and for other good and valuable consideration, the
parties hereto hereby agree as follows:

SECTION 1.

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.

“5.71% Series A Notes”: the 5.71% Series A Senior Guaranteed Secured Notes due
December 4, 2013, issued by Target pursuant to the Target Note Purchase
Agreement, in the original principal amount of $65,000,000.

“6 5/8% Senior Notes”: the 6 5/8% Senior Notes due 2009, issued by Valassis
pursuant to the 6 5/8% Senior Notes Indenture, in the original aggregate
principal amount of $100,000,000.

“6 5/8% Senior Notes Indenture”: the Indenture, dated January 12, 1999, between
Valassis and The Bank of New York Trust Company, N.A., as trustee, as in effect
on the Closing Date, or as may be amended, waived or otherwise modified in
accordance with the terms thereof and hereof.

“Acquisition”: as defined in Section 6.1(b).

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“AcquisitionCo”: Michigan Acquisition Corporation, a Delaware corporation.

“Acquisition Agreement”: the Agreement and Plan of Merger, dated as of July 5,
2006, among Valassis, AcquisitionCo and the Target, as amended by Amendment
No. 1 to Agreement and Plan of Merger, dated as of December 18, 2006, and as in
effect on the Closing Date, or as may be further amended, waived or otherwise
modified in accordance with the terms thereof and hereof.

“Acquisition Documentation”: collectively, the Acquisition Agreement and all
schedules, exhibits and annexes thereto and all side letters and agreements
materially affecting the terms thereof or entered into in connection therewith.

“Addendum”: an instrument, substantially in the form of Exhibit A, by which a
Lender becomes a party to this Agreement as of the Closing Date.

“Adjustment Date”: as defined in the definition of “Pricing Grid”.

“Administrative Agent”: as defined in the recitals to this Agreement, or any
successor agent appointed in accordance with Section 10.9.

“Affiliate”: as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person.
For purposes of this definition, “control” of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person, whether through the ability to exercise voting power or by
contract or otherwise.

“Agents”: the collective reference to the Syndication Agent, the Documentation
Agent, the Joint Lead Arrangers, the Administrative Agent and the Collateral
Agent, which term shall include, for purposes of Section 10 only, the Issuing
Lender and the Swingline Lender.

“Aggregate Exposure”: with respect to any Lender at any time, an amount equal to
(a) until the Closing Date, the aggregate amount of such Lender’s Commitments at
such time and (b) thereafter, the sum of (i) the aggregate then unpaid principal
amount of such Lender’s Tranche B Term Loans, (ii) the amount of such Lender’s
Delayed Draw Term Commitments then in effect (or, if the Delayed Draw Term
Commitments have been terminated, the amount of such Lenders’ Delayed Draw Term
Loans then outstanding), and (iii) the amount of such Lender’s Revolving
Commitment then in effect or, if the Revolving Commitments have been terminated,
the amount of such Lender’s Revolving Extensions of Credit then outstanding.

“Aggregate Exposure Percentage”: with respect to any Lender at any time, the
ratio (expressed as a percentage) of such Lender’s Aggregate Exposure at such
time to the Aggregate Exposure of all the Lenders at such time.

“Agreement”: this Credit Agreement.

“Alternate Currencies”: collectively, (i) Canadian Dollars, (ii) Euros,
(iii) Pounds Sterling and (iv) Mexican Pesos; each sometimes individually
referred to herein as an “Alternate Currency”.

 

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“Alternate Currency Funding Capacity”: at any date of determination, for any
Revolving Lender, the ability of such Revolving Lender to fund Revolving Loans
denominated in an Alternate Currency, as set forth in the records of
Administrative Agent upon notification from such Revolving Lender from time to
time.

“Alternate Currency Loans”: Loans denominated in an Alternate Currency.

“Alternate Currency Participation”: as defined in Section 3.18(a).

“Alternate Currency Participation Fee”: as defined in Section 3.18(e).

“Alternate Currency Participation Settlement”: as defined in Section 3.18(b)(i).

“Alternate Currency Participation Settlement Amount”: as defined in
Section 3.18(b)(ii).

“Alternate Currency Participation Settlement Date”: as defined in
Section 3.18(b)(i).

“Alternate Currency Participation Settlement Period”: as defined in
Section 3.18(b)(i).

“Alternate Currency Revolving Loan”: any Revolving Loan denominated in an
Alternate Currency.

“Applicable Margin”: for each Type of Loan, the rate per annum set forth under
the relevant column heading below:

 

     Eurodollar Loans     Base Rate Loans  

Revolving Loans and Swingline Loans

   2.25 %   1.25 %

Term Loans

   1.75 %   0.75 %

; provided, that, on and after the first Adjustment Date (as defined in the
Pricing Grid) occurring after the completion of two full fiscal quarters of the
Borrower after the Closing Date, the Applicable Margin with respect to Revolving
Loans and Swingline Loans will be determined pursuant to the Pricing Grid.

“Applicable Percentage”: for any Lender, a fraction the numerator of which is
such Lender’s Revolving Commitment and the denominator of which is the Total
Revolving Commitment of all Revolving Lenders.

“Application”: an application, in such form as the Issuing Lender may specify
from time to time, requesting the Issuing Lender to open or amend a Letter of
Credit.

“Approved Fund”: with respect to any Lender that is a fund that invests in
commercial loans, any other fund that invests in commercial loans and is managed
or advised by the same investment advisor as such Lender or by an Affiliate of
such investment advisor.

 

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“Asset Sale”: any Disposition of Property or series of related Dispositions of
Property (excluding any such Disposition permitted by clause (a), (b), (c),
(d) or (k) of Section 8.5) that yields gross proceeds to any Group Member
(valued at the initial principal amount thereof in the case of non-cash proceeds
consisting of notes or other debt securities and valued at fair market value in
the case of other non-cash proceeds) in excess of $5,000,000.

“Assignee”: as defined in Section 11.6(b).

“Assignment and Assumption”: an Assignment and Assumption, substantially in the
form of Exhibit B.

“Available Revolving Commitment”: as to any Revolving Lender at any time, an
amount equal to the excess, if any, of (a) such Lender’s Revolving Commitment
then in effect over (b) such Lender’s Revolving Extensions of Credit then
outstanding; provided that, in calculating any Lender’s Revolving Extensions of
Credit for the purpose of determining such Lender’s Available Revolving
Commitment pursuant to Section 3.5, the aggregate principal amount of Swingline
Loans then outstanding shall be deemed to be zero.

“Base Rate”: for any day, a rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on
such day and (b) the Federal Funds Effective Rate in effect on such day plus
0.50%. For purposes hereof: “Prime Rate” shall mean the rate of interest per
annum publicly announced from time to time by the Reference Lender as its prime
rate in effect at its principal office in New York City (the Prime Rate not
being intended to be the lowest rate of interest charged by the Reference Lender
in connection with extensions of credit to debtors). Any change in the Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change in
the Prime Rate or the Federal Funds Effective Rate, respectively.

“Base Rate Loans”: Loans the rate of interest applicable to which is based upon
the Base Rate.

“Benefitted Lender”: as defined in Section 11.7(a).

“Board”: the Board of Governors of the Federal Reserve System of the United
States (or any successor).

“Borrower”: as defined in the preamble to this Agreement.

“Borrower Credit Agreement Obligations”: as defined in the Guarantee, Security
and Collateral Agency Agreement.

“Borrower Hedge Agreement Obligations”: as defined in the Guarantee, Security
and Collateral Agency Agreement.

“Borrowing”: a borrowing consisting of Loans of one Type made on the same day by
Lenders or a conversion of a Loan or Loans of one Type from Lenders on the same
day.

 

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“Borrowing Date”: any Business Day specified by the Borrower as a date on which
the Borrower requests the relevant Lenders to make Loans hereunder.

“Business”: as defined in Section 5.17(b).

“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in New York City and Detroit, Michigan are authorized or
required by law to close, provided, that with respect to notices and
determinations in connection with, and payments of principal and interest on,
Eurodollar Loans, such day is also a day for trading by and between banks in
Dollar deposits in the interbank eurodollar market.

“Canadian Dollars”: the lawful currency of Canada.

“Capital Expenditures”: for any period, with respect to any Person, the
aggregate of all expenditures by such Person and its Subsidiaries for the
acquisition or leasing (pursuant to a capital lease) of fixed or capital assets
or additions to equipment (including replacements of capital assets, capitalized
repairs and capitalized improvements during such period) that should be
capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries, but excluding (i) expenditures made with Net Cash Proceeds from a
Reinvestment Event to acquire or repair fixed or capital assets useful in a
Permitted Business (as determined in good faith by the Board of Directors of
such Person) or to repair or replace the assets which were the subject of a
Recovery Event and (ii) the purchase price for any Permitted Acquisitions.

“Capital Lease Obligations”: as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized
amount thereof at such time determined in accordance with GAAP.

“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

“Cash Equivalents”: (a) (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition or (ii) with
respect to any Foreign Subsidiary, marketable direct obligations issued by, or
unconditionally guaranteed by, the government of a member state of the European
Union having one of the two highest ratings obtainable from either Standard &
Poor’s Ratings Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), or
issued by any agency thereof and backed by the full faith and credit of such
member state of the European Union, in each case maturing within one year from
the date of acquisition; (b) marketable direct obligations issued by any state
of the United States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings

 

5

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obtainable from either S&P or Moody’s; (c) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody’s;
(d) certificates of deposit or bankers’ acceptances maturing within one year
from the date of acquisition thereof issued by any bank organized under the laws
of the United States of America or any state thereof or the District of Columbia
or any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250.0 million; (e) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications specified in clause (d) above; (f) securities that have stated
maturities beyond three months but are priced and traded as short-term
investments due to the liquidity provided through the interest rate reset
mechanism of 7 to 35 days; and (g) investments in money market funds which
invest substantially all their assets in securities of the types described in
clauses (a) through (f) above.

“Cash Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements or Automated
Clearing House transactions.

“Cash Management Bank” means any Person that, at the time it enters into a Cash
Management Agreement, is a Lender or an Affiliate of a Lender, in its capacity
as a party to such Cash Management Agreement.

“Closing Date”: the date on which the conditions precedent set forth in
Section 6.1 shall have been satisfied or waived.

“Code”: the Internal Revenue Code of 1986, as amended, and all regulations
promulgated thereunder.

“Collateral”: all property of the Loan Parties, now owned or hereafter acquired,
upon which a Lien is purported to be created by any Security Document.

“Collateral Agent”: Bear Stearns Corporate Lending, Inc. in its capacity as
collateral agent pursuant to the terms of the Guarantee, Security and Collateral
Agency Agreement.

“Commitment”: as to any Lender, the sum of the Tranche B Term Commitment, the
Delayed Draw Term Commitment and the Revolving Commitment of such Lender.

“Commitment Fee Rate”: .50% per annum; provided that, on and after the first
Adjustment Date occurring after the completion of two full fiscal quarters of
the Borrower after the Closing Date, the Commitment Fee Rate will be determined
pursuant to the Pricing Grid.

“Commonly Controlled Entity”: an entity, whether or not incorporated, that is
under common control with the Borrower within the meaning of Section 4001 of
ERISA or is part of a group that includes the Borrower and that is treated as a
single employer under Section 414 of the Code.

 

6

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“Compliance Certificate”: a certificate duly executed by a Responsible Officer
substantially in the form of Exhibit C.

“Conduit Lender”: any special purpose entity organized and administered by any
Lender for the purpose of making Loans otherwise required to be made by such
Lender and designated by such Lender in a written instrument, subject to the
consent of the Administrative Agent and the Borrower (which consent shall not be
unreasonably withheld); provided, that the designation by any Lender of a
Conduit Lender shall not relieve the designating Lender of any of its
obligations to fund a Loan under this Agreement if, for any reason, its Conduit
Lender fails to fund any such Loan, and the designating Lender (and not the
Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to
its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be
entitled to receive any greater amount pursuant to Section 4.9, 4.10, 4.11 or
11.5 than the designating Lender would have been entitled to receive in respect
of the extensions of credit made by such Conduit Lender or (b) be deemed to have
any Commitment.

“Confidential Information Memorandum”: the Confidential Information Memorandum
dated February 13, 2006 and furnished to the Lenders.

“Consolidated Current Assets”: at any date, all amounts (other than cash and
Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the
caption “total current assets” (or any like caption) on a consolidated balance
sheet of the Borrower and its Subsidiaries at such date.

“Consolidated Current Liabilities”: at any date, all amounts that would, in
conformity with GAAP, be set forth opposite the caption “total current
liabilities” (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of the Borrower and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving Loans
or Swingline Loans to the extent otherwise included therein.

“Consolidated EBITDA”: for any period, Consolidated Net Income for such period
plus, without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum of (a) income
tax expense, (b) interest expense, amortization or writeoff of debt discount and
debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any extraordinary charges or
losses determined in accordance with GAAP, (f) non-cash compensation expenses
arising from the issuance of stock, options to purchase stock and stock
appreciation rights to the management of the Borrower or any of its
Subsidiaries, and (g) any other non-cash charges, non-cash expenses or non-cash
losses of the Borrower or any of its Subsidiaries for such period (excluding any
such charge, expense or loss incurred in the ordinary course of business that
constitutes an accrual of or a reserve for cash charges for any future period),
provided, however, that cash payments made in such period or in any future
period in respect of such non-cash charges, expenses or losses (excluding any
such charge, expense or loss incurred in the ordinary course of business that
constitutes an accrual of or a reserve for cash charges for any future period)
shall be subtracted

 

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from Consolidated Net Income in calculating Consolidated EBITDA in the period
when such payments are made, and minus, to the extent included in the statement
of such Consolidated Net Income for such period, the sum of (a) interest income,
(b) any extraordinary income or gains determined in accordance with GAAP and
(c) any other non-cash income (excluding any items that represent the reversal
of any accrual of, or cash reserve for, anticipated cash charges in any prior
period that are described in the parenthetical to clause (g) above), all as
determined on a consolidated basis; provided, that Consolidated EBITDA shall
exclude, without limitation, and to the extent deducted in calculating
Consolidated Net Income for such period, (A) non-recurring merger and legal
expenses incurred by the Borrower or the Target in connection with the
Acquisition and (B) non-recurring restructuring, relocation, severance and
consolidation charges in connection with the Acquisition, not to exceed
$17,000,000 in the aggregate. For the purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a “Reference
Period”) pursuant to any determination of the Consolidated Senior Secured
Leverage Ratio, (i) if at any time during such Reference Period the Borrower or
any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA
for such Reference Period shall be reduced by an amount equal to the
Consolidated EBITDA (if positive) attributable to the property that is the
subject of such Material Disposition for such Reference Period or increased by
an amount equal to the Consolidated EBITDA (if negative) attributable thereto
for such Reference Period and (ii) if during such Reference Period the Borrower
or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA
for such Reference Period shall be calculated after taking Pro Forma Adjustments
into account as if such Material Acquisition occurred on the first day of such
Reference Period, and shall exclude transaction fees and costs associated with
such Material Acquisition. As used in this definition, “Material Acquisition”
means the Acquisition and any other acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $10,000,000;
and “Material Disposition” means any Disposition of property or series of
related Dispositions of property that yields gross proceeds to the Borrower or
any of its Subsidiaries in excess of $10,000,000. Notwithstanding the foregoing,
(a) Consolidated EBITDA shall be deemed to be $50,600,0000 and $73,800,000,
respectively, for the fiscal quarters ending September 30, 2006 and December 31,
2006, respectively, and (b) Consolidated EBITDA for any applicable Reference
Period shall be calculated to include pro forma cost savings set forth in
Schedule 1.2 (it being understood and agreed that any such pro forma cost
savings in Schedule 1.2 shall be without duplication of the amount of such pro
forma cost savings that are included in Consolidated EBITDA for the fiscal
quarters of the Borrower ending September 30, 2006 and December 31, 2006 as set
forth in clause (a) of this sentence). In addition, Consolidated EBITDA for the
fiscal quarters following the Closing Date shall be increased by the amount of
the amortization of the customer contract incentives for the customer mutually
agreed to by the Borrower and the Administrative Agent in an amount not to
exceed $6,000,000 in any such period.

“Consolidated Interest Coverage Ratio”: for any period, the ratio of
(a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for
such period.

“Consolidated Interest Expense”: for any period, total cash interest expense
(including that attributable to Capital Lease Obligations) of the Borrower and
its Subsidiaries for

 

8

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such period with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers’ acceptance financing and net
costs under Hedge Agreements in respect of interest rates to the extent such net
costs are allocable to such period in accordance with GAAP), minus, to the
extent not already deducted, interest income.

“Consolidated Net Income”: for any period, the consolidated net income (or loss)
of the Borrower and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower or is merged into or consolidated with Borrower or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary
of the Borrower) in which the Borrower or any of its Subsidiaries has an
ownership interest, except to the extent that any such income is actually
received by the Borrower or such Subsidiary in the form of dividends or similar
distributions, (c) the undistributed earnings of any Subsidiary of the Borrower
to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any Contractual Obligation (other than under any Loan Document) or Requirement
of Law applicable to such Subsidiary and (d) any gain or loss arising from
foreign currency fluctuations on foreign currency denominated Indebtedness.

“Consolidated Senior Secured Leverage Ratio”: at any time, the ratio of
(a) Consolidated Senior Secured Debt as of the last day of then most recently
completed fiscal quarter to (b) Consolidated EBITDA for the period of four
consecutive fiscal quarters ended on such last day.

“Consolidated Senior Secured Debt”: at any date, the aggregate principal amount
of all Consolidated Total Debt at such date minus Unsecured Debt at such date.

“Consolidated Total Debt”: at any date, the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries at such date, determined on a
consolidated basis in accordance with GAAP.

“Consolidated Working Capital”: at any date, the excess of Consolidated Current
Assets on such date over Consolidated Current Liabilities on such date.

“Continuing Directors”: the directors of Borrower on the Closing Date, after
giving effect to the Acquisition and the other transactions contemplated hereby,
and each other director, if, in each case, such other director’s nomination for
election to the board of directors of Borrower is recommended by at least 50% of
the then Continuing Directors.

“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which
such Person is a party or by which it or any of its property is bound.

“Control Agreements”: collectively, each tri-party blocked account agreement by
and among the Collateral Agent, the applicable Loan Party, and each depository
bank set forth on Schedule 5.21(b) (other than payroll accounts or benefits
accounts), in form and substance reasonably acceptable to Collateral Agent.

 

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“Control Investment Affiliate”: as to any Person, any other Person that
(a) directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person and (b) is organized by such Person primarily
for the purpose of making equity or debt investments in one or more companies.
For purposes of this definition, “control” of a Person means the power, directly
or indirectly, to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

“Default”: any of the events specified in Section 9, whether or not any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Delayed Draw Effective Date”: the date, as specified by the Administrative
Agent, on which the conditions set forth in Section 6.2 shall have been
fulfilled and on which the initial Delayed Draw Term Loans shall have been made.

“Delayed Draw Term Commitment”: as to any Lender, the obligation of such Lender,
if any, to make a Delayed Draw Term Loan to the Borrower hereunder in a
principal amount not to exceed the amount set forth under the heading “Delayed
Draw Term Commitment” under such Lender’s name on such Lender’s Addendum. The
original aggregate amount of the Delayed Draw Term Commitment on the Closing
Date is $160,000,000.

“Delayed Draw Term Commitment Fee Rate”: with respect to the Delayed Draw Term
Commitments, 1.0% per annum for the Delayed Draw Term Commitment Period.

“Delayed Draw Term Commitment Period”: the time period commencing on the Closing
Date through and including the Delayed Draw Term Commitment Termination Date.

“Delayed Draw Term Commitment Termination Date”: the earliest to occur of
(i) the date the Delayed Draw Term Commitments are permanently reduced to zero,
(ii) the date of the termination of the Delayed Draw Term Commitments pursuant
to Section 9, (iii) the date as of which the Delayed Draw Term Commitments have
been fully borrowed, and (iv) June 2, 2008.

“Delayed Draw Term Lender”: each Lender that has a Delayed Draw Term Commitment
or that holds a Delayed Draw Term Loan.

“Delayed Draw Term Loans”: as defined in Section 2.1(b).

“Delayed Draw Term Loan Percentage”: as to any Delayed Draw Term Lender at any
time, the percentage which such Lender’s undrawn Delayed Draw Term Commitment
and Delayed Draw Term Loans then constitutes of the aggregate undrawn Delayed
Draw Term Commitments and Delayed Draw Term Loans.

“Disposition”: with respect to any Property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition thereof. The
terms “Dispose” and “Disposed of” shall have correlative meanings.

“Documentation Agent”: as defined in the recitals to this Agreement.

 

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“Dollar Equivalent”: as of any particular date, the equivalent amount in Dollars
of such amount expressed in an Alternate Currency (as presumptively ascertained
by the Administrative Agent absent demonstrable error) which could be purchased
by the Administrative Agent (in accordance with its normal practices) on such
date.

“Dollar Loans”: Loans denominated in Dollars.

“Dollars” and “$”: dollars in lawful currency of the United States.

“Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws
of any jurisdiction within the United States.

“ECF Percentage”: 50%; provided, that, with respect to each fiscal year of the
Borrower ending on or after December 31, 2007, the ECF Percentage shall be
reduced to 25% if the Consolidated Senior Secured Leverage Ratio as of the last
day of such fiscal year is not greater than 2.5 to 1.0 and reduced to 0% if the
Consolidated Senior Secured Leverage Ratio as of the last day of such fiscal
year is less than 2.0 to 1.0.

“Environmental Laws”: any and all foreign, Federal, state, local or municipal
laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority or other Requirements of Law
(including common law) regulating, relating to or imposing liability or
standards of conduct concerning protection of human health or the environment,
as now or may at any time hereafter be in effect.

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any regulations promulgated thereunder.

“Euros”: the lawful currency of the European Union member states of Belgium,
Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands,
Austria, Portugal and Finland, and any other country that adopts the Euro as its
official currency.

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the maximum rates (expressed as a
decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the
Board) maintained by a member bank of the Federal Reserve System.

“Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of
the rate for deposits in Dollars or an Alternate Currency, as applicable, for a
period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period.
In the event that such rate does not appear on Page 3750 of the Telerate screen
(or otherwise on such screen), the “Eurodollar Base Rate” shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the

 

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rate at which the Administrative Agent is offered Dollar or an Alternate
Currency, as applicable, deposits in the approximate amount of the Eurodollar
Loan for the applicable currency comprising part of such Borrowing, at or about
11:00 A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein.

“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon
the Eurodollar Rate.

“Eurodollar Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th
of 1%):

 

  Eurodollar Base Rate     1.00 - Eurocurrency Reserve Requirements  

“Eurodollar Tranche”: the collective reference to Eurodollar Loans under a
particular Facility the then current Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day).

“Event of Default”: any of the events specified in Section 9, provided that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Excess Cash Flow”: for any fiscal year of the Borrower, the excess, if any, of
(a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal
year, (ii) the amount of all non-cash charges (including depreciation and
amortization) deducted in arriving at such Consolidated Net Income,
(iii) decreases in Consolidated Working Capital for such fiscal year, and
(iv) the aggregate net amount of non-cash loss on the Disposition of Property by
the Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income minus (b) the sum, without duplication,
of (i) the amount of all non-cash credits included in arriving at such
Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower
and its Subsidiaries in cash during such fiscal year on account of Capital
Expenditures (excluding the principal amount of Indebtedness incurred to finance
such expenditures (but including repayments of any such Indebtedness incurred
during such period or any prior period) and any such expenditures financed with
the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of
all prepayments of Revolving Loans and Swingline Loans during such fiscal year
to the extent accompanying permanent optional reductions of the Revolving
Commitments and all optional prepayments of the Term Loans during such fiscal
year, (iv) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including the Term Loans) of the Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal year,
(vi) any mandatory principal payments in respect of an Asset Sale as required
under

 

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Section 4.2(b), and (vii) consideration paid for Permitted Acquisitions during
such period which has not been subtracted from the calculation of Excess Cash
Flow for the prior fiscal year.

“Excess Cash Flow Application Date”: as defined in Section 4.2.

“Excluded Equity Issuance”: any issuance of Capital Stock by any Group Member
(i) to another Group Member, (ii) for the purpose of funding (directly or
indirectly) the Acquisition, (iii) for the purpose of funding (directly or
indirectly) a Permitted Acquisition, (iv) to employees or directors of any Group
Member in the ordinary course of business in accordance with the relevant stock
option, compensation or employee stock ownership plan maintained by such Group
Member from time to time, (v) in connection with the conversion of any debt
securities to Capital Stock or the conversion of any class of Capital Stock to
any other class of Capital Stock, or (vi) pursuant to the exercise of options or
warrants.

“Excluded Foreign Subsidiary”: any Foreign Subsidiary in respect of which either
(a) the pledge of all of the Capital Stock of such Subsidiary as Collateral or
(b) the guarantee by such Subsidiary of the Borrower Credit Agreement
Obligations, would, in the good faith judgment of the Borrower, result in
adverse tax consequences to the Borrower.

“Excluded Indebtedness”: all Indebtedness permitted by Section 8.2 (other than
clause (p) thereof).

“Existing Letters of Credit”: the letters of credit issued before the Closing
Date and described by date of issuance, letter of credit number, undrawn amount,
name of beneficiary and date of expiration on Schedule 3.8.

“Existing Valassis Indebtedness”: Indebtedness of Valassis evidenced by each of
the Valassis Indenture Documents (each as in effect on the date hereof).

“Existing Target Indebtedness”: Indebtedness of Target and its Subsidiaries
evidenced by each of the Target Note Purchase Documents (each as in effect on
the date hereof).

“Expected Existing Target Indebtedness Defaults”: the defaults of Target arising
under Target Note Purchase Agreement with respect to the 5.71% Series A Notes
and the Floating Rate Series B Notes, as a result of the financing arrangements
consummated pursuant to this Agreement.

“Facilities”: the collectively reference to (a) the Tranche B Term Commitments
and the Tranche B Term Loans made thereunder (the “Tranche B Term Facility”)
(b) the Delayed Draw Term Loan Commitments and the Delayed Draw Term Loans made
thereunder (the “Delayed Draw Term Facility”), and (c) the Revolving Commitments
and the extensions of credit made thereunder (the “Revolving Facility”); each
sometimes individually referred to herein as a “Facility”.

“Federal Funds Effective Rate”: for any day, 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 on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the

 

13

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average of the quotations for the day of such transactions received by the
Reference Lender from three federal funds brokers of recognized standing
selected by it.

“Floating Rate Series B Notes”: the Floating Rate Series B Senior Guaranteed
Secured Notes due December 4, 2013, issued by Target pursuant to the Target Note
Purchase Agreement, in the original aggregate principal amount of $60,000,000.

“Foreign Subsidiary”: any Subsidiary of the Borrower that is not a Domestic
Subsidiary.

“Funded Alternate Currency Participation”: with respect to any Participating
Alternate Currency Lender relating to Alternate Currency Revolving Loans funded
by Bear Stearns Corporate Lending Inc., (i) the aggregate amount paid by such
Participating Alternate Currency Lender to Bear Stearns Corporate Lending Inc.
pursuant to Section 3.18(b) of the Agreement in respect of such Participating
Alternate Currency Lender’s participation in the principal amount of Alternate
Currency Revolving Loans funded by Bear Stearns Corporate Lending Inc. minus
(ii) the aggregate amount paid to such Participating Alternate Currency Lender
by Bear Stearns Corporate Lending Inc. pursuant to Section 3.18(b) of the
Agreement in respect of its participation in the principal amount of Alternate
Currency Revolving Loans funded by Bear Stearns Corporate Lending Inc.,
excluding in each case any payments made in respect of interest accrued on the
Alternate Currency Revolving Loans funded by Bear Stearns Corporate Lending Inc.
Bear Stearns Corporate Lending Inc.’s Funded Alternate Currency Participation in
any Alternate Currency Revolving Loans funded by Bear Stearns Corporate Lending
Inc. shall be equal to the outstanding principal amount of such Alternate
Currency Revolving Loans minus the total Funded Alternate Currency Participation
of all other Lenders therein.

“Funded Debt”: as to any Person, all Indebtedness of such Person that matures
more than one year from the date of its creation or matures within one year from
such date but is renewable or extendible, at the option of such Person, to a
date more than one year from such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year from such date, including all current maturities
and current sinking fund payments in respect of such Indebtedness whether or not
required to be paid within one year from the date of its creation and, in the
case of the Borrower, Indebtedness in respect of the Loans.

“Funded Delayed Draw Term Loan Percentage”: as to any Lender at any time, the
percentage derived by dividing (x) the aggregate amount of Delayed Draw Term
Loans of such Lender at such time by (y) the aggregate amount of Delayed Draw
Term Loans of all Lenders at such time.

“Funding Office”: the office of the Administrative Agent specified in
Section 11.2 or such other office as may be specified from time to time by the
Administrative Agent as its funding office by written notice to the Borrower and
the Lenders.

“GAAP”: generally accepted accounting principles in the United States as in
effect from time to time.

 

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“General Syndication Closing Date”: the date on which the Joint Lead Arrangers
shall notify the Borrower that the syndication of the Facilities has been
successfully completed.

“Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government,
any securities exchange and any self-regulatory organization (including the
National Association of Insurance Commissioners).

“Group Members”: the collective reference to the Borrower and its Subsidiaries
(other than any Immaterial Subsidiary).

“Guarantee, Security and Collateral Agency Agreement”: the Guarantee, Security
and Collateral Agency Agreement to be executed and delivered by the Borrower and
each Guarantor, substantially in the form of Exhibit C.

