10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  July 1, 2018

or

◻TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from   to 

Commission file number: 1-9824

The McClatchy Company

(Exact name of registrant as specified in its charter)

Delaware	52-2080478
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2100 “Q” Street, Sacramento, CA	95816
(Address of principal executive offices)	(Zip Code)

916-321-1844

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒  No ◻

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ◻	Accelerated filer ☒
Non-accelerated filer (Do not check if smaller reporting company) ◻	Smaller reporting company ◻	Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b of the Exchange Act).

Yes ◻  No ☒

As of August 3, 2018, the registrant had shares of common stock as listed below outstanding:

Class A Common Stock	5,347,337
Class B Common Stock	2,428,191

THE MCCLATCHY COMPANY

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II – OTHER INFORMATION		34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	38
SIGNATURES		39

PART I – FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; amounts in thousands, except per share amounts)

	QuartersEnded				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
	2018		2017		2018		2017
REVENUES — NET:
Advertising	$	106,953	$	125,239	$	206,840	$	245,128
Audience		84,825		89,915		171,103		181,331
Other		12,570		9,966		25,263		19,873
		204,348		225,120		403,206		446,332
OPERATING EXPENSES:
Compensation		77,937		86,823		157,149		178,231
Newsprint, supplements and printing expenses		13,761		16,459		27,420		34,304
Depreciation and amortization		19,222		19,624		38,455		39,428
Other operating expenses		91,817		90,104		181,466		184,821
Other asset write-downs		—		—		59		1,957
		202,737		213,010		404,549		438,741
OPERATING INCOME (LOSS)		1,611		12,110		(1,343)		7,591
NON-OPERATING INCOME (EXPENSE):
Interest expense		(17,939)		(20,292)		(36,835)		(40,746)
Interest income		169		136		306		289
Equity income (loss) in unconsolidated companies, net		2,314		(159)		1,046		(96)
Impairments related to equity investments, net		—		(46,147)		—		(169,147)
Loss on extinguishment of debt, net		(19)		(869)		(5,368)		(869)
Retirement benefit expense		(2,779)		(3,328)		(5,557)		(6,655)
Other — net		(104)		23		(65)		83
		(18,358)		(70,636)		(46,473)		(217,141)
Loss before income taxes		(16,747)		(58,526)		(47,816)		(209,550)
Income tax (benefit) expense		3,618		(21,080)		11,490		(76,529)
NET LOSS	$	(20,365)	$	(37,446)	$	(59,306)	$	(133,021)
Net loss per common share:
Basic	$	(2.62)	$	(4.91)	$	(7.66)	$	(17.49)
Diluted	$	(2.62)	$	(4.91)	$	(7.66)	$	(17.49)
Weighted average number of common shares:
Basic		7,761		7,622		7,741		7,605
Diluted		7,761		7,622		7,741		7,605

See notes to the condensed consolidated financial statements.

1

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited; amounts in thousands) 

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
	2018		2017		2018		2017
NET LOSS	$	(20,365)	$	(37,446)	$	(59,306)	$	(133,021)
OTHER COMPREHENSIVE INCOME (LOSS):
Pension and post retirement plans: (1)
Change in pension and post-retirement benefit plans, net of taxes of $0,  $(1,714),  $0 and $(3,428)		5,549		2,570		11,099		5,141
Investment in unconsolidated companies:
Other comprehensive income, net of taxes of $0,  $(2,649),  $0 and $(2,697)		—		3,974		—		4,046
Other comprehensive income		5,549		6,544		11,099		9,187
Comprehensive loss	$	(14,816)	$	(30,902)	$	(48,207)	$	(123,834)

_____________________

(1)There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance.    

See notes to the condensed consolidated financial statements.

2

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; amounts in thousands, except share amounts)

	July 1,		December 31,
	2018		2017
ASSETS
Current assets:
Cash and cash equivalents	$	20,128	$	99,387
Trade receivables (net of allowances of $2,919 and $3,225)		71,939		101,081
Other receivables		10,319		11,556
Newsprint, ink and other inventories		9,164		7,918
Assets held for sale		6,050		6,332
Other current assets		19,532		19,000
		137,132		245,274
Property, plant and equipment, net		246,520		257,639
Intangible assets:
Identifiable intangibles — net		204,259		228,222
Goodwill		705,174		705,174
		909,433		933,396
Investments and other assets:
Investments in unconsolidated companies		7,371		7,172
Other assets		64,551		62,437
		71,922		69,609
	$	1,365,007	$	1,505,918
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term debt	$	—	$	74,140
Accounts payable		35,387		31,856
Accrued pension liabilities		8,941		8,941
Accrued compensation		21,893		24,050
Income taxes payable		12,715		10,133
Unearned revenue		62,058		60,436
Accrued interest		7,624		7,954
Other accrued liabilities		16,127		18,832
		164,745		236,342
Non-current liabilities:
Long-term debt		688,359		707,252
Deferred income taxes		26,237		28,062
Pension and postretirement obligations		589,238		599,763
Financing obligations		105,401		91,905
Other long-term obligations		45,544		46,926
		1,454,779		1,473,908
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock $.01 par value:
Class A (authorized 200,000,000 shares, issued 5,385,339 shares and 5,256,325 shares)		54		52
Class B (authorized 60,000,000 shares, issued 2,428,191 shares and 2,443,191 shares)		24		24
Additional paid-in-capital		2,216,168		2,215,109
Accumulated deficit		(2,032,071)		(1,970,097)
Treasury stock at cost, 43,155 shares and 3,157 shares		(422)		(51)
Accumulated other comprehensive loss		(438,270)		(449,369)
		(254,517)		(204,332)
	$	1,365,007	$	1,505,918

See notes to the condensed consolidated financial statements.

3

THE MCCLATCHY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(Unaudited; amounts in thousands)

	Six Months Ended
	July 1,		June 25,
	2018		2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(59,306)	$	(133,021)
Reconciliation to net cash provided by (used in) operating activities:
Depreciation and amortization		38,455		39,428
Gain on disposal of property and equipment (excluding other asset write-downs)		(2,820)		(3,694)
Retirement benefit expense		5,557		6,655
Stock-based compensation expense		1,061		1,461
Equity (income) loss in unconsolidated companies		(1,046)		96
Impairments related to equity investments, net		—		169,147
Distributions of income from equity investments		2,876		—
Loss on extinguishment of debt, net		5,368		869
Other asset write-downs		59		1,957
Other		(1,942)		(3,371)
Changes in certain assets and liabilities:
Trade receivables		26,474		24,634
Inventories		(1,246)		1,097
Other assets		(1,141)		280
Accounts payable		3,531		(4,135)
Accrued compensation		(2,157)		2,189
Income taxes		789		(85,517)
Accrued interest		(330)		(204)
Other liabilities		(4,890)		(2,105)
Net cash provided by operating activities		9,292		15,766
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(5,872)		(4,626)
Proceeds from sale of property, plant and equipment and other		4,025		8,932
Contributions to cost and equity investments		(1,925)		(2,683)
Other-net		—		(11)
Net cash provided by (used in) investing activities		(3,772)		1,612
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of public notes		(99,826)		(15,675)
Proceeds from sale-leaseback financial obligations		15,749		—
Purchase of treasury shares		(371)		(287)
Other		(331)		716
Net cash provided by (used in) financing activities		(84,779)		(15,246)
Increase (decrease) in cash, cash equivalents and restricted cash		(79,259)		2,132
Cash, cash equivalents and restricted cash at beginning of period		131,354		36,248
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	52,095	$	38,380

See notes to the condensed consolidated financial statements

4

THE MCCLATCHY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

1.  SIGNIFICANT ACCOUNTING POLICIES

Business and Basis of Accounting

The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer,  The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI.

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. 

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the second-quarter periods and 26 weeks for the six-month periods. See Note 9, Subsequent Events, for a discussion of recent refinancing transactions subsequent to the end of our second quarter of 2018.

Fair Value of Financial Instruments

We account for certain assets and liabilities at fair value.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date.

Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies.

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

5

Cash and cash equivalents, accounts receivable and accounts payable.  As of July 1, 2018, and December 31, 2017, the carrying amount of these items approximates fair value because of the short maturity of these financial instruments.

Long-term debt.  The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. At July 1, 2018 and December 31, 2017, the estimated fair value of long-term debt, including the current portion of long-term debt, was $639.2 million and $810.7 million, respectively. At July 1, 2018, and December 31, 2017, the carrying value of our long-term debt, including the current portion of long-term debt, if any, was $688.4 million and $781.4 million, respectively.

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets.

Newsprint, ink and other inventories

Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the six months ended June 25, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the quarter and six months ended July 1, 2018.

Property, Plant and Equipment

Depreciation expense with respect to property, plant and equipment is summarized below:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Depreciation expense	$	7,295	$	7,531	$	14,492	$	15,252

Assets Held for Sale

During the six months ended July 1, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the six months ended July 1, 2018, and is included in other asset write-downs on our condensed consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale.

Intangible Assets and Goodwill

We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is

6

recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenue growth, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarter and six months ended July 1, 2018 or June 25, 2017.

Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We had no impairment of newspaper mastheads during the quarter and six months ended July 1, 2018, or June 25, 2017. 

Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarter and six months ended July 1, 2018, or June 25, 2017.  

Financial Obligations

Financial obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, and real property previously owned by The Sacramento Bee that was sold and leased back during the third quarter of 2017. In April 2018, we sold and leased back real property owned by The State in Columbia, SC, and as a result, our long-term financial obligations increased by approximately $14.6 million during the second quarter of 2018.

Segment Reporting

We operate 30 media companies, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East.

Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: 

			Other
	Minimum		Comprehensive
	Pension and		Loss
	Post-		Related to
	Retirement		Equity
(in thousands)	Liability		Investments		Total
Balance at December 31, 2017	$	(442,406)	$	(6,963)	$	(449,369)
Amounts reclassified from AOCL		11,099		—		11,099
Other comprehensive income		11,099		—		11,099
Balance at July 1, 2018	$	(431,307)	$	(6,963)	$	(438,270)

7

	Amount Reclassified from AOCL
	Quarters Ended				Six Months Ended
(in thousands)	July 1,		June 25,		July 1,		June 25,		Affected Line in the Condensed
AOCL Component	2018		2017		2018		2017		Consolidated Statements of Operations
Minimum pension and post-retirement liability	$	5,549	$	4,284	$	11,099	$	8,569	Retirement benefit expense
		—		(1,714)		—		(3,428)	Benefit for income taxes (1)
	$	5,549	$	2,570	$	11,099	$	5,141	Net of tax

_____________________

(1)There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. 

Income Taxes

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but the company is able to determine a reasonable estimate, the company must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740, Income Taxes, on the basis of the provisions of the tax laws that were in effect immediately before the Tax Act was enacted. We continue to evaluate the tax implications of the changes to the Tax Act for which our accounting was incomplete, including the impact on state taxes, certain compensation arrangements and depreciation. We will record appropriate adjustments, if any, in the periods in which we conclude our analysis.

A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes. As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and six months ended July 1, 2018, we recorded a valuation allowance charge of $10.1 million and $24.4 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of July 1, 2018, was $134.1 million.

8

We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. 

Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense.

Earnings Per Share (EPS)

Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following:

	Quarters Ended		Six Months Ended
	July 1,	June 25,	July 1,	June 25,
(shares in thousands)	2018	2017	2018	2017
Anti-dilutive common stock equivalents	198	388	201	325

Cash Flow Information

Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:

	July 1,		December 31,
(in thousands)	2018		2017
Cash and equivalents	$	20,128	$	99,387
Restricted cash included in other assets(1)		31,967		31,967
Total cash, cash equivalents and restricted cash	$	52,095	$	131,354

_____________________

(1)Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. 

Cash paid for interest and income taxes and other non-cash activities consisted of the following:

	Six Months Ended
	July 1,		June 25,
(in thousands)	2018		2017
Interest paid (net of amount capitalized)	$	29,244	$	35,127
Income taxes paid (net of refunds)		12,019		8,870
Other non-cash investing and financing activities related to pension plan transactions:
Reduction of financing obligation due to sale of real properties by pension plan		(2,667)		—
Reduction of PP&E due to sale of real properties by pension plan		(2,854)		—

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the

9

consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis but it did not have an impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively but it did not have an impact on our condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $1.0 million in the six months ended June 25, 2017, on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “Leases.” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new lease standard does not substantially change lessor accounting. In 2018, the FASB issued ASU No. 2018-01 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact this standard will have on our condensed consolidated financial statements, but expect an increase in assets and liabilities on our condensed consolidated balance sheet. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. Consequently, the standard eliminates the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the standard only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This standard also requires

10

certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

2. REVENUES

Adoption of ASC 2014-09 (Topic 606), “Revenue from Contracts with Customers”

On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

We recorded a net increase to opening accumulated deficit of $2.7 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606, with the impact primarily related to our audience revenues. The impact to revenues as a result of applying Topic 606 was an increase of $0.1 million and $0.4 million for the quarter and six months ended July 1, 2018, respectively, compared to applying Topic 605.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

All revenues recognized on the condensed consolidated statements of operations are the result of contracts with customers, except for revenues associated with lease income where we are the lessor through a sublease arrangement, as these are out of the scope of Topic 606.

Advertising Revenues

We generate revenues primarily by delivering advertising on our digital media sites, on our partners’ websites and in our newspapers. These advertising revenues are generated through digital and print performance obligations that are included in contracts with customers, which are typically one year or less in duration or commitment. There are no differences in the treatment of digital and print advertising performance obligations or the recognition of revenues for retail, national, classified, and direct marketing revenue categories under Topic 606.  

We generate advertising revenues through digital products that are sold on cost-per-thousand impressions (“CPM”) which means that an advertiser pays based upon number of times their ad is displayed on our owned and operated websites and apps, our partners’ websites, ad exchanges, in a video pre-roll or a programmatic bidding exchange. Such revenues are recognized according to the timing outlined in the contract. 

There are also monthly marketing campaigns which may include multiple products such as items sold by CPM, reputation management, search engine marketing and search engine optimization. In these arrangements as well as in a CPM sale, the contracted goods and services are performed over the specific contract term and the transfer of the performance obligation occurs as the benefits are consumed by the customer. As such, revenue is recognized daily regardless of the performance obligations classification of timing of being point in time or overtime.

Print advertising is advertising that is printed in a publication, inserted into a publication, or physically mailed to a customer. Our performance obligations for print products are directly associated with the inclusion of the advertisement in the final publication and delivery of the product on the contracted distribution day. Revenues are recognized at the point in time that the newspaper publication is delivered and distribution of the advertisement is satisfied.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected value approach.

11

For ads placed on our partners’ websites or selling a product hosted or managed by partners, we evaluate whether we are the principal or agent. Generally, we report advertising revenues for ads placed on our partners’ websites or for the resale of their products on a gross basis; that is, the amounts billed to our customers are recorded as revenues, and amounts paid to our partners for their products or advertising space are recorded as operating expenses. Where we are the principal, we are primarily responsible to our customers for fulfillment of the contract goals though, from time to time, the use of third party goods or services. Our control is further supported by our level of discretion in establishing price and in some cases, controlling inventory before it is transferred to the customer. 

Most products, including the printed newspaper advertising product, banner ads on our websites and video ads on our owned and operated player are reported on a gross basis. However, there are some third party products and services that we offer to customers, such as Cars.com and various revenue share arrangements such as exchange platforms, that are reported on a net basis. Revenues are earned through being a reseller of a product or participating in an exchange where control over the service provided is limited and costs of the arrangement are net of revenue received.

Audience Revenues

Audience revenues include digital and print subscriptions or a combination of both at various frequencies of delivery. Our subscribers typically pay us in advance of when their subscriptions start or shortly thereafter. Our performance obligation to subscribers of our digital products is the real-time access to news and information delivered through multiple digital platforms. Our performance obligation to our traditional print subscribers is delivery of the physical newspaper according to their subscription plan. Revenues related to digital and print subscriptions are recognized each day that a product is delivered to the subscriber. 

Digital subscriptions may be purchased for a day, month, quarter, or year, and revenue is reported daily over the term of the contract.

Traditional print subscriptions may have various frequencies of delivery based upon the subscribers delivery preference. Revenues are recognized based upon each delivery, therefore at a point in time.  

Certain subscribers may enter into a grace period (“grace”) after their previous contract term has expired but before payment has be received on the renewal. Grace is granted as a continuation of the subscription contract, in order to not disrupt service, and the extension is accounted for as variable consideration. We estimate these revenue amounts based on the expected amount to be received, taking into account the expected discontinuation of service or nonpayment based on historical experience.

Other Revenues

Other revenues include primarily commercial printing and distribution revenues. The commercial print agreements are between us and a third party publisher to print and make available for distribution the finished products. Commercial print contracts are for a daily finished product and each day’s product is unique, or a separate performance obligation.  Revenue is recorded at a point in time upon completion of each day’s print project.

The performance obligation for distribution revenues is the transportation of third-party published products to their subscribers or stores for resale. Distribution is performed substantially the same over the life of the contract and revenue is recognized at the point in time  each performance obligation is completed.

We report distribution revenues from the third-party publishers on a gross basis. That is, the amounts that we bill to third party publishers to deliver their finished product to their customers is recorded as revenues, and the amounts paid to our independent carriers to deliver the third party product is recorded as operating expenses.

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its standalone selling price. We generally determine standalone selling prices

12

for audience revenue contracts based upon observable market values and the adjusted market assessment. For advertising revenue contracts with multiple performance obligations, stand alone selling price is based on the prices charged to customers or on an adjusted market assessment.

Unearned Revenues

We record unearned revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The increase in the unearned revenue balance for the six months ended July 1, 2018, was primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $49.1 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017.

Our payment terms vary for advertising and subscriber customers. Subscribers generally pay in advance of up to one year. Advertiser payments are due within 30 days of invoice issuance and therefore amounts paid in advance are not significant. For advertisers that are considered to be at a higher risk of collectability due to payment history or credit processing, we require payment before the products or services are delivered to the customer. 

Practical Expedients and Exemptions

We expense sales commissions when incurred because the amortization period would have been one year or less if capitalized. These costs are recorded within compensation expenses.

We record usage-based royalties promised in exchange for use of our intellectual property, including but not limited to photographs and articles. These royalty revenues are accrued when estimates of usage and recoverability are made. These revenues are recorded within other revenues.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

3.  INTANGIBLE ASSETS AND GOODWILL

Intangible assets subject to amortization (primarily advertiser lists, subscriber lists and developed technology), mastheads and goodwill consisted of the following: 

	December 31,		Amortization		July 1,
(in thousands)	2017		Expense		2018
Intangible assets subject to amortization	$	839,284	$	—	$	839,284
Accumulated amortization		(761,013)		(23,963)		(784,976)
		78,271		(23,963)		54,308
Mastheads		149,951		—		149,951
Goodwill		705,174		—		705,174
Total	$	933,396	$	(23,963)	$	909,433

Amortization expense with respect to intangible assets is summarized below:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Amortization expense	$	11,927	$	12,093	$	23,963	$	24,176

13

The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: 

	Amortization
	Expense
Year	(in thousands)
2018 (Remainder)	$	23,697
2019		24,154
2020		803
2021		680
2022		655
2023		667

4.  INVESTMENTS IN UNCONSOLIDATED COMPANIES

On June 19, 2017, we along with the then-existing ownership group of CareerBuilder, LLC (“CareerBuilder”) announced that we had entered into an agreement to sell a majority of the collective ownership interest in CareerBuilder to an investor group. The transaction closed on July 31, 2017. We received $73.9 million from the closing of the transaction, consisting of approximately $7.3 million in normal distributions and $66.6 million of gross proceeds.

As a result of the closing of the transaction, our ownership interest in CareerBuilder was reduced to approximately 3.0% from 15.0%. As a result, we recorded $45.6 million and $168.6 million in pre-tax impairment charges on our equity investment in CareerBuilder during the quarter and six months ended June 25, 2017, respectively.

In the quarter and six months ended July 1, 2018, we received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our investment in CareerBuilder is accounted for under the cost method (measurement alternative under ASU 2016-01).

5.  LONG-TERM DEBT

Our long-term debt consisted of the following:

	Face Value at		Carrying Value
	July 1,		July 1,		December 31,
(in thousands)	2018		2018		2017
Notes:
9.00% senior secured notes due in 2022	$	344,101	$	339,976	$	433,819
7.150% debentures due in 2027		89,188		85,458		85,262
6.875% debentures due in 2029		276,230		262,925		262,311
Long-term debt	$	709,519	$	688,359	$	781,392
Less current portion		—		—		74,140
Total long-term debt, net of current	$	709,519	$	688,359	$	707,252

Our outstanding notes are stated net of unamortized debt issuance costs, and unamortized discounts, if applicable, totaling $21.2 million and $23.7 million as of July 1, 2018, and December 31, 2017, respectively.

Debt Redemptions, Repurchases and Loss on Extinguishment of Debt

During the first six months of 2018 and 2017, we reduced our outstanding debt as follows:

	Six Months Ended
	July 1,		June 25,
	2018		2017
(in thousands)	Face Value		Face Value
9.00% senior secured notes due in 2022	$	95,529	$	15,000

14

During the quarter and six months ended July 1, 2018, we redeemed $0.5 million of our 9.00% senior secured notes due in 2022 (“2022 Notes”) at par through a tender offer that expired on May 22, 2018, and we wrote off the associated debt issuance costs. Also during in the six months ended July 1, 2018, we redeemed $75.0 million of our 2022 Notes, which we had previously announced in December 2017, and we repurchased $20.0 million of the 2022 Notes through a privately negotiated transaction. We redeemed and repurchased the $95.0 million in 2022 Notes at a premium and wrote off the associated debt issuance costs. As a result of all of these transactions, we recorded a loss on the extinguishment of debt of $19.0 thousand and $5.4 million during the quarter and six months ended July 1, 2018, respectively.

During the quarter and six months ended June 25, 2017, we repurchased a total $15.0 million of our 2022 Notes through a privately negotiated transaction. We repurchased these notes at a premium and wrote off debt issuance costs resulting in a loss on the extinguishment of debt of $0.9 million being recorded during the quarter and six months ended June 25, 2017.

As discussed below, subsequent to July 1, 2018, we refinanced and replaced a significant portion of our debt outstanding at such time, with other long-term debt, therefore, we have continued to classify it as long-term in nature.

Debt Refinancing in July 2018

On July 16, 2018, we entered into an Indenture (“2026 Notes Indenture”), among the Company, subsidiaries of the Company party thereto as guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (“2026 Notes Trustee”), pursuant to which we issued $310.0 million aggregate principal amount of 9.00% Senior Secured Notes due 2026 (“2026 Notes”) as described more fully under the section “2026 Senior Secured Notes and Indenture” below.

In connection with the issuance of the 2026 Notes and other junior debt instruments described below and as discussed more fully in Note 9, “Subsequent Events,” we completed a refinancing of all of our 2022 Notes and substantially all of our debentures, and our revolving credit facilities. On July 16, 2018, we deposited sufficient funds with The Bank of New York Mellon Trust Company, N.A., as trustee (“2022 Notes Trustee”) for the our 2022 Notes, to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes to, but excluding, the redemption date. The 2022 Notes were issued under an Indenture, dated as of December 18, 2012, among the Company, subsidiaries of the Company party thereto as guarantors and the 2022 Notes Trustee (“2022 Notes Indenture”).

