Exhibit 10.1

 

EXECUTION VERSION

 

$310,000,000

 

The McClatchy Company

 

9.000% Senior Secured Notes due 2026

 

Purchase Agreement

 

June 29, 2018

 

J.P. Morgan Securities LLC

 

As Representative of the

several Initial Purchasers listed

in Schedule 1 hereto

 

c/o J.P. Morgan Securities LLC

383 Madison Avenue

New York, New York 10179

 

Ladies and Gentlemen:

 

The McClatchy Company, a Delaware corporation (the “Company”), proposes to issue
and sell to the several initial purchasers listed in Schedule 1 hereto (the
“Initial Purchasers”), for whom you are acting as representative (the
“Representative”), $310,000,000 aggregate principal amount of its 9.000% Senior
Secured Notes due 2026 (the “Securities”). The Securities will be issued
pursuant to an Indenture to be dated as of July 16, 2018 (the “Indenture”) among
the Company, the guarantors from time to time party thereto (the “Guarantors”)
and The Bank of New York Mellon Trust Company, N.A., as trustee (in such
capacity, the “Trustee”) and as notes collateral agent (in such capacity, the
“Notes Collateral Agent”), and will be guaranteed on a senior secured basis,
jointly and severally, by each of the Guarantors listed on Schedule 2 hereto
(the “Guarantees”).

 

The Securities will be sold to the Initial Purchasers without being registered
under the Securities Act of 1933, as amended (the “Securities Act”), in reliance
upon an exemption therefrom. The Company and the Guarantors have prepared a
preliminary offering memorandum dated June 27, 2018 (the “Preliminary Offering
Memorandum”) and will prepare an offering memorandum dated the date hereof (the
“Offering Memorandum”) setting forth information concerning the Company, the
Guarantors and the Securities. Copies of the Preliminary Offering Memorandum
have been, and copies of the Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. The
Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum, the other Time of Sale Information (as defined below) and
the Offering Memorandum in connection with the offering and resale of the
Securities by the Initial Purchasers in the manner contemplated by this purchase
agreement (the “Agreement”). References herein to the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering Memorandum shall be
deemed to refer to and include any document incorporated by reference therein
prior to the Time of Sale (as defined below) unless specifically otherwise
indicated and any reference to “amend,” “amendment” or “supplement” with respect
to the Preliminary Offering Memorandum or the Offering Memorandum shall be
deemed to refer to and include any documents filed after such date and
incorporated by reference therein. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Preliminary Offering
Memorandum.

 

 

 

 

At or prior to the time when sales of the Securities by an Initial Purchaser
were first made (the “Time of Sale”), the Company had prepared the following
information (collectively, the “Time of Sale Information”): the Preliminary
Offering Memorandum, as supplemented and amended by the written communications
(as defined in Section 14 hereof) listed on Annex A hereto including the term
sheet substantially in the form of Annex B hereto.

 

The Company and the Guarantors will initially secure their obligations under the
Securities and the Guarantees by a first-priority security interest in
substantially all of the assets of the Company and the Guarantors (the
“Collateral”), subject to Permitted Liens (as defined in the Time of Sale
Information and the Offering Memorandum) and other Excluded Property (as defined
in the Time of Sale Information and the Offering Memorandum). In connection with
the offering, the Company and the Guarantors, as applicable, and the Notes
Collateral Agent, will enter into a Security Agreement (as defined in Section 14
hereof), a Trademark Security Agreement (as defined in Section 14 hereof), a
Copyright Security Agreement (as defined in Section 14 hereof) and Mortgages (as
defined in Section 14 hereof), providing for, among other things, the Company
and the Guarantors party thereto to grant to the Notes Collateral Agent for its
benefit and for the benefit of the Trustee and the holders of the Securities a
lien on and a security interest in the Collateral as security for their
obligations under the Securities and the Guarantees.

 

On or prior to the Closing Date (as defined below), the Company will enter into
(i) a new asset-based revolving credit facility (the “New ABL Facility”) among
the Company, the guarantors party thereto and Wells Fargo Bank, N.A., as
administrative agent and collateral agent (in such capacities, the “ABL Agent”),
(ii) an intercreditor agreement between the Notes Collateral Agent and the ABL
Agent, and acknowledged by the Company and the Guarantors (the “ABL
Intercreditor Agreement”), (iii) a junior lien term loan credit agreement (the
“Junior Lien Term Loan Facility”) among the Company, the guarantors party
thereto and Chatham Asset Management, LLC, (“Chatham”) and Chatham’s affiliated
entities named therein as lenders and The Bank of New York Mellon, as
administrative agent and collateral agent (in such capacities, the “Junior Lien
Agent”) and (iv) an intercreditor agreement among the Notes Collateral Agent,
the ABL Agent and the Junior Lien Agent, and acknowledged by the Company and the
Guarantors (the “Junior Lien Intercreditor Agreement” and, together with the ABL
Intercreditor Agreement, the “Intercreditor Agreements”).

 

As described in the Time of Sale Information and the Offering Memorandum,
proceeds from the issuance and sale of the Securities, together with borrowings
under the New ABL Facility and the Junior Lien Term Loan Facility, shall be used
to (i) satisfy and discharge (the “2022 Refinancing”) the Company’s outstanding
9.00% Senior Secured Notes due 2022 (the “9.00% Notes”), (ii) repay any
outstanding borrowings under the Company’s existing Third Amended and Restated
Credit Agreement, dated as of December 18, 2012, as amended (the “Existing
Credit Agreement), among the Company, the lenders party thereto and Bank of
America, N.A., as administrative agent and L/C issuer (the “Credit Agreement
Refinancing” and, together with the 2022 Refinancing, the “Refinancing”) and
(iii) pay fees and expenses in connection with the Refinancing and the issuance
and sale of the Securities. For purposes of this Agreement, the term
“Transactions” shall refer to, collectively, (i) the issuance and sale of the
Securities; (ii) the Refinancing; (iii) the execution, delivery and
effectiveness of the Security Documents (as defined in Section 14 hereof); (iv)
the entering into of the Intercreditor Agreements; (v) the effectiveness of the
New ABL Facility; (vi) the effectiveness of the Junior Lien Term Loan Facility
and (vii) the payment of all related fees and expenses in connection with the
foregoing.

 

 -2- 

 

 

The Company and the Guarantors hereby confirm their agreement with the several
Initial Purchasers concerning the purchase and resale of the Securities, as
follows:

 

1.           Purchase and Resale of the Securities.

 

(a)          The Company agrees to issue and sell the Securities to the several
Initial Purchasers as provided in this Agreement, and each Initial Purchaser, on
the basis of the representations, warranties and agreements of the Company and
the Guarantors set forth herein and subject to the conditions set forth herein,
agrees, severally and not jointly, to purchase from the Company the respective
principal amount of Securities set forth opposite such Initial Purchaser’s name
in Schedule 1 hereto at a price equal to 95.492% of the principal amount thereof
plus accrued interest, if any, from July 16, 2018 to the Closing Date. The
Company will not be obligated to deliver any of the Securities except upon
payment for all the Securities to be purchased as provided herein.

 

(b)          The Company understands that the Initial Purchasers intend to offer
the Securities for resale on the terms set forth in the Time of Sale
Information. Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:

 

(i)           it is an accredited investor within the meaning of Rule 501(a) of
Regulation D under the Securities Act (“Regulation D”);

 

(ii)          it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c) of
Regulation D under the Securities Act or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities Act; and

 

(iii)         it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities as part of their initial
offering except:

 

 (A)         to persons whom it reasonably believes to be qualified
institutional buyers within the meaning of Rule 144A under the Securities Act
(“Rule 144A”) in transactions pursuant to Rule 144Aand in connection with each
such sale, it has taken or will take reasonable steps to ensure that the
purchaser of the Securities is aware that such sale is being made in reliance on
Rule 144A; or

 

 (B)         outside the United States in accordance with the restrictions set
forth in Annex C hereto.

 

(c)          Each Initial Purchaser acknowledges and agrees that the Company
and, for purposes of the “no registration” opinions to be delivered to the
Initial Purchasers pursuant to Sections 6(f) and 6(h), counsel for the Company
and counsel for the Initial Purchasers, respectively, may rely upon the accuracy
of the representations and warranties of the Initial Purchasers, and compliance
by the Initial Purchasers with their agreements, contained in paragraph (b)
above (including Annex C hereto), and each Initial Purchaser hereby consents to
such reliance.

 

(d)          The Company and the Guarantors acknowledge and agree that the
Initial Purchasers may offer and sell Securities to or through any affiliate (as
defined in Section 14 hereof) of an Initial Purchaser and that any such
affiliate may offer and sell Securities purchased by it to or through any
Initial Purchaser; provided that such offers and sales shall be made in a
accordance with the provisions of this Agreement.

 

 -3- 

 

 

(e)          The Company and the Guarantors acknowledge and agree that each
Initial Purchaser is acting solely in the capacity of an arm’s length
contractual counterparty to each of the Company and the Guarantors with respect
to the offering of Securities contemplated hereby (including in connection with
determining the terms of the offering) and not as a financial advisor or
fiduciary to, or agent of, the Company, the Guarantors or any other person.
Additionally, neither the Representative nor any other Initial Purchaser is
advising the Company, the Guarantors or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company
and the Guarantors shall consult with their own advisors concerning such matters
and shall be responsible for making their own independent investigation and
appraisal of the transactions contemplated hereby, and neither the
Representative nor any other Initial Purchaser shall have any responsibility or
liability to the Company or the Guarantors with respect thereto. Any review by
the Representative or any Initial Purchaser of the Company, the Guarantors and
the transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of the Representative or
such Initial Purchaser, as the case may be, and shall not be on behalf of the
Company, the Guarantors or any other person.

 

2.            Payment and Delivery.

 

(a)          Payment for and delivery of the Securities will be made at the
offices of Cahill Gordon & Reindel llp, 80 Pine Street, New York, New York 10005
at 10:00 A.M., New York City time, on July 16, 2018, or at such other time or
place on the same or such other date, not later than the fifth business day (as
defined in Section 14 hereof) thereafter, as the Representative and the Company
may agree upon in writing. The time and date of such payment and delivery is
referred to herein as the “Closing Date.”

 

(b)          Payment for the Securities shall be made by wire transfer in
immediately available funds to the account(s) specified by the Company to the
Representative against delivery to the nominee of The Depository Trust Company
(“DTC”), for the account of the Initial Purchasers, of one or more global notes
representing the Securities (collectively, the “Global Note”), with any transfer
taxes payable in connection with the sale of the Securities duly paid by the
Company. The Global Note will be made available for inspection by the
Representative not later than 1:00 P.M., New York City time, on the business day
prior to the Closing Date.

 

3.            Representations and Warranties of the Company and the Guarantors.
The Company and the Guarantors jointly and severally represent and warrant to
each Initial Purchaser that:

 

(a)          Preliminary Offering Memorandum, Time of Sale Information and
Offering Memorandum. The Preliminary Offering Memorandum, as of its date, did
not, the Time of Sale Information, at the Time of Sale, did not, and on the
Closing Date, will not, and the Offering Memorandum, in the form first used by
the Initial Purchasers to confirm sales of the Securities and as of the Closing
Date, will not, contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that
the Company and the Guarantors make no representation or warranty with respect
to any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representative expressly for use
in the Preliminary Offering Memorandum, the Time of Sale Information or the
Offering Memorandum.

 

 -4- 

 

 

(b)          Additional Written Communications. The Company and the Guarantors
(including their agents and representatives, other than the Initial Purchasers
in their capacity as such) have not prepared, made, used, authorized, approved
or referred to and will not prepare, make, use, authorize, approve or refer to
any written communication that constitutes an offer to sell or solicitation of
an offer to buy the Securities (each such communication by the Company and the
Guarantors or their agents and representatives (other than a communication
referred to in clauses (i) and (ii) below) an “Issuer Written Communication”)
other than (i) the Preliminary Offering Memorandum, (ii) the Offering
Memorandum, (iii) the documents listed on Annex A hereto, including a term sheet
or pricing supplement substantially in the form of Annex B hereto, which
constitute part of the Time of Sale Information, and (iv) any electronic road
show or other written communications, in each case used in accordance with
Section 4(c) hereof. Each such Issuer Written Communication, when taken together
with the Time of Sale Information at the Time of Sale, did not, and on the
Closing Date will not, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation and warranty
with respect to any statements or omissions made in each such Issuer Written
Communication in reliance upon and in conformity with information relating to
any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representative expressly for use in any Issuer Written
Communication.