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any
obligation of (a) the guaranteeing person or (b) another Person (including any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary obligations”)
of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation or (iv) otherwise to assure or hold
harmless the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such Guarantee
Obligation is made and (b) the maximum amount for which such guaranteeing person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case
the amount of such Guarantee Obligation shall be such guaranteeing person’s
maximum reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.

“Guarantors”: collectively, each Subsidiary (other than each Immaterial
Subsidiary and each Foreign Subsidiary) that has executed the Guarantee,
Security and Collateral Agency Agreement as of even date herewith and each other
Person that joins as a guarantor to the Guarantee, Security and Collateral
Agency Agreement pursuant to Section 7.10, together with their successor and
assigns.

 

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“Hedge Agreements”: any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by
reference to, one or more rates, currencies, commodities, equity or debt
instruments or securities, or economic, financial or pricing indices or measures
of economic, financial or pricing risk or value or any similar transaction or
any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or the
Subsidiaries shall be a Hedge Agreement.

“Immaterial Subsidiaries”: as of any date of determination, any Subsidiary that
(a) together with its Subsidiaries on a consolidated basis, during the twelve
(12) months preceding such date of determination accounts for (or which may be
attributed) $1,250,000 or less of the Consolidated EBITDA or assets (determined
on a consolidated basis) of the Borrower and its Subsidiaries or (b) is
otherwise not necessary for the ongoing business operations of the Borrower and
its Subsidiaries taken as a whole; provided, that, at no time should all of the
Subsidiaries that qualify as Immaterial Subsidiaries based on the foregoing
parameters account (on a consolidated basis) for more than $10,000,000 of the
Consolidated EBITDA or assets (determined on a consolidated basis) of the
Borrower and its Subsidiaries. As of the Closing Date, the Immaterial
Subsidiaries shall include the entities set forth on Schedule 5.15(b); each
sometimes individually referred to herein as an “Immaterial Subsidiary”.

“Indebtedness”: of any Person at any date, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all obligations of such
Person for the deferred purchase price of property or services (other than
current trade payables incurred in the ordinary course of such Person’s
business), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Capital Lease Obligations of
such Person, (f) all obligations of such Person, contingent or otherwise, as an
account party or applicant under or in respect of acceptances, letters of
credit, surety bonds or similar arrangements, (g) the liquidation value of all
redeemable preferred Capital Stock of such Person, (h) all Guarantee Obligations
of such Person in respect of obligations of the kind referred to in clauses
(a) through (g) above, (i) all obligations of the kind referred to in clauses
(a) through (h) above secured by (or for which the holder of such obligation has
an existing right, contingent or otherwise, to be secured by) any Lien on
property (including accounts and contract rights) owned by such Person, whether
or not such Person has assumed or become liable for the payment of such
obligation, and (j) for the purposes of Sections 8.2, 9(e) and 9(n) only, all
obligations of such Person in respect of Hedge Agreements. The Indebtedness of
any Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness expressly provide that such Person is not liable therefor. For
purposes of clause (j) above, the principal amount of Indebtedness in respect of
Hedge Agreements shall equal the amount that would be payable (giving effect to
netting) at such time if such Hedge Agreements were terminated. For purposes of
clause (j) above, the principal

 

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amount of Indebtedness in respect of Hedge Agreements shall equal the amount
that would be payable (giving effect to netting) at such time if such Hedge
Agreement were terminated.

“Insolvency”: with respect to any Multiemployer Plan, the condition that such
Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”: pertaining to a condition of Insolvency.

“Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under
United States, multinational or foreign laws or otherwise, including copyrights,
copyright licenses, patents, patent licenses, trademarks, trademark licenses,
technology, know-how and processes, and all rights to sue at law or in equity
for any infringement or other impairment thereof, including the right to receive
all proceeds and damages therefrom.

“Interest Payment Date”: (a) as to any Base Rate Loan (other than any Swingline
Loan), the last day of each March, June, September and December to occur while
such Loan is outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last day
of such Interest Period, (c) as to any Eurodollar Loan having an Interest Period
longer than three months, each day that is three months, or a whole multiple
thereof, after the first day of such Interest Period and the last day of such
Interest Period, (d) as to any Loan (other than any Revolving Loan that is a
Base Rate Loan and any Swingline Loan), the date of any repayment or prepayment
made in respect thereof and (e) as to any Swingline Loan, the day that such Loan
is required to be paid.

“Interest Period”: as to any Eurodollar Loan, (a) initially, the period
commencing on the borrowing or conversion date, as the case may be, with respect
to such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower in its notice of borrowing or notice of conversion, as
the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Eurodollar Loan and ending one, two, three or six months thereafter, as
selected by the Borrower by irrevocable notice to the Administrative Agent no
later than 11:00 A.M., New York City time, on the date that is three Business
Days prior to the last day of the then current Interest Period with respect
thereto; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period under a particular Facility
that would extend beyond the Revolving Termination Date or beyond the date final
payment is due on the Tranche B Term Loans;

(iii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day

 

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in the calendar month at the end of such Interest Period) shall end on the last
Business Day of a calendar month; and

(iv) the Borrower shall select Interest Periods so as not to require a payment
or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

“Investments”: as defined in Section 8.8.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Application,
and any other document, agreement and instrument entered into by the Issuing
Lender and the Borrower (or any Subsidiary) or in favor of the Issuing Lender
and relating to such Letter of Credit.

“Issuing Lender”: Bank of America, N.A., in its capacity as issuer of any Letter
of Credit.

“Joint Lead Arrangers”: as defined in the recitals to this Agreement.

“L/C Commitment”: $40,000,000.

“L/C Fee Payment Date”: the last day of each March, June, September and December
and the last day of the Revolving Commitment Period.

“L/C Obligations”: at any date of determination, the aggregate amount available
to be drawn under all outstanding Letters of Credit plus the amount of drawings
under Letters of Credit that have not then been reimbursed in accordance with
this Agreement, including pursuant to Section 3.12. For purposes of computing
the amount available to be drawn under any Letter of Credit, the amount of such
Letter of Credit shall be determined in accordance with Section 3.8. For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed
to be “outstanding” in the amount so remaining available to be drawn.

“L/C Participants”: the collective reference to all the Revolving Lenders other
than the Issuing Lender.

“Lenders”: as defined in the recitals hereto; provided, that unless the context
otherwise requires, each reference herein to the Lenders shall be deemed to
include any Conduit Lender.

“Letters of Credit”: as defined in Section 3.7(a).

 

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“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any capital lease having substantially the same economic
effect as any of the foregoing).

“Liquidity”: cash on-hand and funds to be drawn under the Revolving Loans
subject to the requirements of Sections 6.2 and 8.1.

“Loan”: any loan made by any Lender pursuant to this Agreement.

“Loan Documents”: this Agreement, the Security Documents, the Secured Cash
Management Agreements, the Notes, and all agreements, documents and instruments
at any time executed and/or delivered by any Loan Party or any other Person to,
with or in favor of Administrative Agent or the Collateral Agent in connection
therewith or related thereto, as all of the foregoing now exist or may hereafter
be amended, modified, supplemented, extended, renewed, restated, refinanced or
replaced.

“Loan Parties”: each Group Member that is a party to a Loan Document.

“Majority Facility Lenders”: (i) with respect to the Tranche B Term Facility,
the holders of more than 50% of the aggregate unpaid principal amount of the
Tranche B Term Loans, (ii) with respect to the Delayed Draw Term Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the Delayed
Draw Term Loans (or, prior to termination in full of the Delayed Draw Term
Commitments, the holders of more than 50% of the Delayed Draw Term Commitments
of all Lenders) and (iii) with respect to the Revolving Facility, the holders of
more than 50% of the Total Revolving Extensions of Credit (or, prior to any
termination of the Revolving Commitments, the holders of more than 50% of the
Total Revolving Commitments).

“Management Subscription Agreements”: the collective reference to any
subscription agreement or stockholders agreement between Valassis and any
present or former officer or employee of any Group Member.

“Material Adverse Effect”: a material adverse effect on (a) the business,
assets, property, financial condition, operations or results of operations of
the Borrower and its Subsidiaries, taken as a whole, or (b) the validity or
enforceability of this Agreement or any of the other Loan Documents or the
rights or remedies of the Agents or the Lenders hereunder or thereunder or the
validity, perfection or priority of the Collateral Agent’s Liens upon the
Collateral.

“Material Contract”: each agreement identified on Schedule 8.17 to this
Agreement.

“Materials of Environmental Concern”: any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Law, including asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

 

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“Mexican Pesos”: the lawful currency of Mexico.

“Mortgaged Properties”: the real properties listed on Schedule 1.1, as to which
the Collateral Agent for the benefit of the Secured Parties shall be granted a
Lien pursuant to the Mortgages.

“Mortgages”: each of the mortgages and deeds of trust made by any Loan Party in
favor of, or for the benefit of, the Collateral Agent for the benefit of the
Secured Parties and the holders of the Existing Valassis Indebtedness, in form
and substance acceptable to the Collateral Agent

“Multiemployer Plan”: a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

“Net Cash Proceeds”: (a) in connection with any Asset Sale or any Recovery
Event, the proceeds thereof in the form of cash and Cash Equivalents (including
any such proceeds received by way of deferred payment of principal pursuant to a
note or installment receivable or purchase price adjustment receivable or by the
Disposition of any non-cash consideration received in connection therewith or
otherwise, but only as and when received) of such Asset Sale or Recovery Event,
(i) net of attorneys’ fees, accountants’ fees, investment banking fees, amounts
required to be applied to the repayment of Indebtedness secured by a Lien
expressly permitted hereunder on any asset that is the subject of such Asset
Sale or Recovery Event (other than any Lien pursuant to a Security Document) and
other customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements) and (ii) appropriate amounts to be provided by the
Borrower or any Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Borrower or any Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale and (b) in
connection with any issuance or sale of Capital Stock, any capital contribution
or any incurrence of Indebtedness (other than the refinancing of the Existing
Valassis Indebtedness on terms and conditions reasonable acceptable to the Joint
Lead Arrangers), the cash proceeds received from such issuance, contribution or
incurrence, net of attorneys’ fees, investment banking fees, accountants’ fees,
underwriting discounts and commissions and other customary fees and expenses
actually incurred in connection therewith.

“Non-Excluded Taxes”: as defined in Section 4.10(a).

“Non-U.S. Lender”: as defined in Section 4.10(d).

“Notes”: the collective reference to any promissory notes evidencing Loans.

“Obligations”: unpaid principal of and interest on (including interest accruing
after the maturity of the Loans and Reimbursement Obligations and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower or
any of its Subsidiaries, whether or not a claim for

 

20

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post-filing or post-petition interest is allowed in such proceeding) the Loans
and all other obligations and liabilities of the Borrower and its Subsidiaries
to any Agent or to any Lender (or, in the case of Specified Hedge Agreements,
any Qualified Counterparty), whether direct or indirect, absolute or contingent,
due or to become due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, this Agreement, any other Loan Document,
the Letters of Credit, any Specified Hedge Agreement, any Secured Cash
Management Agreement or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including all
fees, charges and disbursements of counsel to any Agent or to any Lender that
are required to be paid by the Borrower or any of its Subsidiaries pursuant
hereto) or otherwise; provided, that (i) obligations of the Borrower or any
Subsidiary under any Specified Hedge Agreement shall be secured and guaranteed
pursuant to the Security Documents only to the extent that, and for so long as,
the other Obligations are so secured and guaranteed and (ii) any release of
Collateral or Guarantors effected in the manner permitted by this Agreement
shall not require the consent of holders of obligations under Specified Hedge
Agreements.

“Other Taxes”: any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.

“Participating Alternate Currency Lender”: as defined in Section 3.18(a).

“Participant”: as defined in Section 11.6(c).

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA (or any successor).

“Permitted Acquisitions”: any acquisition by the Borrower or any of its
Subsidiaries, whether by purchase, merger or otherwise, of all or substantially
all of the assets or all of the Capital Stock of, or a business line or a
division of, any Person; provided that (i) such acquisition was not preceded by,
or effected pursuant to, an unsolicited or hostile offer by the acquirer or an
Affiliate of the acquirer; (ii) immediately prior to and after giving effect
thereto, no Default or Event of Default shall have occurred and be continuing or
would result therefrom; (iii) such acquisition is made in accordance with all
applicable Requirements of Law and material Contractual Obligations; and all
material consents and approvals required by applicable Requirement of Law and
material Contractual Obligations have been obtained; (iv) the amounts payable in
connection with such acquisition (including all transaction costs and all
Indebtedness, liabilities and contingent obligations (determined in accordance
with GAAP) incurred or assumed in connection therewith or otherwise reflected in
a consolidated balance sheet of Borrower and the acquired entity) shall not
exceed $200,000,000 in the aggregate for all such acquisitions during the term
hereof; provided that (A) the amounts payable in connection with acquisitions
(including all transaction costs and all Indebtedness, liabilities and
contingent obligations (determined in accordance with GAAP) incurred or assumed
in connection therewith or otherwise reflected in a consolidated balance sheet
of the Borrower and the acquired entity) consummated during the 180-day period
immediately following the Closing Date shall not exceed $10,000,000 in the
aggregate and (B) such dollar restrictions shall not apply to any

 

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acquisition(s) consummated solely with the proceeds of an issuance of Capital
Stock by the Borrower; (v) the Borrower shall be in compliance with the
covenants contained in Section 8.1, both immediately before and after giving
effect to such acquisition on a pro forma basis as of the most recently ended
fiscal quarter for which a Compliance Certificate has been delivered pursuant to
Section 7.2; (vi) the provisions of Section 7.10 are complied with in respect of
such acquisition; and, if the amounts payable in connection with such
acquisition (including all transaction costs and all Indebtedness, liabilities
and contingent obligations incurred or assumed in connection therewith or
otherwise reflected in a consolidated balance sheet of Borrower and the acquired
entity) exceed $50,000,000, the Administrative Agent shall have received a pro
forma Compliance Certificate demonstrating compliance with this clause
(vi) accompanied by such supporting information as the Administrative Agent may
reasonably request; and (vii) any Person or assets or division as acquired in
accordance herewith shall be involved in a Permitted Business (as determined in
good faith by the Board of Directors of the Borrower).

“Permitted Business”: the lines of business conducted by the Borrower and its
Subsidiaries on the Closing Date and any business reasonably related,
complimentary or ancillary thereto, including reasonably related extensions or
expansions thereof.

“Permitted Joint Ventures”: any joint venture (which may be in the form of a
limited liability company, partnership, corporation or other entity) in which a
Loan Party, directly or indirectly owns or controls 50% or less of the total
voting power of the shares of Capital Stock of such entity entitled to vote;
provided, however, that any joint venture in which a Loan Party, directly or
indirectly, owns 50% of the total voting power of the Capital Stock of such
entity entitled to vote shall only be a Permitted Joint Venture if engaged in a
line of business permitted under Section 8.16.

“Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

“Pounds Sterling”: the lawful currency of the United Kingdom.

“Plan”: at a particular time, any employee benefit plan that is covered by ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is (or
would under Section 4069 or Section 4212(c) of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.

“Preferred Stock” of any Person means any Capital Stock of such Person that has
preferential rights to any other Capital Stock of such Person with respect to
dividends or redemptions or upon liquidation.

“Pricing Grid”: as set forth in Exhibit I.

“Pro Forma Adjustments”: with respect to a Permitted Acquisition made by the
Borrower or any of its Subsidiaries, whenever pro forma effect is to be given to
an Permitted Acquisition and the amount of income or earnings relating thereto,
the pro forma calculations shall be determined in good faith by a Responsible
Officer of the Borrower and shall comply with the requirements of Rule 11-02 of
Regulation S-X promulgated by the SEC, except that

 

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such pro forma calculations may include operating expense reductions for such
period related to the execution or termination of any contracts, the termination
of any personnel or the closing (or approval by the Board of Directors of the
Borrower of any closing) of any facility, as applicable, resulting from the
Permitted Acquisition which is being given pro forma effect that have been
realized or for which the steps necessary for realization have been taken or are
reasonably expected to be taken within twelve months following any such
Permitted Acquisition; provided that, in either case, such adjustments are set
forth in a certificate, reasonably acceptable to the Administrative Agent,
signed by the Borrower’s chief financial officer and another Responsible Officer
which states (i) the amount of such adjustment or adjustments, (ii) that such
adjustment or adjustments are based on the reasonable good faith beliefs of the
Responsible Officers executing such certificate at the time of such execution
and (iii) that any related incurrence of Indebtedness is permitted pursuant to
this Agreement.

“Pro Forma Balance Sheet”: as defined in Section 5.1(a).

“Projections”: as defined in Section 7.2(c).

“Properties”: as defined in Section 5.17(a).

“Property”: any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including,
without limitation, Capital Stock.

“Qualified Counterparties”: with respect to any Specified Hedge Agreement, any
counterparty thereto that, at the time such Specified Hedge Agreement was
entered into, was a Lender, an Affiliate of a Lender, an Agent or an Affiliate
of an Agent; provided that, in the event a counterparty to a Specified Hedge
Agreement at the time such Specified Hedge Agreement was entered into was a
Qualified Counterparty, such counterparty shall constitute a Qualified
Counterparty hereunder and under the other Loan Documents; each sometimes
individually referred to herein as a “Qualified Counterparty”.

“Recovery Event”: any settlement of or payment in respect of any property or
casualty insurance claim or any condemnation proceeding relating to any asset of
any Group Member.

“Redemption Indebtedness”: means any unsecured Indebtedness issued by a Group
Member to employees or officers of any Group Member to redeem the Equity
Interests of such employees or officers to the extent that (a) the principal
amount of Redemption Indebtedness then being issued, together with all cash
payments to redeem such Equity Interests, does not exceed the amount permitted
by Section 8.6 for the applicable period, and (b) the Borrower could have
incurred the amount of such Redemption Indebtedness as a Revolving Loan at the
time of the issuance thereof.

“Reference Lender”: Bank of New York.

“Refunded Swingline Loans”: as defined in Section 3.4.

“Refunding Date”: as defined in Section 3.4.

 

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“Register”: as defined in Section 11.6(b).

“Regulation U”: Regulation U of the Board as in effect from time to time.

“Reimbursement Obligation”: the obligation of the Borrower to reimburse the
Issuing Lender pursuant to Section 3.12 for amounts drawn under Letters of
Credit.

“Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the
aggregate Net Cash Proceeds received by any Group Member in connection therewith
that are not applied to prepay the Term Loans or reduce the Revolving
Commitments pursuant to Section 4.2(c) as a result of the delivery of a
Reinvestment Notice.

“Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.

“Reinvestment Notice”: a written notice executed by a Responsible Officer
stating that no Event of Default has occurred and is continuing and that the
Borrower (directly or indirectly through a Subsidiary) intends and expects to
use all or a specified portion of the Net Cash Proceeds of an Asset Sale or
Recovery Event to acquire or repair fixed or capital assets useful in its
business or any other Permitted Business (as determined in good faith by the
Board of Directors of the Borrower) or to repair or replace the assets which
were the subject of a Recovery Event.

“Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to
the relevant Reinvestment Prepayment Date to acquire or repair fixed or capital
assets useful in any Permitted Business (as determined in good faith by the
Board of Directors of the Borrower) or to repair or replace the assets which
were the subject of a Recovery Event.

“Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the
earlier of (a) the date occurring six months after such Reinvestment Event and
(b) the date on which the Borrower shall have determined not to, or shall have
otherwise ceased to, repair or replace the assets which were the subject of the
relevant Recovery Event with all or any portion of the relevant Reinvestment
Deferred Amount.

“Reorganization”: with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the thirty day notice period is waived under
subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

“Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the sum of
(i) the aggregate unpaid principal amount of the Tranche B Term Loans then
outstanding, (ii) the aggregate Delayed Draw Term Commitments then in effect
(or, if the Delayed Draw Term Commitments have been terminated, the aggregate
principal amount of Delayed Draw Term Loans then

 

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outstanding) and (ii) the Total Revolving Commitments then in effect (or, if the
Revolving Commitments have been terminated, the Total Revolving Extensions of
Credit then outstanding).

“Requirement of Law”: as to any Person, the certificate of incorporation and
by-laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

“Responsible Officer”: the chief executive officer, president or chief financial
officer of the Borrower, but in any event, with respect to financial matters,
the chief financial officer of the Borrower.

“Restricted Payments”: as defined in Section 8.6.

“Revolving Commitment”: as to any Lender, the obligation of such Lender, if any,
to make Revolving Loans and participate in Swingline Loans and Letters of Credit
in an aggregate principal and/or face amount not to exceed the amount set forth
under the heading “Revolving Commitment” under such Lender’s name on such
Lender’s Addendum or in the Assignment and Assumption pursuant to which such
Lender became a party hereto, as the same may be changed from time to time
pursuant to the terms hereof. The original amount of the Total Revolving
Commitments on the Closing Date is $120,000,000.

“Revolving Commitment Period”: the period from and including the Closing Date to
the Revolving Termination Date.

“Revolving Extensions of Credit”: as to any Revolving Lender at any time, an
amount equal to the sum of (a) the aggregate principal amount of all Revolving
Loans held by such Lender then outstanding, (b) such Lender’s Revolving
Percentage of the L/C Obligations then outstanding and (c) such Lender’s
Revolving Percentage of the aggregate principal amount of Swingline Loans then
outstanding.

“Revolving Lender”: each Lender that has a Revolving Commitment or that holds
Revolving Loans.

“Revolving Loans”: as defined in Section 3.1(a).

“Revolving Percentage”: as to any Revolving Lender at any time, the percentage
which such Lender’s Revolving Commitment then constitutes of the Total Revolving
Commitments (or, at any time after the Revolving Commitments shall have expired
or terminated, the percentage which the aggregate principal amount of such
Lender’s Revolving Loans then outstanding constitutes of the aggregate principal
amount of the Revolving Loans then outstanding).

“Revolving Termination Date”: March 2, 2012.

“SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

 

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“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between the Borrower or any Loan Party and any Cash
Management Bank.

“Secured Parties”: the collective reference to the Lenders, the Collateral
Agent, the Qualified Counterparties, the Issuing Lender and the Swingline
Lender; each sometimes individually referred to herein as a “Secured Party”.

“Security Documents”: the collective reference to the Guarantee, Security and
Collateral Agency Agreement, the Control Agreements, the Mortgages and all other
security documents hereafter delivered to the Collateral Agent granting a Lien
on any property of any Person to secure the obligations and liabilities of any
Loan Party under any Loan Document.

“Senior Convertible Notes”: Senior Convertible Discount Notes due 2033, issued
by Valassis pursuant to the Senior Convertible Notes Indenture in the original
aggregate principal amount of $239,794,000.

“Senior Convertible Notes Indenture”: the Indenture, dated May 22, 2003, between
Valassis and BNY Midwest Trust Company, as trustee, as in effect on the Closing
Date, or as may be amended, waived or otherwise modified in accordance with the
terms thereof and hereof.

“Senior Note Indenture”: the Indenture entered into by the Borrower and certain
of its Subsidiaries in connection with the issuance of the Senior Notes,
together with all instruments and other agreements entered into by the Borrower
or such Subsidiaries in connection therewith.

“Senior Notes”: the notes of the Borrower issued on the Closing Date pursuant to
the Senior Note Indenture.

“Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that
is not a Multiemployer Plan.

“Solvent”: when used with respect to any Person, means that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets
of such Person will, as of such date, exceed the amount of all “liabilities of
such Person, contingent or otherwise”, as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable value
of the assets of such Person will, as of such date, be greater than the amount
that will be required to pay the liability of such Person on its debts as such
debts become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature in
the ordinary course of business. For purposes of this definition, (i) ”debt”
means liability on a “claim”, and (ii) ”claim” means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured,

 

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disputed, undisputed, secured or unsecured. In computing the amount of
contingent liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

“Specified Hedge Agreement”: any Hedge Agreement (a) entered into by (i) the
Borrower or any of its Subsidiaries and (ii) Qualified Counterparty, as
counterparty and (b) that has been designated by such Qualified Counterparty and
the Borrower, by notice to the Administrative Agent, as a Specified Hedge
Agreement pursuant to Section 8.5 of the Guarantee, Security and Collateral
Agency Agreement, provided, that any release of Collateral or Guarantors
effected in the manner permitted by this Agreement shall not require the consent
of holders of obligations under Specified Hedge Agreements. The designation of
any Hedge Agreement as a Specified Hedge Agreement shall not create in favor of
any Qualified Counterparty that is a party thereto any rights in connection with
the management or release of any Collateral or of the obligations of any
Guarantor under the Guarantee, Security and Collateral Agency Agreement.

“Subsidiary”: as to any Person, a corporation, partnership, limited liability
company or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.

“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 3.3 in an aggregate principal amount at any one time
outstanding not to exceed $20,000,000.

“Swingline Lender”: Bear Stearns Corporate Lending Inc., in its capacity as the
lender of Swingline Loans.

“Swingline Loans”: as defined in Section 3.3.

“Swingline Participation Amount”: as defined in Section 3.4.

“Syndication Agent”: as defined in the recitals to this Agreement.

“Target”: collectively, Advo, Inc., a Delaware corporation, and each of its
Subsidiaries.

“Target Note Purchase Agreement”: the Note Purchase Agreement, dated December 4,
2003, among Target and the respective “Purchasers” identified therein, as in
effect on the Closing Date, or as may be amended, waived or otherwise modified
in accordance with the terms thereof and hereof.

 

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“Target Note Purchase Documents”: collectively, (i) the Note Purchase Agreement,
(ii) the 5.71% Series A Notes, (iii) the Floating Rate Series B Notes and
(iv) all agreements, documents or instruments at any time executed and/or
delivered by the Borrower or any other Person in connection therewith or related
thereto.

“Term Lenders”: the collective reference to the Tranche B Term Lenders.

“Term Loan Commitments”: the aggregate sum of the Tranche B Term Commitment and
the Delayed Draw Term Commitment of all the Term Loan Lenders.

“Term Loan Maturity Date”: March 2, 2014

“Term Loans”: the collective reference to the Tranche B Term Loans and the
Delayed Draw Term Loans.

“Total Revolving Commitments”: at any time, the aggregate amount of the
Revolving Commitments then in effect.

“Total Revolving Extensions of Credit”: at any time, the aggregate amount of the
Revolving Extensions of Credit of the Revolving Lenders outstanding at such
time.

“Tranche B Term Commitment”: as to any Lender, the obligation of such Lender, if
any, to make a Tranche B Term Loan to the Borrower hereunder in a principal
amount not to exceed the amount set forth under the heading “Tranche B Term
Commitment” under such Lender’s name on such Lender’s Addendum. The original
aggregate amount of the Tranche B Term Commitments on the Closing Date is
$590,000,000.

“Tranche B Term Lender”: each Lender that has a Tranche B Term Commitment or
that holds a Tranche B Term Loan.

“Tranche B Term Loan”: as defined in Section 2.1.

“Tranche B Term Percentage”: as to any Tranche B Term Lender at any time, the
percentage which such Lender’s Tranche B Term Commitment then constitutes of the
aggregate Tranche B Term Commitments (or, at any time after the Closing Date,
the percentage which the aggregate principal amount of such Lender’s Tranche B
Term Loans then outstanding constitutes of the aggregate principal amount of the
Tranche B Term Loans then outstanding).

“Transferee”: any Assignee or Participant.

“Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

“Unfunded Alternate Currency Participation”: means, in respect of any
Participating Alternate Currency Lender’s Alternate Currency Participation in an
Alternate Currency Revolving Loan of Bear Stearns Corporate Lending Inc., the
outstanding principal amount of such Alternate Currency Participation minus the
amount of such Participating Alternate Currency Lender’s Funded Alternate
Currency Participation in such Alternate Currency Revolving Loan.

 

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“United States”: the United States of America.

“Unsecured Debt”: any unsecured Indebtedness of the Borrower (including the
Indebtedness under the Senior Notes Indenture), no part of the principal of
which is required to be paid (whether by way of mandatory sinking fund,
mandatory redemption or mandatory prepayment), prior to March 2, 2015 (it being
understood that any required offer to purchase such Indebtedness as a result of
a change of control or asset sale shall not violate the foregoing restriction),
and the payment of principal and interest of which and other obligations of the
Borrower or any of its Subsidiaries in respect thereof are subordinated to the
prior payment in full of the Obligations on terms and conditions satisfactory to
the Administrative Agent and the Required Lenders.

“Valassis Indenture Documents”: collectively, (i) the 6 5/8% Senior Notes
Indenture, (ii) the Senior Convertible Notes Indenture, (iii) the 6 5/8% Senior
Notes, (iv) the Senior Convertible Notes and (v) all agreements, documents or
instruments at any time executed and/or delivered by the Borrower or any other
Person in connection therewith or related thereto.

“Wholly Owned Subsidiary”: as to any Person, any other Person all of the Capital
Stock of which (other than directors’ qualifying shares required by law) is
owned by such Person directly and/or through other Wholly Owned Subsidiaries.

“Wholly Owned Guarantor”: any Guarantor that is a Wholly Owned Subsidiary of the
Borrower.

1.2 Conversion to Dollars. All valuations or computations of monetary amounts
set forth in this Agreement shall include the Dollar Equivalent of such amounts.
In connection with all Dollar amounts and amounts in an Alternate Currency set
forth in this Agreement, calculations and valuations of such Alternate Currency
shall be converted to Dollars in accordance with prevailing exchange rates, as
determined by Administrative Agent in its reasonable discretion, on the
applicable date.