As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof.

On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes.

ABL Credit Agreement

Also on July 16, 2018, we entered into a Credit Agreement, among the Company, the subsidiaries of the Company party thereto as borrowers and Wells Fargo Bank, N.A. (“Wells Fargo”), as administrative agent (“ABL Credit Agreement”). The ABL Credit Agreement provides for up to $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. Our obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement as described more fully in Note 9.

Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on the London Interbank Offered Rate (“LIBOR”) for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% and one-month LIBOR plus

15

1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans.

The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days.

In connection with entering into the ABL Credit Agreement and the refinancing of our 2022 Notes as described above, we terminated our Third Amended and Restated Credit Agreement, which had a maturity date of December 18, 2019 and had no borrowings outstanding as of the end of our second quarter of 2018 or as of July 16, 2018, the date of termination.

Separately we are party to an Issuance and Reimbursement Agreement (“LC Agreement”) with Bank of America, N.A., under which we may request letters of credit be issued on our behalf in an aggregate face amount not to exceed $35.0 million. We had standby letters of credit totaling $29.7 million outstanding under the LC Agreement as of July 1, 2018. We are required to provide cash collateral equal to 101% of the aggregate undrawn stated amount of each outstanding letter of credit. We expect this LC Agreement will remain in place for up to 90 days from July 16, 2018, as we transition our letters of credit to the ABL Credit Agreement. Cash collateral associated with this LC Agreement is classified in our condensed consolidated balance sheets in other assets.

2026 Senior Secured Notes and Indenture

As discussed above, on July 16, 2018, we entered into the 2026 Notes Indenture, pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.

The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum.  Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. 

We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture).

The 2026 Notes Indenture contains covenants that, among other things, restrict our ability and our restricted subsidiaries to:

· incur certain additional indebtedness and issue preferred stock;

· make certain distributions, investments and other restricted payments;

· sell assets;

· agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

· create liens;

· merge, consolidate or sell substantially all of our assets, taken as a whole; and

· enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

Junior Lien Term Loan Agreement

On July 16, 2018, we entered into a Junior Lien Term Loan Credit Agreement, among the Company, the guarantors party thereto, the lenders party thereto and The Bank of New York Mellon, as administrative agent and collateral agent (“Junior Term Loan Agreement”). The Junior Term Loan Agreement provides for a $157.1 million secured term loan

16

(“Tranche A Junior Term Loans”) and a $193.5 million term loan (“Tranche B Junior Term Loans”). The Tranche A Junior Term Loans mature on July 15, 2030 and the Tranche B Junior Term Loans mature on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. 

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the holder of approximately $82.1 million in aggregate principal amount of 2027 Debentures (as defined in Note 9) and approximately $193.5 million in aggregate principal amount of 2029 Debentures (as defined in Note 9) and to pay fees, costs, and expenses in connection with our debt refinancing.

Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. 

In general, the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture.

Other Debt

After giving effect to the Junior Term Loan Agreements, we have $7.1 million aggregate principal amount of 2027 Debentures and $82.8 million aggregate principal amount of 2029 Debentures outstanding as discussed more fully in Note 9.

6.  EMPLOYEE BENEFITS

Pension Plan

We maintain a qualified defined benefit pension plan (“Pension Plan”), which covers eligible current and former employees and has been frozen since March 31, 2009.  No new participants may enter the Pension Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

We also have a limited number of supplemental retirement plans to provide certain key current and former employees with additional retirement benefits.  These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations.

The elements of retirement benefit expense are as follows:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Pension plans:
Interest Cost		19,789		21,367	$	39,577	$	42,734
Expected return on plan assets		(22,624)		(22,393)		(45,248)		(44,785)
Actuarial loss		6,296		5,084		12,591		10,168
Net pension expense		3,461		4,058		6,920		8,117
Net post-retirement benefit credit		(682)		(730)		(1,363)		(1,462)
Net retirement benefit expenses	$	2,779	$	3,328	$	5,557	$	6,655

In May 2018, the Pension Plan sold the Lexington real property for approximately $4.1 million and we terminated our lease on the property. The property was included in the real property contributions that we made to the Pension Plan in fiscal year 2011. As a result of the sale by the Pension Plan, we recognized a $0.2 million loss on the sale of the Lexington property in the other operating expenses on the condensed consolidated statement of operations for the quarter and six months ended July 1, 2018.  

17

401(k) Plan

We have a deferred compensation plan (“401(k) plan”), which enables eligible employees to defer compensation. During the fourth quarter of 2017, we announced the reinstatement of a company matching contribution program beginning with the first pay check paid in 2018. Our matching contributions in the quarter and six months ended July 1, 2018, were $0.6 million and $1.3 million, respectively, and are recorded in our compensation line item of our condensed consolidated statement of operations. Also during the fourth quarter of 2017, we terminated the 401(k) plan supplemental contribution that was tied to performance.

7.  COMMITMENTS AND CONTINGENCIES

In December 2008, carriers of The Fresno Bee filed a class action lawsuit against us and The Fresno Bee in the Superior Court of the State of California in Fresno County captioned Becerra v. The McClatchy Company (“Fresno case”) alleging that the carriers were misclassified as independent contractors and seeking mileage reimbursement. In February 2009, a substantially similar lawsuit, Sawin v. The McClatchy Company, involving similar allegations was filed by carriers of The Sacramento Bee (“Sacramento case”) in the Superior Court of the State of California in Sacramento County. The class consists of roughly 5,000 carriers in the Sacramento case and 3,500 carriers in the Fresno case. The plaintiffs in both cases are seeking unspecified restitution for mileage reimbursement. With respect to the Sacramento case, in September 2013, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code. In the Fresno case, in March 2014, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code.

The court in the Sacramento case trifurcated the trial into three separate phases, independent contractor status, liability and restitution. On September 22, 2014, the court in the Sacramento case issued a tentative decision following the first phase, finding that the carriers that contracted directly with The Sacramento Bee during the period from February 2005 to July 2009 were misclassified as independent contractors. We objected to the tentative decision but the court ultimately adopted it as final. In June 2016, we were dismissed from the lawsuit, leaving The Sacramento Bee as the sole defendant. On August 30, 2017, the court issued a statement of decision ruling that the court would not hold a phase two trial but would, instead, assume liability from the evidence previously submitted and from the independent contractor agreements. We objected to this decision but the court adopted it as final. The third phase has not yet been defined.

The court in the Fresno case bifurcated the trial into two separate phases: the first phase addressed independent contractor status and liability for mileage reimbursement and the second phase was designated to address restitution, if any. The first phase of the Fresno case began in the fourth quarter of 2014 and concluded in late March 2015. On April 14, 2016, the court in the Fresno case issued a statement of final decision in favor of us and The Fresno Bee. Accordingly, there will be no second phase. The plaintiffs filed a Notice of Appeal on November 10, 2016.

We continue to defend these actions vigorously and expect that we ultimately will prevail. As a result, we have not established a reserve in connection with the cases. While we believe that a material impact on our condensed consolidated financial position, results of operations or cash flows from these claims is unlikely, given the inherent uncertainty of litigation, a possibility exists that future adverse rulings or unfavorable developments could result in future charges that could have a material impact. We have and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and make appropriate adjustments to such estimates based on experience and developments in litigation.

Other than the cases described above, we are subject to a variety of legal proceedings (including libel, employment, wage and hour, independent contractor and other legal actions) and governmental proceedings (including environmental matters) that arise from time to time in the ordinary course of our business. We are unable to estimate the amount or range of reasonably possible losses for these matters. However, we currently believe, after reviewing such actions with counsel, that the expected outcome of pending actions will not have a material effect on our condensed consolidated financial statements. No material amounts for any losses from litigation that may ultimately occur have been recorded in the condensed consolidated financial statements as we believe that any such losses are not probable.

18

We have certain indemnification obligations related to the sale of assets including but not limited to insurance claims and multi-employer pension plans of disposed newspaper operations. We believe the remaining obligations related to disposed assets will not be material to our financial position, results of operations or cash flows.

As of July 1, 2018, we had $29.7 million of standby letters of credit secured under the LC Agreement.

8.  STOCK PLANS

Stock Plans Activity

The following table summarizes the restricted stock units (“RSUs”) activity during the six months ended July 1, 2018:

		Weighted
		Average Grant
		Date Fair
	RSUs	Value
Nonvested — December 31, 2017	245,794	$	11.55
Granted	218,580	$	9.10
Vested	(99,244)	$	13.31
Forfeited	(2,490)	$	11.41
Nonvested — July 1, 2018	362,640	$	9.59

The total fair value of the RSUs that vested during the six months ended July 1, 2018, was $0.9 million.

The following table summarizes the stock appreciation rights (“SARs”) activity during the six months ended July 1, 2018: 

		Weighted		Aggregate
		Average		Intrinsic Value
	SARs	Exercise Price		(in thousands)
Outstanding December 31, 2017	156,175	$	32.12	$	—
Expired	(24,825)	$	38.60
Outstanding July 1, 2018	131,350	$	30.89	$	—

Stock-Based Compensation

All stock-based payments, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, are recognized in the financial statements based on their grant date fair values. As of July 1, 2018, we had two stock-based compensation plans. Stock-based compensation expenses are reported in the compensation line item in the condensed consolidated statements of operations. Total stock-based compensation expense for the periods presented in this report, are as follows:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Stock-based compensation expense	$	320	$	432	$	1,061	$	1,461

9.  SUBSEQUENT EVENTS

Fifth Supplemental Indenture

On July 13, 2018, in connection with our outstanding 7.15% debentures due November 1, 2027 (“2027 Debentures”) and 6.875% debentures due March 15, 2029 (“2029 Debentures” and together with the 2027 Debentures, “Debentures”), we

19

entered into a Fifth Supplemental Indenture (“Supplemental Indenture”) by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (“Debentures Trustee”), supplementing that certain Indenture, dated as of November 4, 1997, by and between the Company and the Debentures Trustee (“Debentures Indenture”), pursuant to which the Debentures were issued. 

The Supplemental Indenture was entered into in connection with our refinancing of existing indebtedness to amend the Debentures Indenture to eliminate certain restrictive covenants.

2026 Notes Indenture

On July 16, 2018, we entered into the 2026 Notes Indenture pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.

The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum. Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. 

We may redeem the 2026 Notes, in whole or in part, at any time on or after July 15, 2022, at specified redemption prices and may also redeem up to 40% of the aggregate principal amount of the 2026 Notes using the proceeds of certain equity offerings completed before July 15, 2021, at specified redemption prices, in each case, as set forth in the 2026 Notes Indenture. Prior to July 15, 2022, we may also redeem some or all of the 2026 Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date and a “make-whole” premium.

We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture).

If we experience specified changes of control triggering events, we must offer to repurchase the 2026 Notes at a repurchase price equal to 101% of the principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding the applicable repurchase date.

The 2026 Notes Indenture contains covenants that, among other things, restrict the ability of us and our restricted subsidiaries to:

· incur certain additional indebtedness and issue preferred stock;

· make certain distributions, investments and other restricted payments;

· pay dividends;

· sell assets;

· agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

· create liens;

· merge, consolidate or sell substantially all of our assets, taken as a whole; and

· enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

The 2026 Notes Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements, or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2026 Notes under the 2026 Notes Indenture will become due and payable immediately without further action or notice. If any other event of default under the 2026 Notes Indenture occurs or is continuing, the 2026 Notes Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2026 Notes under the 2026 Notes Indenture may declare all of such 2026 Notes to be due and payable immediately.

20

ABL Credit Agreement

On July 16, 2018, we entered into the ABL Credit Agreement, which provides for a $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. The Borrowers’ obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement.

The borrowing base under the ABL Credit Agreement is comprised of 85%  of eligible advertising accounts; the lesser of (i) 80% of eligible unbilled advertising accounts receivable and (ii) $3.0 million; and the lesser of (i) $6.0 million and (ii) 50% of the book value of eligible inventory, in each case subject to reserves established by the administrative agent (“Borrowing Base”). The proceeds of the loans under the ABL Credit Agreement may be used for working capital and general corporate purposes. The Borrowers have the right to prepay loans under the ABL Credit Agreement in whole or in part at any time without penalty. Subject to availability under the Borrowing Base, amounts repaid may be reborrowed. 

As of July16, 2018, under the ABL Credit Agreement we had availability of $46.4 million, and $10.0 million was borrowed to pay expenses associated with the refinancing transactions (leaving $36.4 million in additional availability).  The $10.0 million outstanding under the ABL Credit Agreement was repaid during the third quarter of 2018. The borrowing base is recalculated monthly and is not expected to be subject to material changes in availability except in the fourth quarter of 2018 and early in the first quarter of 2019 when it is expected to increase as a result of the seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances).

Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on LIBOR for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% or one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans.

The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days.

The ABL Credit Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the ABL Credit Agreement contains customary negative covenants limiting our ability and the ability of our subsidiaries, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the ABL Credit Agreement immediately due and payable and may exercise the other rights and remedies provided for under the ABL Credit Agreement and related loan documents. The events of default under the ABL Credit Agreement include, subject to grace periods in certain instances, payment defaults, cross defaults with certain other indebtedness, breaches of covenants or representations and warranties, change in control of us and certain bankruptcy and insolvency events with respect to us meeting a materiality threshold set forth in the ABL Credit Agreement.

Junior Lien Term Loan Agreement

On July 16, 2018, we entered into the Junior Term Loan Agreement, which provides for a $157.1 million Tranche A Junior Term Loans and a $193.5 million Tranche B Junior Term Loans (collectively “Junior Term Loans”).  The Tranche A Junior Term Loans mature and principal is payable on July 15, 2030 and the Tranche B Junior Term Loans mature and principal is payable on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement.  Pursuant to the terms of the

21

Junior Term Loan Agreement, affiliates of Chatham Asset Management, LLC may elect to convert up to $75.0 million in aggregate principal amount of 2029 Debentures owned by them into an equal principal amount of Tranche B Junior Term Loans or notes with terms substantially similar to the Tranche B Junior Term Loans upon written notice to us.

The Junior Term Loans were issued at premiums in order to use the proceeds of the loans to repurchase certain unsecured debentures at a quoted value as the close of business on July 13, 2018, and to use the remaining proceeds, along with the issuance of our 2026 Notes, to repurchase our 2022 Notes (see “Satisfaction and Discharge of 2022 Notes” and discussions below). 

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the lender of approximately $82.1 million in aggregate principal amount of 2027 Debentures, approximately $193.5 million in aggregate principal amount of 2029 Debentures and to pay fees, costs and expenses in connection with the debt refinancing.

We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at (i) specified prices that decline over time, plus accrued and unpaid interest, if any, in the case of Tranche A Junior Term Loans, and (ii) a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any, in the case of the Tranche B Junior Term Loans. Amounts prepaid may not be reborrowed. 

Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. 

The Junior Term Loan Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Junior Term Loan Agreement contains customary negative covenants limiting the ability of us, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the Junior Term Loan Agreement immediately due and payable and may exercise the other rights and remedies provided for under the Junior Term Loan Agreement and related loan documents. In general the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture.

Satisfaction and Discharge of 2022 Notes

On July 16, 2018, we deposited sufficient funds with the 2022 Notes Trustee to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes up to, but excluding, the redemption date. The 2022 Notes were issued under the 2022 Notes Indenture.

As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof.

On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes. We paid a redemption premium of $15.5 million, which was equal to 4.5% of the outstanding principal amount.

22

The following table summarizes our ABL Credit Agreement and long-term debt as of July 16, 2018:

	Face Value at
	July 16,
(in thousands)	2018
ABL Credit Agreement	$	10,000
Notes:
9.00% senior secured notes due in 2026		310,000
7.795% tranche A junior term loan due in 2030		157,083
6.875% tranche B junior term loan due in 2030		193,466
7.150% unsecured debentures due in 2027		7,105
6.875% unsecured debentures due in 2029		82,764
Total long-term debt	$	760,418

The $10.0 million on the ABL Credit Agreement debt is due within the next five years and all other debt is due thereafter.

We expect to record a gain on extinguishment of debt related to our debt refinancing in the third quarter of 2018.

23

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Information

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including statements relating to future financial performance and operations, trends in advertising, uses of cash, including offers for or repurchases of our debt, the refinancing of our debt and our pension plan obligations. These statements are based upon our current expectations and knowledge of factors impacting our business and are generally preceded by, followed by or are a part of sentences that include the words “believes,” “expects,” “anticipates,” “estimates” or similar expressions. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements. For all of those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, trends and uncertainties. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” in Part I, Item 1A of our 2017 Annual Report on Form 10-K as well as our other filings with the Securities and Exchange Commission, including our disclosures herein. We undertake no obligation to revise or update any forward-looking statements except as required under applicable law.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes to the financial statements (“Notes”) as of and for the quarter and six months ended July 1, 2018, included in Item 1 of this Quarterly Report on Form 10-Q, as well as with our audited consolidated financial statements and accompanying notes to the financial statements and MD&A contained in our 2017 Annual Report filed on Form 10-K with the Securities and Exchange Commission on March 12, 2018. All period references are to our fiscal periods unless otherwise indicated.

Overview

We operate 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer,  The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI.

The following table reflects our sources of revenues as a percentage of total revenues for the periods presented:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
	2018		2017		2018		2017
Revenues:
Advertising	52.3	%	55.6	%	51.3	%	54.9	%
Audience	41.5	%	40.0	%	42.4	%	40.6	%
Other	6.2	%	4.4	%	6.3	%	4.5	%
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%

Our primary sources of revenues are digital and print advertising and audience subscriptions. All categories (retail, national and classified) of advertising discussed below include both digital and print advertising. Advertising revenues include advertising delivered digitally, advertising carried as a part of newspapers (run of press (“ROP”) advertising), and/or advertising inserts placed in newspapers (“preprint” advertising). Audience revenues include either digital-only subscriptions, or bundled subscriptions, which include digital and print. Our print newspapers are delivered by large distributors and independent contractors. Other revenues include, among others, commercial printing and distribution revenues.

24

See “Results of Operations” below for a discussion of our revenue performance and contribution by category for the quarter and six months ended July 1, 2018,  and June 25, 2017.

Recent Developments

Asset sales and leasebacks 

In the quarter and six months ended July 1, 2018, we recognized a loss of $0.2 million and a gain of $3.1 million, respectively, related to the sale of land and buildings in several of our markets. We also have various sales agreements or letters of intent to sell other properties that are expected to close in 2018.

On April 23, 2018, we closed a sale and leaseback of real property in Columbia, South Carolina. The transaction resulted in net proceeds of $15.7 million. We are leasing back the Columbia property under a 15-year lease with initial annual payments totaling approximately $1.6 million. The lease includes a repurchase clause allowing us to repurchase the property after the 15-year lease term. Accordingly, the lease is being treated as a financing lease, and we continue to depreciate the carrying value of the property in our financial statements. No gain or loss will be recognized on the sale and leaseback of the property until we no longer have a continuing involvement in the property. 

Under the 2022 Notes Indenture we were required to use the net after tax proceeds of $13.0 million from the Columbia transaction to reinvest in the company within 365 days from the date of the sale or to make an offer to the holders of the 2022 Notes to purchase their notes at 100% of the principal amount plus accrued and unpaid interest. On April 25, 2018, we announced an offer to purchase $13.0 million of the 2022 Notes using the net after tax proceeds from the Columbia transaction at par plus accrued and unpaid interest. The offer expired on May 22, 2018, and $0.5 million principal amount of the 2022 Notes were tendered in the offer and redeemed by us at par.

Debt Repurchase and Extinguishment of Debt

In January 2018, pursuant to the terms of the 2022 Notes Indenture, we redeemed $75.0 million aggregate principal amount of our 2022 Notes at a premium. In February 2018, we repurchased $20.0 million of our 2022 Notes and as discussed above, in May 2018, we redeemed $0.5 million of our 2022 Notes. In all of these transactions, we wrote off the associated debt issuance costs and recorded a loss on the extinguishment of debt of $5.4 million during the six months ended July 1, 2018.

Debt Refinancing 

On July 16, 2018, we announced that we closed on our previously announced offering of $310.0 million aggregate principal amount of our 2026 Notes. The 2026 Notes are guaranteed by certain of our subsidiaries. The 2026 Notes and the guarantees are secured by a first-priority lien on certain of our subsidiary guarantors’ assets and by second-priority-liens on certain of our subsidiary guarantor’s other assets.

We also delivered a notice of full redemption to the trustee of the $344.1 million aggregate principal amount of our outstanding 2022 Notes. The 2022 Notes will be redeemed on August 15, 2018, at a premium, together with accrued and unpaid interest.

On July 16, 2018, we entered into a Junior Lien Term Loan Credit Agreement, which provides for a $157.1 million Tranche A Junior Term Loan and a $193.5 million Tranche B Junior Term Loan. The Tranche A Junior Term Loans mature and principal is payable on July 15, 2030 and the Tranche B Junior Term Loans mature and principal is payable on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. 

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the lender of approximately $82.1 million in aggregate principal amount of 2027 Debentures and approximately $193.5 million in aggregate principal amount of 2029 Debentures and to pay fees, costs and expenses in connection with the debt refinancing.

25

On July 16, 2018, we entered into an ABL Credit Agreement, which provides for a $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023.

We used the net proceeds of the 2026 Notes offering, together with cash available under the ABL Credit Agreement, junior lien term loan financing and cash on hand, to fund our refinancing transaction and related expenses and the satisfaction and discharge and redemption of all of our outstanding 2022 Notes.

We expect to record a gain on extinguishment of debt related to our debt refinancing in the third quarter of 2018.

Results of Operations

The following table reflects our financial results on a consolidated basis for the quarter and six months ended July 1, 2018, and June 25, 2017:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands, except per share amounts)	2018		2017		2018		2017
Net loss	$	(20,365)	$	(37,446)	$	(59,306)	$	(133,021)
Net loss per diluted common share	$	(2.62)	$	(4.91)	$	(7.66)	$	(17.49)

The decrease in the net loss in the quarter and six months ended July 1, 2018, compared to the same periods in 2017, was primarily due to pre-tax impairment charges of $46.1 million and $169.1 million related to our CareerBuilder investment recorded in the quarter and six months ended June 25, 2017, respectively. This decrease was partially offset by charges of $10.1 million and $24.4 million related to the current year impact of the valuation allowance on deferred taxes during the quarter and six months ended July 1, 2018, respectively. In addition, advertising revenues were lower during the quarter and six months ended July 1, 2018, but the decrease was partially offset by a decrease in expenses, as described in greater detail below.  

Revenues

During the quarter and six months ended July 1, 2018, total revenues decreased 9.2% and 9.7%, respectively, compared to the same period in 2017 primarily due to the continued decline in demand for print advertising. The decline in print advertising was primarily a result of large retail advertisers continuing to reduce preprinted insert advertising and in-newspaper ROP advertising. The decline in print advertising revenues is the result of the desire of advertisers to reach online customers directly, and the secular shift in advertising demand from print to digital products. We expect these trends to continue for the foreseeable future.