 

(c)          Incorporated Documents. The documents incorporated by reference in
each of the Time of Sale Information and the Offering Memorandum, when they were
or are filed with the U.S. Securities and Exchange Commission (the
“Commission”), conformed or will conform, as the case may be, in all material
respects to the requirements of the Exchange Act (as defined in Section 14) and
the rules and regulations of the Commission thereunder, and did not and will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading provided, however, that no representation is made as to any statement
or omission that shall have been superseded or modified in either (i) a document
subsequently filed with the Commission and incorporated by reference in each of
the Time of Sale Information and the Offering Memorandum or (ii) each of the
Time of Sale Information and the Offering Memorandum.

 

(d)          Financial Statements. The financial statements and the related
notes thereto included or incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum present fairly in all material respects
the consolidated financial position of the Company and its subsidiaries as of
the dates indicated and the consolidated results of their operations and the
changes in their cash flows for the periods specified; such financial statements
have been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby except as
set forth in the Time of Sale Information and the Offering Memorandum; and the
other financial information of the Company and its subsidiaries included or
incorporated by reference in each of the Time of Sale Information and the
Offering Memorandum has been derived from the accounting records of the Company
and its subsidiaries and presents fairly in all material respects the
information shown thereby. The interactive data in eXtensible Business Reporting
Language included or incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum fairly presents the information called
for in all material respects and is prepared in accordance with the Commission’s
rules and guidelines applicable thereto.

 

 -5- 

 

 

(e)          No Material Adverse Change. Except as disclosed in the Time of Sale
Information and the Offering Memorandum (exclusive of any amendment or
supplement thereto after the Time of Sale), since the date of the most recent
financial statements of the Company included or incorporated by reference in
each of the Time of Sale Information and the Offering Memorandum (i) there has
not been any change in the capital stock (other than the issuance of the shares
of Common Stock, options or restricted stock units to purchase or acquire shares
of Common Stock granted under, or contracts or commitments pursuant to, the
Company’s previous or currently existing stock option, employee stock purchase
and other similar officer, director or employee benefit plans or the issuance of
the Common Stock upon the exercise of outstanding options and warrants) or
long-term debt of the Company or any of its subsidiaries, or any dividend or
distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
business, properties, management, financial position or results of operations of
the Company and its subsidiaries taken as a whole; (ii) neither the Company nor
any of its subsidiaries has entered into any transaction or agreement that is
material to the Company and its subsidiaries taken as a whole or incurred any
liability or obligation, direct or contingent, that is material to the Company
and its subsidiaries taken as a whole; and (iii) neither the Company nor any of
its subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor disturbance or dispute or any action, order or
decree of any court or arbitrator or governmental or regulatory authority.

 

(f)          Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses as currently conducted requires such qualification, and
have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except where
the failure to be so qualified, in good standing or have such power or authority
would not, individually or in the aggregate, have a material adverse effect on
the business, properties, management, financial position, or results of
operations of the Company and its subsidiaries taken as a whole or on the
performance by the Company and the Guarantors of their obligations under this
Agreement, the Securities, the Guarantees and the Security Documents (a
“Material Adverse Effect”). The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Schedule 3 to this Agreement.

 

(g)          Capitalization. The Company has the capitalization as set forth in
each of the Time of Sale Information and the Offering Memorandum under the
heading “Capitalization”; and all the outstanding shares of capital stock or
other equity interests of the subsidiaries of the Company have been duly and
validly authorized and issued, are, to the extent applicable, fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party.

 

(h)          Due Authorization. The Company and each of the Guarantors have full
right, power and authority to execute and deliver this Agreement, the
Securities, the Indenture (including each Guarantee set forth therein), the
Security Documents, the Intercreditor Agreements and the Junior Lien Term Loan
Facility (collectively, the “Transaction Documents”), grant security interests
in the Collateral thereunder and perform their respective obligations hereunder
and thereunder; and, on the Closing Date, except with respect to the Mortgages,
all action required to be taken for the granting of the security interests in
the Collateral and the consummation of the Transactions has been duly and
validly taken.

 

 -6- 

 

 

(i)          The Indenture. The Indenture has been duly authorized by the
Company and each of the Guarantors and on the Closing Date will be duly executed
and delivered by the Company to each of the Guarantors and, when duly executed
and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally or by
equitable principles relating to enforceability including principles of good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or equity) (collectively, the “Enforceability Exceptions”).

 

(j)          The Securities and the Guarantees. The Securities have been duly
authorized by the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein, will be
duly and validly issued and outstanding and will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled
to the benefits of the Indenture; and the Guarantees have been duly authorized
by each of the Guarantors and, when the Securities have been duly executed,
authenticated, issued and delivered as provided in the Indenture and paid for as
provided herein, the Guarantees will be valid and legally binding obligations of
each of the respective Guarantors, enforceable against each of the respective
Guarantors in accordance with their terms, subject to the Enforceability
Exceptions, and will be entitled to the benefits of the Indenture.

 

(k)          [Reserved].

 

(l)          Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and each of the Guarantors and, when duly
executed and delivered in accordance with its terms by each of the parties
thereto, will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, subject to the Enforceability
Exceptions, and except that rights to indemnity and contribution thereunder may
be limited by applicable law and public policy.

 

(m)         Other Transaction Documents. (i) The Security Documents, other than
the Mortgages, have been duly authorized by the Company and each Guarantor to
the extent a party thereto, (ii) each of the New ABL Facility and the Junior
Lien Term Loan Facility have been duly authorized by the Company and each
Guarantor to the extent a party thereto and (iii) the Intercreditor Agreements
have been duly authorized by the Company and each Guarantor to the extent a
party thereto. When the New ABL Facility, the Junior Lien Term Loan Facility,
the Intercreditor Agreements and each of the Security Documents have been duly
executed and delivered, each of the New ABL Facility, the Junior Lien Term Loan
Facility, the Intercreditor Agreements and the Security Documents will
constitute legal, valid and binding agreements of the Company and each Guarantor
to the extent a party thereto, enforceable against the Company and each
Guarantor to the extent a party thereto in accordance with their terms, subject
to the Enforceability Exceptions.

 

(n)          Descriptions of the Transaction Documents. Each of the Transaction
Documents conforms in all material respects to the description, if any, thereof
contained in each of the Time of Sale Information and the Offering Memorandum.
The Collateral conforms in all material respects to the description thereof
contained in each of the Time of Sale Information and the Offering Memorandum.

 

 -7- 

 

 

(o)          No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and after giving effect to the
Refinancing, no event has occurred that, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject; or (iii) in violation of any applicable law or statute
or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory authority having jurisdiction over the Company or its
subsidiaries or any of their properties or assets, except, in the case of
clauses (ii) and (iii) above, for any such default or violation that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(p)          No Conflicts. The execution, delivery and performance by the
Company and each of the Guarantors of each of the Transaction Documents to which
each is a party, the issuance and sale of the Securities, the issuance of the
Guarantees and compliance by the Company and each of the Guarantors with the
terms thereof, the granting of the security interest in the Collateral and the
consummation of the Transactions contemplated by the Transaction Documents will
not (i) upon the effectiveness of the New ABL Facility and the Junior Lien Term
Loan Facility in accordance with its terms and after giving effect to the
Refinancing, conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries (other than any lien, charge or
encumbrance created or imposed by the Transaction Documents) pursuant to, any
indenture, lease, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject, (ii)
result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries or (iii)
assuming the accuracy of the representations and warranties of the Initial
Purchasers contained herein and their compliance with their agreements contained
herein, result in the violation of any applicable law or statute or any
judgment, order, rule or regulation of any court or arbitrator or governmental
or regulatory authority having jurisdiction over the Company or any of its
subsidiaries or any of their properties, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation, default, lien, charge or
encumbrance that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(q)          No Consents Required. Assuming the accuracy of the representations
and warranties of the Initial Purchasers contained herein and their compliance
with their agreements contained herein, no consent, approval, authorization,
order, registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required on the part of the Company or
the Guarantors for the execution, delivery and performance by the Company and
each of the Guarantors of each of the Transaction Documents to which each is a
party, the issuance and sale of the Securities, the issuance of the Guarantees
and compliance by the Company and each of the Guarantors with the terms thereof
and the consummation of the Transactions contemplated by the Transaction
Documents, except for (i) such consents, approvals, authorizations, orders and
registrations or qualifications as have been obtained, (ii) such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required (1) under applicable state and foreign securities laws in connection
with the purchase and resale of the Securities by the Initial Purchasers, (2)
under the Uniform Commercial Code as from time to time in effect in the relevant
jurisdictions or other relevant personal property security legislation, each as
from time to time in effect in the relevant jurisdictions, (3) in connection
with any Mortgage or (4) by the United States Patent and Trademark Office or the
United States Copyright Office or the applicable intellectual property
legislation, rules or regulations in effect in the other relevant jurisdictions
and (iii) such consents, approvals, authorizations, orders and registrations or
qualifications as are expressly contemplated by the Transaction Documents.

 

 -8- 

 

 

(r)          Legal Proceedings. Except as described in each of the Time of Sale
Information and the Offering Memorandum, there are no legal, governmental or
regulatory investigations, actions, demands, suits, arbitrations, inquiries or
proceedings pending to which the Company or any of its subsidiaries is a party
or may be a party or to which any property of the Company or any of its
subsidiaries, to the knowledge of the Company is or may be subject that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect; and to the knowledge of the Company and the Guarantors,
no such investigations, actions, suits or proceedings are threatened or
contemplated by any governmental or regulatory authority or by others.

 

(s)          Independent Accountants. Deloitte & Touche LLP, who have certified
certain financial statements of the Company and its subsidiaries, are
independent public accountants with respect to the Company and its subsidiaries
within the applicable rules and regulations adopted by the Commission and the
Public Company Accounting Oversight Board (United States) and as required by the
Securities Act.

 

(t)          Title to Real and Personal Property. Except as disclosed in each of
the Time of Sale Information and the Offering Memorandum, the Company and its
subsidiaries have good and marketable title in fee simple to, or have valid
rights to lease or otherwise use, all items of real and personal property that
are material to the respective businesses of the Company and its subsidiaries,
in each case free and clear of all liens, encumbrances, claims and defects and
imperfections of title, except those that (i) do not materially interfere with
the use made and proposed to be made of such property by the Company and its
subsidiaries, (ii) would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (iii) are disclosed in the Time
of Sale Information and the Offering Memorandum as incurred in connection with,
or permitted under, the Indenture, the Security Documents, the New ABL Facility
and the Junior Lien Term Loan Facility. As of the date hereof, Schedule 4 hereto
sets forth all of the material real property owned by the Company and the
Guarantors that is required by the terms of the Indenture or the Security
Documents to be encumbered by a Mortgage (each, a “Mortgaged Property”).

 

(u)         Title to Intellectual Property. Except as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect or
as set forth in the Time of Sale Information and the Offering Memorandum, the
Company and its subsidiaries own or possess adequate rights to use all material
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures) and other intellectual property
necessary for the conduct of their respective businesses; and the conduct of
their respective businesses will not infringe or conflict in any material
respect with any such rights of others, and the Company and its subsidiaries
have not received any notice of any claim of infringement of or conflict with
any such rights of others that if true would result in a Material Adverse
Effect.

 

 -9- 

 

 

(v)         No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one hand,
and the directors, officers, stockholders, or other affiliates of the Company or
any of its subsidiaries, on the other, that would be required by the Securities
Act to be described in a registration statement on Form S-1 to be filed with the
Commission and that is not so described in each of the Time of Sale Information
and the Offering Memorandum.

 

(w)          Investment Company Act. Neither the Company nor any of its
subsidiaries is, and after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in each of
the Time of Sale Information and the Offering Memorandum none of them will be,
an “investment company” or an entity “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder.

 

(x)          Taxes. Except, in each case, for (i) any such taxes or tax
deficiencies that are currently being contested in good faith by appropriate
proceedings and for which the Company has established adequate reserves in
accordance with generally accepted accounting principles or (ii) would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect, (1) the Company and its subsidiaries have paid all federal,
state, local and foreign taxes and filed all tax returns required to be paid or
filed through the date hereof and (2) there is no tax deficiency that has been,
or could reasonably be expected to be, asserted against the Company or any of
its subsidiaries or any of their respective properties or assets. There are no
stamp or other issuance or transfer taxes or duties or other similar fees or
charges required to be paid by the Company or the Guarantors in connection with
the execution and delivery of this Agreement or the issuance or sale of the
Securities, other than documentary stamp taxes due in connection with the
issuance of the Securities and documentary stamp taxes and intangible taxes due
in connection with the transferring of certain property.