1.3 Other Definitional Provisions. (a) Unless otherwise specified therein, all
terms defined in this Agreement shall have the defined meanings when used in the
other Loan Documents or any certificate or other document made or delivered
pursuant hereto or thereto.

(b) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, (i) accounting terms
relating to any Group Member not defined in Section 1.1 and accounting terms
partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP, (ii) the words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, (iii) the word “incur” shall be construed to mean incur, create,
issue, assume, become liable in respect of or suffer to exist (and the words
“incurred” and “incurrence” shall have correlative meanings), (iv) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, Capital Stock, securities, revenues, accounts, leasehold
interests and contract rights, and (v) references to agreements or other
Contractual Obligations shall, unless otherwise specified, be deemed to refer to
such agreements or Contractual Obligations as amended, supplemented, restated or
otherwise modified from time to time (subject to any applicable restrictions
hereunder).

 

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(c) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, Schedule and Exhibit
references are to this Agreement unless otherwise specified.

(d) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

(e) Except as otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP; provided that, if
the Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

SECTION 2.

AMOUNT AND TERMS OF TERM COMMITMENTS

2.1 Term Commitments.

(a) Subject to the terms and conditions hereof, each Tranche B Term Lender
severally agrees to make a term loan (a “Tranche B Term Loan”) to the Borrower
on the Closing Date in an amount not to exceed the amount of the Tranche B Term
Commitment of such Lender. The Term Loans may from time to time be Eurodollar
Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.2 and 4.3.

(b) During the Delayed Draw Term Commitment Period, and subject to the terms and
conditions hereof, each Delayed Draw Term Lender severally agrees to make up to
but no more than three term loans (each, a “Delayed Draw Term Loan”) to the
Borrower after the Closing Date in an amount up to but not exceeding such
Lender’s Delayed Draw Term Commitment. Any amount borrowed under this
Section 2.1(b) and subsequently repaid or prepaid may not be reborrowed. Delayed
Draw Term Loans shall be made in an aggregate minimum amount of $20,000,000 and
integral multiples of $5,000,000 in excess thereof. Each Lender’s Delayed Draw
Term Commitment shall expire on the Delayed Draw Term Commitment Termination
Date.

 

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2.2 Procedure for Term Loan Borrowing.

(a) The Borrower shall give the Administrative Agent irrevocable notice (which
notice must be received by the Administrative Agent prior to 1:00 P.M.,
New York City time, (i) three Business Days prior to the anticipated Closing
Date, in the case of Eurodollar Loans, or (ii) one Business Day prior to the
anticipated Closing Date, in the case of Base Rate Loans) requesting that the
Tranche B Term Lenders make the Tranche B Term Loans on the Closing Date and
specifying the amount to be borrowed and the Type of Loan. Unless the
Administrative Agent shall have consented to making Eurodollar Loans, the
Tranche B Term Loans made on the Closing Date shall initially be Base Rate
Loans. Unless otherwise agreed by the Administrative Agent in its sole
discretion, no Tranche B Term Loan may be made as, converted into or continued
as a Eurodollar Loan having an Interest Period in excess of one month prior to
the date that is the earlier of 30 days after the Closing Date and the date that
the Administrative Agent promptly notifies the Borrower that the syndication of
the Tranche B Term Loans has been completed. Upon receipt of such notice the
Administrative Agent shall promptly notify each Tranche B Term Lender thereof.
Not later than 12:00 Noon, New York City time, on the Closing Date each Tranche
B Term Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds equal to the Tranche B Term Loan
or Tranche B Term Loans to be made by such Lender. The Administrative Agent
shall credit the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Tranche B Term Lenders in immediately available
funds.

(b) With respect to the Delayed Draw Term Loan borrowings, Borrower shall give
the Administrative Agent irrevocable notice, which notice must be received by
the Administrative Agent prior to 1:00 P.M., New York City time, (i) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (ii) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans, requesting that the Delayed Draw Term Lenders make a
Delayed Draw Term Loan on such requested Borrowing Date, which shall be a
Business Day. Upon receipt of such notice the Administrative Agent shall
promptly notify each Delayed Draw Term Lender with a Delayed Draw Term
Commitment thereof. Not later than 12:00 Noon, New York City time, on the
applicable proposed borrowing date each Delayed Draw Term Lender with a Delayed
Draw Term Commitment shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to such Delayed
Draw Term Lender’s pro rata share of the Delayed Draw Term Loan or Delayed Draw
Term Loans to be made by such Lender. On the relevant Borrowing Date, the
Administrative Agent shall credit the account of the Borrower specified by the
Borrower with the aggregate of the amounts made available to the Administrative
Agent by the Delayed Draw Term Lenders in immediately available funds.

2.3 Repayment of Term Loans.

(a) The Tranche B Term Loans of each Tranche B Term Lender shall mature and be
repaid in twenty-eight (28) consecutive quarterly installments (each, other than
the final such installment on the Term Loan Maturity Date, a “Tranche B
Installment”), with the first Tranche B Installment due and payable on June 30,
2007, each in the amount of $1,475,000, and with a final installment due on the
Term Loan Maturity Date in an amount equal to the remaining

 

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unpaid principal balance of the Tranche B Term Loans. Each such payment shall be
in an amount equal to such Lender’s Tranche B Term Percentage multiplied by the
amount of such Tranche B Installment.

(b) The Delayed Draw Term Loans of each Delayed Draw Term Lender shall mature
and be repaid in consecutive quarterly installments (each, other than the final
such installment on the Term Loan Maturity Date, a “Delayed Draw Installment”),
with the first Delayed Draw Installment due on the earlier of (i) the last day
of the first full fiscal quarter after the Delayed Draw Effective Date and
(ii) the last day of the second full fiscal quarter after the first anniversary
of the Closing Date, each in an amount equal to (x) the aggregate principal
amount of Delayed Draw Term Loans then outstanding, times (y) .25%, and with a
final installment due on the Term Loan Maturity Date in an amount equal to the
remaining unpaid principal balance of the Delayed Draw Term Loans. Each such
payment shall be in an amount equal to such Lender’s Funded Delayed Draw Term
Loan Percentage multiplied by the amount of such Delayed Draw Installment.

SECTION 3.

AMOUNT AND TERMS OF REVOLVING COMMITMENTS

3.1 Revolving Commitments. (a) Subject to the terms and conditions hereof, each
Revolving Lender severally agrees to make to the Borrower from time to time
during the Revolving Commitment Period, revolving credit loans (“Revolving
Loans”), in an aggregate principal amount at any one time outstanding which,
when added to such Lender’s Revolving Percentage of the sum of (i) the L/C
Obligations then outstanding and (ii) the aggregate principal amount of the
Swingline Loans then outstanding, does not exceed the amount of such Lender’s
Revolving Commitment. During the Revolving Commitment Period the Borrower may
use the Revolving Commitments by borrowing, prepaying and reborrowing the
Revolving Loans in whole or in part, all in accordance with the terms and
conditions hereof. The Revolving Loans may from time to time be Eurodollar Loans
or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 3.2 and 4.3. Not more than
$50,000,000 of Revolving Loans and Swingline Loans shall be made on the Closing
Date.

(b) All Revolving Loans shall be denominated in Dollars; provided, however, the
Borrower may elect, by notice from Borrower to the Administrative Agent in
accordance with the procedures set forth in Section 3.2 below, to borrow
Revolving Loans in one or more Alternate Currencies up to $35,000,000 at any
time outstanding; provided, further, that for the period from the Closing Date
until the Administrative Agent so advises to the contrary, no Loans shall be
requested and provided in Mexican Pesos;

(c) The Borrower agrees to repay all outstanding Revolving Loans in Dollars
(with respect to Dollar Loans) or in the applicable Alternate Currency (with
respect to Alternate Currency Loans), in any case on the Revolving Termination
Date.

3.2 Procedure for Revolving Loan Borrowing. The Borrower may borrow under the
Revolving Commitments during the Revolving Commitment Period on any Business
Day, provided that the Borrower shall give the Administrative Agent irrevocable
notice (which

 

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notice must be received by the Administrative Agent prior to 12:00 Noon,
New York City time, (a) three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans, and (c) three Business
Days prior to the requested Borrowing Date, in the case of Alternate Currency
Loans) (provided that any such notice of a borrowing of Base Rate Loans to
finance payments required to be made pursuant to Section 3.5 may be given not
later than 10:00 A.M., New York City time, on the date of the proposed
borrowing), specifying (i) the amount and Type of Revolving Loans to be
borrowed, (ii) the requested Borrowing Date, (iii) in the case of Eurodollar
Loans, the respective amounts of each such Type of Loan and the respective
lengths of the initial Interest Period therefore and (iv) whether such Revolving
Loans are to be denominated in Dollars or an Alternate Currency, and if an
Alternate Currency, which Alternate Currency; provided, that , the Borrower
shall not have the right to request Revolving Loans in an Alternate Currency to
accrue interest at the Base Rate. Unless the Administrative Agent shall have
consented to making Eurodollar Loans, the Revolving Loans made on the Closing
Date shall initially be Base Rate Loans. No Revolving Loan may be made as,
converted into or continued as a Eurodollar Loan having an Interest Period in
excess of one month prior to the date that is 30 days after the Closing Date.
Each borrowing under the Revolving Commitments shall be in an amount equal to
(x) in the case of Base Rate Loans, $1,000,000 or a whole multiple thereof (or,
if the then aggregate Available Revolving Commitments are less than $1,000,000,
such lesser amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a
whole multiple of $500,000 in excess thereof; provided, that (x) the Swingline
Lender may request, on behalf of the Borrower, borrowings under the Revolving
Commitments that are Base Rate Loans in other amounts pursuant to Section 3.4
and (y) borrowings of Base Rate Loans pursuant to Section 3.12 shall not be
subject to the foregoing minimum amounts. Upon receipt of any such notice from
the Borrower, the Administrative Agent shall promptly notify each Revolving
Lender thereof. Each Revolving Lender will make the amount of its pro rata share
of each borrowing available to the Administrative Agent for the account of the
Borrower at the Funding Office prior to 12:00 Noon, New York City time, with
respect to Dollar Loans, and prior to 12:00 Noon, London time, with respect to
Alternate Currency Loans, in each case on the Borrowing Date requested by the
Borrower in funds immediately available to the Administrative Agent. Such
borrowing will then be made available to the Borrower by the Administrative
Agent crediting the account of the Borrower on the books of such office on the
Borrowing Date with the aggregate of the amounts made available to the
Administrative Agent by the Revolving Lenders and in like funds as received by
the Administrative Agent.

3.3 Swingline Commitment. (a) Subject to the terms and conditions hereof, the
Swingline Lender agrees to make a portion of the credit otherwise available to
the Borrower under the Revolving Commitments from time to time during the
Revolving Commitment Period by making swing line loans (“Swingline Loans”) to
the Borrower; provided that (i) the aggregate principal amount of Swingline
Loans outstanding at any time shall not exceed the Swingline Commitment then in
effect (notwithstanding that the Swingline Loans outstanding at any time, when
aggregated with the Swingline Lender’s other outstanding Revolving Loans
hereunder, may exceed the Swingline Commitment then in effect) and (ii) the
Borrower shall not request, and the Swingline Lender shall not make, any
Swingline Loan if, after giving effect to the making of such Swingline Loan, the
aggregate amount of the Available Revolving Commitments would be less than zero.
During the Revolving Commitment Period, the Borrower may use the

 

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Swingline Commitment by borrowing, repaying and reborrowing, all in accordance
with the terms and conditions hereof. Swingline Loans shall be Base Rate Loans
only.

(b) The Borrower agrees to repay all outstanding Swingline Loans on the
Revolving Termination Date.

3.4 Procedure for Swingline Borrowing; Refunding of Swingline Loans.
(a) Whenever the Borrower desires that the Swingline Lender make Swingline Loans
the Borrower shall give the Swingline Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swingline Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Commitment
Period). Each borrowing under the Swingline Commitment shall be in an amount
equal to $1,000,000 or a whole multiple of $100,000 in excess thereof. Not later
than 3:00 P.M., New York City time, on the Borrowing Date specified in a notice
in respect of Swingline Loans, the Swingline Lender shall make available to the
Administrative Agent at the Funding Office an amount in immediately available
funds equal to the amount of the Swingline Loan to be made by the Swingline
Lender. The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the account of the Borrower with the Administrative Agent on such Borrowing Date
in immediately available funds.

(b) The Swingline Lender, at any time and from time to time in its sole and
absolute discretion may, on behalf of the Borrower (which hereby irrevocably
directs the Swingline Lender to act on its behalf), on one Business Day’s notice
given by the Swingline Lender no later than 12:00 Noon, New York City time,
request each Revolving Lender to make, and each Revolving Lender hereby agrees
to make, a Revolving Loan, in an amount equal to such Revolving Lender’s
Revolving Percentage of the aggregate amount of the Swingline Loans (the
“Refunded Swingline Loans”) outstanding on the date of such notice, to repay the
Swingline Lender. Each Revolving Lender shall make the amount of such Revolving
Loan available to the Administrative Agent at the Funding Office in immediately
available funds, not later than 10:00 A.M., New York City time, one Business Day
after the date of such notice. The proceeds of such Revolving Loans shall be
immediately made available by the Administrative Agent to the Swingline Lender
for application by the Swingline Lender to the repayment of the Refunded
Swingline Loans. The Borrower irrevocably authorizes the Swingline Lender to
charge the Borrower’s accounts with the Administrative Agent (up to the amount
available in each such account) in order to immediately pay the amount of such
Refunded Swingline Loans to the extent amounts received from the Revolving
Lenders are not sufficient to repay in full such Refunded Swingline Loans.

(c) If prior to the time a Revolving Loan would have otherwise been made
pursuant to Section 3.4(b), one of the events described in Section 9(f) shall
have occurred and be continuing with respect to the Borrower or if for any other
reason, as determined by the Swingline Lender in its sole discretion, Revolving
Loans may not be made as contemplated by Section 3.4(b), each Revolving Lender
shall, on the date such Revolving Loan was to have been made pursuant to the
notice referred to in Section 3.4(b) (the “Refunding Date”), purchase for cash
an undivided participating interest in the then outstanding Swingline Loans by
paying to the

 

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Swingline Lender an amount (the “Swingline Participation Amount”) equal to
(i) such Revolving Lender’s Revolving Percentage times (ii) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have
been repaid with such Revolving Loans.

(d) Whenever, at any time after the Swingline Lender has received from any
Revolving Lender such Lender’s Swingline Participation Amount, the Swingline
Lender receives any payment on account of the Swingline Loans, the Swingline
Lender will distribute to such Lender its Swingline Participation Amount
(appropriately adjusted, in the case of interest payments, to reflect the period
of time during which such Lender’s participating interest was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Lender’s pro rata portion of such payment if such payment is not sufficient to
pay the principal of and interest on all Swingline Loans then due); provided,
however, that in the event that such payment received by the Swingline Lender is
required to be returned, such Revolving Lender will return to the Swingline
Lender any portion thereof previously distributed to it by the Swingline Lender.

(e) Each Revolving Lender’s obligation to make the Loans referred to in
Section 3.4(b) and to purchase participating interests pursuant to
Section 3.4(c) shall be absolute and unconditional and shall not be affected by
any circumstance, including (i) any setoff, counterclaim, recoupment, defense or
other right that such Revolving Lender or the Borrower may have against the
Swingline Lender, the Borrower or any other Person for any reason whatsoever;
(ii) the occurrence or continuance of a Default or an Event of Default or the
failure to satisfy any of the other conditions specified in Section 6; (iii) any
adverse change in the condition (financial or otherwise) of the Borrower;
(iv) any breach of this Agreement or any other Loan Document by the Borrower,
any other Loan Party or any other Revolving Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.

3.5 Commitment Fees, etc.

(a) The Borrower agrees to pay to the Administrative Agent for the account of
each Revolving Lender a commitment fee for the period from and including the
Closing Date to the last day of the Revolving Commitment Period, computed at the
Commitment Fee Rate on the average daily amount of the Available Revolving
Commitment of such Lender during the period for which payment is made, payable
quarterly in arrears on the last day of each March, June, September and December
and on the Revolving Termination Date, commencing on the first of such dates to
occur after the date hereof.

(b) The Borrower agrees to pay to the Administrative Agent for the account of
each Delayed Draw Term Lender a commitment fee for the period from and including
the Closing Date to the last day of the Delayed Draw Term Commitment Period,
computed at the Delayed Draw Term Commitment Fee Rate on the average daily
amount of the unfunded Delayed Draw Term Commitment of such Delayed Draw Term
Lender during the period for which payment is made, payable quarterly in arrears
on the last day of March 2007, June 2007, September 2007, December 2007, March
2008 and June 2008 and on the Delayed Draw Term Commitment Termination Date,
commencing on the first of such dates to occur after the Closing Date.

 

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(c) The Borrower agrees to pay to the Administrative Agent (for itself and for
the account of the Joint Lead Arrangers and the Syndication Agent) the fees in
the amounts and on the dates previously agreed to in writing by the Borrower,
the Administrative Agent, the Syndication Agent and/or each Joint Lead Arranger,
as the case may be.

3.6 Termination or Reduction of Commitments. The Borrower shall have the right,
upon not less than three Business Days’ notice by Borrower to the Administrative
Agent, to terminate the Delayed Draw Term Commitments or the Revolving
Commitments or, from time to time, to reduce the amount of the Delayed Draw Term
Commitments or the Revolving Commitments without premium or penalty; provided
that no such termination or reduction of Revolving Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Loans and Swingline Loans made on the effective date thereof, the
Total Revolving Extensions of Credit would exceed the Total Revolving
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Delayed Draw Term
Commitments or Revolving Commitments, as the case may be, then in effect.

3.7 L/C Commitment. (a) Subject to the terms and conditions hereof, the Issuing
Lender, in reliance on the agreements of the other Revolving Lenders set forth
in Section 3.11(a), agrees to issue standby letters of credit (“Letters of
Credit”) for the account of the Borrower on any Business Day during the
Revolving Commitment Period in such form as may be approved from time to time by
the Issuing Lender; provided that the Issuing Lender shall have no obligation to
issue any Letter of Credit if, after giving effect to such issuance, (i) the L/C
Obligations would exceed the L/C Commitment or (ii) the aggregate amount of the
Available Revolving Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars, (ii) have a face amount of at least
$1,000,000 (unless otherwise agreed by the Issuing Lender) and (iii) expire no
later than the earlier of (x) the first anniversary of its date of issuance and
(y) the date that is five Business Days prior to the Revolving Termination Date,
provided that any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above).

(b) The Issuing Lender shall not at any time be obligated to issue any Letter of
Credit hereunder if such issuance would conflict with, or cause the Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.

3.8 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a
Letter of Credit at any time shall be deemed to be the stated amount of such
Letter of Credit in effect at such time; provided, however, that for purposes of
calculating L/C Obligations, any Letter of Credit that, by its terms or the
terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the maximum stated amount of such Letter of Credit after
giving effect to all such increases, whether or not such maximum stated amount
is in effect at such time.

3.9 Procedure for Issuance of Letter of Credit.

(a) The Borrower may from time to time request that the Issuing Lender issue a
Letter of Credit by delivering to the Issuing Lender at its address for notices
specified herein,

 

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with a copy to the Administrative Agent, an Application therefor, completed to
the satisfaction of the Issuing Lender, and such other certificates, documents
and other papers and information as the Issuing Lender may reasonably request.
Upon receipt of any Application, the Issuing Lender will notify the
Administrative Agent of the amount, the beneficiary and the requested expiration
of the requested Letter of Credit, and upon receipt of confirmation from the
Administrative Agent that after giving effect to the requested issuance, the
Available Revolving Commitments would not be less than zero, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrower. The Issuing Lender shall furnish a copy of such
Letter of Credit to the Borrower (with a copy to the Administrative Agent)
promptly following the issuance thereof. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Lenders, notice of the issuance of each Letter of Credit (including the amount
thereof).

(b) On the Closing Date, the Issuing Lender that has issued an Existing Letter
of Credit shall be deemed, without further action by any party hereto, to have
sold to each Revolving Lender, and each such Revolving Lender shall be deemed,
without further action by any party hereto, to have purchased from the Issuing
Lender, without recourse or warranty, an undivided participation interest in
such Existing Letter of Credit and the related Reimbursement Obligations in the
proportion of its Revolving Percentage and any security therefore or guaranty
pertaining thereto.

(c) Notwithstanding anything to the contrary set forth in this Agreement, a
Letter of Credit issued hereunder may be issued for the account of a Subsidiary
of the Borrower, and the Borrower shall be the actual account party for all
purposes of this Agreement for such Letter of Credit and such Letter of Credit
shall not affect the Borrower’s reimbursement obligations hereunder with respect
to such Letter of Credit.

(d) The Issuing Lender shall be under no obligations to issue any Letter of
Credit if (i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender
from issuing such Letter of Credit, or any Law applicable to the Issuing Lender
or any request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Lender shall prohibit,
or request that the Issuing Lender refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon the
Issuing Lender with respect to such Letter of Credit any restriction, reserve or
capital requirement (for which the Issuing Lender is not otherwise compensated
hereunder) not in effect on the Closing Date, or shall impose upon the Issuing
Lender any unreimbursed loss, cost or expense which was not applicable on the
Closing Date and which the Issuing Lender in good faith deems material to it, or
(ii) the issuance of such Letter of Credit would violate one or more policies of
the Issuing Lender; provided, that in such case the Issuing Lender shall be
replaced with a new issuing lender reasonably acceptable to the Borrower and the
Administrative Agent.

 

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3.10 Fees and Other Charges. (a) The Borrower will pay a fee on the face amount
of all outstanding Letters of Credit at a per annum rate equal to the Applicable
Margin then in effect with respect to Eurodollar Loans under the Revolving
Facility, shared ratably among the Revolving Lenders and payable quarterly in
arrears on each L/C Fee Payment Date after the issuance date. In addition, the
Borrower agrees to pay to the Issuing Lender for its own account a fronting fee
on the undrawn and unexpired amount of each Letter of Credit as agreed by the
Borrower and the Issuing Lender, payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date.

(b) In addition to the foregoing fees, the Borrower agrees to pay or reimburse
the Issuing Lender for such normal and customary costs and expenses as are
incurred or charged by the Issuing Lender in issuing, negotiating, effecting
payment under, amending or otherwise administering any Letter of Credit.

3.11 L/C Participations. (a) The Issuing Lender irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Issuing Lender to
issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to
accept and purchase and hereby accepts and purchases from the Issuing Lender, on
the terms and conditions set forth below, for such L/C Participant’s own account
and risk an undivided interest equal to such L/C Participant’s Revolving
Percentage in the Issuing Lender’s obligations and rights under and in respect
of each Letter of Credit issued hereunder and the amount of each draft paid by
the Issuing Lender thereunder. Each L/C Participant unconditionally and
irrevocably agrees with the Issuing Lender that, if a draft is paid under any
Letter of Credit for which the Issuing Lender is not reimbursed in full by the
Borrower in accordance with the terms of this Agreement, such L/C Participant
shall pay to the Administrative Agent upon demand of the Issuing Lender an
amount equal to such L/C Participant’s Revolving Percentage of the amount of
such draft, or any part thereof, that is not so reimbursed. The Administrative
Agent shall promptly forward such amounts to the Issuing Lender.

(b) If any amount required to be paid by any L/C Participant to the
Administrative Agent for the account of the Issuing Lender pursuant to
Section 3.11(a) in respect of any unreimbursed portion of any payment made by
the Issuing Lender under any Letter of Credit is paid to the Administrative
Agent for the account of the Issuing Lender within three Business Days after the
date such payment is due, such L/C Participant shall pay to the Administrative
Agent for the account of the Issuing Lender on demand an amount equal to the
product of (i) such amount, times (ii) the daily average Federal Funds Effective
Rate during the period from and including the date such payment is required to
the date on which such payment is immediately available to the Issuing Lender,
times (iii) a fraction the numerator of which is the number of days that elapse
during such period and the denominator of which is 360. If any such amount
required to be paid by any L/C Participant pursuant to Section 3.11(a) is not
made available to the Administrative Agent for the account of the Issuing Lender
by such L/C Participant within three Business Days after the date such payment
is due, the Issuing Lender shall be entitled to recover from such L/C
Participant, on demand, such amount with interest thereon calculated from such
due date at the rate per annum applicable to Base Rate Loans under the Revolving
Facility. A certificate of the Issuing Lender submitted to any L/C Participant
with respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.

 

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(c) Whenever, at any time after the Issuing Lender has made payment under any
Letter of Credit and has received from any L/C Participant its pro rata share of
such payment in accordance with Section 3.11(a), the Administrative Agent or the
Issuing Lender receives any payment related to such Letter of Credit (whether
directly from the Borrower or otherwise, including proceeds of collateral
applied thereto by the Issuing Lender), or any payment of interest on account
thereof, the Administrative Agent or the Issuing Lender, as the case may be,
will distribute to such L/C Participant its pro rata share thereof; provided,
however, that in the event that any such payment received by Administrative
Agent or the Issuing Lender, as the case may be, shall be required to be
returned by the Administrative Agent or the Issuing Lender, such L/C Participant
shall return to the Administrative Agent for the account of the Issuing Lender
the portion thereof previously distributed by the Administrative Agent or the
Issuing Lender, as the case may be, to it.

3.12 Reimbursement Obligation of the Borrower. The Borrower agrees to reimburse
the Issuing Lender on the Business Day (or, if the Borrower receives such notice
after 11:00 AM, New York City time, in such Business Day, the next succeeding
the Business Day) on which the Issuing Lender notifies the Borrower of the date
and amount of a draft presented under any Letter of Credit and paid by the
Issuing Lender for the amount of (a) such draft so paid and (b) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Lender in connection
with such payment. Each such payment shall be made to the Issuing Lender at its
address for notices referred to herein in Dollars and in immediately available
funds. Interest shall be payable on any such amounts from the date on which the
relevant draft is paid until payment in full at the rate set forth in (i) until
the Business Day next succeeding the date of the relevant notice, Section 4.5(b)
and (ii) thereafter, Section 4.5(c). Each drawing under any Letter of Credit
shall (unless (x) the Borrower directly reimburses the Issuing Lender in
accordance with this Section 3.12 or (y) an event of the type described in
clause (i) or (ii) of Section 9(f) shall have occurred and be continuing with
respect to the Borrower, in which case the procedures specified in Section 3.11
for funding by L/C Participants shall apply) constitute a request by the
Borrower to the Administrative Agent for a borrowing pursuant to Section 3.2 of
Base Rate Loans (or, at the option of the Administrative Agent and the Swingline
Lender in their sole discretion, a borrowing pursuant to Section 3.4 of
Swingline Loans) in the amount of such drawing. The Borrowing Date with respect
to such borrowing shall be the first date on which a borrowing of Revolving
Loans (or, if applicable, Swingline Loans) could be made, pursuant to
Section 3.2 or, if applicable, Section 3.4), if the Administrative Agent had
received a notice of such borrowing at the time the Administrative Agent
receives notice from the Issuing Lender of such drawing under such Letter of
Credit.

3.13 Obligations Absolute. The Borrower’s obligations under Section 3.12 shall
be absolute and unconditional under any and all circumstances and irrespective
of any setoff, counterclaim or defense to payment that the Borrower may have or
have had against the Issuing Lender, any beneficiary of a Letter of Credit or
any other Person. The Borrower also agrees with the Issuing Lender that the
Issuing Lender shall not be responsible for, and the Borrower’s Reimbursement
Obligations under Section 3.12 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even though
such documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrower and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of the Borrower against any

 

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beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrower agrees that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrower and
shall not result in any liability of the Issuing Lender to the Borrower.

3.14 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower and the Administrative Agent of the date and amount thereof. The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.

3.15 Applications. To the extent that any provision of any Application related
to any Letter of Credit is inconsistent with the provisions of this Section 3,
the provisions of this Section 3 shall apply.