26

The following table summarizes our revenues by category:

	Quarters Ended							Six Months Ended
	July 1,		June 25,		$		%	July 1,		June 25,		$		%
(in thousands)	2018		2017		Change		Change	2018		2017		Change		Change
Advertising:
Retail	$	47,484	$	58,701	$	(11,217)	(19.1)	$	91,814	$	114,928	$	(23,114)	(20.1)
National		11,697		9,889		1,808	18.3		21,454		18,726		2,728	14.6
Classified		27,165		31,204		(4,039)	(12.9)		54,729		62,632		(7,903)	(12.6)
Direct marketing and other		20,607		25,445		(4,838)	(19.0)		38,843		48,842		(9,999)	(20.5)
Total advertising		106,953		125,239		(18,286)	(14.6)		206,840		245,128		(38,288)	(15.6)
Audience		84,825		89,915		(5,090)	(5.7)		171,103		181,331		(10,228)	(5.6)
Other		12,570		9,966		2,604	26.1		25,263		19,873		5,390	27.1
Total revenues	$	204,348	$	225,120	$	(20,772)	(9.2)	$	403,206	$	446,332	$	(43,126)	(9.7)

Advertising Revenues

Total advertising revenues decreased 14.6% and 15.6% during the quarter and six months ended July 1, 2018, compared to the same periods in 2017. While we experienced declines in all of our advertising revenue categories, except national, the total decrease was primarily related to declines in print retail and classified advertising revenues. The decreases in print advertising revenues were partially offset by increases in all of our digital revenue categories, as discussed below.

The following table reflects the category of advertising revenue as a percentage of total advertising revenue for the periods presented:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
	2018		2017		2018		2017
Advertising:
Retail	44.4	%	46.9	%	44.4	%	46.9	%
National	10.9	%	7.9	%	10.4	%	7.6	%
Classified	25.4	%	24.9	%	26.4	%	25.6	%
Direct marketing and other	19.3	%	20.3	%	18.8	%	19.9	%
Total advertising	100.0	%	100.0	%	100.0	%	100.0	%

Retail:

During the quarter and six months ended July 1, 2018, retail advertising revenues decreased 19.1% and 20.1%, respectively, compared to the same periods in 2017. In the second quarter, the decrease in retail advertising revenues was primarily due to decreases of 25.2% in print ROP advertising revenues and 37.2% in preprint advertising revenues, compared to the same period in 2017. These decreases were partially offset by an increase in digital retail advertising of 1.0% in the second quarter of 2018 compared to the same period in 2017. In the first six months of 2018, the decrease in retail advertising revenues was primarily due to decreases of 26.3% in print ROP advertising revenues and 37.8% in preprint advertising revenues, compared to the same period in 2017. These decreases were partially offset by an increase in digital retail advertising of 0.9% in the first six months of 2018 compared to the same period in 2017. The overall decreases in retail advertising revenues for the quarter and six months ended July 1, 2018, were spread among various ROP and preprint categories.

National:

National advertising revenues increased 18.3% and 14.6% during the quarter and six months ended July 1, 2018, respectively, compared to the same periods in 2017. We had an increase of 31.6% and 27.5% in digital national advertising during the quarter and six months ended July 1, 2018, respectively, and this was partially offset by a 6.9% and 10.2% decrease in print national advertising during the quarter and six months ended July 1, 2018, respectively,

27

compared to the same periods in 2017. Overall, the increase in digital national advertising revenues during the quarter and six months ended July 1, 2018, was largely led by programmatic digital advertising, including mobile and video revenues. 

Classified:

During the quarter and six months ended July 1, 2018, total classified advertising revenues decreased 12.9% and 12.6%, respectively, compared to the same periods in 2017. Automotive, employment and real estate advertising combined for 50.8% and 50.4% of our classified advertising revenues during the quarter and six months ended July 1, 2018, respectively, compared to 55.4% in both the quarter and six months ended June 25, 2017, respectively. Other classified advertising revenues, which includes legal, remembrance and celebration notices and miscellaneous classified advertising, represents the remaining classified advertising revenues. During the second quarter of 2018 compared to the same period in 2017, we experienced an 8.3% increase in digital classified advertising led by other classified advertising and a 30.1% decrease in print classified advertising. During the first six months of 2018, compared to the same period in 2017, we experienced increases in digital classified advertising of 9.8% and decreases in print classified advertising of 30.6% for the same reasons discussed for the second quarter of 2018.  

During the first quarter of 2018, we revisited the sales activity in remembrance/obituary sales noting that digital advertising has, over time, become the predominate source of obituary sales. As a result, we revised the classification of such sales, which allocates a greater amount of obituary sales from print/digital bundled advertising to digital-only advertising. See definition of digital-only below. Additionally, we continued to see a shift of print advertising to digital platforms. 

Digital:

Digital advertising revenues, which are included in each of the advertising categories discussed above, constituted 43.4%  and 43.2% of total advertising revenues in the quarter and six months ended July 1, 2018,  respectively, compared to 34.3% and 33.8% for the same periods in 2017, respectively. Total digital advertising includes digital-only advertising and digital advertising bundled with print. In the second quarter of 2018, total digital advertising revenues increased 8.0% to $46.4 million compared to the same period in 2017 partially reflecting the change in allocation from print/digital bundled sales to digital-only sales as discussed above in classified advertising. In the first six months of 2018, total digital advertising revenues increased 7.8% to $89.4 million compared to the same period in 2017 also partially reflecting the change in allocation discussed above.

Digital-only advertising is defined as digital advertising sold on a stand-alone basis or as the primary advertising buy with print sold as an “up-sell.” Digital-only advertising revenues increased 20.2% to $39.4 million in the second quarter of 2018 compared to the same period in 2017. Digital-only advertising revenues increased 20.9% to $75.7 million in the first six months of 2018 compared to the same period in 2017. 

Digital advertising revenues bundled with print products declined 31.1% and 32.3%, in the quarter and six months of 2018, respectively, compared to the same periods in 2017 as a result of fewer print advertising sales. The newspaper industry continues to experience a secular shift in advertising demand from print to digital products as advertisers look for multiple advertising channels to reach their customers and are increasingly focused on online customers. While our product offerings and collaboration efforts in digital advertising have grown, we expect to continue to face intense competition in the digital advertising space.

Direct Marketing and Other:

Direct marketing and other advertising revenues decreased 19.0% and 20.5% during the quarter and six months ended July 1, 2018,  respectively, compared to the same periods in 2017. The decrease was largely due to declines in preprint advertising by large retail customers as described above and, to a lesser extent to, decreases in our niche products.

28

Audience Revenues

Audience revenues decreased 5.7% and 5.6% during quarter and six months ended July 1, 2018,  respectively, compared to the same periods in 2017. Overall, digital audience revenues increased 0.6% and 1.6%  during the quarter and first six months of 2018, respectively. Digital-only audience revenues increased 21.8% and 19.2% in the quarter and first six months of 2018, respectively. The increase in digital-only audience revenues during the first six months of 2018 was a result of a 34.5% increase in our digital-only subscribers to 122,400 as of the end of the second quarter of 2018 compared to 91,000 as of the end of the second quarter in 2017.

Print audience revenues decreased 8.1%  and 8.4% in the quarter and first six months of 2018, respectively, compared to the same periods in 2017, primarily due to lower print circulation volumes and were partially offset by pricing adjustments. We have a dynamic pricing model for our traditional subscriptions for which pricing is constantly being adjusted. Print circulation volumes continue to decline as a result of fragmentation of audiences faced by our industry as available media outlets proliferate and readership trends change. To help reduce potential attrition due to the increased pricing, we also increased our subscription-related marketing and promotion efforts.

Operating Expenses

Total operating expenses decreased 4.8% and 7.8% in the quarter and six months ended July 1, 2018,  respectively, compared to the same periods in 2017. The decrease during the quarter and first six months of 2018 was primarily due to decreases in compensation and newsprint, supplements and printing expenses compared to the same periods in 2017, as discussed below. Our total operating expenses reflect our continued effort to reduce costs through streamlining processes to gain efficiencies.

The following table summarizes operating expenses:  

	Quarters Ended							Six Months Ended
	July 1,		June 25,		$		%	July 1,		June 25,		$		%
(in thousands)	2018		2017		Change		Change	2018		2017		Change		Change
Compensation expenses	$	77,937	$	86,823	$	(8,886)	(10.2)	$	157,149	$	178,231	$	(21,082)	(11.8)
Newsprint, supplements and printing expenses		13,761		16,459		(2,698)	(16.4)		27,420		34,304		(6,884)	(20.1)
Depreciation and amortization expenses		19,222		19,624		(402)	(2.0)		38,455		39,428		(973)	(2.5)
Other operating expenses		91,817		90,104		1,713	1.9		181,466		184,821		(3,355)	(1.8)
Other asset write-downs		—		—		—	—		59		1,957		(1,898)	(97.0)
	$	202,737	$	213,010	$	(10,273)	(4.8)	$	404,549	$	438,741	$	(34,192)	(7.8)

Compensation expenses, which included both payroll and fringe benefit costs, decreased 10.2% and  11.8% in the quarter and six months ended July 1, 2018,  respectively, compared to the same periods in 2017. Payroll expenses declined 11.1% and 12.7% during the quarter and first six months of 2018, respectively, compared to the same periods in 2017, reflecting a 14.1% and 14.9% decline, respectively, in average full-time equivalent employees. Similarly, fringe benefits costs decreased 5.1% and 6.9% in the quarter and first six months of 2018 compared to the same periods in 2017. These decreases were primarily due to decreases in health benefit costs and other fringe benefit costs, such as the employer portion of taxes. These decreases were partially offset by the 2018 implementation of a 401k employer match resulting in costs of $0.6 million and $1.3 million in the quarter and first six months of 2018 with no comparable expense in the same periods in 2017.  

Newsprint, supplements and printing expenses decreased 16.4% and 20.1% in the quarter and six months ended July 1, 2018,  respectively, compared to the same periods in 2017. Newsprint expense declined 14.7% and 19.8% during the quarter and first six months of 2018 compared to the same periods in 2017. The newsprint expense declines reflect a decrease in newsprint tonnage used of 24.1% and 23.7% during the quarter and first six months of 2018, respectively, offset by an increase in newsprint prices of 12.7% and 6.0% during the quarter and first six months of 2018, respectively, compared to the same periods in 2017. During these same periods, printing expenses, which are primarily outsourced printing costs, decreased 20.1% and 22.5%, respectively.

29

Depreciation and amortization expenses decreased 2.0% and 2.5% in the quarter and six months ended July 1, 2018, respectively, compared to the same periods in 2017. Depreciation expense decreased $0.2 million and $0.8 million in the quarter and first six months of 2018, respectively, compared to the same periods in 2017, as a result of assets becoming fully depreciated in previous periods. Amortization expense remained flat in the quarter and first six months of 2018 compared to the same periods in 2017.

Other operating expenses increased 1.9% in the quarter and decreased 1.8% in the six months ended July 1, 2018, compared to the same periods in 2017. The increase in the quarter was primarily due to a $3.3 million gain on the disposal of property and equipment in the second quarter of 2017. The decrease in the six months ended July 1, 2018, was primarily a result of cost savings initiatives and other efforts to reduce operational costs. We have had decreases in various categories, such as travel, bad debt, postage, circulation delivery costs and other miscellaneous expenses that were partially offset by increases for software for various enterprise-wide information technology related projects.

Other asset write-downs in the six months ended July 1, 2018, include an impairment charge of $0.1 million related to classifying certain land and buildings as assets held for sale during the first quarter of 2018 compared to a write down of $2.0 million of non-newsprint inventory during the first quarter of  2017.  

Non-Operating Expenses

Interest Expense:

Total interest expense decreased 11.6% and 9.6% in the quarter and six months ended July 1, 2018, respectively, compared to the same periods in 2017. Interest expense related to debt balances decreased by $3.4 million and $6.2 million, in the quarter and first six months of 2018, respectively, as a result of lower overall debt balances reflecting repurchases of debt made during early 2018 and throughout fiscal year 2017. In the quarter and first six months of 2018, this was offset by an increase of non-cash imputed interest of $1.5 million and $2.7 million, respectively, related to our financing obligations due to the sale and leaseback of our Sacramento, CA real property in the third quarter of 2017.

Equity Income (Loss) in Unconsolidated Companies, Net:

During the quarter ended July 1, 2018, we recorded equity income in unconsolidated companies of $2.3 million compared to losses of $0.2 million in the same period in 2017. During the six months ended July 1, 2018, we recorded equity income of $1.0 million compared to losses of $0.1 million in the same period in 2017. Our positive earnings in the quarter and first six months of 2018 resulted from distributions of earnings from our investment in CareerBuilder.

Impairments Related to Equity Investments, Net:

As described more fully in Note 4, during the quarter and six months ended June 25, 2017, we recorded $46.1 million and $169.1 million, respectively, in pre-tax impairment charges related to our equity investment in CareerBuilder.  We had no impairment charges related to equity investments during the quarter and six months ended July 1, 2018.

Extinguishment of Debt:

During the quarter and six months ended July 1, 2018, we redeemed or repurchased $0.5 million and $95.5 million, respectively, aggregate principal amount of 2022 Notes. We repurchased these notes at prices higher than par value and we wrote off historical debt issuance costs. As a result, we recorded losses on the extinguishment of debt totaling $19.0 thousand and $5.4 million during the quarter and first six months of 2018. See Note 5 for further discussion.

Income Taxes:

In the quarter and six months ended July 1, 2018, we recorded an income tax expense of $3.6 million and $11.5 million, respectively.  As discussed more fully in Note 1 under Income Taxes, during the quarter and six months ended July 1, 2018, we recorded charges of $10.1 million and $24.4 million related to the current period impact of the valuation allowance on deferred taxes. The remaining income tax benefit differed from the expected federal tax amounts primarily

30

due to the inclusion of state income taxes, the tax impact of stock compensation and certain permanently non-deductible expenses. 

Liquidity and Capital Resources

Sources and Uses of Liquidity and Capital Resources:

Our cash and cash equivalents were $20.1 million as of July 1, 2018, compared to $8.4 million and $99.4 million as of June 25, 2017, and December 31, 2017, respectively.

For the foreseeable future, we expect that most of our cash and cash equivalents, and our cash generated from operations will be used to (i) repay debt, (ii) pay income taxes, (iii) fund our capital expenditures, (iv) invest in new revenue initiatives,  digital investments and enterprise-wide operating systems, (v) make required contributions to the Pension Plan,  and (vi) for other corporate uses as determined by management and our Board of Directors. As of July 1, 2018, we had approximately $709.5 million in total aggregate principal amount of debt outstanding, consisting of $344.1 million of our 2022 Notes and $365.4 million of our 2027 Debentures and 2029 Debentures.  

See Note 9 and Recent Developments above, regarding the transactions we entered into in July 2018 related to the restructuring and refinancing of certain of our debt. Following the completion of this refinancing, we have approximately $760.4 million of aggregate principal amount of debt outstanding.  Also see Recent Developments previously, related to the sale and leaseback of our Columbia real property.

We expect to continue to opportunistically repurchase or restructure our debt from time to time if market conditions are favorable, whether through privately negotiated repurchases of debt using cash from operations, or other types of tender offers or exchange offers or other means. We may refinance or restructure a significant portion of this debt prior to the scheduled maturity of such debt. However, we may not be able to do so on terms favorable to us or at all. We believe that our cash from operations is sufficient to satisfy our liquidity needs over the next 12 months, while maintaining adequate cash and cash equivalents to fund our operations.

The following table summarizes our cash flows:

	Six Months Ended
	July 1,		June 25,
(in thousands)	2018		2017
Cash flows provided by (used in)
Operating activities	$	9,292	$	15,766
Investing activities		(3,772)		1,612
Financing activities		(84,779)		(15,246)
Increase (decrease) in cash, cash equivalents and restricted cash	$	(79,259)	$	2,132

Operating Activities:

We generated $9.3 million of cash from operating activities in the six months ended July 1, 2018, compared to $15.8 million in the six months ended June 25, 2017.  The decrease in operating cash flows primarily reflects a  $2.3 million change in our inventory balances in the first six months of 2018 compared to the same period in 2017. The remaining changes in operating activities related to miscellaneous timing differences in various payments and receipts. 

Pension Plan Matters

We made no cash contributions to the Pension Plan during the first six months of 2018 or 2017. After applying credits, which resulted from contributing more than the Pension Plan’s minimum required contribution amounts in prior years, we did not have a required cash contribution for 2017 and we do not expect to have a required pension contribution under the Employee Retirement Income Security Act in fiscal year 2018. However, we expect to have material contributions in the future.

31

Investing Activities:

We used  $3.8 million of cash from investing activities in the six months ended July 1, 2018.  We received proceeds from the sale of property, plant and equipment (“PP&E”) of  $4.0 million. These amounts were offset by the purchase of PP&E for $5.9 million and contributions to equity investments of $1.9 million. We expect total capital expenditures for the full year of 2018 to be approximately $12.0 million. We generated  $1.6 million of cash from investing activities in the six months ended June 25, 2017, which was primarily due to the purchase of PP&E of  $4.6 million and made contributions to equity investments of $2.7 million, which were more than offset by proceeds from the sale of PP&E and other for  $8.9 million.

Financing Activities:

We used  $84.8 million of cash for financing activities in the six months ended July 1, 2018, compared to using  $15.2 million in the six months ended June 25, 2017. During the six months ended July 1, 2018, we repurchased or redeemed $95.5 million principal amount of our 2022 Notes, for $99.8 million in cash. See Note 5 for further discussion. These repurchases were partially offset by the $15.7 million increase in our financial obligations as a result of the sale and leaseback of one of our real properties, as described in Recent Developments previously. We repurchased $15.0 million principal amount of our 2022 Notes for $15.7 million in cash in a privately negotiated repurchase during the first six months of 2017. 

Contractual Obligations:

As of July 1, 2018,  except for the debt refinance that we have discussed in Notes 5 and 9, there have been no significant changes to our “Contractual Obligations” table in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2017 Annual Report on Form 10-K.

Off-Balance-Sheet Arrangements

As of July 1, 2018, we did not have any off-balance-sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

Critical Accounting Policies

Critical accounting policies are those accounting policies that we believe are important to the portrayal of our financial condition and results and require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our 2017 Annual Report on Form 10-K includes a description of certain critical accounting policies, including those with respect to goodwill and intangible impairment, pension and post-retirement benefits and income taxes. There have been no material changes to our critical accounting policies described in our 2017 Annual Report on Form 10-K, other than the adoption of Topic 606 (see Note 1 under the “Recently Adopted AccountingPronouncements” subheader). 

32

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, included in our 2017 Annual Report on Form 10-K contains certain disclosures about our exposure to market risk for changes in discount rates on our qualified defined benefit pension plan obligations. There have been no material changes to the information provided which would require additional disclosures as of the date of this filing.

ITEM 4.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a - 15(e) or 15d - 15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on this evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective at that time to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended July 1, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

33

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

See Note 7 included as part of this Quarterly Report on Form 10-Q for a discussion of our legal proceedings.

ITEM 1A. RISK FACTORS. 

Except for a set forth below, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A to our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Following the Refinancing (as defined below), we will have a substantial amount of indebtedness which could adversely affect our financial position and prevent us from fulfilling our obligations, including under the 2026 Notes.

Following the refinancing of our debt, as described in Note 9, Subsequent Events (“Refinancing”), we have a substantial amount of indebtedness. As of July 1, 2018, on an as adjusted basis after giving effect to the Refinancing:

· we and the guarantors would have approximately $750.4 million of total indebtedness, net of an ABL revolver draw, which was subsequently repaid;

· we and the guarantors would have approximately $660.5 million of total secured indebtedness, $310.0 million aggregate principal amount of which would consist of the 2026 Notes, $350.5 million of which would have consisted of loans outstanding under the Junior Lien Loans; we would also expect to have approximately $47.0 million of availability under the ABL Credit Agreement;

· we and the guarantors would have approximately $89.9 million of existing unsecured indebtedness under the Debentures that was effectively subordinated to the 2026 Notes and the guarantees to the extent of the value of the collateral for the 2026 Notes and the guarantees; and

· our Non-Guarantor Subsidiaries would have no indebtedness and $0.8 million of other liabilities (excluding intercompany balances and obligations of a type not required to be reflected on a balance sheet prepared in accordance with GAAP), which are structurally senior to the 2026 Notes and the guarantees.

We may also incur significant additional indebtedness in the future. Our substantial indebtedness may:

· make it more difficult for us to make payments on our indebtedness, including the 2026 Notes;

· increase our vulnerability to general economic, industry and competitive conditions, including recessions and periods of significant inflation and financial market volatility;

· require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

· limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

· restrict us from exploiting business opportunities;

· make it more difficult to satisfy our financial obligations, including payments on the 2026 Notes;

· place us at a competitive disadvantage compared to our competitors that have less debt and lease obligations; and

34

· limit our ability to borrow additional funds that may be needed for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes on satisfactory terms or at all.

We may not be able to generate sufficient cash to service our debt obligations, including our obligations under the 2026 Notes.

Our and our subsidiaries’ ability to make payments on and to refinance our indebtedness, including the 2026 Notes, will depend on our consolidated financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We and our subsidiaries may be unable to maintain a level of cash flows from operating activities sufficient to permit us to

pay the principal, premium, if any, and interest on our indebtedness, including the 2026 Notes.

If we and our subsidiaries’ cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the 2026 Notes. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. We cannot assure you that the Company or the guarantors would be able to implement any of these alternatives on satisfactory terms or at all. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. The indenture governing the 2026 Notes will restrict our and our subsidiaries’ ability to, among other things, dispose of assets, use the proceeds from any disposition of assets and refinance indebtedness. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due.

If we are unable to service our debt obligations from cash flows, we may need to refinance all or a portion of our debt obligations prior to maturity. Our ability to refinance or restructure our debt will depend upon the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We may not be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Covenants in the indenture governing the 2026 Notes, the Junior Term Loan Agreement, the ABL Credit Agreement and our other future debt agreements will restrict our business in many ways.

The indenture governing the 2026 Notes, the Junior Term Loan Agreement and the ABL Credit Agreement contain various covenants that limit, subject to certain exceptions, our ability and/or our restricted subsidiaries’ ability to, among other things, as applicable:

· incur or assume liens;

· incur additional debt or provide guarantees in respect of obligations of other persons;

· issue redeemable stock and preferred stock;

· pay dividends or make distributions on capital stock, repurchase, redeem or make payments on capital stock or prepay, repurchase, redeem, retire, defease, acquire or cancel certain of our existing notes or debentures prior to the stated maturity thereof;

· make loans, investments or acquisitions;

· create or permit restrictions on the ability of our subsidiaries to pay dividends or make other distributions to us or to guarantee our debt, limit our or any of our subsidiaries’ ability to create liens, or make or pay intercompany loans or advances;

· enter into certain transactions with affiliates;

35

· sell, transfer, license, lease or dispose of our or our subsidiaries’ assets, including the capital stock of our subsidiaries; and

· dissolve, liquidate, consolidate or merge with or into, or sell substantially all the assets of us and our subsidiaries, taken as a whole, to, another person.