 

(y)          Licenses and Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in each of the Time of Sale Information and
the Offering Memorandum, except where the failure to possess or make the same
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and except as described in each of the Time of Sale
Information and the Offering Memorandum, neither the Company nor any of its
subsidiaries has received notice of any revocation or modification of any such
license, sub-license, certificate, permit or authorization or has any reason to
believe that any such license, sub-license, certificate, permit or authorization
will not be renewed in the ordinary course except where such revocation,
modification or non-renewal would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.

 

(z)          No Labor Disputes. Except as disclosed in the Time of Sale
Information and Offering Memorandum, no labor disturbance by or dispute with
employees of the Company or any of its subsidiaries exists or, to the knowledge
of the Company and each of the Guarantors, is contemplated or threatened and
neither the Company nor any Guarantor is aware of any existing or imminent labor
disturbance by, or dispute with, the employees of any of the Company’s or the
Company’s subsidiaries’ principal suppliers, except, in each case, as would not
reasonably be expected have a Material Adverse Effect.

 

 -10- 

 

 

(aa)        Compliance with Environmental Laws. (i) The Company and its
subsidiaries (x) are in compliance with any and all applicable federal, state
and local laws, rules, regulations, requirements, decisions and orders relating
to the protection of human health or safety, the environment, natural resources,
hazardous or toxic substances or wastes, pollutants or contaminants
(collectively, “Environmental Laws”), (y) have received and are in compliance
with all permits, licenses, certificates or other authorizations or approvals
required of them under applicable Environmental Laws to conduct their respective
businesses, and (z) have not received notice of any actual or potential
liability under or relating to any Environmental Laws, including for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants; (ii) there are no costs or
liabilities associated with Environmental Laws of or relating to the Company or
its subsidiaries, except in the case of each of clauses (i) and (ii) above, for
any such failure to comply, or failure to receive required permits, licenses,
certificates, or other authorizations or approvals, or cost or liability, as
would not, individually or in the aggregate, have a Material Adverse Effect or
would not require disclosure pursuant to the Commission’s Regulation S-K. Except
as described in each of the Time of Sale Information and the Offering
Memorandum, (x) there are no proceedings that are pending, or that are known by
the Company to be contemplated, against the Company or any of its subsidiaries
under any Environmental Laws in which a governmental entity is also a party,
other than such proceedings regarding which it is reasonably believed no
monetary sanctions of $10.0 million or more will be imposed, (y) the Company and
its subsidiaries are not aware of any noncompliance by them with Environmental
Laws, or liabilities or other obligations of them under Environmental Laws or
laws concerning hazardous or toxic substances or wastes, pollutants or
contaminants, that would reasonably be expected to have a Material Adverse
Effect.

 

(bb)       Compliance with ERISA. Each employee benefit plan, within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each, a “Plan”) is in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other Federal or state Laws. Each Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
from the United States Internal Revenue Service (the “IRS”) or an application
for such a letter is currently being processed by the IRS with respect thereto,
has been established under a prototype plan for which an IRS opinion letter has
been obtained by the plan sponsor and is valid as to the adopting employer, or
is within its applicable remedial amendment period under Section 401(b) of the
Code and, to the knowledge of the Company and the Guarantors, nothing has
occurred which would prevent, or cause the loss of, such qualification. No Plan
has failed to satisfy the minimum funding standard within the meaning of Section
412 of the Code or Section 302 of ERISA, as of the last day of the most recent
fiscal year of such Plan ended prior to the date as of which this representation
is made. Neither the Company nor any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code) is (A) required to
make an additional contribution or give security to any Plan pursuant to Section
436 of the Code or Section 206(g) of ERISA, or (B) subject to a lien in favor of
a Plan, under Section 303(k) of the ERISA or Section 430(k) of the Code.

 

 -11- 

 

 

(cc)       Disclosure Controls. The Company and its subsidiaries maintain an
effective system of “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management as appropriate to allow timely
decisions regarding required disclosure. The Company and its subsidiaries have
carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.

 

(dd)       Accounting Controls. The Company and its subsidiaries maintain
systems of “internal control over financial reporting” (as defined in Rule
13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange
Act and have been designed by, or under the supervision of, their respective
principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The
Company and its subsidiaries maintain internal accounting controls sufficient to
provide reasonable assurance (i) that the maintenance of records is in
reasonable detail that accurately and fairly reflects the transactions and
disposition of assets; (ii) that transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and receipts and expenditures are being made only in
accordance with the authorizations of management and directors; and (iii)
regarding prevention or timely detection of unauthorized acquisitions, use or
disposition of the Company’s and its subsidiaries’ assets that could have a
material effect on the Company’s consolidated financial statements. Except as
disclosed in each of the Time of Sale Information and the Offering Memorandum,
there are no material weaknesses or significant deficiencies in the Company’s
internal controls.

 

(ee)        Insurance. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts as is customary for companies engaged in similar
businesses in similar industries and neither the Company nor any of its
subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage at a reasonable cost from similar insurers as may be necessary
to continue its business.

 

(ff)         No Unlawful Payments. Neither the Company nor any of its
subsidiaries, nor to the knowledge of the Company and the Guarantors, (i) any
director, officer or employee of the Company or any of its subsidiaries, or (ii)
any agent, affiliate or other person acting on behalf of the Company or any of
its subsidiaries has (A) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity;
(B) made or taken an act in furtherance of an offer, promise or authorization of
any direct or indirect unlawful payment or benefit to any foreign or domestic
government official or employee , including of any government-owned or
controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office; (C)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or any applicable law or regulation implementing the
OECD Convention on Combating Bribery of Foreign Public Officials in
International Business Transactions, or committed an offence under the Bribery
Act 2010 of the United Kingdom, or any other applicable anti-bribery or
anti-corruption law; or (D) made, offered, agreed, requested or taken an act in
furtherance of any unlawful bribe or other unlawful benefit, including, without
limitation, any rebate, payoff, influence payment, kickback or other unlawful or
improper payment or benefit. The Company and its subsidiaries have instituted,
maintain and enforce, and will continue to maintain and enforce, policies and
procedures designed to promote and ensure compliance with all applicable
anti-bribery and anti-corruption laws.

 

 -12- 

 

 

(gg)       Compliance with Anti-Money Laundering Laws. The operations of the
Company and its subsidiaries are and have been conducted at all times in
compliance with applicable financial recordkeeping and reporting requirements,
including those of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, the applicable money laundering statutes of all jurisdictions where
the Company or any of its subsidiaries conducts business, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Anti-Money Laundering Laws”), and no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries with respect to
the Anti-Money Laundering Laws is pending or, to the knowledge of the Company,
threatened.

 

(hh)       Compliance with OFAC. None of the Company, any of its subsidiaries
or, to the knowledge of the Company and the Guarantors, no director, officer,
employee or affiliate of the Company or any of its subsidiaries is currently the
subject of any sanctions administered by the U.S. government (including, without
limitation, the Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”) or the U.S. Department of State), and, to the extent
applicable, the United Nations Security Council, the European Union or Her
Majesty’s Treasury or other applicable sanctions authorities (collectively,
“Sanctions”), nor is the Company or any of its subsidiaries, or to the knowledge
of the Company and the Guarantors, any director, officer, employee, agent or
affiliate of the Company or its subsidiaries, located, organized or resident in
a country or territory that is or whose government is the subject of Sanctions,
including Crimea, Cuba, Iran, North Korea and Syria (each, a “Sanctioned
Country”). The Company will not directly or indirectly use the proceeds of the
offering of the Securities hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary (as defined in Section 14 hereof),
joint venture partner or other person or entity for the purpose of financing or
facilitating the activities (i) of any person that is the subject of Sanctions,
(ii) of any business in any Sanctioned Country or (iii) in any country or
territory that is, or whose government is, at the time of such funding, the
subject of Sanctions, or in any other manner that would result in a violation of
Sanctions by any person (including any person participating in the transaction,
whether as underwriter, initial purchaser, advisor, investor or otherwise). For
the past five (5) years, the Company and its subsidiaries have not knowingly
engaged in, are not knowingly engaged in any dealings or transactions with any
person that at the time of the dealing or transaction is or was the subject or
the target of Sanctions or with any Sanctioned Country.

 

(ii)          Solvency. On and immediately after the Closing Date, the Company
(after giving effect to the issuance of the Securities and the Refinancing (as
defined in the Time of Sale Information and the Offering Memorandum) and the
other Transactions as described in each of the Time of Sale Information and the
Offering Memorandum) will be Solvent. As used in this paragraph, the term
“Solvent” means, with respect to a particular date, that on such date (i) the
present fair market value (or present fair saleable value) of the assets of the
Company is not less than the total amount required to pay the probable
liabilities of the Company on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured; (ii) the
Company is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and become
due in the normal course of business; (iii) assuming consummation of the
issuance of the Securities as contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum, the Company is not incurring debts or
liabilities beyond its ability to pay as such debts and liabilities mature; and
(iv) the Company is not engaged in any business or transaction, and does not
propose to engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged.

 

 -13- 

 

 

(jj)         No Restrictions on Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such subsidiary’s capital
stock or similar ownership interest to the Company or any subsidiary, from
repaying to the Company any loans or advances to such subsidiary from the
Company or from transferring any of such subsidiary’s properties or assets to
the Company or any other subsidiary of the Company in each case, except for
restrictions contemplated or permitted by the Indenture and the New ABL Facility
and except for restrictions contemplated or permitted by the Junior Lien Term
Loan Facility that are no more restrictive than restrictions contemplated or
permitted by the Indenture.

 

(kk)         No Broker’s Fees. Neither the Company nor any of its subsidiaries
is a party to any contract, agreement or understanding with any person (other
than this Agreement) that would give rise to a valid claim against any of them
or any Initial Purchaser for a brokerage commission, finder’s fee or like
payment in connection with the offering and sale of the Securities.

 

(ll)         Rule 144A Eligibility. On the Closing Date, the Securities will not
be of the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in an automated
inter-dealer quotation system; and each of the Preliminary Offering Memorandum
and the Offering Memorandum, as of its respective date, contains or will contain
all the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective purchaser
pursuant to Rule 144A(d)(4) under the Securities Act.

 

(mm)      No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.

 

(nn)        No General Solicitation or Directed Selling Efforts. None of the
Company or any of its affiliates (as defined in Rule 501(b) of Regulation D) or
any other person acting on its or their behalf (other than the Initial
Purchasers or persons acting on their behalf, as to which no representation is
made) has (i) solicited offers for, or offered or sold, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D or in any manner involving a public offering within
the meaning of Section 4(a)(2) of the Securities Act or (ii) engaged in any
directed selling efforts within the meaning of Regulation S under the Securities
Act (“Regulation S”), and all such persons have complied with the offering
restrictions requirement of Regulation S.

 

(oo)        Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Initial Purchasers contained in Section
1(b) (including Annex C hereto) and their compliance with their agreements set
forth herein, it is not necessary, in connection with the issuance and sale of
the Securities to the Initial Purchasers and the offer, resale and delivery of
the Securities by the Initial Purchasers in the manner contemplated by this
Agreement, the Time of Sale Information and the Offering Memorandum (it being
understood that no representation is given as to any subsequent resale of the
Securities by purchasers of the Securities from the Initial Purchasers), to
register the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended.

 

 -14- 

 

 

(pp)        No Stabilization. Neither the Company nor any of the Guarantors has
taken, directly or indirectly, any action designed to or that could reasonably
be expected to cause or result in any stabilization or manipulation of the price
of the Securities.

 

(qq)        Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) included or incorporated by reference in any of the Time of Sale
Information or the Offering Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good faith.

 

(rr)         Statistical and Market Data. Nothing has come to the attention of
the Company or any Guarantor that has caused the Company or such Guarantor to
believe that the statistical and market-related data included or incorporated by
reference in each of the Time of Sale Information and the Offering Memorandum is
not based on or derived from sources that are reliable and accurate in all
material respects.

 

(ss)         Sarbanes-Oxley Act. The Company and each of the Company’s directors
or officers, in their capacities as such, has complied in all material respects
with the provision of the Sarbanes-Oxley Act of 2002, as amended, and the rules
and regulations promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to certifications.