3.16 Incremental Facilities. So long as no Default or Event of Default shall
have occurred and be continuing or would result therefrom, and subject to the
terms and conditions set forth herein, the Borrower shall have the right to
incur additional Indebtedness under this Agreement in the form of increases to
the Tranche B Term Facility or Revolving Facility or one or more additional
Tranche B Term Loans or Revolving Loans (the “Additional Loans”) in an aggregate
principal amount not to exceed One Hundred Fifty Million Dollars ($150,000,000);
provided that, (a) the aggregate Revolving Commitment shall not be increased
hereunder by more than $50,000,000, (b) the Additional Loans shall constitute
Obligations and will be secured and guaranteed with the other Obligations on a
pari passu basis therewith, (c) the Additional Loans shall have substantially
the same terms (other than pricing with respect to additional tranches) as the
existing Tranche B Term Loans or Revolving Loans, as the case may be, (d) the
Additional Loans shall have a final maturity date no earlier than the Term Loan
Maturity Date or the Revolving Termination Date, as the case may be, and the
remaining weighted average life of the Additional Loans shall not be shorter
than the remaining weighted average life of the Tranche B Term Loans or
Revolving Loans, as the case may be, (e) each such Additional Loan shall be in a
minimum of $25,000,000 and integral multiples of $5,000,000 in excess thereof,
(f) the Additional Loans shall be obtained from existing Lenders or from other
banks, financial institutions or investment funds, in each case in accordance
with the terms set forth below, (g) the proceeds of the Additional Loans will be
used for general corporate purposes that do not conflict with the provisions of
this Agreement, including, without limitation, the refinancing of the 6 5/8%
Senior Notes or the Senior Convertible Notes, (h) the Borrower shall execute a
note in form and substance reasonably satisfactory to the Administrative Agent
in favor of any new Lender or any existing Lender requesting a note to evidence
its Additional

 

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Loans, (i) the conditions to extensions of credit in Section 6.2 shall have been
satisfied or waived, (j) the Administrative Agent shall have received from the
Borrower an officer’s certificate, in form and substance reasonably satisfactory
to the Administrative Agent, demonstrating that, after giving effect to the
Additional Loans on a pro forma basis, (x) the Borrower will be in compliance
with the financial covenants set forth in Sections 8.1(a) and (b), and (y) no
Default or Event of Default shall exist and be continuing or shall result
therefrom, and (l) the Administrative Agent shall have received legal opinions,
board resolutions and other documentation as reasonably required by the Joint
Lead Arrangers and consistent with those delivered on the Closing Date under
Section 6.1 and such additional documents and filings (including amendments to
the Security Documents and title endorsement bring downs) as the Joint Lead
Arrangers may reasonably require to assure that the Additional Loans are secured
by the Collateral ratably with the existing Loans. Participation in the
Additional Loans shall be offered first to each of the existing Lenders in the
applicable Facility, but each such Lender shall have no obligation to provide
all or any portion of the Additional Loans. If the amount of the Additional
Loans shall exceed the commitments which the existing Lenders are willing to
provide with respect to the Additional Loans, then the Borrower may invite other
banks, financial institutions and investment funds reasonably acceptable to the
Administrative Agent to join this Agreement as Lenders hereunder for the portion
of the Additional Loans not taken by existing Lenders, provided that such other
banks, financial institutions and investment funds shall enter into such joinder
or accession agreements to give effect thereto as the Administrative Agent may
reasonably request. The Administrative Agent is authorized to enter into, on
behalf of the Lenders, any amendment to this Agreement or any other Loan
Documents with the Borrower’s consent (not to be unreasonably withheld) as may
be necessary to incorporate the terms of the Additional Loans therein.

3.17 Reliance on Notices. Administrative Agent shall be entitled to rely upon,
and shall be fully protected in relying upon, any notice of borrowing or similar
notice reasonably believed by Administrative Agent to be genuine. Administrative
Agent may assume that each Person executing and delivering any notice in
accordance herewith was duly authorized, unless the responsible individual
acting thereon for Administrative Agent has actual knowledge to the contrary.

3.18 Alternate Currency Revolving Loans; Intra-Lender Issues.

(a) Alternate Currency Participations. Notwithstanding anything to the contrary
contained herein, all Alternate Currency Revolving Loans shall be made solely by
the Revolving Lenders with Alternate Currency Funding Capacity, on a pro rata
basis in accordance with the Applicable Percentage hereunder; provided, however,
prior to the General Syndication Closing Date, all Alternate Currency Revolving
Loans shall be made solely by Bear Stearns Corporate Lending Inc. Each
(i) Revolving Lender other than Bear Stearns Corporate Lending Inc. at any time
prior to the General Syndication Closing Date and (ii) Revolving Lender that
does not have Alternate Currency Funding Capacity on or after the General
Syndication Closing Date (in each case, a “Participating Alternate Currency
Lender”), shall irrevocably and unconditionally purchase and acquire and shall
be deemed to irrevocably and unconditionally purchase and acquire from Bear
Stearns Corporate Lending Inc., and Bear Stearns Corporate Lending Inc. shall
sell and be deemed to sell to each such Participating Alternate Currency Lender,
without recourse or any representation or warranty whatsoever, an undivided
interest and

 

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participation (an “Alternate Currency Participation”) in each Alternate Currency
Revolving Loan funded by Bear Stearns Corporate Lending Inc. in an amount equal
to such Participating Alternate Currency Lender’s pro rata share of the
Borrowing that includes such Alternate Currency Revolving Loan. Such purchase
and sale of an Alternate Currency Participation shall be deemed to occur
automatically upon the making of an Alternate Currency Revolving Loan by Bear
Stearns Corporate Lending Inc., without any further notice to any Participating
Alternate Currency Lender. The purchase price payable by each Participating
Alternate Currency Lender to Bear Stearns Corporate Lending Inc. for each
Alternate Currency Participation purchased by it from Bear Stearns Corporate
Lending Inc. shall be equal to 100% of the principal amount of such Alternate
Currency Participation (i.e., the product of (i) the amount of the Borrowing
that includes the relevant Alternate Currency Revolving Loan and (ii) such
Participating Alternate Currency Lender’s pro rata share), and such purchase
price shall be payable by each Participating Alternate Currency Lender to Bear
Stearns Corporate Lending Inc. in accordance with the settlement procedure set
forth in Section 3.18(b) below. Bear Stearns Corporate Lending Inc. and
Administrative Agent shall record on their books the amount of the Alternate
Currency Revolving Loans made by Bear Stearns Corporate Lending Inc. and each
Participating Alternate Currency Lender’s Alternate Currency Participation and
Funded Alternate Currency Participation therein, all payments in respect thereof
and interest accrued thereon and all payments made by and to each Participating
Alternate Currency Lender pursuant to this Section 3.18.

(b) Settlement Procedures for Alternate Currency Revolving Loan Participations.
Each Participating Alternate Currency Lender’s Alternate Currency Participation
in the Alternate Currency Revolving Loans shall be in an amount equal to its pro
rata share of all such Alternate Currency Revolving Loans. However, in order to
facilitate the administration of the Alternate Currency Revolving Loans made by
Bear Stearns Corporate Lending Inc. and the Alternate Currency Participations,
settlement among Bear Stearns Corporate Lending Inc. and the Participating
Alternate Currency Lenders with regard to the Participating Alternate Currency
Lenders’ Alternate Currency Participations shall take place in accordance with
the following provisions:

(i) Bear Stearns Corporate Lending Inc. and the Participating Alternate Currency
Lenders shall settle (an “Alternate Currency Participation Settlement”) by
payments in respect of the Alternate Currency Participations as follows: So long
as any Alternate Currency Revolving Loans are outstanding, Alternate Currency
Participation Settlements shall be effected through Administrative Agent on such
Business Days as Administrative Agent shall specify by a notice by telecopy,
telephone or similar form of notice to each Participating Alternate Currency
Lender requesting such Alternate Currency Participation Settlement (each such
date on which an Alternate Currency Participation Settlement occurs herein
called an “Alternate Currency Participation Settlement Date”), such notice to be
delivered no later than 2:00 p.m. (New York City time) at least two Business Day
prior to the requested Alternate Currency Participation Settlement Date;
provided, that Administrative Agent shall have the option but not the obligation
to specify an Alternate Currency Participation Settlement Date and, in any
event, shall not specify an Alternate Currency Participation Settlement Date
prior to the occurrence of an Event of Default;

 

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provided, further, that if (x) such Event of Default is waived in writing in
accordance with the terms hereof, (y) no Obligations have yet been declared due
and payable under Section 9 and (z) Administrative Agent has actual knowledge of
such cure or waiver, all prior to Administrative Agent’s giving notice to the
Participating Alternate Currency Lenders of the first Alternate Currency
Participation Settlement Date under this Agreement, then Administrative Agent
shall not give notice to the Participating Alternate Currency Lenders of an
Alternate Currency Participation Settlement Date based upon such cured or waived
Event of Default. If on any Alternate Currency Participation Settlement Date the
total principal amount of the Alternate Currency Revolving Loans made or deemed
made by Bear Stearns Corporate Lending Inc. during the period ending on (but
excluding) such Alternate Currency Settlement Date and commencing on (and
including) the immediately preceding Alternate Currency Participation Settlement
Date (or the Closing Date in the case of the period ending on the first
Alternate Currency Participation Settlement Date) (each such period herein
called a “Alternate Currency Participation Settlement Period”) is greater than
the principal amount of Alternate Currency Revolving Loans repaid during such
Alternate Currency Participation Settlement Period to Bear Stearns Corporate
Lending Inc., each Participating Alternate Currency Lender shall pay to Bear
Stearns Corporate Lending Inc. (through Administrative Agent), no later than
2:00 p.m. (New York City time) on such Alternate Currency Participation
Settlement Date, an amount equal to such Participating Alternate Currency
Lender’s ratable share of the amount of such excess. If in any Alternate
Currency Participation Settlement Period the outstanding principal amount of the
Alternate Currency Revolving Loans repaid to Bear Stearns Corporate Lending Inc.
in such period exceeds the total principal amount of the Alternate Currency
Revolving Loans made or deemed made by Bear Stearns Corporate Lending Inc.
during such period, Bear Stearns Corporate Lending Inc. shall pay to each
Participating Alternate Currency Lender (through Administrative Agent) on such
Alternate Currency Participation Settlement Date an amount equal to such
Participating Alternate Currency Lender’s ratable share of such excess.
Alternate Currency Participation Settlements in respect of Alternate Currency
Revolving Loans shall be made in an Alternate Currency (or Dollar Equivalent) on
the Alternate Currency Participation Settlement Date for such Alternate Currency
Revolving Loans.

(ii) If any Participating Alternate Currency Lender fails to pay to Bear Stearns
Corporate Lending Inc. on any Alternate Currency Participation Settlement Date
the full amount required to be paid by such Participating Alternate Currency
Lender to Bear Stearns Corporate Lending Inc. on such Alternate Currency
Participation Settlement Date in respect of such Participating Alternate
Currency Lender’s Alternate Currency Participation (such Participating Alternate
Currency Lender’s “Alternate Currency Participation Settlement Amount”) with
Bear Stearns Corporate Lending Inc., Bear Stearns Corporate Lending Inc. shall
be entitled to recover such unpaid amount from such Participating Alternate
Currency Lender, together with interest thereon (in the same respective currency
or currencies as the relevant Alternate Currency

 

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Revolving Loans) at the Federal Funds Effective Rate with respect to Loans
denominated in an Alternate Currency. Without limiting Bear Stearns Corporate
Lending Inc.’s rights to recover from any Participating Alternate Currency
Lender any unpaid Alternate Currency Participation Settlement Amount payable by
such Participating Alternate Currency Lender to Bear Stearns Corporate Lending
Inc., Administrative Agent shall also be entitled to withhold from amounts
otherwise payable to such Participating Alternate Currency Lender an amount
equal to such Participating Alternate Currency Lender’s unpaid Alternate
Currency Participation Settlement Amount owing to Bear Stearns Corporate Lending
Inc. and apply such withheld amount to the payment of any unpaid Alternate
Currency Participation Settlement Amount owing by such Participating Alternate
Currency Lender to Bear Stearns Corporate Lending Inc.

(iii) Whenever, at any time after Bear Stearns Corporate Lending Inc. has
received from any Participating Alternate Currency Lender such Participating
Alternate Currency Lender’s Alternate Currency Participation Settlement Amount,
Bear Stearns Corporate Lending Inc. receives any payment on account of the
Alternate Currency Revolving Loans, Bear Stearns Corporate Lending Inc. will
distribute to such Participating Alternate Currency Lender its Alternate
Currency Participation Settlement Amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Participating
Alternate Currency Lender’s Alternate Currency Participation was outstanding and
funded and, in the case of principal and interest payments, to reflect such
Participating Alternate Currency Lender’s pro rata portion of such payment if
such payment is not sufficient to pay the principal of and interest on all
Alternate Currency Revolving Loans then due); provided, however, that in the
event that such payment received by Bear Stearns Corporate Lending Inc. is
required to be returned, such Participating Alternate Currency Lender will
return to Bear Stearns Corporate Lending Inc. any portion thereof previously
distributed to it by Bear Stearns Corporate Lending Inc.

(iv) Following the first Alternate Currency Participation Settlement Date,
Administrative Agent shall effect an Alternate Currency Participation Settlement
on each subsequent Alternate Currency Participation Settlement Date or within 1
Business Day thereafter.

(c) Obligations Irrevocable. The obligations of each Participating Alternate
Currency Lender to purchase from Bear Stearns Corporate Lending Inc. a
participation in each Alternate Currency Revolving Loan made by Bear Stearns
Corporate Lending Inc. and to make payments to Bear Stearns Corporate Lending
Inc. with respect to such participation, in each case as provided herein, shall
be irrevocable and not subject to any qualification or exception whatsoever,
including any of the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other
Loan Documents or of any Revolving Loans, against the Borrower or any Loan
Party;

 

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(ii) the existence of any claim, setoff, defense or other right which the
Borrower or any Loan Party may have at any time in respect of any Alternate
Currency Revolving Loans;

(iii) any application or misapplication of any proceeds of any Alternate
Currency Revolving Loans;

(iv) the surrender or impairment of any security for any Alternate Currency
Revolving Loans;

(v) the occurrence of any Default or Event of Default;

(vi) the commencement or pendency of any events specified in Section 9(f)
hereof, in respect of the Borrower or any Subsidiary thereof or any other
Person; or

(vii) the failure to satisfy the applicable conditions precedent set forth in
Section 6 hereof.

(d) Recovery or Avoidance of Payments. In the event any payment by or on behalf
of the Borrower or any other Loan Party received by Administrative Agent with
respect to any Alternate Currency Revolving Loan made by Bear Stearns Corporate
Lending Inc. is thereafter set aside, avoided or recovered from Administrative
Agent in connection with any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding under any state bankruptcy or similar law, or due to
any mistake of law or fact, each Participating Alternate Currency Lender shall,
upon demand by Administrative Agent, pay to Bear Stearns Corporate Lending Inc.
(through Administrative Agent) such Participating Alternate Currency Lender’s
pro rata share of such amount set aside, avoided or recovered, together with
interest at the rate and in the currency required to be paid by Bear Stearns
Corporate Lending Inc. or Administrative Agent upon the amount required to be
repaid by it.

(e) Indemnification by Lenders. Each Participating Alternate Currency Lender
agrees to indemnify Bear Stearns Corporate Lending Inc. (to the extent not
reimbursed by the Borrower and without limiting the obligations of the Borrower
hereunder or under any other Loan Document) ratably for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorneys’ fees) or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against Bear Stearns
Corporate Lending Inc. in any way relating to or arising out of any Alternate
Currency Revolving Loans or any action taken or omitted by Bear Stearns
Corporate Lending Inc. in connection therewith; provided that no Participating
Alternate Currency Lender shall be liable for any of the foregoing to the extent
it arises from the gross negligence or willful misconduct of Bear Stearns
Corporate Lending Inc. Without limiting the foregoing, each Participating
Alternate Currency Lender agrees to reimburse Bear Stearns Corporate Lending
Inc. promptly upon demand for such Participating Alternate Currency Lender’s
ratable share of any costs or expenses payable by the Borrower to Bear Stearns
Corporate Lending Inc. in respect of the Alternate Currency Revolving Loans to
the extent that Bear Stearns Corporate Lending Inc. is

 

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not promptly reimbursed for such costs and expenses by the Borrower. The
agreement contained in this Section 3.18 (e) shall survive payment in full of
all Alternate Currency Revolving Loans.

(f) Alternate Currency Revolving Loan Participation Fee. In consideration for
each Participating Alternate Currency Lender’s participation in the Alternate
Currency Revolving Loans made by Bear Stearns Corporate Lending Inc., Bear
Stearns Corporate Lending Inc. agrees to pay to Administrative Agent for the
account of each Participating Alternate Currency Lender, as and when Bear
Stearns Corporate Lending Inc. receives payment of interest on its Alternate
Currency Revolving Loans, a fee (the “Alternate Currency Participation Fee”) at
a rate per annum equal to the Applicable Margin on such Alternate Currency
Revolving Loans minus 0.25% on the Unfunded Alternate Currency Participation of
such Participating Alternate Currency Lender in such Alternate Currency
Revolving Loans of Bear Stearns Corporate Lending Inc. The Alternate Currency
Participation Fee in respect of any Unfunded Alternate Currency Participation in
an Alternate Currency Revolving Loan shall be payable to Administrative Agent in
an Alternate Currency when interest on such Alternate Currency Revolving Loan is
received by Bear Stearns Corporate Lending Inc. If Bear Stearns Corporate
Lending Inc. does not receive payment in full of such interest, the Alternate
Currency Participation Fee in respect of the Unfunded Alternate Currency
Participation in such Alternate Currency Revolving Loans shall be reduced
proportionately.

3.19 Judgment Currency.

(a) If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due hereunder in any currency (the “Original Currency”) into
another currency (the “Other Currency”) the parties hereto agree, to the fullest
extent that they may effectively do so under applicable law, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures the Administrative Agent could purchase the Original Currency with
the Other Currency at 11:00 A.M. (New York City time) on the second Business Day
preceding that on which final judgment is given.

(b) The obligation of the Borrower in respect of any sum due in the Original
Currency from it to any Lender or any Agent hereunder shall, notwithstanding any
judgment in any Other Currency, be discharged only to the extent that on the
Business Day following receipt by such Lender or such Agent (as the case may be)
of any sum adjudged to be so due in such Other Currency such Lender or such
Agent (as the case may be) may in accordance with normal banking procedures
purchase the Original Currency with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Lender or such Agent (as the case may be) in the Original Currency, the Borrower
agrees, as a separate obligation and notwithstanding any such judgment, to
indemnify such Lender or such Agent (as the case may be) against such loss, and
if the amount of the Original Currency so purchased exceeds the sum originally
due to any Lender or such Agent (as the case may be) in the Original Currency,
such Lender or such Agent (as the case may be) agrees to remit to the Borrower
such excess.

 

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SECTION 4.

GENERAL PROVISIONS APPLICABLE

TO LOANS AND LETTERS OF CREDIT

4.1 Optional Prepayments. The Borrower may at any time and from time to time
prepay the Revolving Loans (in Dollars, with respect to Dollar Loans, or in the
applicable Alternate Currency, with respect to Alternate Currency Loans), and
the Term Loans, in whole or in part, without premium or penalty, upon
irrevocable notice delivered by Borrower to the Administrative Agent no later
than 11:00 A.M., New York City time, three Business Days prior thereto, in the
case of Eurodollar Loans, and no later than 11:00 A.M., New York City time, one
Business Day prior thereto, in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided, that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 4.11.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Loans that are Base Rate Loans and
Swingline Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Partial prepayments of
Swingline Loans shall be in an aggregate principal amount of $100,000 or a whole
multiple thereof.

4.2 Mandatory Prepayments and Commitment Reductions.

(a) If any Indebtedness shall be incurred by any Group Member (other than
Excluded Indebtedness), an amount equal to 100% of the Net Cash Proceeds thereof
shall be applied on the date of such issuance, incurrence or contribution toward
the prepayment of the Term Loans and the reduction of the Revolving Commitments
as set forth in Section 4.2(d).

(b) If on any date any Group Member shall receive (X) Net Cash Proceeds from any
Asset Sale (other than an Asset Sale resulting from the issuance by a Group
Member of Capital Stock) or (Y) Net Cash Proceeds from any Recovery Event in
excess of $5,000,000 during the term of this Agreement, then, unless a
Reinvestment Notice shall be delivered in respect thereof, an amount equal to
100% of such Net Cash Proceeds shall be applied on such date toward the
prepayment of the Term Loans and the reduction of the Revolving Commitments as
set forth in Section 4.2(e); provided, that, notwithstanding the foregoing, on
each Reinvestment Prepayment Date, an amount equal to the Reinvestment
Prepayment Amount with respect to the relevant Reinvestment Event shall be
applied toward the prepayment of the Term Loans and the reduction of the
Revolving Commitments as set forth in Section 4.2(d).

(c) If, for any fiscal year of the Borrower, commencing with the fiscal year
ending December 31, 2007, there shall be Excess Cash Flow, the Borrower shall,
on the relevant Excess Cash Flow Application Date, apply the ECF Percentage of
such Excess Cash Flow toward the prepayment of the Term Loans and the reduction
of the Revolving Commitments as set forth in Section 4.2(d). Each such
prepayment and commitment reduction shall be made on a

 

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date (an “Excess Cash Flow Application Date”) no later than five days after the
earlier of (i) the date on which the financial statements of the Borrower
referred to in Section 7.1(a), for the fiscal year with respect to which such
prepayment is made, are required to be delivered to the Lenders and (ii) the
date such financial statements are actually delivered.

(d) Amounts to be applied in connection with prepayments and Commitment
reductions made pursuant to Section 4.2 shall be applied, first, to the
prepayment of the Term Loans until paid in full, second, to prepayment of the
Revolving Loans and Swingline Loans without permanently reducing the Revolving
Commitments and third, to replace outstanding Letters of Credit and/or deposit
an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent without permanently reducing the
Revolving Commitment. The application of any prepayment pursuant to Section 4.2
shall be made, first, to Base Rate Loans and, second, to Eurodollar Loans. Each
prepayment of the Loans under Section 4.2 (except in the case of Revolving Loans
that are Base Rate Loans and Swingline Loans) shall be accompanied by accrued
interest to the date of such prepayment on the amount prepaid.

(e) Notwithstanding anything to the contrary in Section 4.2 or 4.8, with respect
to mandatory prepayments and the amount of any mandatory prepayment described in
Section 4.2 that is allocated to Tranche B Term Loans (such amount, the
“Tranche B Prepayment Amount”), the Borrower will, in lieu of applying such
amount to the prepayment of Tranche B Term Loans, as provided in paragraph (d)
above, on the date specified in Section 4.2 for such prepayment, give the
Administrative Agent telephonic notice (promptly confirmed in writing)
requesting that the Administrative Agent prepare and provide to each Tranche B
Term Lender a notice (each, a “Prepayment Option Notice”) as described below. As
promptly as practicable after receiving such notice from the Borrower, the
Administrative Agent will send to each Tranche B Term Lender a Prepayment Option
Notice, which shall be in the form of Exhibit E, and shall include an offer by
the Borrower to prepay the relevant Tranche B Term Loans of such Lender by an
amount equal to the portion of the Tranche B Prepayment Amount indicated in such
Lender’s Prepayment Option Notice as being applicable to such Lender’s Tranche B
Term Loans. Each Tranche B Term Lender shall have 10 Business Days after the
date of the Prepayment Option Notice (a “Mandatory Prepayment Date”) to elect,
as more fully set forth in the Prepayment Option Notice as provided by the
Administrative Agent, to receive or refuse such prepayment. On the Mandatory
Prepayment Date, (i) the Borrower shall pay to the relevant Tranche B Term
Lenders the aggregate amount necessary to prepay that portion of the outstanding
relevant Tranche B Term Loans in respect of which such Tranche B Term Lenders
have accepted prepayment as described above, (ii) the Borrower shall use an
amount equal to the portion of the Tranche B Prepayment Amount not accepted by
the relevant Tranche B Term Lenders to refinance or repay any Existing Valassis
Indebtedness; provided, that in the event a Tranche B Term Lender does not
return a completed Prepayment Option Notice accepting or declining (as the case
may be) prepayment on or prior to the Mandatory Prepayment Date, then such
Tranche B Term Lender shall either, as more fully set forth in the Prepayment
Option Notice as provided by the Administrative Agent, not receive or receive
(as the case may be) its pro rata share of the Tranche B Prepayment Amount.

4.3 Conversion and Continuation Options. (a) The Borrower may elect from time to
time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative
Agent

 

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prior irrevocable notice of such election no later than 11:00 A.M.,
New York City time, on the Business Day preceding the proposed conversion date,
provided that any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto provided, further, that the
Borrower shall not, at any time, be permitted to convert a Eurodollar Loan that
is an Alternate Currency Loan into a Base Rate Loan. The Borrower may elect from
time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agent prior irrevocable notice of such election no later than
11:00 A.M., New York City time, on the third Business Day preceding the proposed
conversion date (which notice shall specify the length of the initial Interest
Period therefor), provided that no Base Rate Loan under a particular Facility
may be converted into a Eurodollar Loan when any Event of Default has occurred
and is continuing and the Administrative Agent or the Majority Facility Lenders
in respect of such Facility have determined in its or their sole discretion not
to permit such conversions. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.

(b) Any Eurodollar Loan may be continued as such upon the expiration of the then
current Interest Period with respect thereto by the Borrower giving irrevocable
notice to the Administrative Agent, in accordance with the applicable provisions
of the term “Interest Period” set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan under a particular Facility may be continued as such when any Event of
Default has occurred and is continuing and the Administrative Agent has or the
Majority Facility Lenders in respect of such Facility have determined in its or
their sole discretion not to permit such continuations, and provided, further,
that if the Borrower shall fail to give any required notice as described above
in this paragraph or if such continuation is not permitted pursuant to the
preceding proviso (i) such Eurodollar Loans that are Dollar Loans shall be
automatically converted to Base Rate Loans on the last day of such then expiring
Interest Period and (ii) such Eurodollar Loans that are Alternate Currency Loans
shall be continued as Eurodollar Loans with an Interest Period of 1 month. Upon
receipt of any such notice the Administrative Agent shall promptly notify each
relevant Lender thereof.

4.4 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary
in this Agreement, all borrowings, conversions and continuations of Eurodollar
Loans hereunder and all selections of Interest Periods hereunder shall be in
such amounts and be made pursuant to such elections so that, (a) after giving
effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole
multiple of $1,000,000 in excess thereof and (b) no more than ten Eurodollar
Tranches shall be outstanding at any one time.

4.5 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

(b) Each Base Rate Loan shall bear interest at a rate per annum equal to the
Base Rate plus the Applicable Margin.

(c) (i) If all or a portion of the principal amount of any Loan or Reimbursement
Obligation shall not be paid when due (whether at the stated maturity, by

 

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acceleration or otherwise), all outstanding Loans and Reimbursement Obligations
(whether or not overdue) shall bear interest at a rate per annum equal to (x) in
the case of the Loans, the rate that would otherwise be applicable thereto
pursuant to the foregoing provisions of this Section plus 2% or (y) in the case
of Reimbursement Obligations, the rate applicable to Base Rate Loans under the
Revolving Facility plus 2%, and (ii) if all or a portion of any interest payable
on any Loan or Reimbursement Obligation or any commitment fee or other amount
payable hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans under the
relevant Facility plus 2% (or, in the case of any such other amounts that do not
relate to a particular Facility, the rate then applicable to Base Rate Loans
under the Revolving Facility plus 2%), in each case, with respect to clauses
(i) and (ii) above, from the date of such non-payment until such amount is paid
in full (after as well as before judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date, provided
that interest accruing pursuant to paragraph (c) of this Section shall be
payable from time to time on demand.

(e) In the event that the information contained in any financial statement or
Compliance Certificate delivered pursuant to Section 7.2(b) is shown to be
inaccurate, and such inaccuracy, if corrected, would have led to the application
of a higher Applicable Margin for any period (an “Applicable Period”) than the
Applicable Margin actually applied for such Applicable Period, then (i) the
Borrower shall immediately deliver to the Administrative Agent a correct
Compliance Certificate for such Applicable Period, (ii) the Applicable Margin
shall be determined as if Level I (as set forth in the Pricing Grid) were
applicable for such Applicable Period, and (iii) the Borrower shall promptly
deliver to the Administrative Agent full payment in respect of the accrued
additional interest on the Loans as a result of such increased Applicable Margin
for such Applicable Period, which payment shall be promptly applied by the
Administrative Agent in accordance with Section 6.5 of the Guarantee, Security
and Collateral Agency Agreement. Further, in the event that, following delivery
of a Compliance Certificate pursuant to Section 7.2(b), the Applicable Margin is
inadvertently not increased on the relevant Adjustment Date to the extent
required pursuant to the definition thereof, the Borrower shall deliver to the
Administrative Agent, within five (5) Business Days after any Loan Party obtains
knowledge thereof (whether by notice from any Agent or Lender or otherwise),
full payment in respect of the accrued additional interest on the Loans as a
result of such increased Applicable Margin for such Applicable Period, which
payment shall be promptly applied by the Administrative Agent in accordance with
Section 6.5 of the Guarantee, Security and Collateral Agency Agreement (it being
understood that to the extent that the Applicable Margin is inadvertently not
decreased on the relevant Adjustment Date to the extent required pursuant to the
definition thereof, the Administrative Agent and the Lenders shall have no
liability to any Loan Party to refund any excess interest above that to which
such Persons otherwise were entitled unless the Borrower notifies the
Administrative Agent of such matter within thirty (30) Business Days of the
relevant Adjustment Date). It is understood that this Section 4.5(e) shall in no
way limit the rights of the Agents and Lenders to exercise their rights under
Section 4.5(c) or Section 9.

4.6 Computation of Interest and Fees. (a) Interest and fees payable pursuant
hereto shall be calculated on the basis of a 360-day year for the actual days
elapsed, except that,

 

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with respect to Base Rate Loans the rate of interest of which is calculated on
the basis of the Prime Rate, the interest thereon shall be calculated on the
basis of a 365- (or 366-, as the case may be) day year for the actual days
elapsed. The Administrative Agent shall as soon as practicable notify the
Borrower and the relevant Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the Base
Rate or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
relevant Lenders of the effective date and the amount of each such change in
interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant
to any provision of this Agreement shall be conclusive and binding on the
Borrower and the Lenders in the absence of manifest error. The Administrative
Agent shall, at the request of the Borrower, deliver to the Borrower a statement
showing the quotations used by the Administrative Agent in determining any
interest rate pursuant to Section 4.5(a).

4.7 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

(a) the Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Majority
Facility Lenders in respect of the relevant Facility that the Eurodollar Rate
determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Loans during such Interest
Period,

then the Administrative Agent shall give telecopy or telephonic notice, promptly
followed in writing, thereof to the Borrower and the relevant Lenders as soon as
practicable thereafter. If such notice is given (x) any Eurodollar Loans under
the relevant Facility requested to be made on the first day of such Interest
Period shall be made as Base Rate Loans, (y) any Loans under the relevant
Facility that were to have been converted on the first day of such Interest
Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any
outstanding Eurodollar Loans under the relevant Facility shall be converted, on
the last day of the then-current Interest Period, to Base Rate Loans. Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans under the relevant Facility shall be made or continued as such, nor shall
the Borrower have the right to convert Loans under the relevant Facility to
Eurodollar Loans.