The restrictions contained in the ABL Credit Agreement, the Junior Term Loan Agreement and the indenture governing the 2026 Notes could adversely affect our ability to:

· finance our operations;

· make needed capital expenditures;

· make strategic acquisitions or investments or enter into alliances;

· pay dividends or make distributions on capital stock, repurchase, redeem or make payments on capital stock or prepay, repurchase, redeem, retire, defease, acquire or cancel certain of our existing notes or debentures prior to the stated maturity thereof;

· withstand a future downturn in our business or the economy in general;

· refinance our outstanding indebtedness prior to maturity;

· engage in business activities, including future opportunities, that may be in our interest; and

· plan for or react to market conditions or otherwise execute our business strategies.

A breach of any of these covenants could result in a default under the indenture governing the 2026 Notes, the Junior Term Loan Agreement or the ABL Credit Agreement. Further, additional indebtedness that we incur in the future may subject us to further covenants. Our failure to comply with these covenants could result in a default under the agreements governing the relevant indebtedness. If a default under the indenture, the Junior Term Loan Agreement, the ABL Credit Agreement or any such debt agreement is not cured or waived, the default could result in the acceleration of debt under our debt agreements, including the indenture, the Junior Term Loan Agreement, the ABL Credit Agreement or any such debt agreement that contain cross-acceleration or cross-default provisions, which could require us to repurchase or repay debt prior to the date it is otherwise due and that could adversely affect our financial condition.

Our ability to comply with covenants contained in the indenture, the Junior Term Loan Agreement, our ABL Credit Agreement or any other debt agreements to which we may become a party may be affected by events beyond our control, including prevailing economic, financial and industry conditions. Even if we are able to comply with all of the applicable covenants, the restrictions on our ability to manage our business in our sole discretion could adversely affect our business by, among other things, limiting our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that we believe would be beneficial to us. In addition, our obligations under the 2026 Notes, the Junior Term Loan Agreement and the ABL Credit Agreement will be secured, subject to Permitted Liens, and such security interests could (subject to the intercreditor agreement, dated as of July 16, 2016, by and among the Company, the guarantors, The Bank of New York Mellon Trust Company, N.A., and the Wells Fargo, N.A. (“ABL Intercreditor Agreement”)) be enforced in the event of default by the collateral agent for the ABL Credit Agreement. In the event of such an enforcement, we cannot assure you that the proceeds from an enforcement would be sufficient to pay our obligations under the 2026 Notes or at all.

We will need to repay our existing obligations and meet other obligations and the failure to do so could adversely affect our business.

36

We may not be able to generate sufficient cash internally to repay all of our indebtedness at maturity. As of July 1, 2018, on an as adjusted basis after giving effect to the Refinancing, we would have had approximately $750.4 million of total indebtedness outstanding.

Our ability to make payments on and to refinance our indebtedness, including the 2026 Notes, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

If our business does not generate sufficient cash flow from operations or if future borrowings are not available to us in an amount sufficient to enable us to pay our indebtedness, including the 2026 Notes, or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness, including the 2026 Notes, on or before the maturity thereof, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness, including the 2026 Notes, will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations or our ability to refinance our existing debt. The terms of existing or future debt instruments, including the indenture governing the 2026 Notes offered hereby, may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations in respect of the 2026 Notes.

We may not be able to refinance existing obligations or raise any required additional capital or do so on favorable terms following the Refinancing. Borrowing costs related to future capital raising activities may be significantly higher than our current borrowing costs, and we may not be able to raise additional capital on favorable terms, or at all, if unsettled conditions in financial markets continue to exist. We may be forced to cancel or scale back our business activities, and we may be unable to refinance our debt.

37

ITEM 6. EXHIBITS

Exhibit			Incorporated by reference herein
Number		Description	Form	Exhibit	File Date
10.1		Amended and Restated Term Loan Framework Agreement, dated as of June 26, 2018, between the Company and Chatham Asset Management, LLC
10.2		Credit Agreement dated July 16, 2018, among the Company, the lenders from time to time party thereto, and Wells Fargo Bank, N.A., as administrative agent
10.3		Fifth Supplemental Indenture, dated as of July 13, 2018, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee for the Notes
10.4		Indenture dated July 16, 2018, among the Company, certain subsidiaries of the Company and The Bank of New York Mellon Trust Company, N.A., relating to the 9.000% Senior Secured Notes due 2026
10.5		Form of Global 9.000% Senior Secured Notes due 2026 (included in Exhibit 10.4)
10.6		Junior Lien Term Loan Agreement dated July 16, 2018, among the Company, the lenders party thereto, the guarantors party thereto, and The Bank of New York Mellon, N.A., as administrative agent, tranche A collateral agent and tranche B collateral agent
31.1		Certification of the Chief Executive Officer of The McClatchy Company pursuant to Rule 13a-14(a) under the Exchange Act
31.2		Certification of the Chief Financial Officer of The McClatchy Company pursuant to Rule 13a-14(a) under the Exchange Act
32.1	**	Certification of the Chief Executive Officer of The McClatchy Company pursuant to 18 U.S.C. Section 1350
32.2	**	Certification of the Chief Financial Officer of The McClatchy Company pursuant to 18 U.S.C. Section 1350
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

** Furnished, not filed

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The McClatchy Company
	(Registrant)
August 9, 2018	/s/Craig I. Forman
Date	Craig I. Forman Chief Executive Officer
August 9, 2018	/s/R. Elaine Lintecum
Date	R. Elaine Lintecum Chief Financial Officer

39

EX-10.1

Exhibit 10.1

AMENDED AND RESTATED TERM LOAN FRAMEWORK AGREEMENT

This Amended and Restated Term Loan Framework Agreement (as further amended, restated, modified or otherwise supplemented from time to time, the “Agreement”), dated as of June 26, 2018 is entered into between The McClatchy Company, a Delaware Corporation (the “Company”), and Chatham Asset Management, LLC (the “Lender”), for itself and on behalf of the beneficial owners of the Outstanding Debt Securities listed on Exhibit A hereto (“Accounts”) for whom the Lender holds contractual and investment authority (each Account, as well as the Lender if it is exchanging Outstanding Debt Securities hereunder, a “Holder”), amended and restates in its entirety the Term Loan Framework Agreement (the “Prior Agreement”), dated as of April 26, 2018 between the Company and the Lender, for itself and on behalf of the Accounts as defined in the Prior Agreement.

RECITALS

WHEREAS, the Lender and the Company desire to amend and restate the Prior Agreement in its entirety as set forth in this Agreement.

WHEREAS, the Holders are certain holders of, among other of the Company’s securities, the Company’s 2027 Debentures and 2029 Debentures (collectively, the “Outstanding Debt Securities”).

WHEREAS, the Lender and the Borrower Parties desire to enter into the Facilities for the Loans (including, without limitation, the provision by the Lender of $60,000,000 (after application of an original issue discount) of cash in immediately available funds funded to the Borrower under the Facilities (the “Cash Borrowing Amount”)) on the terms and conditions described in the term sheet set forth in Exhibit B hereto (the “Term Sheet”) and, in connection therewith, to use a portion of the proceeds from such Loans plus a certain premium specified in the Term Sheet (the “Premium Amounts”) to repurchase for cash or exchange (A) $82,083,000 aggregate principal amount of the 2027 Debentures (such amount, the “Tranche A 2027 Debentures Amount” and such transaction, the “Tranche A Term Loan”); and (B) $193,466,000 aggregate principal amount of the 2029 Debentures (such amount, the “Tranche B 2029 Debentures Amount”  and such transaction, the “Tranche B Term Loan”), in each case, held by the Holders (the “Term Loan Restructuring”).

WHEREAS, the Lender has an option to exchange or convert the $75,000,000 of 2029 Debentures owned by Lender that are not included in the Tranche B 2029 Debentures Amount into a Tranche B Term Loan or secured bonds on the terms and conditions set forth in the Term Sheet.

WHEREAS, the effectiveness of the Term Loan Restructuring will be subject to, among other conditions, the consummation of the 2022 Debt Refinancing.

AGREEMENT

NOW, THEREFORE, on and subject to the terms and conditions set forth in this Agreement, the parties hereto agree as follows:

Article I:  Definitions

As used in this Agreement, the following terms have the following meanings unless otherwise defined herein or in the Term Sheet:

“2022 Debt Refinancing” shall mean the incurrence by the Borrower of first lien debt in an amount no greater than the amount required to redeem, refinance or otherwise acquire the outstanding amount of the Existing Credit Agreement and 2022 Notes, including any premiums thereon, plus accrued and unpaid interest, and fees and expenses in connection with such redemption, refinancing or acquisition (the “New Secured Debt”), the proceeds of which, together with the proceeds from the Term Loan Restructuring, and cash on hand, are applied to redeem, refinance or otherwise acquire 100% of the Company’s issued and outstanding 2022 Notes.

“2022 Notes” shall have the meaning set forth in the Term Sheet.

“2027 Debentures” shall have the meaning set forth in the Term Sheet.

“2029 Debentures” shall have the meaning set forth in the Term Sheet.

“Accounts” shall have the meaning set forth in the preamble hereto.

“Agreement” shall have the meaning set forth in the preamble hereto.

“Borrower” shall have the meaning set forth in the Term Sheet.

“Borrower Parties” shall mean the Company, the Borrower and the other Guarantors.

“Cash Amount” shall mean the amounts provided to the Borrower from the Facilities plus the Premium Amounts.

“Cash Borrowing Amount” shall have the meaning set forth in the recitals.

“Closing” has the meaning set forth in Article II.

“Closing Date” has the meaning set forth in Article II.

“Common Stock” shall mean the Class A common stock, par value $0.01 per share, of the Company.

“Company” shall have the meaning set forth in the preamble hereto.

“Credit Documentation” has the meaning set forth in the term sheet.

“DTC” means The Depository Trust Company.

“Enforceability Exceptions” shall mean (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of

2

creditors’ rights generally, and (b) the general principles of equity, whether such enforceability is considered in a proceeding at law or in equity.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Credit Agreement” has the meaning set forth in Section 5.1(g). “Guarantors” has the meaning set forth in the Term Sheet.

“Guaranty and Security Agreement” has the meaning set forth in Section 5.1(m). “Holder” shall have the meaning set forth in the preamble hereto.

“Liens” shall mean any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto.

“Materials” has the meaning set forth in Section 3.6.

“Outstanding Debt Securities” shall have the meaning set forth in the recitals.

“Outstanding Debt Securities Indenture” means the Indenture, dated November 4, 1997, between the Company (as successor in interest to Knight-Ridder, Inc.) and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to The Chase Manhattan Bank), as amended and supplemented from time to time.

“Premium Amounts” has the meaning specified in the recitals.

“Public Filings” has the meaning set forth in Section 3.5.

“SEC” shall mean the Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Term Loan Restructuring” shall have the meaning set forth in the recitals.

“Term Sheet” shall have the meaning set forth in the recitals.

“Tranche A 2027 Debentures Amount” shall have the meaning set forth in the recitals.

“Tranche B 2029 Debentures Amount” shall have the meaning set forth in the recitals.

“Tranche A Term Loan” shall have the meaning set forth in the recitals.

“Tranche B Term Loan” shall have the meaning set forth in the recitals.

Article II:  The Term Loan Restructuring

At the Closing, the Lender hereby agrees to cause the Holders to fund the Loans to the Borrower pursuant to the terms of this Agreement and the Term Sheet and will deliver to the

3

Borrower the Premium Amounts in immediately available funds, and the Borrower shall use the Cash Amount to repurchase or exchange the Holders’ respective beneficial interests in the Outstanding Debt Securities set forth on Exhibit A hereto in accordance with the DTC’s applicable procedures and the Outstanding Debt Securities Indenture. Pursuant to the terms of the Term Loan Restructuring, and in connection with the Term Loan Restructuring, the Borrower Parties and the Lender hereby agree to execute and deliver the Credit Documentation in accordance with the terms of this Agreement and the Term Sheet.

The closing of the Term Loan Restructuring (the “Closing”) shall be conducted, subject to the satisfaction of the closing conditions set forth in Article  V, on the date of the closing of the 2022 Debt Refinancing (the “Closing Date”) and at a mutually agreeable location or by the exchange of electronic documentation. At the Closing, (a) each Holder shall deliver or cause to be delivered to the Company all right, title and interest in and to its Outstanding Debt Securities set forth on Exhibit A hereto free and clear of any Liens, together with any documents of conveyance or transfer required by the Company to evidence such transfer and to confirm all right, title and interest in and to such Outstanding Debt Securities set forth on Exhibit A hereto free and clear of any Liens, (b) the Lender shall fund, or shall cause the Holders to fund, the Cash Amount by wire transfer of immediately available funds to the Borrower, (c) the Borrower and the Lender shall enter into the Loans and (d) the Borrower shall repurchase or exchange the Holders’ respective beneficial interests in the Outstanding Debt Securities set forth on Exhibit A hereto. The parties will mutually agree whether the Holders’ beneficial interest in the Outstanding Debt Securities set forth on Exhibit A hereto shall be repurchased or exchanged.

Article III:  Covenants, Representations and Warranties of the Holders

Each Holder (unless limited below to the Lender) hereby covenants (solely as to itself), as follows, and makes the following representations and warranties (solely as to itself), and all such covenants, representations and warranties shall survive the Closing:

Section 3.1     Power and Authorization. The Holder is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Term Loan Restructuring contemplated hereby. If the Lender is executing this Agreement on behalf of Accounts, (a) the Lender has all requisite discretionary and contractual authority to enter into this Agreement on behalf of, and bind, each Account, and (b) Exhibit A hereto is a true, correct and complete list of (i) the name of each Account, and (ii) the aggregate principal amount of Outstanding Debt Securities held by the Accounts.

Section 3.2     Valid and Enforceable Agreement; No Violations. This Agreement has been duly executed and delivered by the Lender and the Holder and constitutes a legal, valid and binding obligation of the Lender and the Holder, enforceable against the Lender and the Holder in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions. This Agreement and consummation of the Term Loan Restructuring will not violate, conflict with or result in a breach of or default under (i) the Lender’s or the Holder’s organizational documents, (ii) any agreement or instrument to which the Lender or the Holder is a party or by which the Lender or the Holder or any of their respective assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the

4

Lender or the Holder, except for such violations, conflicts or breaches under clause (iii) above that would not, individually or in the aggregate, reasonably be likely to prevent, materially delay or materially impair the consummation of the Term Loan Restructuring.

Section 3.3      Title to the Outstanding Debt Securities. The Holders are the sole legal and beneficial owners of the aggregate principal amount of Outstanding Debt Securities set forth on Exhibit A hereto (or, if there are no Accounts, the Lender is the sole legal and beneficial owner of all of the Outstanding Debt Securities). The Holder has good and valid title to its Outstanding Debt Securities, free and clear of any Liens (other than (i) pledges or security interests that such Holder may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker and (ii) Liens that would not, individually or in the aggregate, reasonably be likely to prevent, materially delay or materially impair the consummation of the Term Loan Restructuring). Upon the Holder’s delivery of its Outstanding Debt Securities to the Company pursuant to the Term Loan Restructuring, such Outstanding Debt Securities shall be free and clear of all Liens created by the Holder, other than Liens that would not, individually or in the aggregate, reasonably be likely to prevent, materially delay or materially impair the consummation of the Term Loan Restructuring.

Section 3.4      Institutional Accredited Investor or Qualified Institutional Buyer. The Holder is either (i) an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act, or (ii) a “qualified institutional buyer” within the meaning of Rule 144A promulgated under the Securities Act.

Section 3.5      Adequate Information; No Reliance. The Holder acknowledges and agrees that (a) the Holder has been furnished with all materials it considers relevant to making an investment decision to enter into the Term Loan Restructuring and has had the opportunity to review (and has carefully reviewed) (i) the Company’s filings and submissions with the SEC, including, without limitation, all information filed or furnished pursuant to the Exchange Act (collectively, the “Public Filings”), and (ii) this Agreement (including the exhibits hereto) (the “Materials”), (b) the Holder has had a full opportunity to ask questions of the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the Term Loan Restructuring, and to obtain from the Company any information that it considers necessary in making an informed investment decision and to verify the accuracy of the information set forth in the Public Filings and the Materials, (c) the Holder has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the Term Loan Restructuring and to make an informed investment decision with respect to such Term Loan Restructuring, (d) the Holder is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives or any other entity or person, (e) no statement or written material contrary to the Public Filings or the Materials has been made or given to the Holder by or on behalf of the Company, (f ) the Holder is able to fend for itself in the Term Loan Restructuring, and (g) the Holder is not relying on any information or statements provided by Agent in connection with the Term Loan Restructuring.

5

Section 3.6     Further Action. The Holder agrees that it will, upon request, execute and deliver any additional documents deemed by the Company or the trustee of the applicable series of Outstanding Debt Securities to be necessary to complete the Term Loan Restructuring.

Section 3.7     Credit Documentation. Subject to Section 6.1, the Lender shall enter into the Credit Documentation for the Loans in accordance with the terms of this Agreement and the Term Sheet on the Closing Date.

Section 3.8      Term Loan Restructuring. The terms of the Term Loan Restructuring are the result of bilateral negotiations between the parties.

Article IV:  Covenants, Representations and Warranties of the Borrower Parties

Each Borrower Party hereby covenants as follows, and makes the following representations and warranties, to the Lender and the Holders, and all such covenants, representations and warranties shall survive the Closing:

Section 4.1      Power and Authorization. Each Borrower Party is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder and thereunder, and to consummate the Term Loan Restructuring contemplated hereby.

Section 4.2     Valid and Enforceable Agreements; No Violations. This Agreement has been duly executed and delivered by each Borrower Party and constitutes a legal, valid and binding obligation of such Borrower Party, enforceable against such Borrower Party in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions. This Agreement and consummation of the Term Loan Restructuring will not violate, conflict with or result in a breach of or default under (i) the charter, bylaws or other organizational documents of such Borrower Party, (ii) any material agreement or instrument to which such Borrower Party is a party or by which the Borrower Party or any of its assets are bound (other than the Existing Credit Agreement, the 2022 Notes, the 2027 Debentures, the 2029 Debentures and, in each case, related documentation), or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to such Borrower Party, except for such violations, conflicts or breaches under clause (iii) above that would not, individually or in the aggregate, have a material adverse effect on the business, financial position, results of operations or prospects of such Borrower Party and its subsidiaries taken as a whole or on its performance of its obligations under this Agreement or on the consummation of the transactions contemplated thereby.

Section 4.3      Use of Proceeds. The Borrower shall use the proceeds from the Facilities in the manner set forth in the Term Sheet.

Section 4.4      Further Action. Each Borrower Party agrees that it will, upon request, execute and deliver any additional documents deemed by the Holders to be necessary to complete the Term Loan Restructuring.

6

Section 4.5      Credit Documentation. Subject to Section 5.2, each Borrower Party shall enter into the Credit Documentation for the Loans in accordance with the terms of this Agreement and the Term Sheet on the Closing Date.

Section 4.6      Term Loan Restructuring. The terms of the Term Loan Restructuring are the result of bilateral negotiations between the parties.

Article V:  Closing Conditions

Section 5.1      Closing Conditions of the Lender. The obligations of the Lender to participate in the Term Loan Restructuring is subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Lender:

(a)        Representations and Warranties. The representations and warranties made by the Borrower Parties in Article III hereof and in the Credit Documentation shall be true and correct (i) on the date hereof, or, in the case of the Credit Documentation, on the date of execution thereof, and (ii) on the Closing Date.

(b)        Authorization. At or before the Closing, the Lender shall have obtained all requisite corporate authorizations to enter into the Term Loan Restructuring and the related Credit Documentation.

(c)        Legal Requirements. At the Closing, the Term Loan Restructuring shall be legally permitted by all laws and regulations to which the parties hereto are subject.

(d)        Transaction Documents. The Company and the other Borrower Parties shall have duly executed and delivered to the Lender the Credit Documentation.

(e)        Facilities Proceeds. Substantially concurrent with the Closing and on the Closing Date, the Company shall have used the Cash Amount to repurchase or exchange, as applicable, the Holders’ respective beneficial interests in the Outstanding Debt Securities set forth on Exhibit A hereto.

(f)        Refinancing of the 2022 Notes. Substantially concurrent with the Term Loan Restructuring, the Company shall have effected the 2022 Debt Refinancing.

(g)        Credit Agreement. The Company shall have obtained effective amendments to (or amendment and restatement of), or refinanced, its Third Amended and Restated Credit Agreement, dated as of December 12, 2012, among the Company, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (as amended, restated, modified or otherwise supplemented from time to time, the “Existing Credit Agreement”) and related loan documents in order to permit the 2022 Debt Refinancing, and the transactions contemplated by this Agreement, and all other documentation required by the agent and lenders thereunder in order to permit the New First Lien Debt and the transactions contemplated by this Agreement.

7

(h)        Intercreditor Agreement(s). The administrative agent, on behalf of the lenders party to the Existing Credit Agreement (or any refinancing or replacement thereof), the collateral agent for the New First Lien Debt and the Administrative Agent shall have entered into one or more intercreditor agreements.

(i)         Supplemental Indentures. Supplemental Indentures shall have become effective with respect to the 2027 Debentures and the 2029 Debentures eliminating the restrictions with respect to the granting of liens and sale-and-leaseback transactions.

(j)         Legal Opinions. The Lender shall have received duly executed favorable opinions of counsel to the Borrower Parties addressed to the Administrative Agent and the Lender and addressing such matters as the Lender may reasonably request.

(k)        Financial Officer’s Certificate. The Lender shall have received a certificate of a financial officer of the Company to the effect that (A) each condition set forth in Section 6.1(a) has been satisfied, (B) no default or event of default under the Credit Documentation shall have occurred and be continuing and (C) both the Borrower Parties taken as a whole and the Borrower are solvent after giving effect to the Loans, the consummation of the Term Loan Restructuring, the application of the proceeds thereof in accordance with the Term Sheet and the payment of all estimated legal, accounting and other fees and expenses related hereto and thereto.

(l)         Secretary’s Certificate. The Lender shall have received a certificate from the Company attaching thereto and certifying such documents and certificates as the Lender may reasonably request relating to the organization, existence and good standing of the Borrower Parties, the authorization of the transactions contemplated by this Agreement, the Term Sheet and the Term Loan Restructuring and any other legal matters relating to each Borrower Party, this Agreement or the transactions contemplated hereby, all in form and substance reasonably satisfactory to the Lender.