 

(tt)         Liens and Security Interests in Personal and Real Property. The
Security Documents, other than the Mortgages, when executed and delivered, will
create in favor of the Notes Collateral Agent for the benefit of the holders of
Securities, the Notes Collateral Agent and the Trustee on behalf of the holders
of the Securities, valid and enforceable first-priority security interests
(subject to Permitted Liens) in and liens on the rights of the Company and each
Guarantor in the property in which a security interest is purported to be
granted under such Security Documents and upon, or as a result of, the filing of
Uniform Commercial Code financing statements in appropriate form and with the
appropriate governmental authorities (including payment of all necessary fees
and taxes) and upon the taking of the other actions described in the Security
Documents, such security interests in the rights of the Company and each
Guarantor in such property will constitute a perfected security interest in all
right, title and interest in the property in which a security interest is
purported to be granted to the extent such perfection can be obtained upon the
taking of such actions and will be subject only to Permitted Liens. When the
Mortgages have been executed and delivered by the Company or applicable
Guarantor and are duly recorded in the proper recorders’ offices and the
mortgage recording fees and taxes, if any, in respect thereof are paid, each
such Mortgage will create in favor of the Notes Collateral Agent for the benefit
of itself and the Trustee and the holders of the Securities, valid, enforceable
and perfected security interests in and liens on the Mortgaged Property,
superior to and prior to the liens of all third persons (other than Permitted
Liens) and enforceable in accordance with its terms, except that enforceability
may be limited by or subject to Enforceability Exceptions.

 

 -15- 

 

 

(uu)        Transfer of Collateral. The Company and the Guarantors collectively
own, have rights in or have the power to transfer rights in the Collateral, free
and clear of any liens other than (i) the security interests granted pursuant to
the Security Documents, and (ii) Liens expressly permitted to exist on the
Collateral under the Indenture.

 

(vv)        New ABL Facility. The New ABL Facility has been duly and validly
authorized by the Company and each of the guarantors party thereto and, when
duly executed and delivered by the Company and each of the guarantorys party
thereto and assuming it is duly executed by and the valid and legally binding
obligation of all of the other parties thereto, will be the valid and legally
binding obligations of the Company and each of the guarantorys party thereto,
subject to the Enforceability Exceptions.

 

(ww)       Junior Lien Term Loan Facility. The Junior Lien Term Loan Facility
has been duly and validly authorized by the Company and each of the guarantors
party thereto and, when duly executed and delivered by the Company and each of
the guarantors party thereto and assuming it is duly executed by and the valid
and legally binding obligation of all of the other parties thereto, will be the
valid and legally binding obligations of the Company and each of the guarantors
party thereto, subject to the Enforceability Exceptions.

 

(xx)        Cyber Security; Data Protection. The Company and its subsidiaries’
information technology assets and equipment, computers, systems, networks,
hardware, software, websites, applications, and databases (collectively, “IT
Systems”) operate and perform in all material respects as required in connection
with the operation of the business of the Company and the subsidiaries as
currently conducted, and to the knowledge of the Company, free and clear of all
material bugs, errors, defects, Trojan horses, time bombs, malware and other
corruptants, other than those not reasonably expected to be material to the
Company and its subsidiaries, taken as a whole. The Company and its subsidiaries
maintain commercially reasonable controls, policies, procedures, and safeguards
to maintain and protect their material confidential information and the
integrity, continuous operation, redundancy and security of all IT Systems and
all personal, personally identifiable, sensitive, confidential or regulated data
(“Personal Data”) processed and stored thereon, and to the knowledge of the
Company, there have been no breaches, incidents, violations, outages,
compromises or unauthorized uses of or accesses to same, except for those that
have been remedied without material cost or liability or the duty to notify any
other person, nor any incidents under internal review or investigations relating
to the same. The Company and its subsidiaries are presently in compliance with
all applicable laws or statutes and all applicable judgments, orders, rules and
regulations of any court or arbitrator or governmental or regulatory authority,
internal policies and contractual obligations relating to the privacy and
security of IT Systems and Personal Data and to the protection of such IT
Systems and Personal Data from unauthorized use, access, misappropriation or
modification, except for any such noncompliance that would not reasonably be
expected to have a Material Adverse Effect.

 

Any certificate signed by any officer of the Company, the Guarantors or their
respective subsidiaries and delivered to the Initial Purchasers or counsel for
the Initial Purchasers in connection with the offering of the Securities and,
when issued, the Guarantees, shall be deemed a joint and several representation
and warranty by each of the Company, the Guarantors and their respective
subsidiaries, as to matters covered thereby, to the Initial Purchasers.

 

4.            Further Agreements of the Company and the Guarantors. The Company
and each of the Guarantors jointly and severally covenant and agree with each
Initial Purchaser that:

 

 -16- 

 

 

(a)          Delivery of Copies. Until the earlier to occur of (i) the
completion of the initial resale of the Securities by the Initial Purchasers and
(ii) the nine month anniversary of the Closing Date, the Company will deliver,
without charge, to the Initial Purchasers as many copies of the Preliminary
Offering Memorandum, any other Time of Sale Information, any Issuer Written
Communication and the Offering Memorandum (including all amendments and
supplements thereto) as the Representative may reasonably request.

 

(b)          Offering Memorandum, Amendments or Supplements. During the period
beginning the date hereof and the ending upon the earlier to occur of (i) the
completion of the initial resale of the Securities by the Initial Purchasers and
(ii) the nine month anniversary of the Closing Date, before finalizing the
Offering Memorandum or making or distributing any amendment or supplement to any
of the Time of Sale Information or the Offering Memorandum or filing with the
Commission any document that will be incorporated by reference therein, the
Company will furnish to the Representative and counsel for the Initial
Purchasers a copy of the proposed Offering Memorandum or such amendment or
supplement or document to be incorporated by reference therein for review, and
will not distribute any such proposed Offering Memorandum, amendment or
supplement or file any such document with the Commission to which the
Representative reasonably objects; provided, however, that the Representative
shall not object to any such filing if the Company obtains advice of outside
counsel that such filing is required under the rules and regulations of the
Securities Act or Exchange Act; provided further that the Company shall have the
right to file with the Commission any report required to be filed by the Company
under the Exchange Act (based on the advice of the Company’s internal or
external counsel) no later than the time period required by the Exchange Act.

 

(c)          Additional Written Communications. Before making, preparing, using,
authorizing, approving or referring to any Issuer Written Communication, the
Company and the Guarantors will furnish to the Representative and counsel for
the Initial Purchasers a copy of such written communication for review and will
not make, prepare, use, authorize, approve or refer to any such written
communication to which the Representative reasonably objects.

 

(d)          Notice to the Representative. The Company will advise the
Representative promptly, and confirm such advice in writing, (i) of the issuance
by any governmental or regulatory authority of any order preventing or
suspending the use of any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum or the initiation or threatening of any
proceeding for that purpose; (ii) of the occurrence of any event at any time
prior to the completion of the initial offering of the Securities as a result of
which any of the Time of Sale Information, any Issuer Written Communication or
the Offering Memorandum as then amended or supplemented would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances existing when
such Time of Sale Information, Issuer Written Communication or the Offering
Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt
by the Company of any notice with respect to any suspension of the qualification
of the Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
commercially reasonable efforts to prevent the issuance of any such order
preventing or suspending the use of any Time of Sale Information, any Issuer
Written Communication or the Offering Memorandum or suspending any such
qualification of the Securities and, if any such order is issued, will use
commercially reasonable efforts to obtain as soon as possible the withdrawal
thereof.

 

 -17- 

 

 

(e)          Time of Sale Information. If at any time prior to the Closing Date
(i) any event shall occur or condition shall exist as a result of which any of
the Time of Sale Information as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (ii) it is necessary to amend or
supplement any of the Time of Sale Information to comply with applicable law,
the Company will promptly notify the Initial Purchasers thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial Purchasers
such amendments or supplements to any of the Time of Sale Information (or any
document to be filed with the Commission and incorporated by reference therein)
as may be necessary so that the statements in any of the Time of Sale
Information as so amended or supplemented (including such documents to be
incorporated therein by reference) will not, in the light of the circumstances
under which they were made, be misleading or so that any of the Time of Sale
Information will comply with applicable law.

 

(f)          Ongoing Compliance. If at any time prior to the earlier of (i) the
completion of the initial resale of the Securities and (ii) the nine month
anniversary of the Closing Date, (A) any event shall occur or condition shall
exist as a result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances existing when the Offering Memorandum is
delivered to a purchaser, not misleading or (B) it is necessary to amend or
supplement the Offering Memorandum to comply with applicable law, the Company
will promptly notify the Initial Purchasers thereof and forthwith prepare and,
subject to paragraph (b) above, furnish to the Initial Purchasers such
amendments or supplements to the Offering Memorandum (or any document to be
filed with the Commission and incorporated by reference therein) as may be
necessary so that the statements in the Offering Memorandum as so amended or
supplemented (including such documents to be incorporated by reference therein)
will not, in the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, be misleading or so that the Offering
Memorandum will comply with applicable law.

 

(g)          Blue Sky Compliance. The Company will qualify the Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Representative shall reasonably request and will continue such
qualifications in effect so long as required for the initial offering and resale
of the Securities by the Initial Purchasers; provided that neither the Company
nor any of the Guarantors shall be required to (i) qualify as a foreign
corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file
any general consent to service of process in any such jurisdiction or (iii)
subject itself to taxation in any such jurisdiction if it is not otherwise so
subject.

 

(h)          Clear Market. During the period from the date hereof through and
including the date that is 90 days after the date hereof, neither the Company
nor any of the Guarantors will, without the prior written consent of J.P. Morgan
Securities LLC, offer, sell, contract to sell or otherwise dispose of any debt
securities issued or guaranteed by the Company or any of the Guarantors and
having a tenor of more than one year.

 

(i)           Use of Proceeds. The Company will apply the net proceeds from the
sale of the Securities as described in each of the Time of Sale Information and
the Offering Memorandum under the heading “Use of proceeds”.

 

(j)          Supplying Information. While the Securities remain outstanding and
are “restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the Guarantors will, during any period
in which the Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon the request of
such holders or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.

 

 -18- 

 

 

(k)          DTC. The Company will use its commercially reasonable efforts to
assist the Initial Purchasers in arranging for the Securities to be eligible for
clearance and settlement through DTC.

 

(l)          No Resales by the Company. Until the one year anniversary of the
Closing Date, the Company will not, and will not permit any of its affiliates
(as defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been acquired by any of them, except for sales of
Securities purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act.

 

(m)          No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) will, directly or through any agent,
sell, offer for sale, solicit offers to buy or otherwise negotiate in respect
of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.

 

(n)          No General Solicitation or Directed Selling Efforts. None of the
Company or any of its affiliates or any other person acting on its or their
behalf (other than the Initial Purchasers and persons acting on their behalf, as
to which no covenant is given) will (i) solicit offers for, or offer or sell,
the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D or in any manner
involving a public offering within the meaning of Section 4(a)(2) of the
Securities Act or (ii) engage in any directed selling efforts within the meaning
of Regulation S, and all such persons will comply with the offering restrictions
requirement of Regulation S.

 

(o)          No Stabilization. Neither the Company nor any of the Guarantors
will take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or manipulation
of the price of the Securities.

 

(p)          Liens. Subject to Section 4(q), The Company shall cause the
Securities to be secured by first priority liens on the Collateral to the extent
and in the manner provided for in the Indenture and the Security Documents and
as described in the Time of Sale Information and Offering Memorandum.

 

(q)          Mortgages. Within 100 days of the Closing Date, or as soon as
practical thereafter using commercially reasonable efforts, the Notes Collateral
Agent, the Initial Purchasers and the Trustee shall have received the documents
set forth below, which shall be reasonably satisfactory in form and substance to
the Initial Purchasers, Trustee, Notes Collateral Agent and each of their
respective counsel with respect to the Collateral, as appropriate:

 

(i)           a duly executed Mortgage with respect to each real property
designated as “Mortgaged Property” on Schedule 4 attached hereto;

 

(ii)          a title insurance policy, insuring the lien of such Mortgage as a
valid and enforceable first priority lien on the Mortgaged Properties described
therein, in an amount not less than the fair market value of such Mortgaged
Property (such policies collectively, the “Mortgage Policies”) issued by such
title insurer as shall be reasonably acceptable to the Initial Purchasers, which
reasonably assures the Notes Collateral Agent that the Mortgages on such
Mortgaged Properties are valid and enforceable lien on the respective Mortgaged
Property, free and clear of all defects and encumbrances except Permitted Liens,
and shall include, as appropriate, to the extent available at commercially
reasonably rates such endorsements as reasonably requested by the Initial
Purchasers;

 

 -19- 

 

 

(iii)        a new ALTA survey or existing survey, together with a no-change
affidavit, sufficient for the title company to remove the standard survey
exception and issue the survey-related endorsements for the Mortgage Policies
described in (ii) above;

 

(iv)        to the extent necessary to obtain acceptable zoning endorsements
described in (ii) above, a zoning letter or property zoning report (PZR) for
each Mortgaged Property in form and substance acceptable to the title insurance
company;

 

(v)         favorable opinions of counsel addressed to the Notes Collateral
Agent, Trustee and Initial Purchasers, with respect to each Mortgaged Property,
covering the due authorization, execution, delivery and enforceability and such
other customary matters as reasonably requested by the Initial Purchasers; and

 

(vi)        evidence reasonably acceptable to the Initial Purchasers of payment
by the Company of all Mortgage Policy premiums, search and examination charges,
escrow charges and related charges, mortgage recording taxes, fees, charges,
costs and expenses required for the recording of the Mortgages and issuance of
the Mortgage Policies referred to above.