4.8 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from the
Lenders hereunder, each payment by the Borrower on account of any commitment fee
and any reduction of the Commitments of the Lenders shall be made pro rata
according to the respective Tranche B Term Percentages, Delayed Draw Term Loan
Percentages or Revolving Percentages, as the case may be, of the relevant
Lenders.

 

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(b) Subject to Section 4.2(e), each payment (including each prepayment) by the
Borrower on account of principal of and interest on the Term Loans shall be made
pro rata according to the respective outstanding principal amounts of the Term
Loans then held by the Term Lenders (except as otherwise provided in
Section 4.2(e)). Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Delayed Draw Term Loans shall be
made pro rata according to the Funded Delayed Draw Term Loan Percentages of the
Delayed Draw Term Lenders. The amount of each principal prepayment of the Term
Loans shall be applied to reduce the then remaining installments of the Term
Loans, pro rata based upon the then remaining principal amount thereof. Amounts
prepaid on account of the Term Loans may not be reborrowed.

(c) Each payment (including each prepayment) by the Borrower on account of
principal of and interest on the Revolving Loans shall be made pro rata
according to the respective outstanding principal amounts of the Revolving Loans
then held by the Revolving Lenders.

(d) All payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise, shall be made
without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Funding Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any payment of principal pursuant to the preceding two
sentences, interest thereon shall be payable at the then applicable rate during
such extension.

(e) Unless the Administrative Agent shall have been notified in writing by any
Lender prior to a borrowing that such Lender will not make the amount that would
constitute its share of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent, and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower a corresponding
amount. If such amount is not made available to the Administrative Agent by the
required time on the Borrowing Date therefor, such Lender shall pay to the
Administrative Agent, on demand, such amount with interest thereon at a rate
equal to the greater of (i) the Federal Funds Effective Rate and (ii) a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this paragraph shall be conclusive in the absence of manifest error. If
such Lender’s share of such borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of such Borrowing
Date, the Administrative Agent shall also be entitled to recover such amount
with interest thereon at the rate per annum applicable to Base Rate Loans

 

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under the relevant Facility, on demand, from the Borrower. If the Borrower and
such Lender shall pay such interest to the Administrative Agent for the same or
an overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. In
addition to the rights described above, in the event that the Administrative
Agent shall make available to the Borrower all or any portion of the Loans of
any Lender on a Borrowing Date and such Lender shall fail to make available to
the Administrative Agent a corresponding amount by 5:00 P.M. New York City time
within one Business Day of such Borrowing Date, the Administrative Agent in its
sole discretion shall be entitled to immediately, and without further action on
part of such Lender, register a transfer of such Lender’s Loans to a replacement
Lender, which shall be the Administrative Agent. The Administrative Agent agrees
to purchase any such Loans at par and in accordance with Section 11.6 (other
than the requirement for the signature of the defaulting Lender on the
applicable Assignment and Assumption in connection with such transfer). In
addition to any other remedies the Borrower or the Administrative Agent may have
against such defaulting Lender, the Administrative Agent shall be entitled to
recover from such defaulting Lender the difference (if positive) between par and
the amount for which it is able to sell such purchased Loans in the secondary
market. Nothing in this paragraph shall be deemed to limit the rights of the
Borrower against any such Lender. Nothing herein shall relieve any Lender from
its obligations hereunder or prejudice any rights the Borrower or the
Administrative Agent may have against any Lender which fails to perform its
obligations under this Agreement.

(f) Unless the Administrative Agent shall have been notified in writing by the
Borrower prior to the date of any payment due to be made by the Borrower
hereunder that the Borrower will not make such payment to the Administrative
Agent, the Administrative Agent may assume that the Borrower is making such
payment, and the Administrative Agent may, but shall not be required to, in
reliance upon such assumption, make available to the Lenders their respective
pro rata shares of a corresponding amount. If such payment is not made to the
Administrative Agent by the Borrower within three Business Days after such due
date, the Administrative Agent shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the daily average Federal Funds Effective Rate. Nothing herein shall be
deemed to limit the rights of the Administrative Agent or any Lender against the
Borrower.

4.9 Requirements of Law. (a) If the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having the force of law)
from any central bank or other Governmental Authority made subsequent to the
date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any Application or any Eurodollar Loan
made by it, or change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by Section 4.10 and
changes in the rate of tax on the overall net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits

 

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or other liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by, any office of
such Lender that is not otherwise included in the determination of the
Eurodollar Rate hereunder; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount that such Lender in its commercially reasonable judgment deems to
be material, of making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower
shall pay such Lender any additional amounts necessary to compensate such Lender
for such increased cost or reduced amount receivable, no more than five
(5) Business Days following the receipt by the Borrower of the certificate
referenced in clause (c) of this Section 4.9. If any Lender becomes entitled to
claim any additional amounts pursuant to this paragraph, it shall promptly
notify the Borrower (with a copy to the Administrative Agent) of the event by
reason of which it has become so entitled.

(b) If any Lender shall have determined that the adoption of or any change in
any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on such
Lender’s or such corporation’s capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that
which such Lender or such corporation could have achieved but for such adoption,
change or compliance (taking into consideration such Lender’s or such
corporation’s policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, then from time to time, after submission by such
Lender to the Borrower (with a copy to the Administrative Agent) of a written
request therefor, the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such corporation for such
reduction.

(c) A certificate as to any additional amounts payable pursuant to this
Section 4.9 submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of demonstrable error.
The Borrower shall pay any such Lender the amount shown as due on any such
certificate within five (5) Business Days after receipt thereof. Notwithstanding
anything to the contrary in this Section 4.9, the Borrower shall not be required
to compensate a Lender pursuant to this Section 4.9 for any amounts incurred
more than four months prior to the date that such Lender notifies the Borrower
of such Lender’s intention to claim compensation therefor; provided that, if the
circumstances giving rise to such claim have a retroactive effect, then such
four-month period shall be extended to include the period of such retroactive
effect. The obligations of the Borrower pursuant to this Section 4.9 shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

4.10 Taxes. (a) All payments made by the Borrower under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions

 

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or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender
as a result of a present or former connection between such Agent or such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement, provided, however, that the Borrower
shall not be required to increase any such amounts payable to any Lender with
respect to any Non-Excluded Taxes (i) that are attributable to such Lender’s
failure to comply with the requirements of paragraph (d) or (e) of this Section
or (ii) that are United States withholding taxes imposed on amounts payable to
such Lender at the time such Lender becomes a party to this Agreement, except to
the extent that such Lender’s assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to this paragraph.

(b) In addition, the Borrower agrees to pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower,
as promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of the relevant Agent or Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Agents and the
Lenders for any incremental taxes, interest or penalties that may become payable
by any Agent or any Lender as a result of any such failure.

(d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in
Section 7701(a)(30) of the Code (a “Non-U.S. Lender”) shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender

 

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shall deliver such forms promptly upon the obsolescence or invalidity of any
form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall
promptly notify the Borrower at any time it determines that it is no longer in a
position to provide any previously delivered certificate to the Borrower (or any
other form of certification adopted by the U.S. taxing authorities for such
purpose). Notwithstanding any other provision of this paragraph, a Non-U.S.
Lender shall not be required to deliver any form pursuant to this paragraph that
such Non-U.S. Lender is not legally able to deliver.

(e) A Lender that is entitled to an exemption from or reduction of non-U.S.
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender’s reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

(f) If any Administrative Agent or any Lender determines, in its sole
discretion, that it has received a refund of any Non-Excluded Taxes or Other
Taxes as to which it has been indemnified by the Borrower or with respect to
which the Borrower has paid additional amounts pursuant to this Section 4.10, it
shall pay over such refund to the Borrower (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrower under this
Section 4.10 with respect to the Non-Excluded Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of such Agent or such Lender
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of such Agent or such Lender, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to such Agent or such Lender in the event such
Agent or such Lender is required to repay such refund to such Governmental
Authority. This paragraph shall not be construed to require any Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.

(g) The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.

4.11 Indemnity. The Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense that such Lender may sustain or incur
as a consequence of (a) default by the Borrower in making a borrowing of,
conversion into or continuation of Eurodollar Loans after the Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment of or conversion
from Eurodollar Loans after the Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day that is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest

 

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that would have accrued on the amount so prepaid, or not so borrowed, converted
or continued, for the period from the date of such prepayment or of such failure
to borrow, convert or continue to the last day of such Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) that would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.

4.12 Change of Lending Office. Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 4.9 or 4.10(a) with respect to
such Lender, it will, if requested by the Borrower, use reasonable efforts
(subject to overall policy considerations of such Lender) to designate another
lending office for any Loans affected by such event with the object of avoiding
the consequences of such event; provided, that such designation is made on terms
that, in the sole judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section shall affect or postpone any of the
obligations of the Borrower or the rights of any Lender pursuant to Section 4.9
or 4.10(a).

4.13 Replacement of Lenders. The Borrower shall be permitted to replace any
Lender that (a) requests reimbursement for amounts owing pursuant to Section 4.9
or 4.10(a) or (b) defaults in its obligation to make Loans hereunder, with a
replacement financial institution; provided that (i) such replacement does not
conflict with any Requirement of Law, (ii) no Event of Default shall have
occurred and be continuing at the time of such replacement, (iii) prior to any
such replacement, such Lender shall have taken no action under Section 4.12 so
as to eliminate the continued need for payment of amounts owing pursuant to
Section 4.9 or 4.10(a), (iv) the replaced financial institution shall have
received payment of an amount equal to the outstanding principal of its Loans,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder and under the other Loan Documents from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts), (v) the Borrower shall be liable to such
replaced Lender under Section 4.11 if any Eurodollar Loan owing to such replaced
Lender shall be purchased other than on the last day of the Interest Period
relating thereto, (vi) the replacement financial institution, if not already a
Lender, shall be reasonably satisfactory to the Administrative Agent, (vii) the
replaced Lender shall be obligated to make such replacement in accordance with
the provisions of Section 11.6 (provided that the Borrower shall be obligated to
pay the registration and processing fee referred to therein), (viii) until such
time as such replacement shall be consummated, the Borrower shall pay all
additional amounts (if any) required pursuant to Section 4.9 or 4.10(a), as the
case may be, and (ix) any such replacement shall not be deemed to be a waiver of
any rights that the Borrower, the Administrative Agent or any other Lender shall
have against the replaced Lender.

4.14 Evidence of Debt. (a) Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing indebtedness of the Borrower to
such Lender

 

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resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.

(b) The Administrative Agent, on behalf of the Borrower, shall maintain the
Register pursuant to Section 11.6(d), and a subaccount therein for each Lender,
in which shall be recorded (i) the amount of each Loan made hereunder and any
Note evidencing such Loan, the Type of such Loan and each Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from the Borrower and each Lender’s share thereof.

(c) The entries made in the Register and the accounts of each Lender maintained
pursuant to Section 4.14(a) shall, to the extent permitted by applicable law, be
prima facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any Lender or
the Administrative Agent to maintain the Register or any such account, or any
error therein, shall not in any manner affect the obligation of the Borrower to
repay (with applicable interest) the Loans made to the Borrower by such Lender
in accordance with the terms of this Agreement.

(d) The Borrower agrees that, upon the request to the Administrative Agent by
any Lender, the Borrower will execute and deliver to such Lender a promissory
note evidencing any Term Loans, Revolving Loans or Swingline Loans, as the case
may be, of such Lender, substantially in the forms of Exhibit G-1, G-2, G-3 or
G-4, respectively, with appropriate insertions as to date and principal amount.

4.15 Illegality. Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Loans or fund an Alternate Currency Loan, each as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make Eurodollar Loans,
continue Eurodollar Loans as such, convert Base Rate Loans to Eurodollar Loans
or fund an Alternate Currency Loan shall forthwith be canceled and (b) such
Lender’s Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then current
Interest Periods with respect to such Eurodollar Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 4.11.

 

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SECTION 5.

REPRESENTATIONS AND WARRANTIES

To induce the Agents and the Lenders to enter into this Agreement and to make
the Loans and issue or participate in the Letters of Credit, the Borrower hereby
represents and warrants to each Agent and each Secured Party that:

5.1 Financial Condition. (a) The unaudited pro forma consolidated balance sheet
of Valassis and its consolidated Subsidiaries as at December 31, 2006 (including
the notes thereto) (the “Pro Forma Balance Sheet”), copies of which have
heretofore been furnished to each Lender, has been prepared giving effect (as if
such events had occurred on such date) to (i) the consummation of the
Acquisition, (ii) the Loans to be made on the Closing Date and the use of
proceeds thereof and (iii) the payment of fees and expenses in connection with
the foregoing. The Pro Forma Balance Sheet has been prepared based on the best
information available to Valassis as of the date of delivery thereof, and
presents fairly on a pro forma basis the estimated financial position of
Valassis and its consolidated Subsidiaries as at September 30, 2006, assuming
that the events specified in the preceding sentence had actually occurred at
such date.

(b) The audited consolidated balance sheets of Valassis and its Subsidiaries as
at December 31, 2003, December 31, 2004 and December 31, 2005, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Deloitte & Touche, present fairly the consolidated financial condition of
Valassis and its Subsidiaries as at such date, and the consolidated results of
its operations and its consolidated cash flows for the respective fiscal years
then ended. The unaudited consolidated balance sheet of Valassis and its
Subsidiaries as at September 30, 2006, and the related unaudited consolidated
statements of income and cash flows for the nine-month period ended on such
date, present fairly the consolidated financial condition of Valassis and its
Subsidiaries as at such date, and the consolidated results of its operations and
its consolidated cash flows for the six-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). No Group Member has
any material Guarantee Obligations, contingent liabilities and liabilities for
taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in this paragraph and the following
paragraph (c). During the period from December 31, 2005 to and including the
date hereof there has been no Disposition by Valassis or any of its Subsidiaries
of any material part of their business or property, taken as a whole.

(c) The audited consolidated balance sheets of Target and its Subsidiaries as at
September 25, 2004, September 24, 2005 and September 30, 2006, and the related
consolidated statements of income and of cash flows for the fiscal years ended
on such dates, reported on by and accompanied by an unqualified report from
Ernst & Young, present fairly the consolidated financial condition of Target and
its Subsidiaries as at such date, and the consolidated results of its operations
and its consolidated cash flows for the respective fiscal years then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein). During the period from September 24, 2005 to and
including the date hereof there has been no Disposition by the Target or any of
its Subsidiaries of any material part of their business or property, taken as a
whole.

 

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5.2 No Change. Since (a) September 30, 2006 with respect to the Target and
(b) December 31, 2006 with respect to the Borrower and its Subsidiaries other
than the Target, there has been no development, event or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect.

5.3 Corporate Existence; Compliance with Law. Each Group Member (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the power and authority, and the legal
right, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently engaged, (c) is duly
qualified as a foreign corporation or other entity and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification, except in
jurisdictions where the failure to be so qualified has not had and could not
reasonably be expected to have a Material Adverse Effect and (d) is in
compliance with all Requirements of Law except to the extent that the failure to
comply therewith could not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

5.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power
and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party, to consummate the Acquisition (in the case of
the relevant Loan Parties) and, in the case of the Borrower, to obtain
extensions of credit hereunder. Each Loan Party has taken all necessary
organizational action to authorize the execution, delivery and performance of
the Loan Documents to which it is a party, to consummate the Acquisition (in the
case of the relevant Loan Parties) and, in the case of the Borrower, to
authorize the extensions of credit on the terms and conditions of this
Agreement. No consent or authorization of, filing with, notice to or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection with the Acquisition and the extensions of credit hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement or any of the Loan Documents, except (i) consents, authorizations,
filings and notices described in Schedule 5.4, (ii) consents, authorizations,
filings and notices have been obtained or made and are in full force and effect
(except where the failure to be so obtained or in effect could not reasonably be
expected to have a Material Adverse Effect) and (iii) the filings referred to in
Section 5.19. Each Loan Document has been duly executed and delivered on behalf
of each Loan Party party thereto. This Agreement constitutes, and each other
Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).

5.5 No Legal Bar. The execution, delivery and performance of this Agreement and
the other Loan Documents, the issuance of Letters of Credit, the borrowings
hereunder and the use of the proceeds thereof and the consummation of the
Acquisition will not violate any Requirement of Law or any Contractual
Obligation of any Group Member and will not result in, or require, the creation
or imposition of any Lien on any of their respective properties or revenues
pursuant to any Requirement of Law or any such Contractual Obligation (other
than the Liens created by the Security Documents and the Liens created on the
Closing Date to secure the 6 5/8 Senior Notes and the Senior Convertible Notes).

 

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5.6 Litigation. Except as described in reasonable detail on Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Borrower,
threatened by or against any Group Member or against any of their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby, or (b) that, if not cured or
adversely determined, could reasonably be expected to have a Material Adverse
Effect.

5.7 No Default. No Group Member is in default under or with respect to any of
its Contractual Obligations (other than for the Expected Existing Target
Indebtedness Defaults) in any respect that could reasonably be expected to have
a Material Adverse Effect. No Default or Event of Default has occurred and is
continuing.

5.8 Ownership of Property; Liens. Each Group Member has title in fee simple to,
or a valid leasehold interest in, all its material real property, and good title
to, or a valid leasehold interest in, all its other material property (except
for minor defects in title that could not individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect), and none of such
property is subject to any Lien except as permitted by Section 8.3.

5.9 Intellectual Property. Each Group Member owns, or is licensed to use, all
Intellectual Property reasonably necessary for the conduct of its business as
currently conducted. Except for such claims and infringements that could not
reasonably be expected to have a Material Adverse Effect, no material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor does the Borrower have actual knowledge of any valid basis for any
such claim; and the use of Intellectual Property by each Group Member does not
infringe on the rights of any Person in any material respect.

5.10 Taxes. Except as provided on Schedule 5.10, each Group Member has filed or
caused to be filed all Federal, state and other material tax returns that are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its property and all
other material taxes, fees or other charges imposed on it or any of its property
by any Governmental Authority and no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge (other than such amounts (a) that are not yet
delinquent or (b) the validity of which are currently being contested in good
faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or its
Subsidiaries, as the case may be).

5.11 Federal Regulations. No part of the proceeds of any Loans, and no other
extensions of credit hereunder, will be used for “buying” or “carrying” any
“margin stock” within the respective meanings of each of the quoted terms under
Regulation U as now and from time to time hereafter in effect or for any purpose
that violates the provisions of the Regulations of the Board. If requested by
any Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable,
referred to in Regulation U.

 

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5.12 Labor Matters. Except as set forth on Schedule 5.12 and except as, in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:
(a) there are no strikes or other labor disputes against any Group Member
pending or, to the knowledge of the Borrower, threatened; (b) hours worked by
and payments made to employees of each Group Member have not been in violation
of the Fair Labor Standards Act or any other applicable Requirement of Law
dealing with such matters; and (c) all payments due from any Group Member on
account of employee health and welfare insurance have been paid or accrued as a
liability on the books of the relevant Group Member.

5.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No prohibited transaction within the meaning of Sections 406 and
407 of ERISA or 4975(c) of the Code has occurred with respect to any Plan that
could result in any material tax or liability to any Group Member or Commonly
Controlled Entity. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. No notice of intent to terminate a Single
Employer Plan has been filed, the PBGC has not instituted proceedings to
terminate a Single Employer Plan, and no event or condition has occurred that
constitutes grounds under Section 4041(c) or 4042 for the termination of, or the
appointment of a trustee to administer, a Single Employer Plan. No cessation of
operations at a facility has occurred that could result in liability to any
Group Member or Commonly Controlled Entity under ERISA Section 4062(e). No Group
Member or Commonly Controlled Entity has incurred liability for excise taxes
under Code Section 4971. No Group Member or any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan that has
resulted or could reasonably be expected to result in a material liability under
ERISA, and no Group Member or any Commonly Controlled Entity could reasonably be
expected to become subject to any material liability under ERISA if such Group
Member or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent. No Group Member or any Commonly Controlled
Entity has withdrawn from a Single Employer Plan subject to ERISA Section 4063
in which it was a “substantial employer” within the meaning of
Section 4001(a)(2) of ERISA, and no Group Member or Commonly Controlled Entity
could reasonably be expected to become subject to any material liability under
ERISA Section 4063 if it were to withdraw completely from all Single Employer
Plans subject to Section 4063 in which such Group Member or any Commonly
Controlled Entity was a “substantial employer”.

5.14 Investment Company Act; Other Regulations. No Loan Party is an “investment
company”, or a company “controlled” by an “investment company”, within the
meaning of the Investment Company Act of 1940, as amended. No Loan Party is
subject to

 

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regulation under any Requirement of Law (other than Regulation X of the Board)
that limits its ability to incur Indebtedness.

5.15 Subsidiaries.

(a) Except as disclosed to the Administrative Agent by the Borrower in writing
from time to time after the Closing Date, (i) Schedule 5.15(a) sets forth the
name and jurisdiction of organization of each Subsidiary and, as to each such
Subsidiary, the percentage of each class of Capital Stock owned by any Loan
Party and (ii) except as set forth in Schedule 5.15(a), there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and
directors’ qualifying shares) of any nature relating to any Capital Stock of the
Borrower or any Subsidiary, except as created by the Loan Documents and in
connection with securing Borrower’s obligations under, and with respect to, the
6 5/8 Senior Notes and the Senior Convertible Notes.

(b) No Immaterial Subsidiary (i) owns any Capital Stock or Indebtedness of, or
owns or holds any Lien on, any property of, the Borrower or any Subsidiary of
the Borrower, (ii) together with its respective Subsidiaries on a consolidated
basis, during the twelve (12) months preceding the date of determination
accounts for (or which may be attributed) $1,250,000 or less of the Consolidated
EBITDA or assets (determined on a consolidated basis) of the Borrower and its
Subsidiaries or (iii) is otherwise necessary for the ongoing business operations
of the Borrower and its Subsidiaries taken as a whole. The Immaterial
Subsidiaries do not account (on a consolidated basis) for more than $10,000,000
of the Consolidated EBITDA or assets (determined on a consolidated basis) of the
Borrower and its Subsidiaries.

5.16 Use of Proceeds. The proceeds of the Tranche B Term Loans and a portion of
the proceeds of the Revolving Loans on the Closing Date, if any, shall be used
to refinance existing Indebtedness, to finance a portion of the Acquisition and
to pay related fees and expenses. The proceeds of the Delayed Draw Term Loans
shall be used for the refinancing of Indebtedness existing under one or both of
the Senior Convertible Notes Indenture and the 6 5/8% Senior Notes Indenture.
The remaining proceeds of the Revolving Loans, together with the proceeds of the
Swingline Loans and the Letters of Credit, shall be used for general corporate
purposes.

5.17 Environmental Matters. Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect:

(a) the facilities and properties owned, leased or operated by any Group Member
(the “Properties”) do not contain, and to the knowledge of any Group Member,
have not previously contained, any Materials of Environmental Concern in amounts
or concentrations or under circumstances that constitute or constituted a
violation of, or could give rise to liability of any Group Member under, any
Environmental Law;

(b) no Group Member has received or is aware of any notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to any
of the Properties or

 

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the business operated by any Group Member (the “Business”), nor does the
Borrower have knowledge that any such notice will be received or is being
threatened;

(c) to the knowledge of any Group Member, Materials of Environmental Concern
have not been transported or disposed of from the Properties in violation of, or
in a manner or to a location that could give rise to liability under, any
Environmental Law, nor have any Materials of Environmental Concern been
generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to liability of any Group
Member under, any applicable Environmental Law;

(d) no judicial proceeding or governmental or administrative action is pending
or, to the knowledge of the Borrower, threatened, under any Environmental Law to
which any Group Member is or will be named as a party with respect to the
Properties or the Business, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business;

(e) to the knowledge of any Group Member, there has been no release or threat of
release of Materials of Environmental Concern at or from the Properties, or
arising from or related to the operations of any Group Member in connection with
the Properties or otherwise in connection with the Business, in violation of or
in amounts or in a manner that could give rise to liability of any Group Member
under Environmental Laws;

(f) to the knowledge of any Group Member, the Properties and all operations at
the Properties are in material compliance, and have in the last five years been
in material compliance, with all applicable Environmental Laws, and there is no
violation of Environmental Law with respect to the Business; and

(g) no Group Member has assumed any liability of any other Person under
Environmental Laws.

5.18 Accuracy of Information, etc. No statement or information (excluding,
subject to the second sentence of this Section, projections and estimates)
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
by or on behalf of any Loan Party to the Administrative Agent or the Lenders, or
any of them, for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of the
Confidential Information Memorandum, as of the date of this Agreement), any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements contained herein or therein, taken as a whole,
not materially misleading in light of the circumstances under which such
statements were made. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information

 

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may differ from the projected results set forth therein by a material amount. As
of the date hereof, the representations and warranties contained in the
Acquisition Documentation are true and correct in all material respects. There
is no fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Confidential Information Memorandum or in any other
documents, certificates and statements furnished to the Administrative Agent and
the Lenders for use in connection with the transactions contemplated hereby and
by the other Loan Documents.

5.19 Security Documents. (a) The Guarantee, Security and Collateral Agency
Agreement is effective to create in favor of the Collateral Agent, for the
benefit of the Secured Parties, a legal and valid security interest in the
Collateral described therein and proceeds thereof. In the case of the Pledged
Stock described in the Guarantee, Security and Collateral Agency Agreement, when
stock certificates representing such Pledged Stock are delivered to the
Collateral Agent, and in the case of the other Collateral described in the
Guarantee, Security and Collateral Agency Agreement, when financing statements
and other filings specified on Schedule 5.19(a) in appropriate form are filed in
the offices specified on Schedule 5.19(a), the Guarantee, Security and
Collateral Agency Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee, Security and Collateral Agency Agreement), in each case prior
and superior in right to any other Person (except, in the case of Collateral
other than Pledged Stock, Liens permitted by Section 8.3, other than the Lien
permitted pursuant to clauses (j) and (n) of such Section 8.3).

(b) Each of the Mortgages is effective to create in favor of the Collateral
Agent, for the benefit of the Secured Parties, a legal and valid Lien on the
Mortgaged Properties described therein and proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 5.19(b), each such
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Mortgaged Properties
and the proceeds thereof, as security for the Obligations (as defined in the
relevant Mortgage), in each case prior and superior in right to any other Person
subject to Liens permitted by Sections 8.3(k) and 8.3(l). Schedule 1.1 lists, as
of the Closing Date, each parcel of owned real property located in the United
States and held by the Borrower or any of its Subsidiaries.

(c) Each of the Control Agreements is effective to create in favor of the
Collateral Agent, for the benefit of the Secured Parties, a legal, valid and
enforceable security interest in each of the deposit accounts (other than
payroll or benefit accounts) identified as such on Schedule 5.21(b).

5.20 Solvency. Each Loan Party is, and after giving effect to the Acquisition
and the incurrence of all Indebtedness and obligations being incurred in
connection herewith and therewith will be and will continue to be, Solvent.

5.21 Deposit and Disbursement Accounts. As of the Closing Date, Schedule 5.21(a)
lists all banks and other financial institutions at which any Loan Party
maintains deposit or other accounts, and such Schedule 5.21(a) correctly
identifies the name and address of each

 

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depository, the name in which the account is held, a brief description of the
purpose of the account, and the complete account number therefor.

5.22 Regulation H. No Mortgage encumbers improved real property that is located
in an area that has been identified by the Secretary of Housing and Urban
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968.

5.23 Certain Documents. The Borrower has delivered to the Administrative Agent a
complete and correct copy of the Acquisition Documentation, the Valassis
Indenture Documents and the Target Note Purchase Documents, including any
amendments, supplements or modifications with respect to any of the foregoing.

5.24 Foreign Assets Control Regulations. Neither the Borrower or, to the
knowledge of Borrower, any Affiliate of Borrower, is, or will be after
consummation of the transactions contemplated by the Loan Documents and
application of the proceeds of the Loans, by reason of being a “national” of a
“designated foreign country” or a “specially designated national” within the
meaning of the Regulations of the Office of Foreign Assets Control, United
States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for any other
reason, in violation of, any United States Federal statute or Presidential
Executive Order concerning trade or other relations with any foreign country or
any citizen or national thereof or the ownership or operation of any property.

5.25 Anti-Terrorism Laws.

(a) Neither the Borrower nor, to the knowledge of the Borrower, any of its
Affiliates is in violation of any laws relating to terrorism or money laundering
(“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Public Law 107-56.

(b) Neither the Borrower nor, to the knowledge of the Borrower, any Affiliate or
broker or other agent of Borrower acting or benefiting in any capacity in
connection with the Loans is any of the following:

(i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person
that is listed in the annex to, or is otherwise subject to the provisions of,
the Executive Order;

(iii) a Person with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law; or

(iv) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order.

 

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(c) Neither the Borrower nor, to the knowledge of the Borrower, any broker or
other agent of Borrower acting in any capacity in connection with the Loans
(i) conducts any business or engages in making or receiving any contribution of
funds, goods or services to or for the benefit of any Person described in
paragraph (b) above, (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order or (iii) engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in any Anti-Terrorism Law.

SECTION 6.