(m)       Guaranty and Security Documentation. The Lender shall have received a guaranty and security agreement (the “Guaranty and Security Agreement”), duly executed by each Borrower Party, in form and substance reasonably satisfactory to the Lender, covering all of such Borrower Party’s Collateral, together with the following, each in form and substance reasonably satisfactory to the Lender:

a.          financing statements (Form UCC-1) in proper form for filing under the UCC in the jurisdiction of incorporation or formation, as applicable, of the applicable Borrower Party as may be necessary or, in the reasonable opinion of the Lender, desirable, to perfect the security interests purported to be created by the Guaranty and Security Agreement to the extent they can be perfected by such filings;

b.         results of searches, certified copies of requests for information or other evidence or copies, or equivalent reports as of a recent date in the jurisdiction of incorporation or formation, as applicable, of the applicable Borrower Party, listing all effective financing statements that name any Borrower Party as debtor and that are filed in the in which Collateral is located on the Closing Date, together with copies of the financing statements that

8

are identified in such search results (none of which shall cover any of the Collateral except (x) to the extent evidencing permitted liens (to be agreed in the Credit Documentation) or (y) those in respect of which the Lender shall have received termination statements (Form UCC-3) fully executed for filing;

c.          evidence of the completion of recordings and filings of any intellectual property security agreement in the United States Patent and Trademark Office or in the United States Copyright Office, as the case may be, as may be necessary or, in the reasonable opinion of the Lender, desirable, to perfect the security interests purported to be created by the Guaranty and Security Agreement; and

d.         subject to the terms of the applicable intercreditor agreement, (x) all certificates representing the equity interests required to be pledged pursuant to the Guaranty and Security Agreement together with undated endorsements for transfer executed in blank and (y) promissory notes required to be pledged pursuant to the Guaranty and Security Agreement together with undated endorsements for transfer executed in blank, in each case, in form and substance reasonably satisfactory to the Lender.

(n)        Material Adverse Effect. From December 31, 2017 to the Closing Date, there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has a material adverse effect on the business, financial position, results of operations or prospects of the Borrower Parties taken as a whole or on their performance of their obligations under this Agreement or on the consummation of the Term Loan Restructuring and the transactions contemplated thereby, in each case, except as disclosed in a document filed by the Company with the SEC pursuant to the Exchange Act prior to the date hereof.

(o)        No Litigation. No court or other governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award or agency requirement (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the Term Loan Restructuring or the other transactions contemplated by this Agreement.

(p)        KYC. The Lender shall have received at least three business days prior to the Closing Date all documentation and other information about the Borrower Parties as has been reasonably requested at least five business days prior to the Closing Date that it reasonably determines is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including a duly executed W-9 tax form (or such other applicable IRS tax form) of the Borrower.

(q)        Other Documents. The Lender shall have received such other documents and information as it may reasonably request and is customary for a transaction of this type.

Section 5.2      Closing Conditions of the Borrower Parties. The obligations of the Borrower Parties to participate in the Term Loan Restructuring is subject to the fulfillment, on or

9

prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Company:

(a)        Representations and Warranties. The representations and warranties made by the Lender in Article II hereof and in the Credit Documentation shall be true and correct (i) on the date hereof, or, in the case of the Credit Documentation, on the date of execution thereof, and (ii) on the Closing Date.

(b)        Authorization. At the Closing, the Borrowing Parties shall have obtained all requisite corporate authorizations to enter into the Term Loan Restructuring and the related Credit Documentation.

(c)        Legal Requirements. At the Closing, the Term Loan Restructuring shall be legally permitted by all laws and regulations to which the parties hereto are subject.

(d)        Transaction Documents. The Lender shall have duly executed and delivered to the Borrower Parties the Credit Documentation.

(e)        Satisfactory Credit Documentation; Delivery of Outstanding Debt Securities; Provision of the Loans. The Credit Documentation shall be in form and substance reasonably satisfactory to the Company and the Borrower, including, without limitation, the provision by Lender to the Borrowing Entities of Loans in a total aggregate amount equal to the 2027 Debentures Amount, the Tranche A 2029 Debentures Amount, and the Cash Borrowing Amount. The Lender and any other Holders shall have delivered the Outstanding Debt Securities set forth on Exhibit A to the Company.

(f)        Facilities Proceeds. The Lender shall have funded the Cash Amount to the Borrower by wire transfer of immediately funds.

(g)        Refinancing of the 2022 Notes. Substantially concurrent with the Term Loan Restructuring, the Company shall have effected the 2022 Debt Refinancing.

(h)        Credit Agreement. The Company shall have obtained effective amendments to (or amendment and restatement of), or refinanced, the Existing Credit Agreement and related loan documents in order to permit the 2022 Debt Refinancing, and the transactions contemplated by this Agreement, and all other documentation required by the agent and lenders thereunder in order to permit the New First Lien Debt and the transactions contemplated by this Agreement.

(i)         Intercreditor Agreement(s). The administrative agent, on behalf of the lenders party to the Existing Credit Agreement (or any refinancing or replacement thereof), the collateral agent for the New First Lien Debt and the Administrative Agent shall have entered into one or more intercreditor agreements.

(j)         Supplemental Indentures. Supplemental Indentures shall have become effective with respect to the 2027 Debentures and the 2029 Debentures eliminating the restrictions with respect to the granting of liens and sale-and-leaseback transactions.

10

Article VI:  Miscellaneous

Section 6.1     Entire Agreement. This Agreement and any documents and agreements executed in connection with the Term Loan Restructuring embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.

Section 6.2      Construction. References in the singular shall include the plural, and vice versa, unless the context otherwise requires. References in the masculine shall include the feminine and neuter, and vice versa, unless the context otherwise requires. Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof. Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.

Section 6.3      Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules.

Section 6.4      Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Any counterpart or other signature hereon delivered by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

Section 6.5      Termination. This Agreement will terminate upon the earlier of (1) the date the Board of Directors of the Company (or any authorized committee thereto) determines in its good faith judgment that it would be inadvisable for the Company or the Lender, as applicable, to consummate the Term Loan Restructuring and/or the 2022 Debt Refinancing or (2) the date that is one hundred eighty days (180) days following the date of this Agreement, or such later or earlier date agreed to in writing by the parties.

The Company or any other Borrower Party may terminate this Agreement if there has occurred any breach or withdrawal by the Lender or a Holder of any covenant, representation or warranty set forth in Article III. The Lender or a Holder may terminate this Agreement if there has occurred any breach or withdrawal by the Company of any covenant, representation or warranty set forth in Article IV.

[Signature Page Follows]

11

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

THE MCLATCHY COMPANY
By:	/s/ R. Elaine Lintecum
Name:  R. Elaine Lintecum
Title:    VP, CFO and Treasurer

Signature Page to Amended and Restated Term Loan Framework Agreement

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

CHATHAM ASSET MANAGEMENT, LLC
(in its capacities set forth in the preamble hereto)
By:	/s/ Anthony Melchiorre
Name: Anthony Melchiorre
Title:   Managing Member

Signature Page to Term Loan Framework Agreement

EXHIBIT A

Exchanging Beneficial Owners

The following entities will collectively exchange (i) $82,083,000 aggregate principal amount of 2027 Debentures and (ii) $193,466,000 aggregate principal amount of 2029 Debentures:

· Chatham Asset High Yield Master Fund, Ltd.

· Chatham Asset Private Debt and Strategic Capital Fund, LP

· Chatham Everest Fund, LP

· Chatham Fund, LP

EXHIBIT B

Term Sheet

EX-10.2

Exhibit 10.2

EXECUTION VERSION

CREDIT AGREEMENT

by and among

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Agent,

THE LENDERS THAT ARE PARTIES HERETO

as the Lenders,

THE MCCLATCHY COMPANY,

as Parent,

and

THE BORROWERS THAT ARE PARTIES HERETO

Dated as of July 16,  2018

TABLE OF CONTENTS

			Page
1.	DEFINITIONS AND CONSTRUCTION		1
	1.1	Definitions	1
	1.2	Accounting Terms	53
	1.3	Code	54
	1.4	Construction	54
	1.5	Time References	55
	1.6	Schedules and Exhibits	55
2.	LOANS AND TERMS OF PAYMENT		55
	2.1	Revolving Loans	55
	2.2	[Reserved]	56
	2.3	Borrowing Procedures and Settlements	56
	2.4	Payments; Termination of Commitments; Prepayments	63
	2.5	Promise to Pay; Promissory Notes	66
	2.6	Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations	67
	2.7	Crediting Payments	68
	2.8	Designated Account	69
	2.9	Maintenance of Loan Account; Statements of Obligations	69
	2.10	Fees	69
	2.11	Letters of Credit	70
	2.12	LIBOR Option	78
	2.13	Capital Requirements	81
	2.14	Incremental Facilities	82
	2.15	Joint and Several Liability of Borrowers	84
3.	CONDITIONS; TERM OF AGREEMENT		87
	3.1	Conditions Precedent to Initial Extensions of Credit	87
	3.2	Conditions Precedent to all Extensions of Credit	87
	3.3	Maturity	88
	3.4	Effect of Maturity	88
	3.5	Early Termination by Borrowers	88
	3.6	Conditions Subsequent	88
4.	REPRESENTATIONS AND WARRANTIES		88
	4.1	Due Organization and Qualification; Subsidiaries	89
	4.2	Due Authorization; No Conflict	89
	4.3	Governmental Consents	90

-i-

TABLE OF CONTENTS

(continued)

	4.4	Binding Obligations; Perfected Liens	90
	4.5	Title to Assets; No Encumbrances	90
	4.6	Litigation	90
	4.7	Compliance with Laws	90
	4.8	No Material Adverse Effect	91
	4.9	Solvency	91
	4.10	Employee Benefits	91
	4.11	Environmental Condition	92
	4.12	Complete Disclosure	92
	4.13	Patriot Act	92
	4.14	Indebtedness	93
	4.15	Payment of Taxes	93
	4.16	Margin Stock	93
	4.17	Governmental Regulation	93
	4.18	OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws	93
	4.19	Employee and Labor Matters	94
	4.20	[Reserved.]	94
	4.21	Leases	94
	4.22	Eligible Accounts and Eligible Unbilled Accounts	94
	4.23	Eligible Inventory	94
	4.24	Immaterial Subsidiaries	94
	4.25	Location of Inventory	94
	4.26	Inventory Records	95
	4.27	Material Contracts	95
	4.28	Other Documents	95
	4.29	Hedge Agreements	95
5.	AFFIRMATIVE COVENANTS		95
	5.1	Financial Statements, Reports, Certificates	95
	5.2	Reporting	96
	5.3	Existence	96
	5.4	Maintenance of Properties	96
	5.5	Taxes	96
	5.6	Insurance	96
	5.7	Inspection	97

-ii-

TABLE OF CONTENTS

(continued)

	5.8	Compliance with Laws	97
	5.9	Environmental	97
	5.10	Disclosure Updates	98
	5.11	Formation of Subsidiaries	98
	5.12	Further Assurances	98
	5.13	Lender Meetings	99
	5.14	Location of Inventory; Chief Executive Office	99
	5.15	OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws	99
	5.16	Compliance with ERISA and the IRC	100
	5.17	Pledged Cash	100
	5.18	Reserved	100
	5.19	Bank Products	100
	5.20	Enhancements to Senior Secured Notes Documents or Junior Lien Term Loan Documents	100
6.	NEGATIVE COVENANTS		100
	6.1	Indebtedness	101
	6.2	Liens	101
	6.3	Restrictions on Fundamental Changes	101
	6.4	Disposal of Assets	101
	6.5	Nature of Business	101
	6.6	Prepayments and Amendments	101
	6.7	Restricted Payments	103
	6.8	Accounting Methods and Fiscal Year	104
	6.9	Investments	104
	6.10	Transactions with Affiliates	104
	6.11	Use of Proceeds	105
	6.12	Limitation on Issuance of Equity Interests	105
	6.13	Inventory with Bailees	105
	6.14	[Reserved]	106
	6.15	Immaterial Subsidiaries	106
	6.16	Employee Benefits	106
	6.17	Limitations on Layering Indebtedness	106
7.	FINANCIAL COVENANT		106
8.	EVENTS OF DEFAULT		106

-iii-

TABLE OF CONTENTS

(continued)

	8.1	Payments	107
	8.2	Covenants	107
	8.3	Judgments	107
	8.4	Voluntary Bankruptcy, etc	107
	8.5	Involuntary Bankruptcy, etc	107
	8.6	Default Under Other Agreements	108
	8.7	Representations, etc	108
	8.8	Guaranty	108
	8.9	Security Documents	108
	8.10	Loan Documents	108
	8.11	Change of Control	109
	8.12	ERISA	109
	8.13	Invalidity of Intercreditor Agreements	109
9.	RIGHTS AND REMEDIES		109
	9.1	Rights and Remedies	109
	9.2	Remedies Cumulative	110
10.	WAIVERS; INDEMNIFICATION		110
	10.1	Demand; Protest; etc	110
	10.2	The Lender Group’s Liability for Collateral	110
	10.3	Indemnification	110
11.	NOTICES		111
12.	CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION		112
13.	ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS		115
	13.1	Assignments and Participations	115
	13.2	Successors	119
14.	AMENDMENTS; WAIVERS		119
	14.1	Amendments and Waivers	119
	14.2	Replacement of Certain Lenders	121
	14.3	No Waivers; Cumulative Remedies	121
15.	AGENT; THE LENDER GROUP		122
	15.1	Appointment and Authorization of Agent	122
	15.2	Delegation of Duties	122
	15.3	Liability of Agent	123

-iv-

TABLE OF CONTENTS

(continued)

	15.4	Reliance by Agent	123
	15.5	Notice of Default or Event of Default	123
	15.6	Credit Decision	124
	15.7	Costs and Expenses; Indemnification	124
	15.8	Agent in Individual Capacity	125
	15.9	Successor Agent	125
	15.10	Lender in Individual Capacity	126
	15.11	Collateral Matters	126
	15.12	Restrictions on Actions by Lenders; Sharing of Payments	127
	15.13	Agency for Perfection	128
	15.14	Payments by Agent to the Lenders	128
	15.15	Concerning the Collateral and Related Loan Documents	128
	15.16	Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information	128
	15.17	Several Obligations; No Liability	129
16.	WITHHOLDING TAXES		130
	16.1	Payments	130
	16.2	Exemptions	130
	16.3	Reductions	132
	16.4	Refunds	132
17.	GENERAL PROVISIONS		133
	17.1	Effectiveness	133
	17.2	Section Headings	133
	17.3	Interpretation	133
	17.4	Severability of Provisions	133
	17.5	Bank Product Providers	133
	17.6	Debtor-Creditor Relationship	134
	17.7	Counterparts; Electronic Execution	134
	17.8	Revival and Reinstatement of Obligations; Certain Waivers	134
	17.9	Confidentiality	135
	17.10	Survival	136
	17.11	Patriot Act; Due Diligence	137
	17.12	Integration	137
	17.13	McClatchy Newspapers, Inc	137

-v-

TABLE OF CONTENTS

(continued)

17.14	Acknowledgement and Consent to Bail-In of EEA Financial Institutions	138
17.15	Intercreditor Agreements	138

-vi-

EXHIBITS AND SCHEDULES

Exhibit A-1	Form of Assignment and Acceptance
Exhibit B-1	Form of Borrowing Base Certificate
Exhibit C-1	Form of Compliance Certificate
Exhibit J-1	Form of Joinder
Exhibit L-1	Form of LIBOR Notice
Exhibit P-1	Form of Perfection Certificate

Schedule A-1	Agent’s Account
Schedule C-1	Commitments
Schedule 3.1	Conditions Precedent
Schedule 3.6	Conditions Subsequent
Schedule 5.1	Financial Statements, Reports, Certificates
Schedule 5.2	Collateral Reporting

-vii-

CREDIT AGREEMENT

THIS CREDIT AGREEMENT, is entered into as of July 16, 2018 by and among the lenders identified on the signature pages hereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”, as that term is hereinafter further defined), WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), THE MCCLATCHY COMPANY, a Delaware corporation  (“Parent”), the Subsidiaries of Parent identified on the signature pages hereof as “Borrowers”, and those additional entities that hereafter become parties hereto as “Borrowers” in accordance with the terms hereof by executing the form of Joinder attached hereto as Exhibit J-1  (each a  “Borrower” and individually and collectively, jointly and severally, the “Borrowers”).

The parties agree as follows:

1.          DEFINITIONS AND CONSTRUCTION.

1.1        Definitions.  As used in this Agreement, the following terms shall have the following definitions:

“ABL Priority Collateral” means the “ABL Priority Collateral” as defined in the Senior Secured Notes Intercreditor Agreement.

“Acceptable Appraisal” means, with respect to an appraisal of Inventory, the most recent appraisal of such property received by Agent (a) from an appraisal company satisfactory to Agent, (b) the scope and methodology (including, to the extent relevant, any sampling procedure employed by such appraisal company) of which are satisfactory to Agent, and (c) the results of which are satisfactory to Agent, in each case, in Agent’s Permitted Discretion.

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper, or a general intangible.

“Account Party” has the meaning specified in Section 2.11(h) of this Agreement.

“Accounting Changes” means changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successor thereto or any agency with similar functions).

“Acquired Indebtedness” means Indebtedness of a Person whose assets or Equity Interests are acquired by a Loan Party or any of its Subsidiaries in a Permitted Acquisition, including Indebtedness assumed in connection with the acquisition of assets from such Person;  provided, that such Indebtedness (a) was in existence prior to the date of such Permitted Acquisition, and (b) was not incurred in connection with, or in contemplation of, such Permitted Acquisition.

“Acquisition” means (a) the purchase or other acquisition by a Person or its Subsidiaries of all or substantially all of the assets of (or any division or business line of) any other Person, or (b) the

purchase or other acquisition (whether by means of a merger, consolidation, or otherwise) by a Person or its Subsidiaries of all or substantially all of the Equity Interests of any other Person.

“Additional Documents” has the meaning specified in Section 5.12 of this Agreement.

“Administrative Borrower” has the meaning specified in Section 17.13 of this Agreement.

“Administrative Questionnaire” has the meaning specified in Section 13.1(a)(ii)(G) of this Agreement.

“Affected Lender” has the meaning specified in Section 2.13(b) of this Agreement.

“Affiliate”  means, as applied to any Person, any other Person who controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, “control” means the possession, directly or indirectly through one or more intermediaries, of the power to direct the management and policies of a Person, whether through the ownership of Equity Interests, by contract, or otherwise; provided, that for purposes of the definition of Eligible Accounts and Section 6.10 of this Agreement: (a) if any Person owns directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of directors or other members of the governing body of a Person or 10% or more of the partnership or other ownership interests of a Person (other than as a limited partner of such Person), then both such Persons shall be Affiliates of each other, (b) each director (or comparable manager) of a Person shall be deemed to be an Affiliate of such Person, and (c) each partnership in which a Person is a general partner shall be deemed an Affiliate of such Person.

“Agent” has the meaning specified in the preamble to this Agreement.

“Agent-Related Persons” means Agent, together with its Affiliates, officers, directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1 to this Agreement (or such other Deposit Account of Agent that has been designated as such, in writing, by Agent to Borrowers and the Lenders).

“Agent’s Liens” means the Liens granted by each Loan Party or its Subsidiaries to Agent under the Loan Documents and securing the Obligations.

“Agreement” means this Credit Agreement, as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Anti-Corruption Laws”  means the FCPA, the U.K. Bribery Act of 2010, as amended, and all other applicable laws and regulations or ordinances concerning or relating to bribery, money laundering or corruption in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business.

“Anti-Money Laundering Laws”  means the applicable laws or regulations in any jurisdiction in which any Loan Party or any of its Subsidiaries or Affiliates is located or is doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

-2-

“Applicable Margin” means, as of any date of determination and with respect to Base Rate Loans or LIBOR Rate Loans, as applicable, the applicable margin set forth in the following table that corresponds to the Average Excess Availability of Borrowers for the most recently completed calendar quarter; provided, that for the period from the Closing Date through and including September 30, 2018, the Applicable Margin shall be set at the margin in the row styled “Level I”; provided further that any time an Event of Default has occurred and is continuing, the Applicable Margin shall be set at the margin in the row styled “Level III”:

Level	Average Excess Availability	Applicable Margin for Base Rate Loans (the “Base Rate Margin”)	Applicable Margin for LIBOR Rate Loans (the “LIBOR Rate Margin”)
I	> 66% of the Maximum Revolver Amount	0.75 percentage points	1.75 percentage points
II	≤ 66% of the Maximum Revolver Amount and > 33% of the Maximum Revolver Amount	1.00 percentage points	2.00 percentage points
III	≤ 33% of the Maximum Revolver Amount	1.25 percentage points	2.25 percentage points

The Applicable Margin shall be re-determined as of the first day of each calendar quarter based on Average Excess Availability for the immediately prior calendar quarter.

“Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage” means, as of any date of determination, the applicable percentage set forth in the following table that corresponds to the Average Pledged Cash L/C Usage of Borrowers for the most recently completed month as determined by Agent in its Permitted Discretion;  provided, that for the period from the Closing Date through and including the last day of the first full month after the Closing Date, the Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage shall be set at the margin in the row styled “Level II”; provided further, that any time an Event of Default has occurred and is continuing, the Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage shall be set at the margin in the row styled “Level II”:

Level	Average Pledged Cash L/C Usage	Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage
I	> 50% of the Pledged Cash Letter of Credit Commitment	0.25 percentage points
II	≤ 50% of the Pledged Cash Letter of Credit Commitment	0.375 percentage points

The Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage shall be re-determined on the first day of each month by Agent based on the Average Pledged Cash L/C Usage for the immediately prior month.

-3-

“Applicable Unused Line Fee Percentage” means, as of any date of determination, the applicable percentage set forth in the following table that corresponds to the Average Revolver Usage of Borrowers for the most recently completed month as determined by Agent in its Permitted Discretion; provided, that for the period from the Closing Date through and including the last day of the first full month after the Closing Date, the Applicable Unused Line Fee Percentage shall be set at the margin in the row styled “Level II”; provided further,  that any time an Event of Default has occurred and is continuing, the Applicable Unused Line Fee Percentage shall be set at the margin in the row styled “Level II”:

Level	Average Revolver Usage	Applicable Unused Line Fee Percentage
I	> 50% of the Maximum Revolver Amount	0.25 percentage points
II	≤ 50% of the Maximum Revolver Amount	0.375 percentage points

The Applicable Unused Line Fee Percentage shall be re-determined on the first day of each month by Agent based on the Average Revolver Usage for the immediately prior month.

“Application Event” means the occurrence of (a) a failure by Borrowers to repay all of the Obligations in full on the Maturity Date, or (b) an Event of Default and the election by Agent or the Required Lenders to require that payments and proceeds of Collateral be applied pursuant to Section 2.4(b)(iii) of this Agreement.

“Assignee” has the meaning specified in Section 13.1(a) of this Agreement.

“Assignment and Acceptance” means an Assignment and Acceptance Agreement substantially in the form of Exhibit A-1 to this Agreement.

“Authorized Person” means any one of the individuals identified as an officer of a Borrower on Schedule A-2 to the Disclosure Letter,  or any other individual identified by Administrative Borrower as an authorized person and authenticated through Agent’s electronic platform or portal in accordance with its procedures for such authentication.