 

5.            Certain Agreements of the Initial Purchasers. Each Initial
Purchaser hereby represents and agrees that it has not and will not use,
authorize use of, refer to, or participate in the planning for use of, any
written communication that constitutes an offer to sell or the solicitation of
an offer to buy the Securities other than (i) the Preliminary Offering
Memorandum and the Offering Memorandum, (ii) any written communication that
contains either (a) no “issuer information” (as defined in Rule 433(h)(2) under
the Securities Act) or (b) “issuer information” that was included (including
through incorporation by reference) in the Time of Sale Information or the
Offering Memorandum, (iii) any written communication listed on Annex A or
prepared pursuant to Section 4(c) above (including any electronic road show),
(iv) any written communication prepared by such Initial Purchaser and approved
by the Company and the Representative in advance in writing or (v) any written
communication relating to or that contains the terms of the Securities and/or
other information that was included (including through incorporation by
reference) in the Time of Sale Information or the Offering Memorandum.

 

6.            Conditions of Initial Purchasers’ Obligations. The obligation of
each Initial Purchaser to purchase Securities on the Closing Date as provided
herein is subject to the performance in all material respects by the Company and
each of the Guarantors of their respective covenants and other obligations
hereunder and to the following additional conditions:

 

(a)          Representations and Warranties. The representations and warranties
of the Company and the Guarantors contained herein shall be true and correct on
the date hereof and on and as of the Closing Date; and the statements of the
Company, the Guarantors and their respective officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.

 

(b)          No Downgrade. Subsequent to the earlier of (A) the Time of Sale and
(B) the execution and delivery of this Agreement, (i) no downgrading shall have
occurred in the rating accorded the Company or any of its subsidiaries, the
Securities or any other debt or preferred stock issued or guaranteed by the
Company or any of its subsidiaries by any “nationally recognized statistical
rating organization,” as such term is defined under Section 3(a)(62) under the
Exchange Act; and (ii) no such organization shall have publicly announced that
it has under surveillance or review, or has changed its outlook with respect to,
its rating of the Securities or of any other debt securities or preferred stock
issued or guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible upgrading).

 

 -20- 

 

 

(c)          No Material Adverse Change. No event or condition of a type
described in Section 3(e) hereof shall have occurred or shall exist, which event
or condition is not described in each of the Time of Sale Information (excluding
any amendment or supplement thereto) and the Offering Memorandum (excluding any
amendment or supplement thereto) the effect of which in the reasonable judgment
of the Representative makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Offering
Memorandum.

 

(d)          Officer’s Certificate. The Representative shall have received on
and as of the Closing Date a certificate of an executive officer of the Company
who has specific knowledge of the Company’s and the Guarantors’ financial
matters and is reasonably satisfactory to the Representative (i) confirming that
such officer has carefully reviewed the Time of Sale Information and the
Offering Memorandum and, to the knowledge of such officer, the representations
set forth in Sections 3(a) and 3(b) hereof are true and correct, (ii) confirming
that the other representations and warranties of the Company and the Guarantors
in this Agreement are true and correct and that the Company and the Guarantors
have complied in all material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied hereunder at or prior to
the Closing Date and (iii) to the effect set forth in paragraphs (b) and (c)
above.

 

(e)          Comfort Letters. On the date of this Agreement and on the Closing
Date, Deloitte & Touche LLP shall have furnished to the Representative, at the
request of the Company, letters, dated the respective dates of delivery thereof
and addressed to the Initial Purchasers and the board of directors of the
Company, in form and substance reasonably satisfactory to the Representative,
containing statements and information of the type customarily included in
accountants’ “comfort letters” to initial purchasers with respect to the
financial statements and certain financial information contained or incorporated
by reference in each of the Time of Sale Information and the Offering
Memorandum; provided that the letter delivered on the Closing Date shall use a
“cut off” date reasonably acceptable to the Representative.

 

(f)          Opinions and 10b-5 Statement of Counsel for the Company. Wilson
Sonsini Goodrich & Rosati, Professional Corporation, counsel for the Company and
certain of the Guarantors, shall have furnished to the Representative, at the
request of the Company, their written opinion and 10b-5 statement, dated the
Closing Date and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representative, to the effect set forth in Annex
D hereto.

 

(g)          Opinions of Local Counsel. Local counsel, reasonably acceptable to
the Representative and listed on Annex E hereto for each jurisdiction set forth
therein, shall have furnished to the Representative opinion letters in a form
and substance reasonably satisfactory to the Representative, substantially to
the effect set forth in Annex F.

 

(h)          Opinion and 10b-5 Statement of Counsel for the Initial Purchasers.
The Representative shall have received on and as of the Closing Date an opinion
and 10b-5 statement of Cahill Gordon & Reindel llp, counsel for the Initial
Purchasers, with respect to such matters as the Representative may reasonably
request, and such counsel shall have received such documents and information as
they may reasonably request to enable them to pass upon such matters.

 

 -21- 

 

 

(i)          No Legal Impediment to Issuance. No action shall have been taken
and no statute, rule, regulation or order shall have been enacted, adopted or
issued by any federal, state or foreign governmental or regulatory authority
that would, as of the Closing Date, prevent the issuance or sale of the
Securities or the issuance of the Guarantees; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Securities or the issuance of
the Guarantees.

 

(j)          Good Standing. The Representative shall have received on and as of
the Closing Date reasonably satisfactory evidence of the good standing of the
Company and its subsidiaries in their respective jurisdictions of organization
and their good standing in such other jurisdictions as the Representative may
reasonably request, in each case in writing or any standard form of
telecommunication, from the appropriate governmental authorities of such
jurisdictions.

 

(k)          Insurance. The Initial Purchasers shall receive policies or
certificates of insurance covering the property and assets of the Company and
the Guarantors on the same date that the ABL Agent and the Junior Lien Agent
receive such policies and certificates in respect of each of the New ABL
Facility and the Junior Lien Term Loan Facility, which policies or certificates,
including endorsements thereto, shall reflect the Notes Collateral Agent for its
benefit and the benefit of the Trustee and the holders of the Securities, as an
additional insured on liability policies and a loss payee on property policies.

 

(l)          DTC. The Securities shall be eligible for clearance and settlement
through DTC on or prior to the Closing Date.

 

(m)         Indenture. On the Closing Date, the Company, the Guarantors, the
Trustee and the Notes Collateral Agent shall have entered into the Indenture,
and the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.

 

(n)          Security Documents. On the Closing Date, the Notes Collateral Agent
shall have received each of the Security Documents, except for the Mortgages,
executed by the parties thereto and Uniform Commercial Code financing statements
in appropriate form for filing and filings with the United States Patent and
Trademark Office and the United States Copyright Office in appropriate form for
filing, in each case as applicable. Each such document shall be in form and
substance reasonably satisfactory to the Representative and in full force and
effect and the Company and the Guarantors shall have taken all actions required
by the Security Documents to be taken as of such date. The Representative shall
also have received (i) copies of Uniform Commercial Code, United States Patent
and Trademark Office and United States Copyright Office, tax and judgment lien
searches, or equivalent reports or searches, each of a recent date, listing all
effective financing statements, lien notices or comparable documents that name
the Company or any Guarantor as debtor and that are filed in those state
jurisdictions in which the Company or such Guarantor is organized and such other
searches that the Representative deems necessary or appropriate, none of which
encumber the Collateral covered or intended to be covered by the Security
Documents, subject only to Permitted Liens and (ii) the stock certificates and
blank, undated stock powers for the Company and each of the Guarantors.

 

(o)          The New ABL Facility. On the Closing Date, the New ABL Facility
shall have become effective.

 

 -22- 

 

 

(p)          The Junior Lien Term Loan Facility. On or prior to the Closing
Date, the Company shall have delivered to the Representative the Junior Lien
Term Loan Facility, the terms of which shall be consistent in all material
respects with the terms set forth in the Term Sheet set forth as Exhibit B to
the Amended and Restated Framework Agreement, dated as of June 26, 2018, between
the Company and Chatham, with the provisions of such Junior Lien Term Loan
Facility to be reasonably acceptable to the Representative (it being understood
that with respect to any provision in the Junior Lien Term Loan Facility that is
consistent in all material respects with the Term Sheet, such provision in the
Junior Lien Term Loan Facility will be deemed to be reasonably acceptable to the
Representative so long as the Company’s obligations under Junior Lien Term Loan
Facility shall not be contractually subordinated to any other indebtedness); and
on the Closing Date  the Junior Lien Term Loan Facility shall have become
effective.

 

(q)          The Intercreditor Agreements. On the Closing Date, the
Intercreditor Agreements shall have become effective.

 

(r)          Refinancing and Payoff Release. Substantially concurrently with the
issue and sale of the Securities on the Closing Date, the Initial Purchasers
shall have received (i) a copy of the conditional notice of redemption for the
9.00% Notes, delivered to the trustee under the 9.00% Notes in accordance with
the terms of the indenture governing the 9.00% Notes, (ii) reasonably
satisfactory evidence that the indenture governing the 9.00% Notes shall have
been satisfied and discharged in accordance with the terms of such indenture,
(iii) reasonably satisfactory evidence of the repayment in full by the Company
of all obligations under the Existing Credit Agreement and (iv) documentation
sufficient to evidence that all of the liens on the Collateral, other than liens
securing the New ABL Facility and the Junior Lien Term Loan Facility, liens
securing the Securities and other Permitted Liens as described in the Time of
Sale Information and the Offering Memorandum, have been terminated and released
in form and substance reasonably satisfactory to the Initial Purchasers.

 

(s)          Additional Documents. On or prior to the Closing Date, the Company
and the Guarantors shall have furnished to the Representative such further
certificates and documents as the Representative may reasonably request.

 

All opinions, letters, certificates and evidence mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Initial Purchasers.

 

7.            Indemnification and Contribution.

 

(a)          Indemnification of the Initial Purchasers. The Company and the
Guarantors jointly and severally agree to indemnify and hold harmless each
Initial Purchaser, its affiliates, directors and officers and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation,
reasonable and documented out-of-pocket legal fees and other reasonable and
documented out-of-pocket expenses incurred in connection with any suit, action
or proceeding or any claim asserted, as such fees and expenses are incurred),
joint or several, that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum, any of the other Time of Sale Information, any Issuer
Written Communication or the Offering Memorandum (or any amendment or supplement
thereto) or any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case except
insofar as such losses, claims, damages or liabilities (including such legal
fees and expenses) arise out of, or are based upon, any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any information relating to any Initial Purchaser furnished to
the Company in writing by such Initial Purchaser through the Representative
expressly for use therein.

 

 -23- 

 

 

(b)          Indemnification of the Company and the Guarantors. Each Initial
Purchaser agrees, severally and not jointly, to indemnify and hold harmless the
Company, each of the Guarantors and each of their respective directors and
officers and each person, if any, who controls the Company or any of the
Guarantors within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the indemnity set forth in paragraph
(a) above, but only with respect to any losses, claims, damages or liabilities
(including, without limitation, reasonable and documented out-of-pocket legal
fees and other reasonable and documented out-of-pocket expenses incurred in a
connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred) that arise out of, or are based upon, any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with any information relating to such Initial Purchaser
furnished to the Company in writing by such Initial Purchaser through the
Representative expressly for use in the Preliminary Offering Memorandum, any of
the other Time of Sale Information, any Issuer Written Communication or the
Offering Memorandum (or any amendment or supplement thereto), it being
understood and agreed that the only such information consists of the following:
the second and third sentences of the third paragraph, the third sentence of the
nineteenth paragraph and twenty-first paragraph, each under the heading “Plan of
distribution” in the Preliminary Offering Memorandum and the Offering
Memorandum.