CONDITIONS PRECEDENT

6.1 Conditions to Initial Extension of Credit. The agreement of each Lender to
make the initial extension of credit requested to be made by it is subject to
the satisfaction of the following conditions precedent on or prior to the
Closing Date:

(a) Credit Agreement; Guarantee, Security and Collateral Agency Agreement. The
Administrative Agent shall have received (i) this Agreement, or, in the case of
the Lenders, an Addendum, executed and delivered by each Agent, the Borrower and
each Person that is a Lender as of the Closing Date, (ii) the Guarantee,
Security and Collateral Agency Agreement, executed and delivered by the Borrower
and each Guarantor, (iii) an Acknowledgment and Consent in the form attached to
the Guarantee, Security and Collateral Agency Agreement, executed and delivered
by each Issuer (as defined therein), if any, that is not a Loan Party and
(iv) the Control Agreements, executed and delivered by the Collateral Agent, the
applicable Loan Party and the applicable depository bank.

(b) Acquisition, etc. The following transactions shall have been or shall
concurrently be consummated (unless otherwise consented to by the Joint Lead
Arrangers):

(i) pursuant to the Acquisition Agreement, AcquisitionCo shall have acquired
100% of the issued and outstanding shares of Capital Stock of the Target, and
the Target shall have merged with and into AcquisitionCo, with the Target being
the surviving corporation (the “Acquisition”);

(ii) the Borrower shall have received or shall concurrently receive at least
$540,000,000 in gross cash proceeds from the issuance of the Senior Notes; and

(iii) (i) The Administrative Agent shall have received or shall concurrently
receive reasonably satisfactory evidence that other than Indebtedness permitted
under Section 8.2, all of the Indebtedness of the Target and its Subsidiaries
shall have been terminated and all amounts thereunder shall have been paid in
full and (ii) reasonably satisfactory arrangements shall have been made for the
termination of all Liens granted in connection therewith.

 

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(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall have
received the financial statements described in Section 5.1, and such financial
statements shall not, in the reasonable judgment of the Lenders, reflect any
material adverse change in the consolidated financial condition of the Borrower,
as reflected in the financial statements or projections contained in the
Confidential Information Memorandum (such receipt and judgment to be evidenced
by such Lender’s execution of this Agreement).

(d) Approvals. All governmental and third party approvals (including, without
limitation, material landlords’ consents, material customer supply agreements
consents, Hart-Scott-Rodino clearance and other material consents) reasonably
necessary in connection with the Acquisition and the transactions contemplated
hereby shall have been obtained and be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority that would restrain, prevent or otherwise
impose adverse conditions on the Acquisition or the financing contemplated
hereby.

(e) Lien Searches. The Administrative Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Target and
each of its Subsidiaries and Loan Parties are located, and such search shall
reveal no liens on any of the assets of the Loan Parties except for liens
permitted by Section 8.3 or discharged on or prior to the Closing Date pursuant
to documentation reasonably satisfactory to the Administrative Agent.

(f) Environmental Audit. The Administrative Agent shall have received an
environmental audit with respect to the real properties of the Target, the
Borrower and their respective Subsidiaries specified by the Administrative
Agent.

(g) Fees. The Lenders and the Agents shall have received all fees required to be
paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Closing Date.
All such amounts will be paid with proceeds of Loans made on the Closing Date
and will be reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Closing Date.

(h) Closing Certificate. The Administrative Agent shall have received (i) a
certificate of each Loan Party, dated the Closing Date, substantially in the
form of Exhibit H, with appropriate insertions and attachments including the
certificate of incorporation of each Loan Party that is a corporation certified
by the relevant authority of the jurisdiction of organization of such Loan
Party, and (ii) to the extent available a good standing certificate for each
Loan Party from its jurisdiction of organization.

(i) Legal Opinions. The Administrative Agent shall have received the following
executed legal opinions:

(i) the legal opinion of McDermott Will & Emery LLP, counsel to the Borrower and
the Loan Parties in form and substance reasonably satisfactory to the
Administrative Agent; and

 

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(ii) the legal opinion of local counsel in each of, Maryland, Michigan, North
Carolina, Kansas and Connecticut, and of such other special and local counsel as
may be reasonably required by the Administrative Agent.

Each such legal opinion shall cover such other matters related to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.

(j) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent shall have
received (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Guarantee, Security and Collateral Agency Agreement, together
with an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof and (ii) each promissory note (if
any) pledged to the Collateral Agent pursuant to the Guarantee, Security and
Collateral Agency Agreement with a principal amount in excess of $1,000,000
endorsed (without recourse) in blank (or accompanied by an executed transfer
form in blank) by the pledgor thereof.

(k) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by the Security Documents or under
law or reasonably requested by the Collateral Agent to be filed, registered or
recorded in order to create in favor of the Collateral Agent, for the benefit of
the Secured Parties, a perfected Lien on the Collateral described therein, prior
and superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 8.3), shall be in proper form for filing,
registration or recordation.

(l) Mortgages, etc. (i) The Collateral Agent shall have received a Mortgage with
respect to each Mortgaged Property, executed and delivered by a duly authorized
officer of each party thereto.

(ii) If requested by the Collateral Agent, the Collateral Agent shall have
received, and the title insurance company issuing the policy referred to in
clause (iii) below (the “Title Insurance Company”) shall have received, maps or
plats of an as-built survey of the sites of the Mortgaged Properties certified
to the Collateral Agent and the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the Collateral Agent and the
Title Insurance Company by an independent professional licensed land surveyor
satisfactory to the Collateral Agent and the Title Insurance Company, which maps
or plats and the surveys on which they are based shall be made in accordance
with the Minimum Standard Detail Requirements for Land Title Surveys jointly
established and adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1992, and, without limiting the generality
of the foregoing, there shall be surveyed and shown on such maps, plats or
surveys the following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback lines;
(B) the lines of streets abutting the sites and width thereof; (C) all access
and other easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the

 

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sites or otherwise known to the surveyor; (E) any encroachments on any adjoining
property by the building structures and improvements on the sites; (F) if the
site is described as being on a filed map, a legend relating the survey to said
map; and (G) the flood zone designations, if any, in which the Mortgaged
Properties are located.

(iii) The Collateral Agent shall have received in respect of each Mortgaged
Property a mortgagee’s title insurance policy (or policies) or marked up
unconditional binder for such insurance. Each such policy shall (A) be in an
amount reasonably satisfactory to the Collateral Agent; (B) be issued at
ordinary rates; (C) insure that the Mortgage insured thereby creates a valid
first Lien on such Mortgaged Property free and clear of all defects and
encumbrances, except as disclosed therein and those Liens referenced in Sections
8.3(k) and 8.3(l); (D) name the Collateral Agent for the benefit of the Secured
Parties as the insured thereunder; (E) be in the form of ALTA Loan Policy - 1970
(Amended 10/17/70 and 10/17/84) or 1992 ALTA Loan Policy (or equivalent
policies); (F) contain such endorsements and affirmative coverage as the
Collateral Agent may reasonably request and (G) be issued by title companies
reasonably satisfactory to the Collateral Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the Collateral
Agent exercised in the Collateral Agent’s reasonable discretion). The Collateral
Agent shall have received evidence reasonably satisfactory to it that all
premiums in respect of each such policy, all charges for mortgage recording tax,
and all related expenses, if any, have been paid.

(iv) If requested by the Collateral Agent, the Collateral Agent shall have
received (A) a policy of flood insurance that (1) covers any parcel of improved
real property that is encumbered by any Mortgage, (2) is written in an amount
not less than the outstanding principal amount of the indebtedness secured by
such Mortgage that is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3) has a
term ending not later than the maturity of the Indebtedness secured by such
Mortgage and (B) confirmation that the Borrower has received the notice required
pursuant to Section 208(e)(3) of Regulation H of the Board.

(v) The Collateral Agent shall have received a copy of all recorded documents
referred to, or listed as exceptions to title in, the title policy or policies
referred to in clause (iii) above and a copy of all other material documents
affecting the Mortgaged Properties.

(m) Solvency Certificate. The Administrative Agent shall have received a
solvency certificate, in form and substance reasonably satisfactory to the
Administrative Agent, from the chief financial officer of the Borrower.

 

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(n) Insurance. The Collateral Agent shall have received insurance certificates
satisfying the requirements of Section 5.2(b) of the Guarantee, Security and
Collateral Agency Agreement.

6.2 Conditions to Each Extension of Credit. The agreement of each Lender to make
any extension of credit requested to be made by it on any date (including its
initial extension of credit) is subject to the satisfaction of the following
conditions precedent:

(a) Representations and Warranties. Each of the representations and warranties
made by any Loan Party in or pursuant to the Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of such date
as if made on and as of such date (except to the extent that such
representations and warranties relate solely to an earlier date).

(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the extensions of credit
requested to be made on such date.

Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 6.2 have been satisfied.

SECTION 7.

AFFIRMATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect,
any Letter of Credit remains outstanding or any Loan or other amount is owing to
any Lender or Agent hereunder, the Borrower shall and shall cause each of its
Subsidiaries to:

7.1 Financial Statements. Furnish to the Administrative Agent and each Lender
(except for those documents or other information posted to an Intralinks website
or otherwise delivered electronically to each Lender by the Borrower):

(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower, a copy of the audited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such year and
the related audited consolidated statements of income and of cash flows for such
year, setting forth in each case in comparative form the figures for the
previous year, reported on without a “going concern” or like qualification or
exception, or qualification arising out of the scope of the audit, by Deloitte &
Touche or other independent certified public accountants of nationally
recognized standing;

(b) as soon as available, but in any event not later than 45 days after the end
of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as

 

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at the end of such quarter and the related unaudited consolidated statements of
income and of cash flows for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments); and

All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

Documents delivered electronically shall be deemed to have been delivered on the
date (i) on which the Borrower or any Loan Party posts such documents, or
provides a link thereto on the Borrower’s or any Loan Party’s website on the
Internet at the website address listed on Schedule 7.1; or (ii) on which such
documents are posted on the Borrower’s or any Loan Party’s behalf on an Internet
or intranet website, if any, to which each Lender and the Administrative Agent
have access (whether a commercial, third party website or whether sponsored by
the Administrative Agent); provided that: (X) the Borrower and each Loan Party
shall deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower or such Loan Party to deliver such paper
copies until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender and (Y) the Borrower and each Loan Party
shall notify the Administrative Agent and each Lender (by telecopier or
electronic mail) of the posting of any such documents and provide to the
Administrative Agent by electronic mail electronic versions (i.e., soft copies)
of such documents.

7.2 Certificates; Other Information. Furnish to the Administrative Agent and
each Lender or, in the case of clause (h), to the relevant Lender (except for
those documents or other information posted to an Intralinks website or
otherwise delivered electronically to each Lender by the Borrower):

(a) concurrently with the delivery of the financial statements referred to in
Section 7.1(a), to the extent not otherwise waived by the Joint Lead Arrangers
in their sole discretion, a certificate of the independent certified public
accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default with respect to any financial and/or accounting matters, including
the Borrower’s noncompliance with any financial covenants set forth in this
Agreement, except as specified in such certificate;

(b) concurrently with the delivery of any financial statements pursuant to
Section 7.1, (i) a certificate of a Responsible Officer stating that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly or
annual financial statements, (x) a Compliance Certificate containing all
information and calculations reasonably necessary for determining compliance by
each Group Member with the provisions of this Agreement referred to therein
(including, without limitation, Section 8.6(c), which shall include a
reconciliation setting forth the applicable amount at the end of the prior
fiscal quarter and increases and deductions permitted or required, as the case
may be, as set

 

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forth therein) as of the last day of the fiscal quarter or fiscal year of the
Borrower, as the case may be, and, if applicable, for determining the Applicable
Margins and Commitment Fee Rate, and (y) to the extent not previously disclosed
to the Administrative Agent, a listing of any Intellectual Property acquired by
any Loan Party since the date of the most recent list delivered pursuant to this
clause (y) (or, in the case of the first such list so delivered, since the
Closing Date);

(c) as soon as available, and in any event no later than 90 days after the end
of each fiscal year of the Borrower, a reasonably detailed consolidated budget
presented quarterly for the following fiscal year (including a projected
consolidated balance sheet of the Borrower and its Subsidiaries as of the end of
the following fiscal year, the related consolidated statements of projected cash
flow and projected income and a description of the underlying assumptions
applicable thereto, collectively, the “Projections”), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer stating that
such Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such Projections
are incorrect or misleading in any material respect;

(d) if the Borrower is not then reporting companies under the Securities
Exchange Act of 1934, as amended, within 45 days after the end of each fiscal
quarter of the Borrower (or 90 days, in the case of the last fiscal quarter of
any fiscal year), a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter, as compared to the portion of the Projections
covering such periods and to the comparable periods of the previous year;

(e) except with respect to the supplemental indentures to be executed and
delivered on the Closing Date in connection with establishing Liens on the
Collateral to secure the Existing Valassis Indebtedness, no later than 10
Business Days prior to the effectiveness thereof, copies of substantially final
drafts of any proposed amendment, supplement, waiver or other modification with
respect to the Valassis Indenture Documents, the Target Note Purchase Documents
or the Acquisition Documentation;

(f) copies of all material notices, documents, certificates or demands in
connection with the Existing Valassis Indebtedness and/or the Existing Target
Indebtedness, either received by the Borrower or on its behalf, promptly after
the receipt thereof, as the case may be;

(g) within 5 days after the same are sent, copies of all financial statements
and reports that the Borrower sends to the holders of any class of its debt
securities or public equity securities and, within 5 days after the same are
filed, copies of all financial statements and reports that the Borrower may make
to, or file with, the SEC; and

(h) within reasonable promptness, such additional financial and other
information as any Lender may from time to time reasonably request.

 

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7.3 Payment of Obligations. Except in respect of the Existing Target
Indebtedness which obligations thereunder shall be paid and discharged in
accordance with the time period set forth in Section 7.11, pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all its material obligations of whatever nature, except where the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the relevant Group Member.

7.4 Maintenance of Existence; Compliance. (a) (i) Preserve, renew and keep in
full force and effect its organizational existence (except as set forth in
Section 7.12) and (ii) take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business, except, in each case, as otherwise permitted by Section 8.4 and
except, in the case of clause (ii) above, to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect; and
(b) comply with all Contractual Obligations and Requirements of Law except to
the extent that (i) failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect or (ii) a Requirement
of Law is being contested in good faith by appropriate proceedings diligently
conducted.

7.5 Maintenance of Property; Insurance. (a) Keep all property materially useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business and
owning similar properties.

7.6 Inspection of Property; Books and Records; Discussions. (a) Keep proper
books of records and accounts in which full, true and correct entries in
conformity with GAAP and in material compliance with all applicable Requirements
of Law shall be made of all dealings and transactions in relation to its
business and activities and (b) upon reasonable notice and during normal
business hours, permit representatives of any Lender upon reasonable prior
notice to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time during normal business
hours and as often as may reasonably be desired and to discuss the business,
operations, properties and financial and other condition of the Group Members
with officers and employees of the Group Members and with their independent
certified public accountants; provided, that such visits or inspections shall
not occur more than once in any period of twelve (12) consecutive months, unless
a Default or an Event of Default has occurred and is continuing.

7.7 Notices.

(a) Promptly give notice to the Administrative Agent and each Lender of:

(i) the occurrence of any Default or Event of Default;

 

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(ii) any (A) default or event of default under any Contractual Obligation of any
Group Member or (B) litigation, investigation or proceeding that exists at any
time between any Group Member and any Governmental Authority, that in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;

(iii) any litigation or proceeding affecting any Group Member (A) in which the
amount involved is $15,000,000 or more and not covered by insurance, (B) in
which injunctive or similar relief is sought, and the granting of such relief
could reasonably be expected to have a Material Adverse Effect or (C) which
relates to the validity or enforceability of any Loan Document; and

(iv) any development or event that has had or could reasonably be expected to
have a Material Adverse Effect.

(b) As soon as possible and in any event within 30 days after the Borrower knows
or has reason to know thereof, give notice to the Administrative Agent and each
Lender of: (i) the occurrence of any Reportable Event with respect to any Plan,
a failure to make any required contribution to a Plan, the creation of any Lien
in favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan, (ii) the institution of proceedings
or the taking of any other action by the PBGC or the Borrower or any Commonly
Controlled Entity or any Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan, or (iii) the assessment
of excise taxes under Code Section 4971 or liability under ERISA Section 4062(e)
against any Group Member or Commonly Controlled Entity.

Each notice pursuant to this Section 7.7 shall be accompanied by a statement of
a Responsible Officer setting forth a reasonable description of the occurrence
referred to therein and stating what action the Borrower or the relevant
Subsidiary proposes to take with respect thereto.

7.8 Environmental Laws. (a) Comply with, and use commercially reasonable efforts
to ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply with and
maintain, and ensure that all tenants and subtenants obtain and comply in all
material respects with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws.

(b) Conduct and complete all investigations, studies, sampling and testing, and
all remedial, removal and other actions required under Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities regarding Environmental Laws.

7.9 Interest Rate Protection. In the case of the Borrower, within 180 days after
the Closing Date, enter into, and thereafter maintain, Hedge Agreements to the
extent necessary to provide that at least 40% of Funded Debt (excluding Total
Revolving Extensions of Credit) is subject to either a fixed interest rate or
interest rate protection for a period of not less

 

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than three years, which Hedge Agreements shall have terms and conditions
reasonably satisfactory to the Administrative Agent.

7.10 Additional Collateral, etc. (a) With respect to any property acquired after
the Closing Date by any Group Member (other than (x) any property described in
paragraph (c) or (d) below and any interest in real property, (y) any property
subject to a Lien expressly permitted by Section 8.3(g), and (z) property
acquired by any Excluded Foreign Subsidiary) as to which the Collateral Agent,
for the benefit of the Secured Parties, does not have a perfected Lien, promptly
(i) execute and deliver to the Collateral Agent such amendments to the
Guarantee, Security and Collateral Agency Agreement or such other documents as
the Collateral Agent reasonably deems necessary or advisable to grant to the
Collateral Agent, for the benefit of the Secured Parties, a security interest in
such property and (ii) take all actions reasonably necessary or advisable to
grant to the Collateral Agent, for the benefit of the Secured Parties, a
perfected first priority security interest in such property (subject only to the
Liens set forth in Section 8.3), including the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee,
Security and Collateral Agency Agreement or by law or as may be requested by the
Administrative Agent or the Collateral Agent.

(b) With respect to any fee interest in any real property located in the United
States having a value (together with improvements thereof) of at least
$2,500,000 acquired after the Closing Date by any Group Member (other than
(x) any such real property subject to a Lien expressly permitted by
Section 8.3(g), and (y) real property acquired by any Excluded Foreign
Subsidiary), within 90 days of such acquisition (unless such property has been
sold during such period of time as permitted pursuant to a provision hereunder),
(i) execute and deliver a first priority Mortgage (subject only to the Liens set
forth in Sections 8.3(k) and 8.3(l)), in favor of the Collateral Agent, for the
benefit of the Secured Parties, covering such real property, (ii) if requested
by the Administrative Agent or the Collateral Agent, provide the Lenders with
(x) title and extended coverage insurance covering such real property in an
amount at least equal to the purchase price of such real property (or such other
amount as shall be reasonably specified by the Administrative Agent or the
Collateral Agent) as well as a current ALTA survey thereof, together with a
surveyor’s certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent or the Collateral Agent in
connection with such Mortgage, each of the foregoing in form and substance
reasonably satisfactory to the Collateral Agent and (iii) if requested by the
Administrative Agent or the Collateral Agent, deliver to the Collateral Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Collateral Agent.

(c) With respect to any new Subsidiary (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by any Group Member
(which, for the purposes of this paragraph (c), shall include any existing
Subsidiary that ceases to be an Excluded Foreign Subsidiary), promptly
(i) execute and deliver to the Collateral Agent such amendments to the
Guarantee, Security and Collateral Agency Agreement as the Collateral Agent
reasonably deems necessary or advisable to grant to the Collateral Agent, for
the benefit of the Secured Parties, a perfected first priority security interest
(subject to any of the Liens set forth in Sections 8.3(k) and 8.3(l)) in the
Capital Stock of such new Subsidiary that is owned by any Group Member,
(ii) deliver to the Collateral Agent the certificates representing such Capital

 

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Stock, together with undated stock powers, in blank, executed and delivered by a
duly authorized officer of the relevant Group Member, (iii) if such Subsidiary
is not an Immaterial Subsidiary or a Foreign Subsidiary, cause such new
Subsidiary (A) to become a party to the Guarantee, Security and Collateral
Agency Agreement, (B) to take such actions reasonably necessary or advisable to
grant to the Collateral Agent for the benefit of the Secured Parties a perfected
first priority security interest (subject only to the Liens set forth in
Sections 8.3(k) and 8.3(l)) in the Collateral described in the Guarantee,
Security and Collateral Agency Agreement with respect to such new Subsidiary,
including the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by the Guarantee, Security and Collateral
Agency Agreement or by law and (C) to deliver to the Collateral Agent a
certificate of such Subsidiary, substantially in the form of Exhibit C, with
appropriate insertions and attachments, and (iv) if requested by the
Administrative Agent or the Collateral Agent, deliver to the Collateral Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Collateral Agent.

(d) With respect to any new Excluded Foreign Subsidiary created or acquired
after the Closing Date by any Group Member (other than by any Group Member that
is an Excluded Foreign Subsidiary), promptly (i) execute and deliver to the
Collateral Agent such amendments to the Guarantee, Security and Collateral
Agency Agreement as the Administrative Agent deems necessary or advisable to
grant to the Collateral Agent, for the benefit of the Secured Parties, a
perfected first priority security interest in the Capital Stock of such new
Subsidiary that is owned by any such Group Member (provided that in no event
shall more than 65% of the total outstanding Capital Stock of any such new
Subsidiary be required to be so pledged), (ii) deliver to the Collateral Agent
the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of the
relevant Group Member, as the case may be, and take such other action as may be
necessary or, in the opinion of the Collateral Agent, desirable to perfect the
Collateral Agent’s security interest therein, and (iii) if requested by the
Administrative Agent or the Collateral Agent, deliver to the Collateral Agent
legal opinions relating to the matters described above, which opinions shall be
in form and substance, and from counsel, reasonably satisfactory to the
Collateral Agent.

7.11 Existing Target Indebtedness. To the extent not repaid in full on or prior
to the Closing Date, repay in full the Existing Target Indebtedness by no later
than (i) in the case of the 5.71% Series A Notes, the date that is 35 days after
the Closing Date (the “5.71% Series A Termination Date”), and (ii) in the case
of the Floating Rate Series B Notes, the date that is 5 Business Days after the
Closing Date (the “Floating Series B Termination Date”).

7.12 Dissolution Subsidiaries. As soon as possible and in any event within
ninety (90) days after the Closing Date (or by such later date as Administrative
Agent shall consent to in its sole discretion), the Administrative Agent shall
have received evidence, in form and substance reasonably satisfactory to the
Administrative Agent, that each of the Immaterial Subsidiaries listed on
Schedule 7.12 has either (a) wound up its affairs or dissolved itself or
otherwise wound up its business, or (b) had its shares pledged to the Collateral
Agent in accordance with the terms and conditions of this Agreement and the
other Loan Documents.

 

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7.13 Further Assurances. From time to time execute and deliver, or cause to be
executed and delivered, such additional instruments, certificates or documents,
and take all such actions, as the Administrative Agent or Collateral Agent may
reasonably request for the purposes of implementing or effectuating the
provisions of this Agreement and the other Loan Documents, or of more fully
perfecting or renewing the rights of the Collateral Agent and the Secured
Parties with respect to the Collateral (or with respect to any additions thereto
or replacements or proceeds thereof or with respect to any other property or
assets hereafter acquired by the Borrower or any Subsidiary which may be deemed
to be part of the Collateral) pursuant hereto or thereto. Upon the exercise by
the Administrative Agent, the Collateral Agent or any Lender of any power,
right, privilege or remedy pursuant to this Agreement or the other Loan
Documents which requires any consent, approval, recording qualification or
authorization of any Governmental Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the
Administrative Agent, the Collateral Agent or such Lenders may be required to
obtain from the Borrower or any of its Subsidiaries for such governmental
consent, approval, recording, qualification or authorization.

SECTION 8.

NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in effect,
any Letter of Credit remains outstanding or any Loan or other amount is owing to
any Lender or Agent hereunder, the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:

8.1 Financial Condition Covenants. (a) Consolidated Senior Secured Leverage
Ratio. Permit the Consolidated Senior Secured Leverage Ratio as at the last day
of any period of four consecutive fiscal quarters of the Borrower (or, if less,
the number of full fiscal quarters subsequent to the Closing Date) ending with
any fiscal quarter set forth below to exceed the ratio set forth below opposite
such fiscal quarter:

 

Fiscal Quarter

  

Consolidated

Senior Secured Leverage Ratio

June 30, 2007

   4.25:1.00

September 30, 2007

   4.25:1.00

December 31, 2007

   4.00:1.00

March 31, 2008

   4.00:1.00

June 30, 2008

   4.00:1.00

September 30, 2008

   4.00:1.00

December 31, 2008

   3.75:1.00

March 31, 2009

   3.75:1.00

June 30, 2009

   3.75:1.00

September 30, 2009

   3.75:1.00

December 31, 2009

   3.50:1.00

March 31, 2010

   3.50:1.00

June 30, 2010

   3.50:1.00

September 30, 2010

   3.50:1.00

December 31, 2010

   3.50:1.00

March 31, 2011

   3.50:1.00

June 30, 2011

   3.50:1.00

September 30, 2011

   3.50:1.00

December 31, 2011

   3.50:1.00

March 31, 2012

   3.50:1.00

June 30, 2012

   3.50:1.00

September 30, 2012

   3.50:1.00

December 31, 2012

   3.50:1.00

March 31, 2013

   3.50:1.00

June 30, 2013

   3.50:1.00

September 30, 2013

   3.50:1.00

December 31, 2013

   3.50:1.00

March 31, 2014

   3.50:1.00

 

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(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:

 

Fiscal Quarter

  

Consolidated

Interest Coverage Ratio

June 30, 2007

   1.60:1.00

September 30, 2007

   1.60:1.00

December 31, 2007

   1.60:1.00

March 31, 2008

   1.60:1.00

June 30, 2008

   1.60:1.00

September 30, 2008

   1.60:1.00

December 31, 2008

   1.75:1.00

March 31, 2009

   1.75:1.00

June 30, 2009

   1.75:1.00

September 30, 2009

   1.75:1.00

December 31, 2009

   2.00:1.00

March 31, 2010

   2.00:1.00

June 30, 2010

   2.00:1.00

September 30, 2010

   2.00:1.00

December 31, 2010

   2.00:1.00

March 31, 2011

   2.00:1.00

June 30, 2011

   2.00:1.00

September 30, 2011

   2.00:1.00

December 31, 2011

   2.00:1.00

March 31, 2012

   2.00:1.00

June 30, 2012

   2.00:1.00

September 30, 2012

   2.00:1.00

December 31, 2012

   2.00:1.00

March 31, 2013

   2.00:1.00

June 30, 2013

   2.00:1.00

September 30, 2013

   2.00:1.00

December 31, 2013

   2.00:1.00

March 31, 2014

   2.00:1.00

; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 2006, March 30,
2007, June 30, 2007 and September 30, 2007, Consolidated Interest Expense for
the relevant period shall be deemed to equal Consolidated Interest Expense for
such fiscal quarter (and, in the case of the latter two such determinations,
each previous fiscal quarter commencing after the Closing Date) multiplied by 4,
2 and 4/3, respectively.

 

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8.2 Indebtedness. Create, issue, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except:

(a) Indebtedness of any Loan Party pursuant to any Loan Document;

(b) Indebtedness (i) of the Borrower to any Loan Party, (ii) of any Loan Party
to the Borrower or any other Loan Party, (iii) of any Subsidiary that is not a
Loan Party to any other Subsidiary that is not a Loan Party and (iv) subject to
Section 8.8(h), of any Foreign Subsidiary to the Borrower or any other Loan
Party;

(c) Guarantee Obligations incurred in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations of the Borrower, any Wholly
Owned Guarantor and, subject to Section 8.8(h), of any Foreign Subsidiary;

(d) Indebtedness outstanding on the date hereof and listed on Schedule 8.2(d)
and any refinancings, refundings, renewals or extensions thereof, without
(i) increasing the principal amount or shortening the maturity or remaining
weighted average life thereof, (ii) providing collateral security therefor, or
(iii) otherwise refinancing, refunding, renewing or extending such Indebtedness
on terms and conditions less favorable in any material respect to the Borrower
and its Subsidiaries or to the rights or interests of the Agents and the
Lenders;

(e) Indebtedness (including, without limitation, Capital Lease Obligations)
secured by Liens permitted by Section 8.3(g) in an aggregate principal amount
not to exceed $50,000,000 at any one time outstanding;

(f) Redemption Indebtedness in an amount not to exceed $2,000,000 at any time
outstanding;

(g) unsecured Indebtedness up to $150,000,000 in the aggregate at any one time
outstanding (i) in order to consummate Permitted Acquisitions and/or
(ii) assumed

 

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in connection with any Permitted Acquisition, in the case of this clause
(ii) only, up to $50,000,000 in the aggregate at any one time outstanding, and
in each case, subject to the additional limitations set forth in clause (iv) of
the definition of “Permitted Acquisition”;

(h) Hedge Agreements permitted under Section 8.12;

(i) additional unsecured Indebtedness of the Borrower or any of its Subsidiaries
in an aggregate principal amount (for the Borrower and all Subsidiaries) not to
exceed $50,000,000 at any one time outstanding, and Guarantee Obligations of any
Guarantor in respect of such Indebtedness, provided that such Guarantee
Obligations are subordinated to the same extent as the obligations of the
Borrower in respect of such Unsecured Debt;

(j) the Existing Valassis Indebtedness and any refinancings, refundings,
renewals or extensions thereof; provided, that, (i) the principal amount thereof
shall not be increased, (ii) the maturity or mandatory redemption date of shall
not be shortened, (iii) the material terms of any such refinancing, refunding,
renewal or extension (and of any agreement entered into and of any instrument
issued in connection therewith) shall be, when taken as a whole, no less
favorable to the Borrower and its Subsidiaries or to the rights or interests of
the Agents and the Lenders than the terms of the indebtedness being so
refinanced, refunded, renewed or extended, and (iv) immediately before and
immediately after giving pro forma effect to any such extension, refunding,
refinancing or replacement, no Default or Event of Default shall have occurred
and be continuing

(k) [Intentionally Deleted.]