“Availability” means, as of any date of determination, the amount that Borrowers are entitled to borrow as Revolving Loans under Section 2.1 of this Agreement (after giving effect to the then outstanding Revolver Usage).

“Available Increase Amount” means, as of any date of determination, an amount equal to the result of (a) $10,000,000,  minus (b) the aggregate principal amount of Increases to the Revolver Commitments previously made pursuant to Section 2.14 of this Agreement.

“Average Excess Availability” means, with respect to any period, the sum of the aggregate amount of Excess Availability for each day in such period (as calculated by Agent as of the end of each respective day) divided by the number of days in such period.

“Average Pledged Cash L/C Usage” means, with respect to any period, the sum of the aggregate amount of Pledged Cash L/C Usage for each day in such period (calculated as of the end of each respective day) divided by the number of days in such period.

-4-

“Average Revolver Usage” means, with respect to any period, the sum of the aggregate amount of Revolver Usage for each day in such period (calculated as of the end of each respective day) divided by the number of days in such period.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bank Product” means any one or more of the following financial products or accommodations extended to any Loan Party or any of its Subsidiaries by a Bank Product Provider:  (a) credit cards (including commercial cards (including so-called “purchase cards”,  “procurement cards” or “p-cards”)), (b) payment card processing services, (c) debit cards, (d) stored value cards, (e) Cash Management Services, or (f) transactions under Hedge Agreements.

“Bank Product Agreements” means those agreements entered into from time to time by any Loan Party or any of its Subsidiaries with a Bank Product Provider in connection with the obtaining of any of the Bank Products.

“Bank Product Collateralization” means providing cash collateral (pursuant to documentation reasonably satisfactory to Agent) to be held by Agent for the benefit of the Bank Product Providers (other than the Hedge Providers) in an amount determined by Agent as sufficient to satisfy the reasonably estimated credit exposure, operational risk or processing risk with respect to the then existing Bank Product Obligations (other than Hedge Obligations).

“Bank Product Obligations” means (a) all obligations, liabilities, reimbursement obligations, fees, or expenses owing by each Loan Party and its Subsidiaries to any Bank Product Provider pursuant to or evidenced by a Bank Product Agreement and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, (b) all Hedge Obligations, and (c) all amounts that Agent or any Lender is obligated to pay to a Bank Product Provider as a result of Agent or such Lender purchasing participations from, or executing guarantees or indemnities or reimbursement obligations to, a Bank Product Provider with respect to the Bank Products provided by such Bank Product Provider to a Loan Party or its Subsidiaries.

“Bank Product Provider” means Wells Fargo or any of its Affiliates, including each of the foregoing in its capacity, if applicable, as a Hedge Provider.

“Bank Product Reserves” means, as of any date of determination, those reserves that Agent deems necessary or appropriate in its Permitted Discretion to establish (based upon the Bank Product Providers’ determination of the liabilities and obligations of each Loan Party and its Subsidiaries in respect of Bank Product Obligations) in respect of Bank Products then provided or outstanding.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.

“Base Rate” means the greatest of (a) the Federal Funds Rate plus ½%, (b) the LIBOR Rate (which rate shall be calculated based upon an Interest Period of one month and shall be determined on a daily basis), plus one percentage point, and (c) the rate of interest announced, from time to time,

-5-

within Wells Fargo at its principal office in San Francisco as its “prime rate”, with the understanding that the “prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of such rates) and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto and is evidenced by the recording thereof after its announcement in such internal publications as Wells Fargo may designate (and, if any such announced rate is below zero, then the rate determined pursuant to this clause (c) shall be deemed to be zero).

“Base Rate Loan” means each portion of the Revolving Loans that bears interest at a rate determined by reference to the Base Rate.

“Base Rate Margin” has the meaning set forth in the definition of Applicable Margin.

“Board of Directors” means, as to any Person, the board of directors (or comparable managers) of such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).

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

“Borrower” and “Borrowers” have the respective meanings specified in the preamble to this Agreement.

“Borrower Materials” has the meaning specified in Section 17.9(c) of this Agreement.

“Borrowing” means a borrowing consisting of Revolving Loans made on the same day by the Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent in the case of an Extraordinary Advance.

“Borrowing Base” means, as of any date of determination, the result of:

(a)         85% of the amount of Eligible Accounts, less the amount, if any, of the Dilution Reserve, plus

(b)         the lesser of:

(i)          80% of the amount of Eligible Unbilled Accounts less the amount, if any, of the Dilution Reserve (without duplication of any Dilution Reserve deducted from clause (a) above), and

(ii)         $3,000,000,  plus

(c)         the lesser of

(i)          $6,000,000, and

(ii)         the product of 50% multiplied by the book value (calculated at the lower of cost and net realizable value on a basis consistent with Borrowers’ historical accounting practices) of Eligible Inventory at such time,  minus

(d)         the aggregate amount of Reserves, if any, established by Agent from time to time under Section 2.1(c) of this Agreement.

-6-

“Borrowing Base Certificate” means a certificate in the form of Exhibit B-1 to this Agreement.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks are authorized or required to close in the state of California, except that, if a determination of a Business Day shall relate to a LIBOR Rate Loan, the term “Business Day” also shall exclude any day on which banks are closed for dealings in Dollar deposits in the London interbank market.

“Capital Expenditures” means, with respect to any Person for any period, the amount of all expenditures by such Person and its Subsidiaries during such period that are capital expenditures as determined in accordance with GAAP, whether such expenditures are paid in cash or financed, but excluding, without duplication (a) with respect to the purchase price of assets that are purchased substantially contemporaneously with the trade-in of existing assets during such period, the amount that the gross amount of such purchase price is reduced by the credit granted by the seller of such assets for the assets being traded in at such time, and (b) expenditures made during such period to consummate one or more Permitted Acquisitions.

“Capitalized Lease Obligation” means that portion of the obligations under a Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or unconditionally guaranteed by, the United States or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof, (b) marketable direct obligations issued or fully guaranteed by any state of the United States or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc. (“Moody’s”), (c) commercial paper maturing no more than 270 days from the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit, time deposits, overnight bank deposits or bankers’ acceptances maturing within one year from the date of acquisition thereof issued by any bank organized under the laws of the United States or any state thereof or the District of Columbia or any United States branch of a foreign bank having at the date of acquisition thereof combined capital and surplus of not less than $1,000,000,000, (e) Deposit Accounts maintained with (i) any bank that satisfies the criteria described in clause (d) above, or (ii) any other bank organized under the laws of the United States or any state thereof so long as the full amount maintained with any such other bank is insured by the Federal Deposit Insurance Corporation, (f) repurchase obligations of any commercial bank satisfying the requirements of clause (d) of this definition or of any recognized securities dealer having combined capital and surplus of not less than $1,000,000,000, having a term of not more than seven days, with respect to securities satisfying the criteria in clauses (a) or (d) above, (g) debt securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the criteria described in clause (d) above, and (h) Investments in money market funds substantially all of whose assets are invested in the types of assets described in clauses (a) through (g) above.

“Cash Management Services” means any cash management or related services including treasury, depository, return items, overdraft, controlled disbursement, merchant store value cards, e-payables services, electronic funds transfer, interstate depository network, automatic clearing house

-7-

transfer (including the Automated Clearing House processing of electronic funds transfers through the direct Federal Reserve Fedline system) and other cash management arrangements.

“CFC” means a controlled foreign corporation (as that term is defined in the IRC) in which any Loan Party is a “United States shareholder” within the meaning of Section 951(b) of the IRC.

“CFC Debt” means Indebtedness owed or treated as owed by one or more CFCs.

“Change of Control” means that:

(a)         any Person or two or more Persons acting in concert, shall have acquired beneficial ownership, directly or indirectly, of Equity Interests of Parent (or other securities convertible into such Equity Interests) representing 35% or more of the combined voting power of all Equity Interests of Parent entitled (without regard to the occurrence of any contingency) to vote for the election of members of the Board of Directors of Parent,

(b)         Parent fails to own and control, directly or indirectly, 100% of the Equity Interests of each other Loan Party (other than in connection with a Permitted Disposition or other transaction expressly permitted under this Agreement),

(c)         the adoption by the stockholders of Parent of a plan or proposal for the liquidation or dissolution of Parent,

(d)         the sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of Parent and its Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), or

(e)         the occurrence of a “Change of Control” or similar event as defined under the Senior Secured Notes Documents, Junior Lien Term Loan Documents or the Permitted Junior Conversion Debt Documents.

Notwithstanding the foregoing, neither the ownership nor acquisitions of shares of the capital stock of the Parent by, nor the transfers of shares of the Equity Interests  of the Parent between, Members of the McClatchy Family or any McClatchy Family Entity shall constitute a Change in Control.  For purposes of this definition, “McClatchy Family Entity” shall mean a Person in which Members of the McClatchy Family beneficially own (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934, as in effect on the Closing Date) more than 50% of the aggregate ordinary voting power represented by the issued and outstanding voting Equity Interests of such Person.

(i)       “Change in Law” means the occurrence after the date of this Agreement of:  (a) the adoption or effectiveness of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation, judicial ruling, judgment or treaty or in the administration, interpretation, implementation or application by any Governmental Authority of any law, rule, regulation, guideline or treaty, or (c) the making or issuance by any Governmental Authority of any request, rule, guideline or directive, whether or not having the force of law; provided, that notwithstanding anything in this Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and (ii) all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar

-8-

authority) or the United States or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Chatham” means Chatham Asset Management, LLC.

“Closing Date” means July 16, 2018.

“Code” means the California Uniform Commercial Code, as in effect from time to time.

“Collateral” means all assets and interests in assets and proceeds thereof now owned or hereafter acquired by any Loan Party or its Subsidiaries in or upon which a Lien is granted by such Person in favor of Agent or the Lenders under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, processor letter or acknowledgement agreement of any lessor, warehouseman, processor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in any Loan Party’s or its Subsidiaries’ books and records, Equipment, or Inventory, in each case, in form and substance reasonably satisfactory to Agent.

“Collections” means, all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, cash proceeds of asset sales, rental proceeds and tax refunds).

“Commitment” means, with respect to (a) each Lender, its Revolver Commitment and, with respect to all Lenders, their Revolver Commitments, as such Dollar amounts are set forth beside such Lender’s name under the applicable heading on Schedule C-1 to this Agreement or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 of this Agreement or otherwise in accordance with this Agreement and (b) the Pledged Cash Letter of Credit Issuing Bank, the Pledged Cash Letter of Credit Commitment.

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Compliance Certificate” means a certificate substantially in the form of Exhibit C-1 to this Agreement delivered by the chief financial officer or treasurer of Parent to Agent.

“Confidential Information” has the meaning specified in Section 17.9(a) of this Agreement.

“Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:

(1)         increased (without duplication) by the following items to the extent deducted in calculating such Consolidated Net Income:

(a)         Interest Expense; plus

(b)         Consolidated Income Taxes; plus

(c)         consolidated depreciation expense; plus

-9-

(d)         consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standards Board issued Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets”; plus

(e)         other non‑cash charges, losses or expenses (including, without limitation, non-cash pension expense) reducing Consolidated Net Income, including any write-offs or write-downs (excluding any such non‑cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); plus

(f)         any non-cash compensation expense realized for grants of restricted stock, performance shares, stock options or other rights to officers, directors and employees of Parent or any Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Equity Interests of Parent (other than Disqualified Equity Interests); plus

(g)         any fees, charges or other expenses made or Incurred in connection with any actual or proposed Investment, asset sale, acquisition, recapitalization or issuance of Equity Interests or Incurrence of Indebtedness or any amendment or modification of Indebtedness (including as a result of Statement of Financial Accounting Standards 141R); plus

(h)         the amount of any restructuring charges (including lease termination, severance and relocation expenses), integration costs or other non-recurring charges or expenses deducted (and not added back) in such period in computing Consolidated Net Income (collectively, “Restructuring Charges”) in an aggregate amount not to exceed twenty percent (20%) of Consolidated EBITDA (calculated before giving effect to the addback for any such Restructuring Charges and over the most recent trailing twelve month period) in the aggregate for any Reference Period; plus

(i)          all non-cash pension expense included in non-operating expenses.

(2)         decreased (without duplication) by non‑cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges that reduced Consolidated EBITDA in any prior period); and

(3)         increased or decreased (without duplication) to eliminate the following items reflected in Consolidated Net Income:

(a)         any net gain or loss resulting in such period from Hedge Obligations or Other Hedge Obligations and the application of ASC Topic 815, Derivatives and Hedging;

(b)         all unrealized gains and losses relating to financial instruments to which fair market value accounting is applied;

(c)         any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness (including any net

-10-

loss or gain resulting from Hedge Obligations or Other Hedge Obligations for currency exchange risk); and

(d)         effects of adjustments (including the effects of such adjustments pushed down to Parent and its Subsidiaries) in any line item in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any completed acquisition.

Notwithstanding the foregoing, clauses (1)(b) through (e) relating to amounts of a Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (1)(b) through (e) are in excess of those necessary to offset a net loss of such Subsidiary or if such Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be distributed to Parent by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders.

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority, which taxes or other payments are calculated by reference to the income or profits or capital of such Person or such Person and its Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), including, without limitation, state, franchise and similar taxes and foreign withholding taxes regardless of whether such taxes or payments are required to be remitted to any governmental authority.

“Consolidated Net Income” means, for any period, the net income (loss) of Parent and its consolidated Subsidiaries determined on a consolidated basis in accordance with GAAP (before preferred stock dividends); provided, however, that there will not be included in such Consolidated Net Income:

(1)         any net income (loss) of any Person if such Person is not a Subsidiary or that is accounted for by the equity method of accounting, except that:

(a)         subject to the limitations contained in clauses (3) through (6) below, Parent’s equity in the net income of any such Person for such period will be included (and, without duplication, and to the extent such amounts decreased Parent’s equity in the net income of any such Person for such period, shall be increased by Parent’s Proportionate Equity Share of the amounts described in clauses (1)(a), (1)(b), (1)(c) and 1(d) of the definition of Consolidated EBITDA that decreased the net income of such Person during such period) in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period or, without duplication, within three months following the last day of such period and prior to the date of determination or which Parent has determined as of such date of determination will be distributed imminently in respect of such period (subject, in the case of a dividend or other distribution to a Subsidiary, to the limitations contained in clause (2) below); and

(b)         Parent’s equity in a net loss of any such Person for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from Parent or a Subsidiary during such period;

-11-

(2)         any net income (but not loss) of any Subsidiary if such Subsidiary is subject to prior government approval or other restrictions due to the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or government regulation (which have not been waived), directly or indirectly, on the payment of dividends or the making of distributions by such Subsidiary, directly or indirectly, to Parent, except that:

(a)         subject to the limitations contained in clauses (3) through (6) below, Parent’s equity in the net income of any such Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Subsidiary during such period to Parent or another Subsidiary as a dividend (subject, in the case of a dividend to another Subsidiary, to the limitation contained in this clause); and

(b)         Parent’s equity in a net loss of any such Subsidiary for such period will be included in determining such Consolidated Net Income;

(3)         any after-tax effect of gain or loss (less all fees and expenses relating thereto) realized upon sales or other dispositions of any assets of Parent or such Subsidiary (including pursuant to any Sale/Leaseback Transaction) other than in the ordinary course of business;

(4)         any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedge Obligations, Other Hedge Obligations or other derivative instruments;

(5)         the after-tax effect of extraordinary gain or loss;

(6)         the after-tax effect of the cumulative effect of a change in accounting principles;

(7)         any after-tax effect of non-cash impairment charges recorded in connection with the application of ASC Topic 350, Intangibles – Goodwill and Other and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets”; and

(8)         any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of Parent or any Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Equity Interests of Parent (other than Disqualified Equity Interests).

“Control Agreement” means a control agreement, in form and substance reasonably satisfactory to Agent, executed and delivered by a Loan Party, Agent, and the applicable securities intermediary (with respect to a Securities Account) or bank (with respect to a Deposit Account).

“Copyright Security Agreement” has the meaning specified in the Guaranty and Security Agreement.

“Covenant Testing Period” means a period (a) commencing on the last day of the fiscal month of Parent most recently ended prior to a Covenant Trigger Event for which Borrowers are required to deliver to Agent monthly, quarterly or annual financial statements pursuant to Schedule 5.1 to this Agreement, and (b) continuing through and including the first day after such Covenant Trigger Event that Excess Availability has equaled or exceeded the greater of (i) 12.5% of the Maximum Revolver Amount and (ii)  $8,125,000 for 30 consecutive days.

-12-

“Covenant Trigger Event” means if at any time Excess Availability is less than the greater of (i)  12.5% of the Maximum Revolver Amount and  (ii) $8,125,000.

“Daily One Month LIBOR” means, for any day the rate per annum for United States dollar deposits determined by Agent for the purpose of calculating the effective interest rate for loans that reference Daily One Month LIBOR as the Inter-Bank Market Offered Rate in effect from time to time for the 3 month delivery of funds in amounts approximately equal to the principal amount of such loans (and, if such rate is below zero, Daily One Month LIBOR shall be deemed to be zero).  Borrowers understand and agree that Agent may base its determination of the Inter-Bank Market Offered Rate upon such offers or other market indicators of the Inter-Bank Market as Agent in its discretion deems appropriate, including but not limited to the rate offered for U.S. dollar deposits on the London Inter-Bank Market.  When interest is determined hereunder in relation to Daily One Month LIBOR, each change in the interest rate hereunder shall become effective each Business Day that Agent determines that Daily One Month LIBOR has changed.

“Default” means an event, condition, or default that, with the giving of notice, the passage of time, or both, would be an Event of Default.

“Defaulting Lender”  means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies Agent and Administrative Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to Agent, Issuing Bank, or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit) within two Business Days of the date when due, (b) has notified any Borrower, Agent or Issuing Bank in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable Default or Event of Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by Agent or Administrative Borrower, to confirm in writing to Agent and Administrative Borrower that it will comply with its prospective funding obligations hereunder (provided,  that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by Agent and Administrative Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of any Insolvency Proceeding, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-in Action;  provided,  that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.  Any determination by Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to Administrative Borrower, Issuing Bank, and each Lender.

-13-

“Defaulting Lender Rate” means (a) for the first three days from and after the date the relevant payment is due, the Base Rate, and (b) thereafter, the interest rate then applicable to Revolving Loans that are Base Rate Loans (inclusive of the Base Rate Margin applicable thereto).

“Deposit Account” means any deposit account (as that term is defined in the Code).

“Designated Account” means the Deposit Account of Administrative Borrower identified on Schedule D-1 to the Disclosure Letter (or such other Deposit Account of Administrative Borrower located at Designated Account Bank that has been designated as such, in writing, by Borrowers to Agent).

“Designated Account Bank” has the meaning specified in Schedule D-1 to the Disclosure Letter (or such other bank that is located within the United States that has been designated as such, in writing, by Borrowers to Agent).

“Dilution” means, as of any date of determination, a percentage, based upon the experience of the immediately prior 12 months, that is the result of dividing the Dollar amount of (a) bad debt write-downs, discounts, advertising allowances, credits, or other dilutive items with respect to Borrowers’ Accounts during such period, by (b) Borrowers’  gross billings with respect to Accounts during such period.

“Dilution Reserve” means, as of any date of determination, an amount sufficient to reduce the advance rate against Eligible Accounts and Eligible Unbilled Accounts by the extent to which Dilution is in excess of 5%.

“Disclosure Letter” means the disclosure letter, dated as of the Closing Date, delivered by the Parent to the Agent for the benefit of the Lenders.

“Disqualified Equity Interests”  means any Equity Interests that, by their terms (or by the terms of any security or other Equity Interests into which they are convertible or for which they are exchangeable), or upon the happening of any event or condition (a) matures or are mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Obligations that are accrued and payable and the termination of the Commitments), (b) are redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part, (c) provide for the scheduled payments of dividends in cash, or (d) are or become convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date.

“Disqualified Institution” means, any Person designated by Administrative Borrower as a “Disqualified Institution” by written notice delivered to Agent prior to the Closing Date, which such designated Persons have been consented to in writing by Agent prior to the Closing Date; provided, that “Disqualified Institutions” shall exclude any Person that Administrative Borrower has designated as no longer being a “Disqualified Institution” by written notice delivered to Agent from time to time.

“Dollars” or “$” means United States dollars.

“Domestic Subsidiary” means any Subsidiary of any Loan Party that is not a Foreign Subsidiary.

-14-

“Drawing Document” means any Letter of Credit or other document presented for purposes of drawing under any Letter of Credit, including by electronic transmission such as SWIFT, electronic mail, facsimile or computer generated communication.

“Earn-Outs”  means unsecured liabilities of a Loan Party arising under an agreement to make any deferred payment as a part of the Purchase Price for a Permitted Acquisition, including performance bonuses or consulting payments in any related services, employment or similar agreement, in an amount that is subject to or contingent upon the revenues, income, cash flow or profits (or the like) of the target of such Permitted Acquisition.