 

(c)          Notice and Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the “Indemnified
Person”) shall promptly notify the person against whom such indemnification may
be sought (the “Indemnifying Person”) in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under paragraph (a) or (b) above except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided, further, that the failure to notify the
Indemnifying Person shall not relieve it from any liability that it may have to
an Indemnified Person otherwise than under paragraph (a) or (b) above. If any
such proceeding shall be brought or asserted against an Indemnified Person and
it shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall retain counsel reasonably satisfactory to the Indemnified Person (who
shall not, without the consent of the Indemnified Person, be counsel to the
Indemnifying Person) to represent the Indemnified Person and any others entitled
to indemnification pursuant to this Section 7 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such
proceeding and shall pay the reasonable and documented out-of-pocket fees and
expenses of such counsel related to such proceeding, as incurred. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Person and the Indemnified
Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person; (iii) the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it that are different
from or in addition to those available to the Indemnifying Person; or (iv) the
named parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the reasonable and documented
out-of-pocket fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be paid or reimbursed as they are incurred. Any such separate
firm for any Initial Purchaser, its affiliates, directors and officers and any
control persons of such Initial Purchaser shall be designated in writing by J.P.
Morgan Securities LLC and any such separate firm for the Company, the
Guarantors, their respective directors and officers and any control persons of
the Company and the Guarantors shall be designated in writing by the Company.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.

 

 -24- 

 

 

(d)          Contribution. If the indemnification provided for in paragraphs (a)
and (b) above is unavailable to an Indemnified Person or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Guarantors on the one hand and
the Initial Purchasers on the other shall be deemed to be in the same respective
proportions as the net proceeds (before deducting expenses) received by the
Company from the sale of the Securities and the total discounts and commissions
received by the Initial Purchasers in connection therewith, as provided in this
Agreement, bear to the aggregate offering price of the Securities. The relative
fault of the Company and the Guarantors on the one hand and the Initial
Purchasers on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or any Guarantor or by the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

 

(e)          Limitation on Liability. The Company, the Guarantors and the
Initial Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any reasonable and documented out-of-pocket legal or other
reasonable and documented out-of-pocket expenses incurred by such Indemnified
Person in connection with any such action or claim. Notwithstanding the
provisions of this Section 7, in no event shall an Initial Purchaser be required
to contribute any amount in excess of the amount by which the total discounts
and commissions received by such Initial Purchaser with respect to the offering
of the Securities exceeds the amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers’ obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.

 

 -25- 

 

 

(f)          Non-Exclusive Remedies. The remedies provided for in this Section 7
are not exclusive and shall not limit any rights or remedies that may otherwise
be available to any Indemnified Person at law or in equity.

 

8.           Effectiveness of Agreement. This Agreement shall become effective
as of the date first written above.

 

9.           Termination. This Agreement may be terminated in the absolute
discretion of the Representative, by notice to the Company, if after the
execution and delivery of this Agreement and on or prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on the New
York Stock Exchange or the Nasdaq Global Select Market; (ii) trading of any
securities issued or guaranteed by the Company or any of the Guarantors shall
have been suspended on any exchange or in any over-the-counter market; (iii) a
general moratorium on commercial banking activities shall have been declared by
federal or New York State authorities; or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis, either within or outside the United States, that, in the
reasonable judgment of the Representative, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or delivery, of
the Securities on the terms and in the manner contemplated by this Agreement,
the Time of Sale Information and the Offering Memorandum.

 

10.         Defaulting Initial Purchaser.

 

(a)          If, on the Closing Date, any Initial Purchaser defaults on its
obligation to purchase the Securities that it has agreed to purchase hereunder,
the non-defaulting Initial Purchasers may in their discretion arrange for the
purchase of such Securities by other persons satisfactory to the Company on the
terms contained in this Agreement. If, within 36 hours after any such default by
any Initial Purchaser, the non-defaulting Initial Purchasers do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further
period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Initial Purchasers to purchase such Securities on such terms. If
other persons become obligated or agree to purchase the Securities of a
defaulting Initial Purchaser, either the non-defaulting Initial Purchasers or
the Company may postpone the Closing Date for up to five full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Time of Sale
Information, the Offering Memorandum or in any other document or arrangement,
and the Company agrees to promptly prepare any amendment or supplement to the
Time of Sale Information or the Offering Memorandum that effects any such
changes. As used in this Agreement, the term “Initial Purchaser” includes, for
all purposes of this Agreement unless the context otherwise requires, any person
not listed in Schedule 1 hereto that, pursuant to this Section 10, purchases
Securities that a defaulting Initial Purchaser agreed but failed to purchase.

 

(b)          If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
all the Securities, then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder plus such Initial
Purchaser’s pro rata share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Initial Purchaser or Initial Purchasers for which such arrangements
have not been made.

 

 -26- 

 

 

(c)          If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the
Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
the Company or the Guarantors, except that the Company and each of the
Guarantors will continue to be liable for the payment of expenses as set forth
in Section 11 hereof and except that the provisions of Section 7 hereof shall
not terminate and shall remain in effect.

 

(d)          Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.

 

11.         Payment of Expenses.

 

(a)          Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company and each of the
Guarantors jointly and severally agree to pay or cause to be paid all costs and
expenses incident to the performance of their respective obligations hereunder,
including without limitation, (i) the costs incident to the authorization,
issuance, sale, preparation and delivery of the Securities and any taxes payable
in that connection; (ii) the costs incident to the preparation and printing of
the Preliminary Offering Memorandum, any other Time of Sale Information, any
Issuer Written Communication and the Offering Memorandum (including any
amendment or supplement thereto) and the distribution thereof; (iii) the costs
of reproducing and distributing each of the Transaction Documents; (iv) the
reasonable and documented out-of-pocket fees and expenses of the Company’s and
the Guarantors’ counsel and independent accountants; (v) [reserved]; (vi) the
fees and expenses incurred in connection with the registration or qualification
and determination of eligibility for investment of the Securities under the laws
of such United States and Canadian jurisdictions as the Representative may
designate, the preparation, printing and distribution of a Blue Sky Memorandum
(including filing fees and the related fees and expenses of counsel for the
Initial Purchasers); (vii) any fees charged by rating agencies for rating the
Securities; (viii) the fees and expenses of the Trustee, the Notes Collateral
Agent and any paying agent (including related fees and expenses of any counsel
to such parties); (ix) all expenses and application fees incurred in connection
with the application for the approval of the Securities for book-entry transfer
by DTC; (x) the fees and expenses incurred with respect to creating, documenting
and perfecting the security interests in the Collateral as contemplated by the
Security Documents (including the related fees and expenses of counsel to the
Initial Purchasers for all periods prior to and after the Closing Date) and (xi)
all expenses incurred by the Company in connection with any “road show”
presentation to potential investors (except that, subject to Section 11(b), the
Initial Purchasers shall pay 50% of the cost of any aircraft used in connection
with the “road show”).

 

(b)          If (i) this Agreement is terminated pursuant to Section 9(ii)
(other than as the result of an event of the type described in Section 9(i)),
(ii) the Company for any reason fails to tender the Securities for delivery to
the Initial Purchasers or (iii) the Initial Purchasers decline to purchase the
Securities for any reason permitted under this Agreement, the Company and each
of the Guarantors jointly and severally agrees to reimburse the Initial
Purchasers for all out-of-pocket costs and expenses (including the reasonable
and documented out-of-pocket fees and expenses of their counsel and the full
cost of any aircraft used in connection with the “road show”) reasonably
incurred by the Initial Purchasers in connection with this Agreement and the
offering contemplated hereby.

 

 -27- 

 

 

12.         Persons Entitled to Benefit of Agreement. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and any controlling persons referred to herein, and the affiliates,
officers and directors of each Initial Purchaser referred to in Section 7
hereof. Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor merely by reason of
such purchase.

 

13.         Survival. The respective indemnities, rights of contribution,
representations, warranties (it being understood that such representations and
warranties are made only as of the date hereof and as of the date of any
officer’s certificate delivered pursuant to Section 6(d)) and agreements of the
Company, the Guarantors and the Initial Purchasers contained in this Agreement
or made by or on behalf of the Company, the Guarantors or the Initial Purchasers
pursuant to this Agreement or any certificate delivered pursuant hereto shall
survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company, the Guarantors or the Initial
Purchasers.

 

14.         Certain Defined Terms. For purposes of this Agreement, (a) except
where otherwise expressly provided, the term “affiliate” has the meaning set
forth in Rule 405 under the Securities Act; (b) the term “business day” means
any day other than a day on which banks are permitted or required to be closed
in New York City; (c) the term “Copyright Security Agreement” shall mean the
copyright security agreement to be dated as of the Closing Date, among the
Company, the Guarantors party thereto and the Notes Collateral Agent; (d) the
term “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder; (e) the term “Mortgages”
shall mean one or more mortgages, deeds of trust or deeds to secure debt
executed and delivered by the Company or the applicable Guarantor to the Notes
Collateral Agent for the benefit of the Notes Collateral Agent, the Trustee and
the holders of the Securities, (f) the term “Security Agreement” shall mean the
security agreement to be dated as of the Closing Date, among the Company, the
Guarantors and the Notes Collateral Agent; (g) the term “Security Documents”
shall mean (i) the Security Agreement, (ii) the Trademark Security Agreement,
(iii) the Copyright Security Agreement, (iv) the Mortgages and (v) any other
instruments delivered on the Closing Date evidencing or creating or purporting
to create a security interest in favor of the Notes Collateral Agent to secure
the Securities and the Guarantees, (h) the term “subsidiary” has the meaning set
forth in Rule 405 under the Securities Act; (i) the term “Trademark Security
Agreement” shall mean the trademark security agreement to be dated as of the
Closing Date, among the Company, the Guarantors party thereto and the Notes
Collateral Agent; and (j) the term “written communication” has the meaning set
forth in Rule 405 under the Securities Act.

 

15.         Miscellaneous.

 

(a)          Authority of the Representative. Any action by the Initial
Purchasers hereunder may be taken by J.P. Morgan Securities LLC on behalf of the
Initial Purchasers, and any such action taken by J.P. Morgan Securities LLC
shall be binding upon the Initial Purchasers.

 

(b)          Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Initial
Purchasers shall be given to the Representative c/o J.P. Morgan Securities LLC,
383 Madison Avenue, New York, New York 10179 (fax: (212) 270-1063); Attention:
Richard Gabriel. Notices to the Company and the Guarantors shall be given c/o
The McClatchy Company, 2100 “Q” Street, Sacramento, California 95816 (fax:
(916) 326-5586); Attention: Billie McConkey, with a copy to Wilson Sonsini
Goodrich Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto,
California 94304 (fax: (650) 493-6811); Attention Michael A. Occhiolini.

 

 -28- 

 

 

(c)          Governing Law, etc. This Agreement and any claim, controversy or
dispute arising under or related to this Agreement shall be governed by and
construed in accordance with the laws of the State of New York. THE COMPANY,
EACH GUARANTOR AND EACH INITIAL PURCHASER EACH IRREVOCABLY AGREES TO WAIVE TRIAL
BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF
OF ANY PARTY TO THIS AGREEMENT OR THE PERFORMANCE HEREOF. The Company and each
Guarantor irrevocably and unconditionally submits to the exclusive jurisdiction
of any state or federal court sitting in the County and City of New York over
any suit, action or proceeding arising out of or relating to this agreement.
Service of process, summons, notice or document by registered mail addressed to
the Company or any Guarantor shall be effective service of process against such
person for such suit, action or proceeding brought in any such court. The
Company and each Guarantor irrevocably and unconditionally waives any objection
to the laying of venue in any suit, action or proceeding brought in any such
court and any claim that any such suit, action or proceeding has been brought in
an inconvenient forum. A final judgment in any such suit, action or proceeding
brought in any such court may be enforced in any other courts to whose
jurisdiction the Company or any Guarantor is or may be subject, by suit upon
judgment. The Company and each Guarantor further agrees that nothing herein
shall affect any Initial Purchaser’s right to effect service of process in any
other manner permitted by law or bring a suit, action or proceeding (including a
proceeding for enforcement of a judgment) in any other court or jurisdiction in
accordance with applicable law.

 

(d)          Counterparts. This Agreement may be signed in counterparts (which
may include counterparts delivered by any standard form of telecommunication or
electronic .pdf transmission), each of which shall be an original and all of
which together shall constitute one and the same instrument.

 

(e)          Amendments or Waivers. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto.

 

(f)          Headings. The headings herein are included for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

 

16.         Compliance with USA Patriot Act. In accordance with the requirements
of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)), the Initial Purchasers are required to obtain, verify and record
information that identifies their respective clients, including the Company and
the Guarantors, which information may include the name and address of their
respective clients, as well as other information that will allow the Initial
Purchasers to properly identify their respective clients.