(l) Indebtedness owed to any Person providing property, casualty or liability
insurance to any Group Member (including any state insurance guarantee funds
relating to any such insurance policy), so long as such Indebtedness shall not
be in excess of the amount of the unpaid cost of, and shall be incurred only to
defer the cost of, such insurance for the year in which such Indebtedness is
incurred and such Indebtedness shall be outstanding only during such year;

(m) Indebtedness of the Borrower or any of its Subsidiaries not to exceed
$1,000,000 at any time outstanding (except in the case of overdrafts caused by
direct withdrawals by the U.S. Postal Service, in which case such Indebtedness
shall not exceed $20,000,000 at any time outstanding; provided, that such
Indebtedness is extinguished within five Business Days of incurrence) arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently (except in the case of daylight overdrafts)
drawn against insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within ten Business Days of
incurrence;

(n) Indebtedness of the Borrower or any of its Subsidiaries (including, without
limitation, letters of credit) in respect of performance bonds, bankers’
acceptances, workers’ compensation claims, surety or appeal bonds, payment
obligations in connection with self-insurance or similar obligations, and bank
overdrafts in the ordinary course of business;

 

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(o) Indebtedness of the Borrower or any Subsidiary consisting of guarantees,
indemnities or obligations in respect of purchase price adjustments in
connection with the acquisition or Disposition of assets;

(p) additional unsecured Indebtedness of the Borrower or any of its Subsidiaries
in an aggregate principal amount (for the Borrower and all Subsidiaries) not to
exceed $300,000,000 at any one time outstanding, provided that such unsecured
Indebtedness is applied to prepay the Loans pursuant to Section 4.2(a); and

(q) (i) Indebtedness of the Borrower in respect of the Senior Notes in an
aggregate principal amount not to exceed $540,000,000 and (ii) Guarantee
Obligations of any Subsidiary in respect of such Indebtedness, provided that
such Guarantee Obligations are subordinated to the same extent as the
obligations of the Borrower in respect of the Senior Notes.

8.3 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, whether now owned or hereafter acquired, except for:

(a) Liens for taxes not yet due or that are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Borrower or its Subsidiaries, as the case may
be, in conformity with GAAP;

(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics,
materialmen and suppliers and other Liens imposed by law or pursuant to
customary reservations or retentions of title arising in the ordinary course of
business, provided that such Liens secure only amounts not yet due and payable
or, if due and payable, are unfilled and no other action has been taken to
enforce the same or are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have been
established;

(c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

(d) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

(e) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are not
substantial in amount and that do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;

 

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(f) Liens in existence on the date hereof listed on Schedule 8.3(f), securing
Indebtedness permitted by Section 8.2(d), provided that no such Lien is spread
to cover any additional property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;

(g) Liens securing Indebtedness of the Borrower or any Subsidiary incurred
pursuant to Section 8.2(e) to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created within sixty (60) days
after the acquisition of such fixed or capital assets, (ii) such Liens do not at
any time encumber any property other than the property financed by such
Indebtedness and (iii) the amount of Indebtedness secured thereby is not
increased;

(h) Liens created pursuant to the Security Documents;

(i) any interest or title of a lessor under any lease entered into by the
Borrower or any Subsidiary in the ordinary course of its business and covering
only the assets so leased;

(j) Liens not otherwise permitted by this Section so long as neither (i) the
aggregate outstanding principal amount of the obligations secured thereby nor
(ii) the aggregate fair market value (determined as of the date such Lien is
incurred) of the assets subject thereto exceeds (as to the Borrower and all
Subsidiaries) $10,000,000 at any one time;

(k) to the extent required by the Valassis Indenture Documents as in effect on
the Closing Date, Liens securing the Existing Valassis Indebtedness (as
permitted under Section 8.2(j)) on a pari passu basis with the Obligations;

(l) Liens securing the Existing Target Indebtedness (the “Existing Target
Liens”); provided, that the Existing Target Liens will have been released by no
later than (A) in the case of the 5.71% Series A Notes, the 5.71% Series A
Termination Date, and (B) in the case of the Floating Rate Series B Notes, the
Floating Series B Termination Date;

(m) customary set-off rights or similar rights and remedies of applicable
depository banks to the extent permitted under the Control Agreements, if
applicable;

(n) licenses, sublicenses, leases or subleases granted to others not interfering
in any material respect with the Business;

(o) Liens deemed to exist in connection with Investments in repurchase
agreements permitted under Section 8.8;

(p) Liens arising from judgments, decrees or attachments (or securing of appeal
bonds with respect thereto) in circumstances not constituting an Event of
Default under Section 9; provided that no cash or other property (other than
proceeds of insurance payable by reason of such judgments, decrees or
attachments) the fair value of which

 

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exceeds $5,000,000 is deposited or delivered to secure any such judgment, decree
or award or any appeal bond in respect thereof;

(q) pledges or deposits of cash and Cash Equivalents securing deductibles,
self-insurance, co-payment, co-insurance, retentions and similar obligations to
providers of insurance in the ordinary course of business;

(r) any Lien existing on (i) any asset of any Person at the time such Person
becomes a direct or indirect Subsidiary of the Borrower and (ii) any asset at
the time of acquisition thereof by the Borrower or a Subsidiary and in each case
not created in contemplation of such event;

(s) Liens on (i) incurred premiums, dividends and rebates which may become
payable under insurance policies and loss payments which reduce the incurred
premiums on such insurance policies and (ii) rights which may arise under state
insurance guarantee funds relating to any such insurance policy, in each case
securing Indebtedness permitted to be incurred pursuant to Section 8.2;

(t) Liens solely on any cash earnest money deposits made by the Borrower or any
Subsidiary in connection with any letter of intent or purchase agreement with
respect to a Permitted Acquisition;

(u) Liens, other than the other Liens described in this Section 8.3, existing as
of the date hereof and set forth on Schedule 8.3(u);

(v) Liens on the assets of an Excluded Foreign Subsidiary securing Indebtedness
of such Excluded Foreign Subsidiary as permitted by Section 8.2; and

(w) Liens in favor of a Loan Party.

8.4 Fundamental Changes. Enter into any merger, consolidation or amalgamation,
or liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or Dispose of, all or substantially all of its property or
business, except that:

(a) any Subsidiary of the Borrower may be merged or consolidated with or into
the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any Loan Party (provided that the Loan Party shall
be the continuing or surviving corporation) or, subject to Section 8.8(h), with
or into any Foreign Subsidiary; and

(b) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Subsidiary; provided,
that if the transferor of such property is a Loan Party (i) the transferee
thereof must be a Loan Party or (ii) to the extent such transaction constitutes
an Investment, such transaction is permitted under Section 8.8;

(c) any Subsidiary may merge with another Person to effect a transaction
permitted under Section 8.8; and

 

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(d) transactions permitted under Section 8.6 shall be permitted;

(e) the Borrower may consummate Permitted Acquisitions;

(f) the relevant Loan Parties may consummate the Acquisition; and

(g) if necessary and subject to Section 8.5, any Immaterial Subsidiary or
Foreign Subsidiary may dissolve, liquidate or wind up its affairs at any time
provided that such dissolution, liquidation or winding up, as applicable, could
not reasonably be expected to have a Material Adverse Effect.

8.5 Disposition of Property. Dispose of any of its property, whether now owned
or hereafter acquired, or, in the case of any Subsidiary, issue or sell any
shares of such Subsidiary’s Capital Stock to any Person, except:

(a) the Disposition of obsolete or worn out property in the ordinary course of
business;

(b) the sale of inventory in the ordinary course of business;

(c) Dispositions permitted by Section 8.4(b);

(d) the sale or issuance of any Subsidiary’s Capital Stock to the Borrower or
any Loan Party;

(e) Disposition of any assets (other than in connection with a Reinvestment
Event); provided that the aggregate fair market value of all property disposed
of pursuant to this clause (e) does not exceed (x) $5,000,000 in the aggregate
in any fiscal year of the Borrower plus the unused amounts under this clause
(e) from the prior fiscal years or (y) $25,000,000 in the aggregate from and
after the Closing Date;

(f) Disposition of machinery or equipment which will be replaced or upgraded
with machinery or equipment put to a similar use and owned by such Person;
provided that (i) such replacement or upgraded machinery and equipment is
acquired within ninety (90) days after such disposition, (ii) the fair market
value of all property disposed of pursuant to this clause (f) does not exceed
$500,000 in the aggregate in any fiscal year of the Borrower and (iii) upon
their acquisition, such replacement assets become subject to the Lien of the
Collateral Agent under the Security Documents;

(g) Dispositions of machinery, equipment and interests in real property no
longer used or useful in the conduct of business of the Loan Parties and their
Subsidiaries that are Disposed of in the ordinary course of business (including
owned real property acquired from lessors for the purpose of avoiding lease
termination penalties, which is in the process of being sold (or was acquired
for the purpose of resale) and which has been owned less than twelve (12) months
from the date of such acquisition);

(h) licenses, sublicenses, leases or subleases granted to others not interfering
in any material respect with the Business;

 

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(i) the sale or disposition of Cash Equivalents for fair market value;

(j) any sale and leaseback transaction not prohibited by Section 8.11;

(k) Disposition of defaulted receivables and similar obligations in the ordinary
course of business and not as part of an accounts receivable financing
transaction; and

(l) Disposition of other property not otherwise permitted by clauses (a) through
(k) above; provided that (i) the property disposed of pursuant to this clause
(l) is disposed of for cash or Cash Equivalents and for at least the fair market
value thereof, (ii) the fair market value of all property disposed of pursuant
to this clause (l) on or after the Closing Date does not exceed $250,000,000 in
the aggregate and (iii) the Net Cash Proceeds of such Asset Sales are applied in
accordance with Section 4.2(b).

8.6 Restricted Payments. Declare or pay any dividend on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any
Capital Stock of any Group Member, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower or any Subsidiary
(collectively, “Restricted Payments”), except that:

(a) any Subsidiary may make Restricted Payments to the Borrower or any Loan
Party;

(b) each Loan Party and each Subsidiary may declare and make dividend payments
or other distributions payable solely in the common stock of such Person;

(c) the payment of any dividend within ninety (90) days after the date of
declaration of such dividend if the dividend would have been permitted on the
date of declaration;

(d) repurchases by a Group Member of the Capital Stock of such Group Member from
officers, directors and employees of such Group Member or any of its
Subsidiaries or their authorized representatives upon the death, disability or
termination of employment of such employees or termination of their seat on the
Board of Directors of the Group Member;

(e) repurchases of the Capital Stock of a Group Member deemed to occur upon
(i) the exercise of stock options or warrants or (ii) the grant, award or
vesting of Capital Stock, in each case, if such Capital Stock represents all or
a portion of the exercise price thereof or tax payment with respect thereto;

(f) cash payments in lieu of the issuance of fractional shares in connection
with the exercise of warrants, options or other securities convertible into or
exchangeable for Capital Stock of a Group Member;

(g) so long as no Default or Event of Default exist immediately prior and after
giving effect thereto, the Borrower may purchase the Borrower’s common stock or

 

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common stock options from present or former officers or employees of any Group
Member, provided, that the aggregate amount of payments (in cash or in the form
of Redemption Indebtedness) under this clause (g) after the date hereof (net of
any proceeds received by the Borrower and contributed to the Subsidiaries after
the date hereof in connection with resales of any common stock or common stock
options so purchased) shall not exceed $2,000,000 during any fiscal year of the
Borrower plus the unused amount (not to exceed $1,000,000) available for
redemptions under this Section 8.6(g) for any preceding year; and

(h) so long as no Default or Event of Default shall have occurred and be
continuing or would result after giving pro form effect to such Restricted
Payment, the Borrower may redeem the Existing Valassis Indebtedness;

(i) the Borrower may (i) pay dividends to its equity holders, (ii) purchase or
redeem Capital Stock of any Group Member and (iii) make payments on account of
any Permitted Joint Venture (in addition to, and not in limitation of, such
Investments permitted under Section 8.8(n)) in an aggregate amount not to exceed
$25,000,000; provided that (i) on an annual basis commencing with the fiscal
year ending December 31, 2007, the Borrower may increase such amount with
respect to the foregoing clauses (i), (ii) and (iii) by 50% of Consolidated Net
Income determined as of the last day of the most recently ended fiscal year
minus amounts expended by the Borrower to pay dividends to its equity holders,
purchase or redeem Capital Stock of any Group Member and make payments on
account of any Permitted Joint Venture during such fiscal year and (ii) no
Default or Event of Default shall have occurred and be continuing or would
result after giving pro form effect to such Restricted Payment;

(j) the purchase, defeasance, redemption, prepayment, decrease, acquisition or
retirement of any Unsecured Debt either (i) solely in exchange for shares of
Capital Stock of the Borrower, or (ii) through the application of net proceeds
of a substantially concurrent sale for cash (other than to a Subsidiary of the
Borrower) of (A) shares of Capital Stock of the Borrower or (B) Indebtedness
permitted under Section 8.2(d); and

(k) payments or distributions to stockholders of the Borrower or the Target
pursuant to appraisal rights required under applicable law in connection with
any consolidation, merger or transfer of assets permitted under this Agreement.

8.7 Capital Expenditures. Make or commit to make any Capital Expenditure, except
(a) Capital Expenditures made with the proceeds of any Reinvestment Deferred
Amount and (b) Capital Expenditures of the Borrower and its Subsidiaries in the
ordinary course of business not exceeding the amount identified in the table set
forth below for the applicable fiscal year:

 

Fiscal Year Ending

   Maximum Capital Expenditures

December 31, 2007

   $75,000,000

December 31, 2008 and each fiscal year thereafter

   $50,000,000

 

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provided, that (i) any such amount referred to above, if not so expended in the
fiscal year for which it is permitted, may be carried over for expenditure in
the next succeeding fiscal year and (ii) Capital Expenditures made pursuant to
this clause (b) during any fiscal year shall be deemed made, first, in respect
of amounts permitted for such fiscal year as provided above and, second, in
respect of amounts carried over from the prior fiscal year pursuant to
subclause (i) above.

8.8 Investments. Make any advance, loan, extension of credit (by way of guaranty
or otherwise) or capital contribution to, or purchase any Capital Stock, bonds,
notes, debentures or other debt securities of, or any assets constituting a
business unit of, or make any other investment in, any Person (all of the
foregoing, “Investments”), except:

(a) extensions of trade credit in the ordinary course of business;

(b) Investments in Cash Equivalents;

(c) Guarantee Obligations permitted by Section 8.2;

(d) loans and advances to employees of any Group Member of the Borrower in the
ordinary course of business (including for travel, entertainment and relocation
expenses) in an aggregate amount for all Group Members not to exceed
(i) $5,000,000 at any one time outstanding during the period from the Closing
Date through the first anniversary of the Closing Date and (ii) $2,500,000 at
any one time outstanding after the first anniversary of the Closing Date;

(e) the Acquisition;

(f) Investments in assets useful in the business of the Borrower and its
Subsidiaries made by the Borrower or any of its Subsidiaries with the proceeds
of any Reinvestment Deferred Amount;

(g) intercompany Investments by any Group Member in the Borrower or any Person
that, prior to such Investment, is a Loan Party;

(h) intercompany Investments by the Borrower or any of its Subsidiaries in any
Person, that, prior to such Investment, is a Foreign Subsidiary (including,
without limitation, Guarantee Obligations with respect to obligations of any
such Foreign Subsidiary, loans made to any such Foreign Subsidiary and
Investments resulting from mergers with or sales of assets to any such Foreign
Subsidiary) in an aggregate amount (valued at cost) not to exceed, together with
any Investment pursuant to paragraph (i) of this Section that results in the
creation or acquisition of a Foreign Subsidiary or the acquisition of assets of
a Foreign Subsidiary or any Investment in the Capital Stock of any Person which
is incorporated outside the United States of America, $10,000,000 at any time
outstanding; provided, that the original amount of any such Investment will be
deemed reduced by any permanent return of principal or equity thereon up to, but
not exceeding the original amount of such Investment; provided, further, that
the Borrower will provide to the Administrative Agent calculations upon which
the deemed reduction

 

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is based, accompanied by a certificate of a Responsible Officer stating that
such calculations are based on reasonable estimates, information and
assumptions, as of the time such calculations are provided, and that such
Responsible Officer has no reason to believe, as of the delivery of the
calculations, that such calculations are incorrect or misleading in any material
respect;

(i) Investments made by the Borrower or any of its Subsidiaries for the purpose
of consummating Permitted Acquisitions;

(j) Investments existing as of the Closing Date and set forth on Schedule 8.8,
as such Investments may be amended, restated, modified, renewed, refunded,
replaced or refinanced, whether or not with the same party (including, without
limitation, by means of sales of debt securities to institutional investors) in
whole or in part from time to time;

(k) Investments by any Subsidiary of the Borrower that is not a Loan Party in
any other Subsidiary of the Borrower that is not a Loan Party;

(l) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such trade creditors or customers or in good faith settlement of
delinquent obligations of such trade creditors or customers;

(m) Investments in prepaid expenses, negotiable instruments held for collection
and lease, utility and workers’ compensation, performance and other similar
deposits provided to third parties in the ordinary course of business;

(n) in addition to Investments otherwise expressly permitted by this Section,
together with any Investment in Permitted Joint Ventures in accordance with the
limitations set forth in Section 8.6(i), Investments by the Borrower or any of
its Subsidiaries in an aggregate amount (valued at cost) not to exceed
$75,000,000 during the term of this Agreement;

(o) Investments made by the Borrower or any of its Subsidiaries in order to
purchase, redeem or otherwise acquire or retire for value any Capital Stock of
the Borrower to the extent permitted under Section 8.6; and

(p) in addition to Investments otherwise expressly permitted by this Section,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount
(valued at cost) not to exceed $10,000,000 during the term of this Agreement.

8.9 Optional Payments and Modifications of Certain Debt Instruments. (a) Make or
offer to make any payments (other than regularly scheduled payments of principal
and interest) under the Valassis Indenture Documents except to the extent
permitted by Section 8.6(h), (b) amend, modify, waive or otherwise change, or
consent or agree to any amendment, modification, waiver or other change to, any
of the terms of the Valassis Indenture Documents or the Target Note Purchase
Documents (other than any such amendment, modification, waiver or other change
that (i) would extend the maturity or reduce the amount of any payment of
principal thereof or reduce the rate or extend any date for payment of interest
thereon and (ii) does not

 

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involve the payment of a material consent fee or could not otherwise be
reasonably expected to have a Material Adverse Effect), (c) redeem, retire,
defease, purchase or otherwise acquire the Existing Valassis Indebtedness, or
set aside or otherwise deposit or invest any sums for such purpose, except to
the extent permitted by Section 8.6(h), (d) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of the Preferred Stock of the Borrower or any of its
Subsidiaries (other than any such amendment, modification, waiver or other
change that (i) would extend the scheduled redemption date or reduce the amount
of any scheduled redemption payment or reduce the rate or extend any date for
payment of dividends thereon and (ii) does not involve the payment of a material
consent fee); or (e) designate any Indebtedness (other than obligations of the
Loan Parties pursuant to the Loan Documents or the Valassis Indenture Documents)
as “Designated Senior Indebtedness” (or any other defined term having a similar
purpose) for the purposes of the Valassis Indenture Documents or the Target Note
Purchase Documents, as the case may be.

8.10 Transactions with Affiliates. Enter into any transaction, including any
purchase, sale, lease or exchange of property, the rendering of any service or
the payment of any management, advisory or similar fees, with any Affiliate
(other than the Borrower or any Loan Party) unless such transaction is (a) (i)
otherwise permitted under this Agreement, (ii) in the ordinary course of
business of the relevant Group Member, and (iii) upon fair and reasonable terms
no less favorable to the relevant Group Member, than it would obtain in a
comparable arm’s length transaction with a Person that is not an Affiliate or
(b) a transaction identified on Schedule 8.10.

8.11 Sales and Leasebacks. Enter into any arrangement with any Person providing
for the leasing by any Group Member of real or personal property that has been
or is to be sold or transferred by such Group Member to such Person or to any
other Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Group Member, unless the
Net Cash Proceeds received by any Group Member pursuant to such an arrangement
are contemporaneously used to prepay the Loans pursuant to Section 4.2(b).

8.12 Hedge Agreements. Enter into any Hedge Agreement, except (a) Hedge
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure (other than those in respect of Capital Stock)
and (b) Hedge Agreements entered into in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to
another floating rate or otherwise) with respect to any interest-bearing
liability or investment of the Borrower or any Subsidiary.

8.13 Changes in Fiscal Periods. Permit the fiscal year of the Borrower to end on
a day other than December 31 or change the Borrower’s method of determining
fiscal quarters.

8.14 Negative Pledge Clauses. Enter into or suffer to exist or become effective
any agreement that prohibits, limits or imposes any condition upon the ability
of any Group Member to create, incur, assume or suffer to exist any Lien upon
any of its property or revenues, whether now owned or hereafter acquired (other
than with respect to the Valassis Indenture Documents and the Target Note
Purchase Documents until the Existing Target Indebtedness is

 

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repaid in full pursuant to Section 7.11), to secure its obligations under the
Loan Documents or any refinancing thereof other than (a) this Agreement and the
other Loan Documents, (b) pursuant to any applicable Requirement of Law and
(c) any agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby) or
entered into in connection with any Lien permitted under Section 8.3 (in which
case, any prohibition or limitation shall only be effective against the assets
subject to such permitted Lien (or proceeds thereof)).

8.15 Clauses Restricting Subsidiary Distributions. Enter into or suffer to exist
or become effective any consensual encumbrance or restriction on the ability of
any Subsidiary of the Borrower to (a) make Restricted Payments in respect of any
Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, the
Borrower or any other Subsidiary of the Borrower, (b) make loans or advances to,
or other Investments in, the Borrower or any other Subsidiary of the Borrower or
(c) transfer any of its assets to the Borrower or any other Subsidiary of the
Borrower, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents, (ii) customary
restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with a Disposition permitted under
Section 8.5, (iii) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business,
(iv) agreements existing as of the date hereof in the manner such agreements are
in effect on the date hereof; (v) customary provisions in joint venture
agreements and other similar agreements (in each case relating solely to the
respective joint venture or similar entity or the equity interests therein)
entered into in the ordinary course of business; and (vi) any restrictions
pursuant to agreements governing any purchase money Liens or Capital Lease
Obligations otherwise permitted hereby or entered into in connection with any
Lien permitted under Section 8.3 (in which case, any such restriction shall only
be effective against the assets financed by such purchase money Liens or Capital
Lease Obligations or subject to such permitted Lien (or proceeds thereof)).

8.16 Lines of Business. Enter into any business, either directly or through any
Subsidiary, except for a Permitted Business (as determined in good faith by the
Board of Directors of the Borrower).

8.17 Amendments to Material Contracts and Acquisition Documents. (a) Amend,
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of Acquisition Agreement in a manner adverse to the Lead Arrangers or
the Lenders without the prior written consent of each Lead Arranger and the
Administrative Agent or (b) otherwise amend, supplement or otherwise modify the
terms and conditions of any Material Contract or the Acquisition Documentation
or any such other documents except for any such amendment, supplement or
modification that (i) becomes effective after the Closing Date and (ii) could
not reasonably be expected to have a Material Adverse Effect.

 

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SECTION 9.

EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) the Borrower shall fail to pay any principal of any Loan or Reimbursement
Obligation when due in accordance with the terms hereof; or the Borrower shall
fail to pay any interest on any Loan or Reimbursement Obligation, or any other
amount payable hereunder or under any other Loan Document, within 5 days after
any such interest or other amount becomes due in accordance with the terms
hereof; or

(b) any representation or warranty made or deemed made by any Loan Party herein
or in any other Loan Document or that is contained in any certificate, document
or financial or other statement furnished by it at any time under or in
connection with this Agreement or any such other Loan Document shall prove to
have been inaccurate in any material respect on or as of the date made or deemed
made; or

(c) (i) any Loan Party shall default in the observance or performance of any
agreement contained in clause (i) or (ii) of Section 7.4(a) (with respect to the
Borrower only), Section 7.7, Section 7.11 or Section 8 of this Agreement or
Sections 5.5 and 5.7(b) of the Guarantee, Security and Collateral Agency
Agreement or (ii) an “Event of Default” under and as defined in any Mortgage
shall have occurred and be continuing; or

(d) any Loan Party shall default in the observance or performance of any other
agreement contained in this Agreement or any other Loan Document (other than as
provided in paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after notice to the Borrower from
the Administrative Agent or the Required Lenders; or

(e) any Group Member (i) defaults in making any payment of any principal of or
interest on any Indebtedness for borrowed money (including any Guarantee
Obligation or Hedge Agreement (other than a Specified Hedge Agreement), but
excluding the Loans) on the scheduled or original due date with respect thereto
and such default continues beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(ii) defaults in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or to become subject to a mandatory offer to
purchase by the obligor thereunder or (in the case of any such Indebtedness
constituting a Guarantee Obligation) to become payable; provided, that a
default, event or condition described in clause (i), (ii) or (iii) of this
paragraph (e) shall not at any time constitute an Event of Default unless, at
such time, one or more defaults, events or conditions of the type described in
clauses (i), (ii) and (iii) of

 

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this paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the aggregate
$25,000,000; and provided, further, a default, event or condition described in
clause (i), (ii) or (iii) or this paragraph (e) with respect to the Existing
Target Indebtedness shall not constitute a Default or an Event of Default under
the Agreement solely to the extent such default, event or condition occurs
during the period commencing on the Closing Date and ending on the 5.71% Series
A Termination Date (in the case of the 5.71% Series A Notes) and the Floating
Series B Termination Date (in the case of the Floating Series B Notes), as
applicable; or

(f) (i) any Group Member shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or any Group Member shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against any Group Member any case, proceeding or other action of a nature
referred to in clause (i) above that (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 60 days; or (iii) there shall be
commenced against any Group Member any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets that results in the entry of
an order for any such relief that shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) any Group Member shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in
clause (i), (ii), or (iii) above; or (v) any Group Member shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due; or

(g) (i) any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets of any Group Member or any Commonly
Controlled Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is,
in the reasonable opinion of the Required Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) any Group
Member or any Commonly Controlled Entity shall, or in the reasonable opinion of
the Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan,
(vi) any Group Member or any Commonly Controlled Entity shall, in the reasonable
opinion of the Required Lenders is

 

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likely to incur any liability under ERISA Section 4062(e) or any liability in
connection with a withdrawal from a Single Employer Plan subject to Section 4063
of ERISA at a time when the Group Member or Commonly Controlled Entity is a
“substantial employer” within the meaning of ERISA Section 4001(a)(2), (vii) any
Group Member or Commonly Controlled Entity has incurred liability for excise
taxes under Code Section 4971, or (viii) any other event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i) through
(viii) above, such event or condition, together with all other such events or
conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect or result in a Lien; or

(h) one or more final judgments or decrees shall be entered against any Group
Member involving in the aggregate a liability (not paid or fully covered by
insurance as to which the relevant insurance company does not dispute coverage)
of $25,000,000 or more, and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 30 days from the
entry thereof; or

(i) any of the Security Documents shall cease, for any reason, to be in full
force and effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Security Documents shall cease to be
enforceable and of the same effect and priority purported to be created thereby,
or any Loan Party or any Affiliate of any Loan Party shall so assert; or

(j) the guarantee contained in Section 2 of the Guarantee, Security and
Collateral Agency Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so assert; or

(k) (i) any “person” or “group” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
shall become, or obtain rights (whether by means or warrants, options or
otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and
13(d)-5 under the Exchange Act), directly or indirectly, of more than 35% of the
outstanding common stock of Valassis; (ii) the board of directors of Valassis
shall cease to consist of a majority of Continuing Directors; or (iii) Valassis
shall cease to own and control, of record and beneficially, directly, 100% of
each class of outstanding Capital Stock of AcquisitionCo (prior to giving effect
to the Acquisition) and the Target (after giving effect to the Acquisition) free
and clear of all Liens (except Liens created by the Guarantee, Security and
Collateral Agency Agreement); or

(l) any Unsecured Debt or the guarantees thereof shall cease, for any reason, to
be validly subordinated to the Borrower Credit Agreement Obligations or the
obligations of the Guarantors under the Guarantee, Security and Collateral
Agency Agreement, or any Loan Party, any Affiliate of any Loan Party, the
trustee in respect of any Unsecured Debt shall so assert in writing; or

(m) any Group Member (i) defaults in making any payment or delivery due on the
last payment, delivery or exchange date of, or any payment due on early
termination of, any Specified Hedge Agreement, in each case beyond the period of
grace, if any,

 

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provided in such Specified Hedge Agreement; or (ii) defaults in the observance
or performance of any other agreement or condition relating to any such
Specified Hedge Agreement, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or beneficiary of such Indebtedness (or a trustee or agent on
behalf of such holder or beneficiary) to cause, after the giving of notice if
required or the elapse of any grace period, a liquidation, acceleration or early
termination of such Specified Hedge Agreement; provided, that a default, event
or condition described in clause (i) or (ii) of this paragraph (n) shall not at
any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i) and (ii) of
this paragraph (n) shall have occurred and be continuing under Specified Hedge
Agreements which have an outstanding principal amount of Indebtedness thereunder
which exceeds $5,000,000;

(n) any “event of default” as defined in the Valassis Indenture Documents shall
have occurred and be continuing;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including all amounts of L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) shall immediately
become due and payable, and (B) if such event is any other Event of Default,
either or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower
declare the Revolving Commitments and the Delayed Draw Term Commitments to be
terminated forthwith, whereupon the Revolving Commitments and the Delayed Draw
Term Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable. With respect to all Letters of Credit with
respect to which presentment for honor shall not have occurred at the time of an
acceleration pursuant to this paragraph, the Borrower shall at such time deposit
in a cash collateral account opened by the Administrative Agent an amount equal
to the aggregate then undrawn and unexpired amount of such Letters of Credit.
Amounts held in such cash collateral account shall be applied by the
Administrative Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit shall
have expired or been fully drawn upon, if any, shall be applied to repay other
obligations of the Borrower hereunder and under the other Loan Documents and the
Specified Hedge Agreements. After all such Letters of Credit shall have expired
or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrower hereunder and under the
other Loan Documents and the Specified Hedge Agreements shall have been paid in
full, the balance, if any, in such cash collateral account shall be returned to
the Borrower (or such other Person as may be lawfully entitled thereto). Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived by the Borrower.