“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Eligible Accounts” means those Accounts created by a Borrower in the ordinary course of its advertising and commercial printing businesses, that arise out of such Borrower’s sale of goods or rendition of services, that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents, and that are not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any information with respect to the Borrowers’ business or assets of which Agent becomes aware after the Closing Date, including any field examination performed by (or on behalf of) Agent from time to time after the Closing Date.  In determining the amount to be included, Eligible Accounts shall be calculated net of customer deposits, unapplied cash, taxes, finance charges, service charges, discounts, credits, allowances, and rebates.  Eligible Accounts shall not include the following:

(a)         Accounts that the Account Debtor has failed to pay within 120 days of original invoice date or 60 days of due date,

(b)         Accounts owed by an Account Debtor (or its Affiliates) where 50% or more of all Accounts owed by that Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above,

(c)         Accounts with selling terms of more than 90 days,

(d)         Accounts with respect to which the Account Debtor is an Affiliate of any Borrower or an employee or agent of any Borrower or any Affiliate of any Borrower,

(e)         Accounts (i) arising in a transaction wherein goods are placed on consignment or are sold pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and hold, or any other terms by reason of which the payment by the Account Debtor may be conditional, or (ii) with respect to which the payment terms are “C.O.D.”, cash on delivery or other similar terms,

-15-

(f)         Accounts that are not payable in Dollars,

(g)         Accounts with respect to which the Account Debtor either (i) does not maintain its chief executive office in the United States or Canada, or (ii) is not organized under the laws of the United States or Canada or any state or province thereof, or (iii) is the government of any foreign country or sovereign state, or of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, unless (A) the Account is supported by an irrevocable letter of credit reasonably satisfactory to Agent (as to form, substance, and issuer or domestic confirming bank) that has been delivered to Agent and, if requested by Agent, is directly drawable by Agent, or (B) the Account is covered by credit insurance in form, substance, and amount, and by an insurer, reasonably satisfactory to Agent,

(h)         Accounts with respect to which the Account Debtor is either (i) the United States or any department, agency, or instrumentality of the United States (exclusive, however, of Accounts with respect to which the applicable Borrower has complied, to the reasonable satisfaction of Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii) any state of the United States (exclusive, however, of Accounts with respect to which the applicable Borrower has complied, to the satisfaction of Agent, with the state law (if any) that is the substantial equivalent of the Assignment of Claims Act, 31 USC §3727) or any other Governmental Authority,

(i)          Accounts with respect to which the Account Debtor is a creditor of a Borrower, has or has asserted a right of recoupment or setoff, or has disputed its obligation to pay all or any portion of the Account, to the extent of such claim, right of recoupment or setoff, or dispute,

(j)          Accounts with respect to an Account Debtor and its Affiliates whose Eligible Accounts owing to Borrowers exceed 20% (such percentage, as applied to a particular Account Debtor and its Affiliates, being subject to reduction by Agent in its Permitted Discretion if the creditworthiness of such Account Debtor or its Affiliates deteriorates) of all Eligible Accounts, to the extent of the obligations owing by such Account Debtor and its Affiliates in excess of such percentage; provided, that in each case, the amount of Eligible Accounts that are excluded because they exceed the foregoing percentage shall be determined by Agent based on all of the otherwise Eligible Accounts prior to giving effect to any eliminations based upon the foregoing concentration limit,

(k)         Accounts with respect to which the Account Debtor is subject to an Insolvency Proceeding, is not Solvent, has gone out of business, or as to which any Borrower has received notice of an imminent Insolvency Proceeding or a material impairment of the financial condition of such Account Debtor,

(l)          Accounts, the collection of which, Agent, in its Permitted Discretion, believes to be doubtful, including by reason of the Account Debtor’s financial condition,

(m)        Accounts that are not subject to a valid and perfected first priority Agent’s Lien,

(n)         Accounts with respect to which (i) the goods giving rise to such Account have not been shipped and billed to the Account Debtor, or (ii) the services giving rise to such Account have not been performed and billed to the Account Debtor,

(o)         Accounts with respect to which the Account Debtor is a Sanctioned Person or Sanctioned Entity,

-16-

(p)         Accounts (i) that represent the right to receive progress payments or other advance billings that are due prior to the completion of performance by the applicable Borrower of the subject contract for goods or services, or (ii) that represent credit card sales,

(q)         Accounts owned by a target acquired in connection with a Permitted Acquisition or Permitted Investment, or Accounts owned by a Person that is joined to this Agreement as a Borrower pursuant to the provisions of this Agreement, until the completion of a field examination with respect to such Accounts, in each case, satisfactory to Agent in its Permitted Discretion, or

(r)         Accounts owed by subscribers of any publication (in any format or medium) produced by or on behalf of any Borrower or otherwise arising from any subscriptions.

“Eligible Inventory” means newsprint Inventory of a Borrower, that complies with each of the representations and warranties respecting Eligible Inventory made in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the excluding criteria set forth below; provided, that such criteria may be revised from time to time by Agent in Agent’s Permitted Discretion to address the results of any information with respect to the Borrowers’ business or assets of which Agent becomes aware after the Closing Date, including any field examination or appraisal performed or received by Agent from time to time after the Closing Date.  In determining the amount to be so included, Inventory shall be valued at the lower of cost or net realizable value on a basis consistent with Borrowers’ historical accounting practices.  An item of Inventory shall not be included in Eligible Inventory if:

(a)         a Borrower does not have good, valid, and marketable title thereto,

(b)         a Borrower does not have actual and exclusive possession thereof (either directly or through a bailee, processor or agent of a Borrower),

(c)         it is not located at one of the locations in the continental United States set forth on Schedule 4.25 to the Disclosure Letter (as such Schedule 4.25 may be amended from time to time upon not less than five days prior written notice to Agent (or such shorter period agreed to by Agent in writing in its sole discretion)  pursuant to Section 5.14)  (or in-transit from one such location to another such location),

(d)         it is stored at locations holding less than $100,000 of the aggregate value of such Borrower’s Inventory,

(e)         it is in-transit to or from a location of a Borrower (other than in-transit from one location set forth on Schedule 4.25 to the Disclosure Letter to another location set forth on Schedule 4.25 to the Disclosure Letter (as such Schedule 4.25 may be amended from time to time upon not less than five days prior written notice to Agent (or such shorter period agreed to by Agent in writing in its sole discretion) pursuant to Section 5.14)),

(f)         it is located on real property leased by a Borrower or in a contract warehouse or with a bailee, in each case, unless either (i)  it is subject to a Collateral Access Agreement executed by the lessor, bailee or warehouseman, as the case may be, and it is segregated or otherwise separately identifiable from goods of others, if any, stored on the premises, or (ii) Agent has established a Landlord Reserve with respect to such location,

(g)         it is the subject of a bill of lading or other document of title,

(h)         it is not subject to a valid and perfected first priority Agent’s Lien,

-17-

(i)          it consists of goods returned or rejected by a Borrower’s customers,

(j)          it consists of goods that are obsolete, slow moving, spoiled or are otherwise past the stated expiration, “sell-by” or “use by” date applicable thereto, restrictive or custom items or otherwise is manufactured in accordance with customer-specific requirements, work-in-process, raw materials or goods that constitute spare parts, packaging and shipping materials, supplies used or consumed in Borrowers’ business, bill and hold goods, defective goods, “seconds,”, Inventory acquired on consignment or any opened or partially used newsprint paper rolls,

(k)         it is subject to third party intellectual property, licensing or other proprietary rights, unless Agent is satisfied that such Inventory can be freely sold by Agent on and after the occurrence of an Event of a Default despite such third party rights, or

(l)          it was acquired in connection with a Permitted Acquisition or Permitted Investment, or such Inventory is owned by a Person that is joined to this Agreement as a Borrower pursuant to the provisions of this Agreement, until the completion of an Acceptable Appraisal of such Inventory and the completion of a field examination with respect to such Inventory that is satisfactory to Agent in its Permitted Discretion.

“Eligible Transferee” means (a) any Lender (other than a Defaulting Lender), any Affiliate of any Lender and any Related Fund of any Lender; (b) (i) a commercial bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof, and having total assets in excess of $1,000,000,000; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided, that (A) (x) such bank is acting through a branch or agency located in the United States, or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country, and (B) such bank has total assets in excess of $1,000,000,000;  (c) any other entity (other than a natural person) that is an “accredited investor” (as defined in Regulation D under the Securities Act) that extends credit or buys loans as one of its businesses including insurance companies, investment or mutual funds and lease financing companies, and having total assets in excess of $1,000,000,000; and (d)  during the continuation of an Event of Default, any other Person approved by Agent.

“Eligible Unbilled Accounts” shall mean all Accounts for which an invoice has not yet been issued by Borrowers to the applicable Account Debtor, but which otherwise satisfy the criteria for “Eligible Accounts” (as set forth in the definition thereof), so long as (i) an invoice is issued therefor within thirty (30) days of the completion of the rendition of services by the applicable Borrower which gave rise to such Accounts and (ii) for the avoidance of doubt, such Accounts are created by a Borrower in the ordinary course of its business, that arise out of such Borrower’s sale of goods or rendition of services, and that comply with each of the representations and warranties respecting Eligible Accounts made in the Loan Documents.

“Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA, (a) that is or within the preceding six (6) years has been sponsored, maintained or contributed to by any Loan Party or ERISA Affiliate or (b) to which any Loan Party or ERISA Affiliate has, or has had at any time within the preceding six (6) years, any liability, contingent or otherwise.

“Environmental Action” means any written complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter, or

-18-

other written communication from any Governmental Authority, or any third party involving violations of Environmental Laws or releases of Hazardous Materials (a) from any assets, properties, or businesses of any Loan Party, any Subsidiary of any Loan Party, or any of their predecessors in interest, (b) from adjoining properties or businesses, or (c) from or onto any facilities which received Hazardous Materials generated by any Loan Party, any Subsidiary of any Loan Party, or any of their predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or local statute, law, rule, regulation, ordinance, code, binding and enforceable guideline, binding and enforceable written policy, or rule of common law now or hereafter in effect and in each case as amended, or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, in each case, to the extent binding on any Loan Party or its Subsidiaries, relating to the environment, the effect of the environment on employee health, or Hazardous Materials, in each case as amended from time to time.

“Environmental Liabilities” means all liabilities, monetary obligations, losses, damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts, or consultants, and costs of investigation and feasibility studies), fines, penalties, sanctions, and interest incurred as a result of any claim or demand, or Remedial Action required, by any Governmental Authority or any third party, and which relate to any Environmental Action.

“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental Liabilities.

“Equipment” means equipment (as that term is defined in the Code).

“Equity Interests” means, with respect to a Person, all of the shares, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in such Person, whether voting or nonvoting, including capital stock (or other ownership or profit interests or units), preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute thereto, and the rules and regulations promulgated thereunder.

“ERISA Affiliate”  means (a) any Person whose employees are treated as employed by the same employer as the employees of any Loan Party or its Subsidiaries under IRC Section 414(b), (b) any trade or business whose employees are treated as employed by the same employer as the employees of any Loan Party or its Subsidiaries under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any organization that is a member of an affiliated service group of which any Loan Party or any of its Subsidiaries is a member under IRC Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any Person that is a party to an arrangement with any Loan Party or any of its Subsidiaries and whose employees are aggregated with the employees of such Loan Party or its Subsidiaries under IRC Section 414(o).

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.

“Event of Default” has the meaning specified in Section 8 of this Agreement.

“Excess Availability” means, as of any date of determination, an amount equal to (a) the Line Cap minus (b) the aggregate Revolver Usage at such time.

-19-

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time to time.

“Excluded Subsidiary” means (a) Immaterial Subsidiaries, (b)  any FSHCO, (c) any Foreign Subsidiary of a Loan Party,  (d) any Domestic Subsidiary of a Loan Party that is a direct or indirect subsidiary of a Foreign Subsidiary, or (e) any not-for-profit subsidiary or captive insurance subsidiary.

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guaranty of such Loan Party of (including by virtue of the joint and several liability provisions of Section 2.15), or the grant by such Loan Party of a security interest to secure, such Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guaranty of such Loan Party or the grant of such security interest becomes effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guaranty or security interest is or becomes illegal.

“Excluded Taxes” means (i) any tax imposed on the net income or net profits of any Lender (including any franchise taxes and branch profits taxes), in each case imposed by the jurisdiction (or by any political subdivision or taxing authority thereof) in which such Lender is organized or the jurisdiction (or by any political subdivision or taxing authority thereof) in which such Lender’s principal office is located in or as a result of a present or former connection between such Lender and the jurisdiction or taxing authority imposing the tax (other than any such connection arising solely from such Lender having executed, delivered or performed its obligations or received payment under, or enforced its rights or remedies under this Agreement or any other Loan Document), (ii) taxes that would not have been imposed but for a Lender’s failure to comply with the requirements of Section 16.2 of this Agreement, (iii) any United States federal withholding taxes that would be imposed on amounts payable to a Foreign Lender based upon the applicable law in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office, other than a designation made at the request of a Loan Party), except that Excluded Taxes shall not include (A) any amount that such Foreign Lender (or its assignor, if any) was previously entitled to receive pursuant to Section 16.1 of this Agreement, if any, with respect to such withholding tax at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), and (B) additional United States federal withholding taxes that may be imposed after the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), as a result of a change in law, rule, regulation, treaty, order or other decision or other Change in Law with respect to any of the foregoing by any Governmental Authority, and (iv) any withholding taxes imposed under FATCA.

“Existing 2022 Notes” means Parent’s 9.00% Senior Secured Notes due December 15, 2022.

“Existing 2029 Debentures Conversion” means any conversion (at the election of Chatham and/or its Affiliates)  of up to $75,000,000 of the Existing Unsecured 2029 Debentures to (a) Junior Lien Additional Tranche B Loans (in accordance with Section 2.01(c) of the Junior Lien Term Loan Credit Agreement) or (b) Junior Lien Exchange Notes that are Debenture Junior Lien Exchange Notes (in accordance with Section 5.09(b) of the Junior Lien Term Loan Credit Agreement), in each case, to be issued by Parent pursuant to the terms of the Permitted Junior Conversion Debt Documents.

-20-

“Existing Credit Facility” means Parent’s existing credit facility governed by that certain Third Amended and Restated Credit Agreement, dated as of December 18, 2012 (as amended, restated, supplemented, or otherwise modified from time to time), by and among Parent, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent, swing line lender and L/C issuer, and the other related loan documentation.

“Existing Letters of Credit” means those letters of credit described on Schedule E-1 to this Agreement.

“Existing Debt Refinancing” means incurrence by Parent of debt on the Closing Date pursuant to the Senior Secured Notes Documents and the Junior Lien Term Loan Documents to redeem, refinance or otherwise acquire (i) $193,466,000 aggregate principal amount of the Existing Unsecured 2029 Debentures, (ii) $82,083,000 aggregate principal amount of the Existing Unsecured 2027 Debentures, and (iii) 100% of the issued and outstanding amount of the Existing 2022 Notes, in each case, including any premiums thereon, plus accrued and unpaid interest, and fees and expenses in connection with such redemption, refinancing or acquisition.

“Existing Unsecured 2027 Debentures” means Parent’s 7.15% Debentures due November 1, 2027 and issued by Parent pursuant to the Existing Unsecured 2027/2029 Indenture.

“Existing Unsecured 2029 Debentures” means Parent’s 6.875% Debentures due March 15, 2029 and issued by Parent pursuant to the Existing Unsecured 2027/2029 Indenture.

“Existing Unsecured 2027/2029 Indenture” means that certain Indenture, dated as of November 4, 1997, between Parent, as successor to Knight-Ridder, Inc., as issuer, and The Bank of New York Mellon Trust Company, N.A., as successor to The Chase Manhattan Bank, as the trustee, as supplemented by the First Supplemental Indenture, dated as of June 1, 2001, the Second Supplemental Indenture, dated as of November 1, 2004, the Third Supplemental Indenture, dated as of August 16, 2005, the Fourth Supplemental Indenture, dated as of June 27, 2006, and the Fifth Supplemental Indenture, dated as of July 13, 2018.

“Extraordinary Advances” has the meaning specified in Section 2.3(d)(iii) of this Agreement.

“FATCA” means Sections 1471 through 1474 of the IRC, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), and (a) any current or future regulations or official interpretations thereof, (b) any agreements entered into pursuant to Section 1471(b)(1) of the IRC, and (c) any intergovernmental agreement entered into by the United States (or any fiscal or regulatory legislation, rules, or practices adopted pursuant to any such intergovernmental agreement entered into in connection therewith).

“FCPA”  means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

“FSHCO” means any direct or indirect Domestic Subsidiary if substantially all of its assets consist, directly or indirectly, of (i) the equity of one or more direct or indirect Foreign Subsidiaries that are CFCs or other FSHCOs or (ii) CFC Debt.

“Family Percentage Holding” means the aggregate percentage of the securities held by a Qualified Trust representing, directly or indirectly, an interest in voting shares or rights to voting shares of the Parent that it is reasonable, under all the circumstances, to regard as being held beneficially for

-21-

Qualified Persons (or any class consisting of two or more Qualified Persons); provided,  however, always that in calculating the Family Percentage Holding (A) in respect of any power of appointment or discretionary trust capable of being exercised in favor of any of the Qualified Persons such trust or power shall be deemed to have been exercised in favor of Qualified Persons until such trust or power has been otherwise exercised; (B) where any beneficiary of a Qualified Trust has assigned, transferred or conveyed, in any manner whatsoever, his or her beneficial interest to another Person, then, for the purpose of determining the Family Percentage Holding in respect of such Qualified Trust, the Person to whom such interest has been assigned, transferred or conveyed shall be regarded as the only Person beneficially interested in the Qualified Trust in respect of such interest but in the case where the interest so assigned, transferred or conveyed is an interest in a discretionary trust or is an interest which may arise as a result of the exercise in favor of the assignor of a discretionary power of appointment and such discretionary trust or power of appointment is also capable of being exercised in favor of a Member of the McClatchy Family, such discretionary trust or power shall be deemed to have been so exercised in favor of Qualified Persons until it has in fact been otherwise exercised; and (C) the interest of any Permitted Residuary Beneficiary shall be ignored until its interest has indefeasibly vested.

“Fee Letter” means that certain fee letter, dated as of the Closing Date, among Borrowers and Agent, in form and substance reasonably satisfactory to Agent.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal to, for each day during such period, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal funds brokers of recognized standing selected by it (and, if any such rate is below zero, then the rate determined pursuant to this definition shall be deemed to be zero).

“Fixed Charges” means, with respect to any fiscal period and with respect to Parent and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum, without duplication, of (a) Interest Expense required to be paid (other than interest paid-in-kind, amortization of financing fees, and other non-cash Interest Expense) during such period, (b) scheduled principal payments in respect of Indebtedness that are required to be paid during such period, (c) all income taxes paid in cash during such period, (d) (i) Restricted Payments in respect of making dividends and distributions and any other dividends paid in cash during such period and (ii) solely for the purpose of determining compliance with any applicable Payment Condition and without duplication of clause (d)(i), all Restricted Payments paid in cash during such period, and (e) all required payments or contributions made (whether in cash or other property, other than common Equity Interests) in respect of any Pension Plan or Multiemployer Plan funding obligations during such period (provided that if any such aforementioned payments or contributions are made with property other than cash, the amount of such non-cash payments or contributions included in the calculation of Fixed Charges shall be limited to the minimum required contribution and funding requirements in respect of any Pension Plan or Multiemployer Plan funding obligations during such period).

“Fixed Charge Coverage Ratio” means, with respect to any fiscal period and with respect to Parent determined on a consolidated basis in accordance with GAAP, the ratio of (a) Consolidated EBITDA for such period minus Unfinanced Capital Expenditures made (to the extent not already incurred in a prior period) or incurred during such period, to (b) Fixed Charges for such period.

For the purposes of calculating Fixed Charge Coverage Ratio for any period of twelve consecutive months (each, a “Reference Period”), if at any time during such Reference Period (and after the Closing Date), any Loan Party or any of its Subsidiaries shall have made a Permitted Acquisition,

-22-

Fixed Charges and Unfinanced Capital Expenditures for such Reference Period shall be calculated after giving pro forma effect thereto or in such other manner acceptable to Agent as if any such Permitted Acquisition occurred on the first day of such Reference Period.

“Foreign Lender” means any Lender or Participant that is not a United States person within the meaning of IRC Section 7701(a)(30).

“Foreign Subsidiary” means any direct or indirect subsidiary of any Loan Party that is organized under the laws of any jurisdiction other than the United States, any state thereof or the District of Columbia.

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” has the meaning specified in Section 2.12(b)(ii) of this Agreement.

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States, consistently applied.

“Governing Documents” means, with respect to any Person, the certificate or articles of incorporation, by-laws, or other organizational documents of such Person.

“Governmental Authority” means the government of any nation or any political subdivision thereof, whether at the national, state, territorial, provincial, county, municipal or any other level, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantor” means (a) each Person that guaranties all or a portion of the Obligations, including Parent and any Person that is a “Guarantor” under the Guaranty and Security Agreement, and (b) each other Person that becomes a guarantor after the Closing Date pursuant to Section 5.11 of this Agreement.

“Guaranty and Security Agreement” means a guaranty and security agreement, dated as of the Closing Date, in form and substance reasonably satisfactory to Agent, executed and delivered by each of the Loan Parties to Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or otherwise classified pursuant to, any applicable laws or regulations as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas, natural gas liquids, synthetic gas, drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of crude oil, natural gas, or geothermal resources, (c) any flammable substances or explosives or any radioactive materials, and (d) asbestos in any form or electrical equipment that contains any oil or dielectric fluid containing levels of polychlorinated biphenyls in excess of 50 parts per million.

“Hedge Agreement” means a “swap agreement” as that term is defined in Section 101(53B)(A) of the Bankruptcy Code.

-23-

“Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of each Loan Party and its Subsidiaries arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into with one or more of the Hedge Providers.

“Hedge Provider” means Wells Fargo or any of its Affiliates.

“Immaterial Subsidiary” means each Subsidiary of a Borrower that is not a Material Subsidiary and that has been designated, either (i) on the Closing Date and as set forth on Schedule I-1 to the Disclosure Letter,  (ii) in a  prior written notice to Agent together with an officer’s certificate certifying that such Subsidiary qualifies as an “Immaterial Subsidiary” for purposes of this Agreement or (iii) in a Compliance Certificate delivered pursuant to Section 5.1 by Parent as an “Immaterial Subsidiary” for purposes of this Agreement; provided that at no time shall any Loan Party be designated as an Immaterial Subsidiary;  provided further that a Subsidiary will not be considered an Immaterial Subsidiary if it, directly or indirectly, incurs any Indebtedness under or in respect of the Senior Secured Notes Obligations, the Junior Lien Term Loan Obligations or the Permitted Junior Conversion Debt.

“Increase” has the meaning specified in Section 2.14(a).

“Increase Date”  means the date of the effectiveness of any increase to the Revolver Commitments and the Maximum Revolver Amount.

“Increase Joinder” has the meaning specified in Section 2.14(b)(i).

“Incur” means to issue, create, assume, guarantee, incur or otherwise become liable for and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.  Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.

“Indebtedness” as to any Person means (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement obligations in respect of letters of credit and bankers acceptances,  (c) all obligations of such Person as a lessee under Capital Leases, (d) all obligations or liabilities of another Person secured by a Lien on any asset of such Person, irrespective of whether such obligation or liability is assumed, (e) all obligations of such Person to pay the deferred purchase price of assets (other than (i) trade payables incurred in the ordinary course of business and repayable in accordance with customary trade practices, (ii) royalty payments payable in the ordinary course of business in respect of non-exclusive licenses, (iii) any Earn-Out obligations until the amount of such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP, (iv) short-term intercompany payables arising under shared services arrangements (as among any of Parent and its Subsidiaries) in the ordinary course of business, (v) accrued expenses in the ordinary course of business and (vi) customer deposits and advance payments received in the ordinary course of business), (f) all net monetary obligations of such Person owing under Hedge Agreements (which amount shall be calculated based on the amount that would be payable by such Person if the Hedge Agreement were terminated on the date of determination), (g) any Disqualified Equity Interests of such Person, and (h) any obligation of such Person guaranteeing or intended to guarantee (whether directly or indirectly guaranteed, endorsed, co-made, discounted, or sold with recourse) any obligation of any other Person that constitutes Indebtedness under any of clauses (a) through (g) above.  For purposes of this definition, (i) the amount of any Indebtedness represented by a guaranty or other similar instrument shall be the lesser of the principal amount of the obligations guaranteed and still outstanding and the maximum amount for which the guaranteeing Person may be

-24-

liable pursuant to the terms of the instrument embodying such Indebtedness, and (ii) the amount of any Indebtedness which is limited or is non-recourse to a Person or for which recourse is limited to an identified asset shall be valued at the lesser of (A) if applicable, the limited amount of such obligations, and (B) if applicable, the fair market value (as determined by the Parent in its reasonable business judgment and in good faith) of such assets securing such obligation.

“Indemnified Liabilities” has the meaning specified in Section 10.3 of this Agreement.

“Indemnified Person” has the meaning specified in Section 10.3 of this Agreement.