 

[Remainder of page intentionally left blank]

 

 -29- 

 

  

If the foregoing is in accordance with your understanding, please indicate your
acceptance of this Agreement by signing in the space provided below.

 

  Very truly yours,       THE MCCLATCHY COMPANY

 

  By:       Name:     Title:

 

[Signature Page to Purchase Agreement] 

     

 

 

 

  Aboard Publishing, Inc.   Belton Publishing Company, Inc.   Biscayne Bay
Publishing, Inc.   Cass County Publishing Company   Columbus Ledger-Enquirer,
Inc.   Cypress Media, Inc.   East Coast Newspapers, Inc.   Gulf Publishing
Company, Inc.   HLB Newspapers, Inc.   Keltatim Publishing Company, Inc.  
Keynoter Publishing Company, Inc.   Lee’s Summit Journal, Incorporated  
Lexington H-L Services, Inc.   Macon Telegraph Publishing Company   Mail
Advertising Corporation   McClatchy Interactive West   McClatchy Investment
Company   McClatchy Management Services, Inc.   McClatchy Newspapers, Inc.  
McClatchy U.S.A., Inc.   Miami Herald Media Company   Nittany Printing and
Publishing Company   Nor-Tex Publishing, Inc.   Olympic-Cascade Publishing, Inc.
  Pacific Northwest Publishing Company, Inc.   QUAD COUNTY PUBLISHING, INC.  
Star-Telegram, Inc.   Tacoma News, Inc.   The Bradenton Herald, Inc.   The
Charlotte Observer Publishing Company   The News and Observer Publishing Company
  The State Media Company   The Sun Publishing Company, Inc.   Wichita Eagle and
Beacon Publishing Company, Inc.

 

  By:       Name: R. Elaine Lintecum     Title: Vice President, Assistant
Secretary and Treasurer

 

[Signature Page to Purchase Agreement]

 

 

 

 

  McClatchy Interactive LLC

 

  By:       Name: R. Elaine Lintecum     Title: Vice President, Assistant
Secretary and Treasurer

 

  Bellingham Herald Publishing, LLC   Idaho Statesman Publishing, LLC   Olympian
Publishing, LLC

 

  By: Pacific Northwest Publishing Company, Inc.,     its Sole Member

 

  By:       Name: R. Elaine Lintecum     Title: Vice President, Assistant
Secretary and Treasurer

 

  Cypress Media, LLC

 

  By: Cypress Media, Inc.,     its Sole Member

 

  By:       Name: R. Elaine Lintecum     Title: Vice President, Assistant
Secretary and Treasurer

 

  San Luis Obispo Tribune, LLC

 

  By: The McClatchy Company,     its Sole Member

 

  By:       Name: R. Elaine Lintecum     Title: Vice President, Assistant
Secretary and Treasurer

 

[Signature Page to Purchase Agreement]

 

 

 

 

 

Accepted:  June 29, 2018   J.P. MORGAN SECURITIES LLC   For itself and on behalf
of the several Initial Purchasers listed in Schedule 1 hereto.

 

By:       Authorized Signatory  

 

[Signature Page to Purchase Agreement]

 

 

 

 

SCHEDULE 1

 

Initial Purchaser  Principal Amount        J.P. Morgan Securities LLC 
$252,960,000         Credit Suisse Securities (USA) LLC  $57,040,000        
Total  $310,000,000 

 

 Sch. 1-1 

 

 

SCHEDULE 2

 

Guarantors

 

Aboard Publishing, Inc., a Florida corporation Bellingham Herald Publishing,
LLC, a Delaware limited liability company Belton Publishing Company, Inc., a
Missouri corporation Biscayne Bay Publishing, Inc., a Florida corporation Cass
County Publishing Company, a Missouri corporation Columbus-Ledger Enquirer,
Inc., a Georgia corporation Cypress Media, Inc., a New York corporation Cypress
Media, LLC, a Delaware limited liability company East Coast Newspapers, Inc., a
South Carolina corporation Gulf Publishing Company, Inc., a Mississippi
corporation HLB Newspapers, Inc., a Missouri corporation Idaho Statesman
Publishing, LLC, a Delaware limited liability company Keltatim
PublishingCompany, Inc., a Kansas corporation Keynoter Publishing Company, Inc.,
a Florida corporation Lee’s Summit Journal, Incorporated, a Missouri corporation
Lexington H-L Services, Inc., a Kentucky corporation Macon Telegraph Publishing
Company, a Georgia corporation Mail Advertising Corporation, a Texas corporation
McClatchy Interactive LLC, a Delaware limited liability company McClatchy
Interactive West, a Delaware corporation McClatchy Investment Company, a
Delaware corporation McClatchy Management Services, Inc., a Delaware corporation
McClatchy Newspapers, Inc., a Delaware corporation McClatchy U.S.A., Inc., a
Delaware corporation Miami Herald Media Company, a Delaware corporation Nittany
Printing and Publishing Company, a Pennsylvania corporation Nor-Tex Publishing,
Inc., a Texas corporation Olympian Publishing, LLC, a Delaware limited liability
company Olympic-Cascade Publishing, Inc., a Washington corporation Pacific
Northwest Publishing Company, Inc., a Florida corporation Quad County
Publishing, Inc., an Illinois corporation San Luis Obispo Tribune, LLC, a
Delaware limited liability company Star-Telegram, Inc., a Delaware corporation
Tacoma News, Inc., a Washington corporation The Bradenton Herald, Inc., a
Florida corporation The Charlotte Observer Publishing Company, a Delaware
corporation The McClatchy Company The News and Observer Publishing Company, a
North Carolina corporation The State Media Company, a South Carolina corporation
The Sun Publishing Company, Inc., a South Carolina corporation Wichita Eagle and
Beacon Publishing Company, Inc., a Kansas corporation

 

 Sch. 2-1 

 

 

SCHEDULE 3

 

Subsidiaries of The McClatchy Company

 

Aboard Publishing, Inc., a Florida corporation Bellingham Herald Publishing,
LLC, a Delaware limited liability company Belton Publishing Company, Inc., a
Missouri corporation Biscayne Bay Publishing, Inc., a Florida corporation Cass
County Publishing Company, a Missouri corporation Columbus-Ledger Enquirer,
Inc., a Georgia corporation Cypress Media, Inc., a New York corporation Cypress
Media, LLC, a Delaware limited liability company East Coast Newspapers, Inc., a
South Carolina corporation El Dorado Newspapers Gulf Publishing Company, Inc., a
Mississippi corporation HLB Newspapers, Inc., a Missouri corporation Idaho
Statesman Publishing, LLC, a Delaware limited liability company Keltatim
PublishingCompany, Inc., a Kansas corporation Keynoter Publishing Company, Inc.,
a Florida corporation Lee’s Summit Journal, Incorporated, a Missouri corporation
Lexington H-L Services, Inc., a Kentucky corporation Macon Telegraph Publishing
Company, a Georgia corporation Mail Advertising Corporation, a Texas corporation
McClatchy Big Valley, Inc. McClatchy Interactive LLC, a Delaware limited
liability company McClatchy Interactive West, a Delaware corporation McClatchy
International, Inc. McClatchy Investment Company, a Delaware corporation
McClatchy Leasing Company McClatchy Management Services, Inc., a Delaware
corporation McClatchy Net Ventures McClatchy News Services McClatchy Newspaper
Sales, Inc. McClatchy Newspapers, Inc., a Delaware corporation McClatchy
Property, Inc. McClatchy Resources McClatchy Sales, Inc. McClatchy Shared
Services McClatchy U.S.A., Inc., a Delaware corporation Mediastream, Inc. Miami
Herald Media Company, a Delaware corporation N&O Holdings, Inc. Newsprint
Ventures, Inc., a California corporation Nittany Printing and Publishing
Company, a Pennsylvania corporation Nor-Tex Publishing, Inc., a Texas
corporation Oak Street Development Corporation Olympian Publishing, LLC, a
Delaware limited liability company Olympic-Cascade Publishing, Inc., a
Washington corporation Pacific Northwest Publishing Company, Inc., a Florida
corporation

 

 Sch. 3-1 

 

  

Quad County Publishing, Inc., an Illinois corporation Richwood, Inc.   San Luis
Obispo Tribune, LLC, a Delaware limited liability company Star-Telegram, Inc., a
Delaware corporation Tacoma News, Inc., a Washington corporation The Bradenton
Herald, Inc., a Florida corporation The Charlotte Observer Publishing Company, a
Delaware corporation The News and Observer Publishing Company, a North Carolina
corporation The State Media Company, a South Carolina corporation The Sun
Publishing Company, Inc., a South Carolina corporation Tribune Newsprint Company
Wichita Eagle and Beacon Publishing Company, Inc., a Kansas corporation Wingate
Paper Company, a Delaware corporation

 

 Sch. 3-2 

 

 

SCHEDULE 4

 

Mortgaged Property

 

Entity of Record   Common Name and Address McClatchy Newspapers Inc. d/b/a
Tri-City Herald   333 W. Canal Dr., Kennewick,  WA East Coast Newspapers Inc.
d/b/a Island Packet   10 Buck Island Rd., Bluffton,  SC Tacoma News, Inc.   1950
South State St., Tacoma,  WA Olympic-Cascade Publishing, Inc.   3555 Erickson
St. , Gig Harbor,  WA Idaho Statesman Publishing, Inc.   1200 North Curtis Rd.,
Boise,  ID Charlotte Observer Publishing Company   1001 Pressley Rd.,
Charlotte,  NC

 

 Sch. 4-1 

 

 

 

ANNEX A

 

a.       Additional Time of Sale Information

 

1.       Term sheet containing the terms of the securities, substantially in the
form of Annex B.

 

 A-1 

 

 

ANNEX B

 

[See attached]

 

 B-1 

 

 

ANNEX C

 

Restrictions on Offers and Sales Outside the United States

 

In connection with offers and sales of Securities outside the United States:

 

(a)          Each Initial Purchaser acknowledges that the Securities have not
been registered under the Securities Act and may not be offered or sold within
the United States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act.

 

(b)          Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:

 

(i)       Such Initial Purchaser has offered and sold the Securities, and will
offer and sell the Securities, (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the offering
of the Securities and the Closing Date, only in accordance with Regulation S
under the Securities Act (“Regulation S”) or Rule 144A or any other available
exemption from registration under the Securities Act.

 

(ii)      None of such Initial Purchaser or any of its affiliates or any other
person acting on its or their behalf has engaged or will engage in any directed
selling efforts with respect to the Securities, and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S.

 

(iii)     At or prior to the confirmation of sale of any Securities sold in
reliance on Regulation S, such Initial Purchaser will have sent to each
distributor, dealer or other person receiving a selling concession, fee or other
remuneration that purchases Securities from it during the distribution
compliance period a confirmation or notice to substantially the following
effect:

 

“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering of the
Securities and the date of original issuance of the Securities, except in
accordance with Regulation S or Rule 144A or any other available exemption from
registration under the Securities Act. Terms used above have the meanings given
to them by Regulation S.”

 

(iv)     Such Initial Purchaser has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of the
Securities, except with its affiliates that agree to comply with the provisions
of this Annex C or with the prior written consent of the Company.

 

Terms used in paragraph (a) and this paragraph (b) and not otherwise defined in
this Agreement have the meanings given to them by Regulation S.

 

 C-1 

 

 

(c)          Each Initial Purchaser, severally and not jointly, represents,
warrants and agrees that:

 

(i)       it has only communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or inducement to engage
in investment activity (within the meaning of Section 21 of the FSMA) received
by it in connection with the issue or sale of any Securities in circumstances in
which Section 21(1) of the United Kingdom Financial Services and Markets Act
2000 (the “FSMA”) does not apply to the Company or the Guarantors; and

 

(ii)      it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the Securities in, from
or otherwise involving the United Kingdom.

 

(d)          Each Initial Purchaser acknowledges that no action has been or will
be taken by the Company that would permit a public offering of the Securities,
or possession or distribution of any of the Time of Sale Information, the
Offering Memorandum, any Issuer Written Communication or any other offering or
publicity material relating to the Securities, in any country or jurisdiction
where action for that purpose is required.