 

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SECTION 10.

THE AGENTS

10.1 Appointment. Each Lender (and, if applicable, each other Secured Party)
hereby irrevocably designates and appoints each Agent as the agent of such
Lender (and, if applicable, each other Secured Party) under this Agreement and
the other Loan Documents, and each such Lender (and, if applicable, each other
Secured Party) irrevocably authorizes such Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to such Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, no
Agent shall have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender or other Secured
Party, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.

10.2 Delegation of Duties. Each Agent may execute any of its duties under this
Agreement and the other Loan Documents by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. No Agent shall be responsible for the negligence or misconduct of
any agents or attorneys in-fact selected by it with reasonable care.

10.3 Exculpatory Provisions. Neither any Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Loan Document
(except to the extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person’s own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders or any other Secured Party
for any recitals, statements, representations or warranties made by any Loan
Party or any officer thereof contained in this Agreement or any other Loan
Document or any Specified Hedge Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agents under or in connection with, this Agreement or any other Loan Document or
any Specified Hedge Agreement or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or any Specified Hedge Agreement or for any failure of any Loan Party a
party thereto to perform its obligations hereunder or thereunder. The Agents
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document or any Specified Hedge
Agreement, or to inspect the properties, books or records of any Loan Party.

 

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10.4 Reliance by Agents. Each Agent shall be entitled to rely, and shall be
fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including counsel to
the Borrower), independent accountants and other experts selected by such Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. Each Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders (or, if so specified by this Agreement,
all Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action. The
Agents shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement, all
Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans and all other Secured Parties.

10.5 Notice of Default. No Agent shall be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder unless such Agent
has received notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”. In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders (or, if
so specified by this Agreement, all Lenders or any other instructing group of
Lenders specified by this Agreement); provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Secured Parties.

10.6 Non-Reliance on Agents and Other Lenders. Each Lender (and, if applicable,
each other Secured Party) expressly acknowledges that neither the Agents nor any
of their respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
any Agent hereafter taken, including any review of the affairs of a Loan Party
or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by any Agent to any Lender or any other Secured
Party. Each Lender (and, if applicable, each other Secured Party) represents to
the Agents that it has, independently and without reliance upon any Agent or any
other Lender or any other Secured Party, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates and made
its own decision to make its Loans hereunder and enter into this Agreement or
any Specified Hedge Agreement. Each Lender (and, if applicable, each other
Secured Party) also represents that it will, independently and without reliance
upon any Agent or any other Lender or any other Secured Party, and based on such
documents and information as it shall deem appropriate at the time,

 

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continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents or any
Specified Hedge Agreement, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Loan Parties and their affiliates. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender or any other
Secured Party with any credit or other information concerning the business,
operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party that may
come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.

10.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity
as such (to the extent not reimbursed by the Borrower and without limiting the
obligation of the Borrower to do so), ratably according to their respective
Aggregate Exposure Percentages in effect on the date on which indemnification is
sought under this Section (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with such Aggregate Exposure Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, or
reasonably out-of-pocket costs, expenses or disbursements of any kind whatsoever
that may at any time (whether before or after the payment of the Loans) be
imposed on, incurred by or asserted against such Agent in any way relating to or
arising out of, the Commitments, this Agreement, any of the other Loan
Documents, any Specified Hedge Agreement or any documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by such Agent under or in connection with any of
the foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements that are found by a final and
nonappealable decision of a court of competent jurisdiction to have resulted
from such Agent’s gross negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Loans and all other amounts payable
hereunder.

10.8 Agent in Its Individual Capacity. Each Agent and its affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
any Loan Party as though such Agent were not an Agent. With respect to its Loans
made or renewed by it and with respect to any Letter of Credit issued or
participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms “Lender”, “Lenders”, “Secured
Party” and “Secured Parties” shall include each Agent in its individual
capacity.

10.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 20 days’ notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent, which successor agent shall (unless an
Event of Default under Section 9(a) or Section 9(f) with respect to the Borrower
shall have occurred and be continuing) be subject to approval by the Borrower
(which approval shall not be unreasonably withheld or delayed), whereupon such

 

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successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. Any resignation of BSCL as the Administrative Agent
pursuant to this Section shall also constitute the resignation of BSCL or its
successor as Collateral Agent, and any successor Administrative Agent appointed
pursuant to this Section shall, upon its acceptance of such appointment, become
the successor Collateral Agent for all purposes hereunder. If no successor agent
has accepted appointment as Administrative Agent by the date that is 20 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s and Collateral Agent’s resignations shall nevertheless
thereupon become effective and the Lenders shall assume and perform all of the
duties of the Administrative Agent and Collateral Agent hereunder until such
time, if any, as the Required Lenders appoint a successor agent as provided for
above. The Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the
duties, rights, obligations and responsibilities of the Syndication Agent
hereunder shall automatically be assumed by, and inure to the benefit of, the
Administrative Agent, without any further act by the Syndication Agent, the
Administrative Agent or any Lender. After any retiring Administrative Agent’s
resignation as Administrative Agent, the provisions of this Section 10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.

10.10 Agents Generally. Except as expressly set forth herein, no Agent shall
have any duties or responsibilities hereunder in its capacity as such.

10.11 The Joint Lead Arrangers. The Joint Lead Arrangers, in their respective
capacities as such, shall have no duties or responsibilities, and shall incur no
liability, under this Agreement and the other Loan Documents.

SECTION 11.

MISCELLANEOUS

11.1 Amendments and Waivers. Neither this Agreement, any other Loan Document,
nor any terms hereof or thereof may be amended, supplemented or modified except
in accordance with the provisions of this Section 11.1. The Required Lenders and
each Loan Party party to the relevant Loan Document may, or, with the written
consent of the Required Lenders, the Administrative Agent and each Loan Party
party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders or the Administrative Agent, as the case may
be, may specify in such instrument, any of the requirements of this Agreement or
the other Loan Documents or any Default or Event of Default and its
consequences; provided, however, that no such waiver and no such amendment,
supplement or modification shall:

(i) forgive the principal amount or extend the final scheduled date of maturity
of any Loan, extend the scheduled date of any amortization payment in respect of
any Term Loan, reduce the stated rate of any interest or fee payable hereunder
(except (x) in connection with the waiver of applicability of any post-default
increase in interest rates, which waiver shall be effective with the consent of
the Majority Facility Lenders of each adversely affected Facility) and (y) that
any amendment or modification of defined terms used in the financial covenants
in this Agreement shall not constitute a reduction in the rate of interest or
fees for purposes of this clause (i)) or extend the scheduled date of any
payment thereof, or increase the amount or extend the expiration date of any
Lender’s Revolving Commitment, in each case without the written consent of each
Lender directly affected thereby;

 

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(ii) eliminate or reduce the voting rights of any Lender under this Section 11.1
without the written consent of such Lender;

(iii) reduce any percentage specified in the definition of Required Lenders,
consent to the assignment or transfer by the Borrower of its rights and
obligations under this Agreement and the other Loan Documents, release all or
substantially all of the Collateral or release all or substantially all of the
Guarantors from their obligations under the Guarantee, Security and Collateral
Agency Agreement, in each case without the written consent of all Lenders;

(iv) amend, modify or waive any condition precedent to any extension of credit
under the Revolving Facility set forth in Section 6.2 (including in connection
with any waiver of an existing Default or Event of Default) without the written
consent of the Majority Facility Lenders with respect to the Revolving Facility;

(v) amend, modify or waive any provision of Section 4.8 without the written
consent of the Majority Facility Lenders in respect of each Facility adversely
affected thereby;

(vi) reduce the amount of Net Cash Proceeds or Excess Cash Flow required to be
applied to prepay Loans under this Agreement without the written consent of the
Majority Facility Lenders with respect to each Facility;

(vii) reduce the percentage specified in the definition of Majority Facility
Lenders with respect to any Facility without the written consent of all Lenders
under such Facility;

(viii) amend, modify or waive any provision of Section 10 without the written
consent of each Agent adversely affected thereby;

(ix) amend, modify or waive any provision of Section 3.3 or 3.4 without the
written consent of the Swingline Lender;

 

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(x) amend, modify or waive any provision of Sections 3.7 to 3.15 without the
written consent of the Issuing Lender; or

(xi) amend, modify or waive (A) any Loan Document so as to alter the ratable
treatment of the Borrower Hedge Agreement Obligations and the Borrower Credit
Agreement Obligations or (B) the definition of “Qualified Counterparty,”
“Specified Hedge Agreement,” “Obligations,” “Borrower Obligations,” or “Borrower
Hedge Agreement Obligations,” in each case in a manner adverse to any Qualified
Counterparty with Obligations then outstanding without the written consent of
any such Qualified Counterparty.

Any such waiver and any such amendment, supplement or modification shall apply
equally to each of the Lenders and shall be binding upon the Loan Parties, the
Lenders, the Agents and all future holders of the Loans. In the case of any
waiver, the Loan Parties, the Lenders and the Agents shall be restored to their
former position and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.

Notwithstanding the foregoing, this Agreement may be amended (or amended and
restated) with the written consent of the Required Lenders, the Administrative
Agent and the Borrower (a) to add one or more additional credit facilities to
this Agreement and to permit the extensions of credit from time to time
outstanding thereunder and the accrued interest and fees in respect thereof
(collectively, the “Additional Extensions of Credit”) to share ratably in the
benefits of this Agreement and the other Loan Documents with the Term Loans and
Revolving Extensions of Credit and the accrued interest and fees in respect
thereof and (b) to include appropriately the Lenders holding such credit
facilities in any determination of the Required Lenders and Majority Facility
Lenders; provided, that no such amendment shall permit the Additional Extensions
of Credit to share ratably with or with preference to the Term Loans in the
application of mandatory prepayments without the consent of the Majority
Facility Lenders under each Facility (other than the Revolving Facility) or
otherwise to share ratably with or with preference to the Revolving Extensions
of Credit without the consent of the Majority Facility Lenders under the
Revolving Facility.

In addition, notwithstanding the foregoing, (a) this Agreement may be amended
with the written consent of the Administrative Agent, the Borrower and the
Lenders providing the relevant Replacement Tranche B Term Loans (as defined
below) to permit the refinancing of all outstanding Tranche B Term Loans
(“Refinanced Tranche B Term Loans”) with a replacement “B” term loan tranche
hereunder (“Replacement Tranche B Term Loans”), provided that (i) the aggregate
principal amount of such Replacement Tranche B Term Loans shall not exceed the
aggregate principal amount of such Refinanced Tranche B Term Loans, (ii) the
Applicable Margin for such Replacement Tranche B Term Loans shall not be higher
than the Applicable Margin for such Refinanced Tranche B Term Loans, (iii) the
weighted average life to maturity of such Replacement Tranche B Term Loans shall
not be shorter than the weighted average life to maturity of such Refinanced
Tranche B Term Loans at the time of such refinancing and (iv) all other terms
applicable to such Replacement Tranche B Term Loans shall be substantially
identical to, or less favorable to the Lenders providing such Replacement

 

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Tranche B Term Loans than, those applicable to such Refinanced Tranche B Term
Loans, except to the extent necessary to provide for covenants and other terms
applicable to any period after the latest final maturity of the Tranche B Term
Loans in effect immediately prior to such refinancing; and (b) this Agreement
may be amended with the written consent of the Administrative Agent, the
Borrower and the Lenders providing the relevant Replacement Delayed Draw Term
Loans (as defined below) to permit the refinancing of all outstanding Delayed
Draw Term Loans (“Refinanced Delayed Draw Term Loans”) with a replacement
“delayed draw” term loan hereunder (“Replacement Delayed Draw Term Loans”),
provided that (i) the aggregate principal amount of such Replacement Delayed
Draw Term Loans shall not exceed the aggregate principal amount of such
Refinanced Delayed Draw Term Loans, (ii) the Applicable Margin for such
Replacement Delayed Draw Term Loans shall not be higher than the Applicable
Margin for such Refinanced Delayed Draw Term Loans, (iii) the weighted average
life to maturity of such Replacement Delayed Draw Term Loans shall not be
shorter than the weighted average life to maturity of such Refinanced Delayed
Draw Term Loans at the time of such refinancing and (iv) all other terms
applicable to such Replacement Delayed Draw Term Loans shall be substantially
identical to, or less favorable to the Lenders providing such Replacement
Delayed Draw Term Loans than, those applicable to such Refinanced Delayed Draw
Term Loans, except to the extent necessary to provide for covenants and other
terms applicable to any period after the latest final maturity of the Delayed
Draw Term Loans in effect immediately prior to such refinancing.

If, in connection with any proposed amendment, modification, waiver or
termination requiring the consent of more than the Required Lenders, the consent
of Required Lenders is obtained, but the consent of other Lenders whose consent
is required is not obtained (any such Lender whose consent is not obtained being
referred to as a “Non-Consenting Lender”), then either (x) the Administrative
Agent or (y) a Person reasonably acceptable to the Administrative Agent who
shall provide its consent to the proposed amendment, modification, waiver or
termination in question, shall have the right to purchase from such
Non-Consenting Lenders, and such Non-Consenting Lenders agree that they shall,
upon the Administrative Agent's request, sell and assign to the Administrative
Agent or such Person, all of the Loans of such Non-Consenting Lenders for an
amount equal to the principal balance of all Loans held by such Non-Consenting
Lenders and all accrued interest and fees with respect thereto through the date
of sale, such purchase and sale to be consummated pursuant to an executed
Assignment and Assumption; provided that the Administrative Agent is not the
Non-Consenting Lender whose Loans are being assigned. The Borrower shall be
liable to such Non-Consenting Lender under Section 4.11 if any Eurodollar Loan
owing to such Non-Consenting Lender shall be purchased other than on the last
day of the Interest Period relating thereto. In addition to the foregoing, the
Borrower may replace any Non-Consenting Lender pursuant to Section 4.13.

 

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11.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered, or three Business Days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Borrower and the Agents, and as set
forth in an administrative questionnaire delivered to the Administrative Agent
in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto:

 

The Borrower:

  

Valassis Communications, Inc.

19975 Victor Parkway

Livonia, Michigan 48152

Attention: Mr. Robert Recchia

Telecopy: (734) 462-2513

Telephone: (734) 591-4900

with a copy to:

  

McDermott Will & Emery

340 Madison Avenue

New York, NY 10173-1922

Attention: Amy S. Leder, Esq.

Telecopy: (212) 547-5444

Telephone: (212) 547-5514

The Administrative Agent:

  

Bear Stearns Corporate Lending, Inc.

383 Madison Avenue

New York, New York 10179

Attention: Kevin Cullen

Telecopy: (212) 272-9184

Telephone: (212) 272-5724

with a copy to:

  

Paul, Hastings, Janofsky & Walker LLP

75 East 55th Street

New York, New York 10022

Attention: Leslie A. Plaskon, Esq.

Telecopy: (212) 319-4090

Telephone: (212) 318-6000

The Syndication Agent:

  

Bank of America, N.A.

231 South LaSalle Street

Chicago, Illinois 60604

Attention: Daniel R. Petrik

Telecopy: (312) 828-7393

Telephone: (312) 828-8160

provided that any notice, request or demand to or upon any Agent, the Issuing
Lender or the Lenders shall not be effective until received.

Notices and other communications to the Lenders hereunder may be delivered or
furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices
pursuant to Section 2 unless otherwise agreed by the Administrative Agent and
the applicable Lender. The Administrative Agent or the Borrower may, in their
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications.

 

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11.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any Agent or any Lender, any right, remedy, power or
privilege hereunder or under the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.

11.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder, until all Loans, Borrower Credit
Agreement Obligations and Borrower Hedge Agreement Obligations have been
indefeasibly satisfied and paid in full.

11.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse
each Agent and the Lenders for all their reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including the reasonable fees and disbursements
of one outside counsel to the Agents and Lenders (provided that, in the event of
a conflict of interest with such counsel, the Agents and the Lenders shall be
entitled to engage additional counsel at their choosing) and local counsel as
required by the Agents, and filing and recording fees and expenses, with
statements with respect to the foregoing to be submitted to the Borrower prior
to the Closing Date (in the case of amounts to be paid on the Closing Date) and
from time to time thereafter on a quarterly basis or such other periodic basis
as such Agent shall deem appropriate, (b) to pay or reimburse each Lender and
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of one outside
counsel to the Agents and the Lenders (provided that, in the event of a conflict
of interest with such counsel, the Agents and the Lenders shall be entitled to
engage additional counsel at their choosing), (c) to pay, indemnify, and hold
each Lender and Agent harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other taxes, if any, that may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and
(d) to pay, indemnify, and hold each Lender and Agent and their respective
officers, directors, employees, affiliates, agents and controlling persons
(each, an “Indemnitee”) harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, or
reasonably out-of-pocket costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Loan Documents (regardless of
whether any Loan Party is or is not a party to any such actions or suits),
including any of the foregoing relating to the use of proceeds of the Loans or
the violation of, noncompliance with or liability under, any Environmental Law
applicable to the operations of

 

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any Group Member or any of the Properties and the out-of-pocket reasonable fees
and expenses of legal counsel in connection with claims, actions or proceedings
by any Indemnitee against any Loan Party under any Loan Document (all the
foregoing in this clause (d), collectively, the “Indemnified Liabilities”),
provided, that the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee. Without limiting the foregoing (including the
foregoing proviso), and to the extent permitted by applicable law, the Borrower
agrees not to assert and to cause their Subsidiaries not to assert, and hereby
waive and agree to cause their Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any Indemnitee. All amounts due
under this Section 11.5 shall be payable not later than 10 days after written
demand therefor. Statements payable by the Borrower pursuant to this
Section 11.5 shall be submitted to the Borrower, at the address of the Borrower
set forth in Section 11.2, or to such other Person or address as may be
hereafter designated by the Borrower in a written notice to the Administrative
Agent. The agreements in this Section 11.5 shall survive repayment of the Loans
and all other amounts payable hereunder.

11.6 Successors and Assigns; Participations and Assignments. (a) The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any affiliate of the Issuing Lender that issues any Letter of Credit), except
that (i) the Borrower may not assign or otherwise transfer any of their rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by the Borrower without such consent shall
be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any
Lender may assign to one or more assignees (each, an “Assignee”) all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

(A) the Borrower, provided that no consent of the Borrower shall be required for
an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as
defined below) or, if an Event of Default has occurred and is continuing, any
other Person; and

(B) the Administrative Agent, provided that no consent of the Administrative
Agent shall be required for (x) an assignment to an Assignee that is a Lender
immediately prior to giving effect to such assignment, except in the case of an
assignment of a Revolving Commitment to an Assignee that does not already have a
Revolving Commitment, (y) any assignment by the Administrative Agent (or its
affiliates) or (z) any assignment of Term Loans; and

 

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(C) in the case of any assignment of a Revolving Commitment, the Issuing Lender
and the Swingline Lender.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or
an Approved Fund or an assignment of the entire remaining amount of the
assigning Lender’s Commitments or Loans under any Facility, the amount of the
Commitments or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date) shall not be
less than $1,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent; provided that (1) no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing and (2) such
amounts shall be aggregated in respect of each Lender and its Affiliates or
Approved Funds, if any;

(B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500;

(C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire; and

(D) in the case of an assignment by a Lender to a related CLO (as defined below)
managed or administered by such Lender or an Affiliate of such Lender, the
assigning Lender shall retain the sole right to approve any amendment,
modification or waiver of any provision of this Agreement and the other Loan
Documents, provided that the Assignment and Assumption between such Lender and
such CLO may provide that such Lender will not, without the consent of such CLO,
agree to any amendment, modification or waiver that (1) requires the consent of
each Lender directly affected thereby pursuant to the proviso to the second
sentence of Section 11.1 and (2) directly affects such CLO.

For the purposes of this Section 11.6, the terms “Approved Fund” and “CLO” have
the following meanings:

“Approved Fund” means (a) with respect to any Lender, a CLO managed or
administered by such Lender or an Affiliate of such Lender, and (b) with respect
to any Lender that is a fund which invests in bank loans and similar extensions
of credit, any other fund that invests in bank loans and similar extensions of
credit and is managed by the same investment advisor as such Lender or by an
Affiliate of such investment advisor.

“CLO” means any entity (whether a corporation, partnership, trust or otherwise)
that is engaged in making, purchasing, holding or otherwise investing in bank
loans and similar extensions of credit in the ordinary course and is
administered or managed by a Lender or an Affiliate of such Lender.

 

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(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv)
below, from and after the effective date specified in each Assignment and
Assumption the Assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Sections 4.9,
4.10, 4.11 and 10.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 11.6
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c) of
this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amount of the
Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent, the Issuing Lender and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Lender and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an Assignee, the Assignee’s completed administrative
questionnaire (unless the Assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section and
any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.

(c) (i) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a “Participant”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such

 

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agreement may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that (1) requires
the consent of each Lender directly affected thereby pursuant to the proviso to
the second sentence of Section 11.1 and (2) directly affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 4.9, 4.10 and 4.11 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 11.7(b)
as though it were a Lender, provided such Participant shall be subject to
Section 11.7(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under
Section 4.9 or 4.10 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent. Any Participant that is a Non-U.S. Lender shall not be entitled
to the benefits of Section 4.10 unless such Participant complies with
Section 4.10(d).

(d) Any Lender may, without the consent of the Borrower or the Administrative
Agent, at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including
any pledge or assignment to secure obligations to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or Assignee for such Lender as a party hereto.

(e) The Borrower, upon receipt of written notice from the relevant Lender,
agrees to issue Notes to any Lender requiring Notes to facilitate transactions
of the type described in paragraph (d) above.

(f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of
the Loans it may have funded hereunder to its designating Lender without the
consent of the Borrower or the Administrative Agent and without regard to the
limitations set forth in Section 11.6(b). The Borrower, each Lender and the
Administrative Agent hereby confirms that it will not institute against a
Conduit Lender or join any other Person in instituting against a Conduit Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any state bankruptcy or similar law, for one year and one day
after the payment in full of the latest maturing commercial paper note issued by
such Conduit Lender; provided, however, that each Lender designating any Conduit
Lender hereby agrees to indemnify, save and hold harmless each other party
hereto for any loss, cost, damage or expense arising out of its inability to
institute such a proceeding against such Conduit Lender during such period of
forbearance.

11.7 Adjustments; Set-off. (a) Except to the extent that this Agreement
expressly provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a “Benefitted Lender”) shall
receive any payment of all or part of the Obligations owing to it, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
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Section 9(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, such Benefitted Lender shall purchase for cash from
the other Lenders a participating interest in such portion of the Obligations
owing to each such other Lender, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each
Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise), to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Borrower. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender, provided that the failure to give such notice shall not affect
the validity of such setoff and application.

11.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.

11.9 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

11.10 Integration. This Agreement and the other Loan Documents represent the
entire agreement of the Borrower, the Agents and the Lenders with respect to the
subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by any Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other Loan
Documents.

11.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

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11.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and
unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States for the Southern District of New York, and appellate
courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Borrower, at the
address set forth in Section 11.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

11.13 Acknowledgments. The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of
this Agreement and the other Loan Documents;

(b) no Agent or Lender has any fiduciary relationship with or duty to the
Borrower arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Agents and Lenders, on one
hand, and the Borrower, on the other hand, in connection herewith or therewith
is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Borrower and the Lenders.

11.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to the
contrary contained herein or in any other Loan Document, the Collateral Agent is
hereby irrevocably authorized by each Secured Party (without requirement of
notice to or consent of any Secured Party except as expressly required by
Section 11.1) to take any action requested by the Borrower having the effect of
releasing any Collateral or guarantee obligations (i) to the extent

 

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necessary to permit consummation of any transaction not prohibited by any Loan
Document or that has been consented to in accordance with Section 11.1 or
(ii) under the circumstances described in paragraph (b) below.

(b) At such time as (i) the Loans, the Reimbursement Obligations and the other
obligations under the Loan Documents (other than obligations under or in respect
of Hedge Agreements) shall have been paid in full (or cash collateralized in a
manner satisfactory to the Administrative Agent), (ii) the Commitments have been
terminated and no Letters of Credit shall be outstanding and (iii) the net
termination liability under or in respect of, and other amounts due and payable
under, Specified Hedge Agreements at such time shall have been paid or secured
in the manner provided in such Specified Hedge Agreements or by a collateral
arrangement satisfactory to the relevant Qualified Counterparties in their sole
discretion, the Collateral shall be released from the Liens created by the
Security Documents, and the Security Documents and all obligations (other than
those expressly stated to survive such termination) of the Collateral Agent and
each Loan Party under the Security Documents shall terminate, all without
delivery of any instrument or performance of any act by any Person.

11.15 Confidentiality. Each Agent and each Lender agrees to keep confidential
all non-public information provided to it by any Loan Party pursuant to this
Agreement that is designated by such Loan Party as confidential; provided that
nothing herein shall prevent any Agent or any Lender from disclosing any such
information (a) to any Agent, any other Lender or any Lender Affiliate,
(b) subject to an agreement to comply with the provisions of this Section, to
any actual or prospective Transferee or any direct or indirect counterparty to
any Hedge Agreement (or any professional advisor to such counterparty), (c) to
its employees, directors, agents, attorneys, accountants and other professional
advisors or those of any of its affiliates on a confidential basis, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been publicly
disclosed, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about a Lender’s investment portfolio in connection with
ratings issued with respect to such Lender, or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.

11.16 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.

11.17 Delivery of Addenda. Each initial Lender shall become a party to this
Agreement by delivering to the Administrative Agent an Addendum duly executed by
such Lender.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

BORROWER: VALASSIS COMMUNICATIONS, INC. By:   /s/ Barry P. Hoffman Name:   Barry
P. Hoffman Title:   Executive Vice President

 

BEAR, STEARNS & CO. INC., as Joint Lead Arranger and Joint Bookrunner By:   /s/
Victor Bulzacchelli Name:   Victor Bulzacchelli Title:   Authorized Agent

 

BANC OF AMERICA SECURITIES LLC, as Joint Lead Arranger and Joint Bookrunner By:
  /s/ Jeffrey H. Dronan Name:   Jeffrey H. Dronan Title:   Principal

 

BEAR STEARNS CORPORATE LENDING INC., as Administrative Agent, as Collateral
Agent and as a Lender By:   /s/ Victor Bulzacchelli Name:   Victor Bulzacchelli
Title:   Authorized Agent

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BANK OF AMERICA, N.A., as Syndication Agent and as a Lender By:   /s/ Daniel R.
Petrik Name:   Daniel R. Petrik Title:   Senior Vice President

 

THE ROYAL BANK OF SCOTLAND PLC, as Documentation Agent and as a Lender By:   /s/
Vincent Fitzgerald Name:   Vincent Fitzgerald Title:   Managing Director

 

JPMORGAN CHASE BANK, N.A., as Documentation Agent and as a Lender By:   /s/
Sabir A. Hashmy Name:   Sabir A. Hashmy Title:   Vice President

 

GENERAL ELECTRIC CAPITAL CORPORATION, as Documentation Agent and as a Lender By:
  /s/ Karl Kieffer Name:   Karl Kieffer Title:   Duly Authorized Signatory

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COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as a Lender By:   /s/ Isabel
S. Zeissig Name:   Isabel S. Zeissig Title:   Vice President

 

By:   /s/ Charles W. Polet Name:   Charles W. Polet Title:   Assistant Treasurer

 

WEBSTER BANK, NATIONAL ASSOCIATION, as a Lender By:   /s/ Hans Jung Name:   Hans
Jung Title:   Vice President

 

FIFTH THIRD BANK, A MICHIGAN BANKING CORPORATION, as a Lender By:   /s/ Brian
Jelinski Name:   Brian Jelinski Title:   Officer