 

 C-2 

 

 

ANNEX D

 

Form of Opinions of Wilson Sonsini Goodrich & Rosati, Professional Corporation

 

On the basis of the foregoing and in reliance thereon and having regard for
legal considerations which we deem relevant, and subject to the limitations and
qualifications set forth herein, we advise you that in our opinion:

 

1.The Company is a corporation duly incorporated and validly existing under the
laws of the State of Delaware and is in good standing under such laws. The
Company has the requisite corporate power and authority to own, lease and
operate its properties and conduct its business as described in the Disclosure
Package and the Final Offering Memorandum. The Company is qualified to do
business as a foreign corporation in the State of California.

 

2.Each Specified Subsidiary Guarantor (other than the LLC Specified Subsidiary
Guarantors and the Washington Corporations) is a corporation duly incorporated
and is validly existing and in good standing under the laws of its jurisdiction
of incorporation. Each Washington Corporation is a corporation duly incorporated
and validly existing under the laws of the State of Washington. Each Specified
Subsidiary Guarantor (other than the LLC Specified Subsidiary Guarantors) has
the requisite corporate power to conduct its business as described in the
Disclosure Package and the Final Offering Memorandum.

 

3.Each LLC Specified Subsidiary Guarantor has been duly formed and is validly
existing as a limited liability company under the laws of the State of Delaware
and is in good standing under such laws. Each LLC Specified Subsidiary Guarantor
has the requisite limited liability company power to conduct its business as
described in the Disclosure Package and the Final Offering Memorandum.

 

4.The Company and each Specified Subsidiary Guarantor (other than the LLC
Specified Subsidiary Guarantors) has all requisite corporate power and each LLC
Specified Subsidiary Guarantor has all requisite limited liability company power
to execute and deliver the Transaction Documents to which it is a party and to
perform its obligations under the terms of the Transaction Documents to which it
is a party.

 

5.The Purchase Agreement has been duly authorized, executed and delivered by the
Company and each Specified Subsidiary Guarantor.

 

6.The Notes and the Guarantees of the Specified Subsidiary Guarantors have been
duly authorized, executed and delivered by the Company and the Specified
Subsidiary Guarantors and, when issued and authenticated by the Trustee in the
manner provided for in the Indenture and delivered to the Initial Purchasers
against payment of the purchase price therefor specified in the Purchase
Agreement in accordance with the terms of the Purchase Agreement, the Notes and
Guarantees will constitute valid and binding obligations of the Company and each
of the Subsidiary Guarantors, as applicable, enforceable against the Company and
each of the Subsidiary Guarantors, as applicable, in accordance with their
terms, and will be entitled to the benefits provided by the Indenture.

 

 D-1 

 

 

7.Each of the Indenture, the ABL/Notes Intercreditor Agreement and the
Subordination Agreement has been duly authorized, executed and delivered by the
Company and each Specified Subsidiary Guarantor and constitutes a valid and
binding agreement of the Company and each Subsidiary Guarantor, enforceable
against the Company and each Subsidiary Guarantor in accordance with its
respective terms.

 

8.Each Security Document has been duly authorized, executed and delivered by the
Company and each Specified Subsidiary Guarantor which is a party thereto and
each Security Document constitutes a valid and binding agreement of the Company
and each Subsidiary Guarantor which is a party thereto, enforceable against the
Company and such Subsidiary Guarantor in accordance with its respective terms.

 

9.The issuance and sale of the Notes by the Company and the Guarantees of the
Specified Subsidiary Guarantors, the execution and delivery by the Company and
each Specified Subsidiary Guarantor of the Transaction Documents to which it is
a party, the undertaking of the covenants set forth in the Transaction Documents
to which it is a party and the consummation of the transactions contemplated
therein do not (a) violate any provision of the organizational documents of the
Company or any Specified Subsidiary Guarantor; (b) violate any applicable law,
rule or regulation known to us to be customarily applicable to transactions of
this nature; (c) violate any Reviewed Judgment; or (d) violate or constitute a
default under any Reviewed Agreement.

 

10.No consent, approval or authorization of, and no designation, declaration or
filing with, any governmental authority on the part of the Company or any
Specified Subsidiary Guarantor is required in connection with the issuance and
sale of the Notes by the Company or the issuance of the Guarantees by the
Specified Subsidiary Guarantors, the valid execution or delivery by the Company
or each Specified Subsidiary Guarantor of the Transaction Documents to which it
is a party, the undertaking of the covenants set forth in the Transaction
Documents to which it is a party and the consummation of the transactions
contemplated therein, except for (i) such consents, approvals, authorizations,
orders and registrations or qualifications as have been obtained, (ii) such
consents, approvals, authorizations, orders and registrations or qualifications
as may be required (1) under applicable state and foreign securities laws in
connection with the purchase and resale of the Notes and Guarantees by the
Initial Purchasers, (2) under the Act, the Trust Indenture Act and applicable
state securities laws, and (3) such filings required by the Security Documents,
as to each of which we express no opinion, and (iii) such consents, approvals,
authorizations, orders and registrations or qualifications as are expressly
contemplated by the Transaction Documents.

 

11.The Security Agreement is sufficient to create a valid security interest in
favor of the Collateral Agent for the benefit of the Trustee and holders of the
Notes in the collateral described therein to the extent a security interest in
such collateral may be created under Article 9 of the New York Uniform
Commercial Code.

 

12.If a financing statement in the form of each Delaware Financing Statement is
communicated to the Delaware Secretary of State by an authorized method of
communication and an amount equal to the applicable filing fee is tendered to
such filing office, such filing office will have an obligation to accept such
financing statement. Upon acceptance of each Delaware Financing Statement by
such filing office, the security interest of the Collateral Agent for the
benefit of the Trustee and holders of the Notes in the collateral described in
both such Delaware Financing Statement and the Security Agreement, and for which
perfection under Article 9 of the Delaware UCC may occur by the filing of a
UCC-1 financing statement with the Delaware Secretary of State, will be
perfected.

 

 D-2 

 

 

13.If a financing statement in the form of the New York Financing Statement is
communicated to the New York Secretary of State by an authorized method of
communication and an amount equal to the applicable filing fee is tendered to
such filing office, such filing office will have an obligation to accept such
financing statement. Upon acceptance of the New York Financing Statement by such
filing office, the security interest of the Collateral Agent for the benefit of
the Trustee and holders of the Notes in the collateral described in both the New
York Financing Statement and the Security Agreement, and for which perfection
under Article 9 of the New York UCC may occur by the filing of a UCC-1 financing
statement with the New York Secretary of State, will be perfected.

 

14.If a financing statement in the form of each Texas Financing Statement is
communicated to the Texas Secretary of State by an authorized method of
communication and an amount equal to the applicable filing fee is tendered to
such filing office, such filing office will have an obligation to accept such
financing statement. Upon acceptance of each Texas Financing Statement by such
filing office, the security interest of the Collateral Agent for the benefit of
the Trustee and holders of the Notes in the collateral described in both such
Texas Financing Statement and the Security Agreement, and for which perfection
under Article 9 of the Texas Uniform Commercial Code may occur by the filing of
a UCC-1 financing statement with the Texas Secretary of State, will be
perfected.

 

15.If a financing statement in the form of each Washington Financing Statement
is communicated to the Washington Department of Licensing by an authorized
method of communication and an amount equal to the applicable filing fee is
tendered to such filing office, such filing office will have an obligation to
accept such financing statement. Upon acceptance of each Washington Financing
Statement by such filing office, the security interest of the Collateral Agent
for the benefit of the Trustee and holders of the Notes in the collateral
described in both such Washington Financing Statement and the Security
Agreement, and for which perfection under Article 9A of the Washington Uniform
Commercial Code may occur by the filing of a UCC-1 financing statement with the
Washington Department of Licensing, will be perfected.

 

16.The statements set forth in the Disclosure Package and the Final Offering
Memorandum under the caption “Description of notes” insofar as such statements
purport to constitute summaries of the legal matters, documents or proceedings
referred to therein, accurately summarize in all material respects the matters
referred to therein.

 

17.None of the Company nor any Subsidiary Guarantor is, and upon the issuance of
the Notes and Guarantees and the application of the net proceeds therefrom, will
be, required to register as an “investment company,” as such term is defined in
the Investment Company Act.

 

18.No registration of the Notes or Guarantees under the Act, and no
qualification of the Indenture under the Trust Indenture Act with respect
thereto, is required for the offer, sale and delivery of the Notes by the
Company or the Guarantees of the Subsidiary Guarantors to the Initial Purchasers
pursuant to the Purchase Agreement and the initial resale of the Notes and
Guarantees by the Initial Purchasers in the manner contemplated by the Purchase
Agreement and the Final Offering Memorandum (it being understood that no opinion
is expressed as to any subsequent resale of the Notes and Guarantees).

 

 D-3 

 

 

19.The statements set forth in the Disclosure Package and the Final Offering
Memorandum under the caption “Certain U.S. federal income tax considerations,”
insofar as they purport to summarize matters of United States federal income tax
laws or legal conclusions with respect thereto, accurately summarize in all
material respects the matters referred to therein.

 

20.Upon the Collateral Agent taking possession of the certificates listed on
Schedule I (collection, the “Certificates”) in the State of New York, the
security interest in the Certificates will be perfected.

 

 D-4 

 

 

ANNEX E

 

Local Counsel Opinions

 

Jurisdiction   Local Counsel Alaska   Davis Wright Tremaine LLP Florida  
Holland & Knight LLP Georgia   Carlton Fields, P.A. Kansas   Fleeson, Gooing,
Coulson & Kitch, L.L.C. Kentucky   Stoll Keenon Ogden, PLLC Illinois   Lewis,
Rice & Fingerish, L.C. Mississippi   Watkins Ludlam Winter & Stennis, P.A.
Missouri   Lewis, Rice & Fingerish, L.C. North Carolina   McGuireWoods LLP
Pennsylvania   Fox Rothschild LLP South Carolina   Wyche, Burgess, Freeman &
Parham, P.A. Utah   Holland & Hart LLP

 

 E-1 

 

 

ANNEX F

 

Form of Opinion of Local Counsel for the Subsidiary Guarantors

 

1.Each Subsidiary Guarantor is a corporation duly incorporated and validly
existing under the laws of the State of [__________] and is in good standing
under such laws. Each Subsidiary Guarantor has the requisite corporate power to
carry on its business as currently conducted.

 

2.Each Subsidiary Guarantor has the corporate power to (a) guarantee the Notes
and (b) execute and deliver the Transaction Documents to which it is a party and
to carry out and perform its obligations under the terms of the Transaction
Documents to which it is a party.

 

3.All corporate action on the part of the Subsidiary Guarantor, its directors
and shareholders necessary for the authorization, execution and delivery of the
Transaction Documents to which it is a party, and the performance by the
Subsidiary Guarantor of its obligations under the Transaction Documents to which
it is a party, has been taken.

 

4.The Purchase Agreement has been duly authorized, executed and delivered by
each Subsidiary Guarantor.

 

5.The Indenture has been duly authorized, executed and delivered by each
Subsidiary Guarantor.

 

6.The Guarantees of the Subsidiary Guarantors have been duly authorized,
executed and delivered by each Subsidiary Guarantor.

 

7.The Security Agreement has been duly authorized, executed and delivered by
each Subsidiary Guarantor.

 

8.The Intercreditor Agreements have been duly authorized, executed and delivered
by each Subsidiary Guarantor.

 

9.The issue and sale of the Guarantees by the Subsidiary Guarantors, the
compliance by the Subsidiary Guarantors with all of the provisions of the
Transaction Documents to which it is a party, and the consummation of the
transactions contemplated by the Transaction Documents to which it is a party
will not (a) violate any provision of the [Certificate/Articles] of
Incorporation or Bylaws of the Subsidiary Guarantor or (b) violate any statute,
rule or regulation known to us to be customarily applicable to transactions of
this nature.

 

10.No consent, approval, authorization, order, registration or qualification of
or with any such U.S. Federal or [__________] court or governmental agency or
body, the State of [__________] under the [__________] Corporation Law, is
required for the issue and sale of the Guarantees by each of the Subsidiary
Guarantors or the consummation of the transactions contemplated by the
Transaction Documents to which it is a party.

 

11.If a financing statement in the form of the UCC-1 Financing Statement is
communicated to the [__________] [Secretary of State] by an authorized method of
communication and an amount equal to the applicable filing fee is tendered to
such filing office, such filing office will have an obligation to accept such
financing statement. Upon acceptance of the UCC-1 Financing Statement by such
filing office, the security interest in the collateral described in both the
UCC-1 Financing Statement and the Security Agreement, and for which perfection
under [Article/Division] 9 of the [__________] Uniform Commercial Code may occur
by the filing of a UCC-1 financing statement with the [__________] [Secretary of
State], will be perfected.

 

 F-1