“Indemnified Taxes” means, (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by, or on account of any obligation of, any Loan Party under any Loan Document, and (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intercompany Subordination Agreement” means any intercompany subordination agreement executed and delivered by each Loan Party and each of its Subsidiaries, and Agent, the form and substance of which is reasonably satisfactory to Agent.

“Intercreditor Agreements”  means, collectively, any Junior Lien Intercreditor Agreement and the Senior Secured Notes Intercreditor Agreement (and each, an “Intercreditor Agreement”).

“Interest Expense” means, for any period, the aggregate of the interest expense of Parent and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, 3, or 6 months thereafter; provided, that (a) interest shall accrue at the applicable rate based upon the LIBOR Rate from and including the first day of each Interest Period to, but excluding, the day on which any Interest Period expires, (b) any Interest Period that would end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day, (c) with respect to an Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period), the Interest Period shall end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months after the date on which the Interest Period began, as applicable, and (d) Borrowers may not elect an Interest Period which will end after the Maturity Date.

“Inventory” means inventory (as that term is defined in the Code).

“Inventory Reserves” means, as of any date of determination, (a) Landlord Reserves in respect of Inventory, and (b) those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves for slow moving Inventory and Inventory shrinkage) with respect to Eligible Inventory, including based on the results of appraisals.

-25-

“Investment” means, with respect to any Person, any investment by such Person in any other Person (including Affiliates) in the form of loans, guarantees, advances, capital contributions (excluding (a) commission, travel, and similar advances to officers and employees of such Person made in the ordinary course of business, and (b) bona fide accounts receivable arising in the ordinary course of business), or acquisitions of Indebtedness, Equity Interests, or all or substantially all of the assets of such other Person (or of any division or business line of such other Person), and any other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP.  The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustment for increases or decreases in value, or write-ups, write-downs, or write-offs with respect to such Investment.

“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“ISP” means, with respect to any Letter of Credit, the International Standby Practices 1998 (International Chamber of Commerce Publication No. 590) and any version or revision thereof accepted by the Issuing Bank for use.

“Issuer Document” means, with respect to any Letter of Credit, a letter of credit application, a letter of credit agreement, or any other document, agreement or instrument entered into (or to be entered into) by a Borrower in favor of Issuing Bank and relating to such Letter of Credit.

“Issuing Bank” means Wells Fargo or any other Lender that, at the request of the Administrative Borrower and with the consent of Agent, agrees, in such Lender’s sole discretion, to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section 2.11 of this Agreement, and Issuing Bank shall be a Lender.

“Joinder” means a joinder agreement substantially in the form of Exhibit J-1 to this Agreement.

“Junior Lien Additional Tranche B Loan” means the “Additional Tranche B Loan”  (as defined in the Junior Lien Term Loan Credit Agreement, as in effect on the Closing Date) issued by Parent upon any Existing 2029 Debentures Conversion.

“Junior Lien Exchange Notes” means the “Exchange Notes” (as defined in the Junior Lien Term Loan Credit Agreement, as in effect on the Closing Date) issued by Parent upon (a) any Existing 2029 Debentures Conversion (any such “Exchange Notes” referenced in this clause (a), “Debenture Junior Lien Exchange Notes”), or (b) as provided in Section 5.09(a) or (c) of the Junior Lien Term Loan Credit Agreement (any such “Exchange Notes” referenced in this clause (b), “Alternative Junior Lien Exchange Notes”).

“Junior Lien Initial Tranche B Loan” means the “Initial Tranche B Loan” (as defined in the Junior Lien Term Loan Credit Agreement).

“Junior Lien Intercreditor Agreement” means (a) the Junior Lien Intercreditor Agreement, dated as of the Closing Date,  among Agent, the Senior Secured Notes Agent and the Junior Lien Term Loan Agent, and acknowledged by the Loan Parties and (b) any other intercreditor agreement on terms not less favorable to any member of the Lender Group than the terms of the intercreditor agreement described in clause (a) above and reasonably satisfactory to Agent, pursuant to which the holders (or the Junior Lien Term Loan Agent or other trustee or agent on behalf of the holders) of any Indebtedness subordinate the Liens securing such Indebtedness to the Senior Secured Notes Obligations and the Obligations and which is acknowledged by the Loan Parties.

-26-

“Junior Lien Term Loan Agent” means The Bank of New York Mellon, in its capacities as administrative agent and collateral agent under the Junior Lien Term Loan Credit Agreement and the other Junior Lien Term Loan Documents, together with any successor administrative agent or collateral agent appointed pursuant to the Junior Lien Term Loan Documents and the Junior Lien Intercreditor Agreement.

“Junior Lien Term Loan Credit Agreement” means that certain Junior Lien Term Loan Credit Agreement, dated as of the date hereof, by and among Parent, as the borrower, the lenders party thereto, the guarantors party thereto, and the Junior Lien Term Loan Agent.

“Junior Lien Term Loan Documents” means the Junior Lien Term Loan Credit Agreement, the promissory note(s), the Collateral Documents (as defined in the Junior Lien Term Loan Credit Agreement) and all other guarantees, security documents and other documents executed and delivered with respect to the Junior Lien Term Loan Credit Agreement.

“Junior Lien Term Loan Obligations” means the “Obligations” as such term is defined in the Junior Lien Term Loan Credit Agreement or any equivalent term used to describe the obligations arising thereunder and in connection therewith.

“Junior Lien Tranche A Loan” means the “Tranche A Loan” (as defined in the Junior Lien Term Loan Credit Agreement).

“Landlord Reserve” means, as to each location at which a Borrower has Inventory and as to which a Collateral Access Agreement has not been received by Agent, a reserve in an amount equal to 3 months’ rent, storage charges, fees or other amounts under the lease or other applicable agreement relative to such location or, if greater and Agent so elects, the number of months’ rent, storage charges, fees or other amounts for which the landlord, bailee, processor, warehouseman or other property owner will have, under applicable law, a Lien in the Inventory of such Borrower to secure the payment of such amounts under the lease or other applicable agreement relative to such location.

“Lender” has the meaning set forth in the preamble to this Agreement, shall include Issuing Bank and the Swing Lender, and shall also include any other Person made a party to this Agreement pursuant to the provisions of Section 13.1 of this Agreement and “Lenders” means each of the Lenders or any one or more of them.

“Lender Group” means each of the Lenders (including Issuing Bank and the Swing Lender) and Agent, or any one or more of them.

“Lender Group Expenses” means all (a) reasonable and documented costs or expenses (including taxes and insurance premiums) required to be paid by any Loan Party or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Lender Group, (b) reasonable and documented out-of-pocket fees or charges paid or incurred by Agent in connection with the Lender Group’s transactions with each Loan Party and its Subsidiaries under any of the Loan Documents, including, photocopying, notarization, couriers and messengers, telecommunication, public record searches, filing fees, recording fees, publication, real estate surveys, real estate title policies and endorsements, and environmental audits, (c) Agent’s customary fees and charges imposed or incurred in connection with any background checks or OFAC/PEP searches related to any Loan Party or its Subsidiaries, (d) Agent’s customary fees and charges (as adjusted from time to time) with respect to the disbursement of funds (or the receipt of funds) to or for the account of any Borrower (whether by wire transfer or otherwise), together with any reasonable and documented out-of-pocket costs and expenses incurred in connection therewith, (e) customary charges imposed or incurred by Agent resulting from the

-27-

dishonor of checks payable by or to any Loan Party, (f) reasonable, documented out-of-pocket costs and expenses paid or incurred by the Lender Group to correct any default or enforce any provision of the Loan Documents, or during the continuance of an Event of Default, in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated, (g) field examination, appraisal, and valuation fees and expenses of Agent related to any field examinations, appraisals, or valuation to the extent of the fees and charges (and up to the amount of any limitation) provided in Section 2.10 of this Agreement, (h) Agent’s  and Lenders’  reasonable and documented costs and expenses (including reasonable and documented attorneys’ fees and expenses) relative to third party claims or any other lawsuit or adverse proceeding paid or incurred, whether in enforcing or defending the Loan Documents or otherwise in connection with the transactions contemplated by the Loan Documents, Agent’s Liens in and to the Collateral, or the Lender Group’s relationship with any Loan Party or any of its Subsidiaries, (i) Agent’s reasonable and documented costs and expenses (including reasonable and documented attorneys’ fees and due diligence expenses) incurred in advising, structuring, drafting, reviewing, administering (including travel, meals, and lodging), syndicating (including reasonable costs and expenses relative to, CUSIP, DXSyndicate™, SyndTrak or other communication costs incurred in connection with a syndication of the loan facilities), or amending, waiving, or modifying the Loan Documents, and (j) Agent’s and each Lender’s reasonable and documented costs and expenses (including reasonable and documented attorneys, accountants, consultants, and other advisors fees and expenses) incurred in terminating, enforcing (including attorneys, accountants, consultants, and other advisors fees and expenses incurred in connection with a “workout,” a “restructuring,” or an Insolvency Proceeding concerning any Loan Party or any of its Subsidiaries or in exercising rights or remedies under the Loan Documents), or defending the Loan Documents, irrespective of whether a lawsuit or other adverse proceeding is brought, or in taking any enforcement action or any Remedial Action with respect to the Collateral.

“Lender Group Representatives” has the meaning specified in Section 17.9(a) of this Agreement.

“Lender-Related Person” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, officers, directors, employees, attorneys, and agents.

“Letter of Credit” means a letter of credit (as that term is defined in the Code) issued by Issuing Bank (including, for the avoidance of doubt, any Pledged Cash Letter of Credit).

“Letter of Credit Collateralization” means any of the following: (a) providing cash collateral (pursuant to documentation reasonably satisfactory to Agent (including that Agent has a first priority perfected Lien in such cash collateral), including provisions that specify that the Letter of Credit Fees and all commissions, fees, charges and expenses provided for in Section 2.11(k) of this Agreement (including any fronting fees) will continue to accrue while the Letters of Credit are outstanding) to be held by Agent (for the benefit of (x) the Revolving Lenders with respect to any Sub-facility Letter of Credit and (y) the Pledged Cash Letter of Credit Issuing Bank with respect to any Pledged Cash Letter of Credit) in an amount equal to (1) 102% of the then existing Letter of Credit Usage (other than Pledged Cash L/C Usage), and (2) 102% of the then existing Pledged Cash L/C Usage,  such percentage taking into account the amount of any Pledged Cash at such time;  (b) delivering to Agent documentation executed by all beneficiaries under the Letters of Credit, in form and substance reasonably satisfactory to Agent and Issuing Bank, terminating all of such beneficiaries’ rights under the Letters of Credit; (c) providing Agent with a standby letter of credit, in form and substance reasonably satisfactory to Agent, from a commercial bank acceptable to Agent (in its sole discretion) in an amount equal to (1) 102% of the then existing Letter of Credit Usage (other than Pledged Cash L/C Usage) and (2) 102% of the then existing Pledged Cash L/C Usage (it being understood that the Letter of Credit Fee and all fronting fees set forth in this

-28-

Agreement will continue to accrue while the Letters of Credit are outstanding and that any such fees that accrue must be an amount that can be drawn under any such standby letter of credit); or (d) the Borrowers making other arrangements with respect to the Letters of Credit of any Issuing Bank satisfactory to such Issuing Bank in its sole discretion.

“Letter of Credit Cutoff Date” means the date which is the earlier to occur of (a) 90 days following the Closing Date (or such longer period agreed to by Agent in its sole discretion) or (b) the date upon which all of the Existing Letters of Credit have been cancelled or terminated and the Pledged Cash Letters of Credit have been issued in accordance with the terms of this Agreement in lieu of such Existing Letters of Credit.

“Letter of Credit Disbursement” means a payment made by Issuing Bank pursuant to a Letter of Credit.

“Letter of Credit Exposure” means, as of any date of determination with respect to any Lender, such Lender’s  participation in the Letter of Credit Usage (other than Pledged Cash L/C Usage) pursuant to Section 2.11(e) on such date.

“Letter of Credit Fee” has the meaning specified in Section 2.6(b) of this Agreement.

“Letter of Credit Indemnified Costs” has the meaning specified in Section 2.11(f) of this Agreement.

“Letter of Credit Related Person” has the meaning specified in Section 2.11(f) of this Agreement.

“Letter of Credit Sublimit” means (a) for the period beginning with and including the Closing Date through and including the Letter of Credit Cutoff Date, $30,000,000 and (b) at all other times, $20,000,000.

“Letter of Credit Usage” means, as of any date of determination, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit,  plus (b) the aggregate amount of outstanding reimbursement obligations with respect to Letters of Credit which remain unreimbursed or which have not been paid through a Revolving Loan.

“LIBOR Deadline” has the meaning specified in Section 2.12(b)(i) of this Agreement.

“LIBOR Notice” means a written notice in the form of Exhibit L-1 to this Agreement.

“LIBOR Option” has the meaning specified in Section 2.12(a) of this Agreement.

“LIBOR Rate” means the rate per annum as published by ICE Benchmark Administration Limited (or any successor page or other commercially available source as the Agent may designate from time to time) as of 11:00 a.m., London time, two Business Days prior to the commencement of the requested Interest Period, for a term, and in an amount, comparable to the Interest Period and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a LIBOR Rate Loan) by Borrowers  in accordance with this Agreement (and, if any such published rate is below zero, then the rate determined pursuant to this clause shall be deemed to be zero).  Each determination of the LIBOR Rate shall be made by the Agent and shall be conclusive in the absence of manifest error.

-29-

“LIBOR Rate Loan” means each portion of a Revolving Loan that bears interest at a rate determined by reference to the LIBOR Rate.

“LIBOR Rate Margin”  has the meaning set forth in the definition of Applicable Margin.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit arrangement, encumbrance, easement, lien (statutory or other), security interest, or other security arrangement and any other preference, priority, or preferential arrangement of any kind or nature whatsoever, including any conditional sale contract or other title retention agreement,  the interest of a lessor under a Capital Lease and any synthetic or other financing lease having substantially the same economic effect as any of the foregoing.

“Line Cap” means, as of any date of determination, the lesser of (a) the Maximum Revolver Amount and (b) the Borrowing Base as of such date of determination.

“Loan”  means any Revolving Loan, Swing Loan or Extraordinary Advance made (or to be made) hereunder.

“Loan Account” has the meaning specified in Section 2.9 of this Agreement.

“Loan Documents” means this Agreement, the Disclosure Letter, the Control Agreements, the Copyright Security Agreement, any Borrowing Base Certificate, the Fee Letter, the Guaranty and Security Agreement, any Intercompany Subordination Agreement, the Intercreditor Agreements,  any Issuer Documents, any Compliance Certificate, the Letters of Credit, the Mortgages, the Patent Security Agreement, the Trademark Security Agreement, any note or notes executed by Borrowers in connection with this Agreement and payable to any member of the Lender Group, and any other instrument or agreement entered into, now or in the future, by any Loan Party or any of its Subsidiaries and any member of the Lender Group in connection with this Agreement (but specifically excluding Bank Product Agreements and any Hedge Agreement).

“Loan Party” means any Borrower or any Guarantor.

“Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to time.

“Material Adverse Effect” means (a) a material adverse effect in the business, operations, results of operations, assets, liabilities or financial condition of the Loan Parties and their Subsidiaries, taken as a whole, (b) a material impairment of the Loan Parties’ and their Subsidiaries’ ability to perform their obligations under the Loan Documents to which they are parties or of the Lender Group’s ability to enforce the Obligations or realize upon the Collateral (other than as a result of as a result of an action taken or not taken that is solely in the control of Agent), or (c) a material impairment of the enforceability or priority of Agent’s Liens with respect to all or a material portion of the Collateral.

“Material Contracts” means each of the agreements listed as exhibits to Parent’s Annual Report on Form 10-K for the year ended December 31, 2017 or any Annual Report on Form 10-K, Quarterly Report on Form 10-Q or Current Report on Form 8-K filed thereafter, included therein pursuant to the requirements of clauses (2), (4), (9) or (10) of Item 601(b) of Regulation S-K (other than those which have expired, terminated or are otherwise no longer in effect).

-30-

“Material Subsidiary” means (a) each Borrower and (b) as of any date, any wholly owned Subsidiary of Parent whose total assets, as of that date, are greater than $5,000,000 and whose total revenues for the most recent 12‑month period exceed $5,000,000.

“Maturity Date” means July 16,  2023.

“Maximum Revolver Amount” means $65,000,000, decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.4(c) of this Agreement and increased by the amount of any Increase made in accordance with Section 2.14 of this Agreement.

“McClatchy Family Entity” has the meaning specified in the definition of Change of Control.

“Member of the McClatchy Family” means: (a) Trust for the Primary Benefit of James B. McClatchy, Trust for the Primary Benefit of Charles K. McClatchy, Trust for the Primary Benefit of Sue Stiles, Molly Maloney Evangelisti, Brown McClatchy Maloney, Kevin McClatchy, Adair McClatchy, Carlos McClatchy, Trust FBO William McClatchy, C.K. McClatchy Exempt T/U/W fbo Charles K. McClatchy, C.K. McClatchy Non-exempt T/U/W fbo Charles K. McClatchy, Britney Beth Maloney, Trust FBO Cortney Cate Maloney, Trust FBO Blaire Brinnen Maloney, Trust FBO Mallory McClatchy Maloney, and Carolan Kelly Stiles; (b) the spouse, for the time being and from time to time, of any Person listed in clause (a) above; (c) after the death of any Person listed in clause (a) above, the widow or widower, if any, of any Person listed in clause (a) above; (d) the issue of any Person listed in clause (a) above; (e) individuals adopted by any Person listed in clause (a) above or adopted by any of the issue of any Person listed in clause (a) above;  provided, however, that such individuals have not attained the age of majority at the date of such adoption, together with the issue of any such adopted individuals; provided that if any Person is born out of wedlock he shall not be deemed to be the issue of another Person for the purposes hereof unless and until he is proven or acknowledged to be the issue of such Person; or (f) a Qualified Trust, but only to the extent of its Family Percentage Holding of voting shares or rights to voting shares of the capital stock of the Parent at such time.

“Moody’s” has the meaning specified in the definition of Cash Equivalents.

“Mortgages” means, individually and collectively, one or more mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a Loan Party or one of its Subsidiaries in favor of Agent, in form and substance reasonably satisfactory to Agent, that encumber the Real Property Collateral.

“Multiemployer Plan” means any multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA with respect to which any Loan Party or ERISA Affiliate has an obligation to contribute or has any liability, contingent or otherwise or could be assessed withdrawal liability assuming a complete withdrawal from any such multiemployer plan.

“Non-Consenting Lender” has the meaning specified in Section 14.2(a) of this Agreement.

“Non-Defaulting Lender” means each Lender other than a Defaulting Lender.

“Notification Event”  means (a) the occurrence of a “reportable event” described in Section 4043 of ERISA for which the 30-day notice requirement has not been waived by applicable regulations issued by the PBGC, (b) the withdrawal of any Loan Party or ERISA Affiliate from a Pension Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of

-31-

ERISA, (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC or any Pension Plan or Multiemployer Plan administrator, (e) any other event or condition that would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, (f) the imposition of a Lien pursuant to the IRC or ERISA in connection with any Employee Benefit Plan or the existence of any facts or circumstances that could reasonably be expected to result in the imposition of a Lien, (g) the partial or complete withdrawal of any Loan Party or ERISA Affiliate from a Multiemployer Plan, (h) any event or condition that results in the insolvency of a Multiemployer Plan under ERISA, (i) any event or condition that results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC of proceedings to terminate or to appoint a trustee to administer a Multiemployer Plan under ERISA, (j) any Pension Plan being in “at risk status” within the meaning of IRC Section 430(i), (k) any Multiemployer Plan being in “endangered status” or “critical status” within the meaning of IRC Section 432(b) or the determination that any Multiemployer Plan is or is expected to be insolvent within the meaning of Title IV of ERISA, (l) with respect to any Pension Plan, any Loan Party or ERISA Affiliate incurring a substantial cessation of operations within the meaning of ERISA Section 4062(e), (m) an “accumulated funding deficiency” within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA) or the failure of any Pension Plan or Multiemployer Plan to meet the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA), in each case, whether or not waived, (n) the filing of an application for a waiver of the minimum funding standards within the meaning of the IRC or ERISA (including Section 412 of the IRC or Section 302 of ERISA) with respect to any Pension Plan or Multiemployer Plan, (o) the failure to make by its due date a required payment or contribution with respect to any Pension Plan or Multiemployer Plan, (p) any event that results in or could reasonably be expected to result in a liability by a Loan Party pursuant to Title I of ERISA or the excise tax provisions of the IRC relating to Pension Plans or any event that results in or could reasonably be expected to result in a liability to any Loan Party or ERISA Affiliate pursuant to Title IV of ERISA or Section 401(a)(29) of the IRC, or (q) any Loan Party or ERISA Affiliate incurring any liability under Title IV of ERISA with respect to any Pension Plan or Multiemployer Plan (other than premiums due and not delinquent).

“Obligations” means (a) all loans (including the Revolving Loans (inclusive of Extraordinary Advances and Swing Loans)), debts, principal, interest (including any interest that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), reimbursement or indemnification obligations with respect to Letters of Credit (irrespective of whether contingent), premiums, liabilities (including all amounts charged to the Loan Account pursuant to this Agreement), obligations (including indemnification obligations), fees (including the fees provided for in the Fee Letter), Lender Group Expenses (including any fees or expenses that accrue after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), guaranties, and all covenants and duties of any other kind and description owing by any Loan Party arising out of, under, pursuant to, in connection with, or evidenced by this Agreement or any of the other Loan Documents and irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all other expenses or other amounts that any Loan Party is required to pay or reimburse by the Loan Documents or by law or otherwise in connection with the Loan Documents, and (b) all Bank Product Obligations;  provided that, anything to the contrary contained in the foregoing notwithstanding, the Obligations shall exclude any Excluded Swap Obligation.  Without limiting the generality of the foregoing, the Obligations of Borrowers under the Loan Documents include the obligation to pay (i) the principal of the Revolving Loans, (ii) interest accrued on the Revolving Loans,

-32-

(iii) the amount necessary to reimburse Issuing Bank for amounts paid or payable pursuant to Letters of Credit, (iv) Letter of Credit commissions, fees (including fronting fees) and charges, (v) Lender Group Expenses, (vi) fees payable under this Agreement or any of the other Loan Documents, and (vii) indemnities and other amounts payable by any Loan Party under any Loan Document.  Any reference in this Agreement or in the Loan Documents to the Obligations shall include all or any portion thereof and any extensions, modifications, renewals, or alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“OFAC”  means The Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Originating Lender” has the meaning specified in Section 13.1(e) of this Agreement.

“Other Hedge Obligations” means any and all obligations or liabilities, whether absolute or contingent, due or to become due, now existing or hereafter arising, of each Loan Party and its Subsidiaries arising under, owing pursuant to, or existing in respect of Hedge Agreements entered into in the ordinary course of business with any counterparty that is not a Hedge Provider hereunder.  For the avoidance of doubt, Other Hedge Obligations shall not constitute Secured Obligations under and as defined in the Guaranty and Security Agreement.

“Other Taxes” means all present or future stamp, court, excise, value added, or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document.

“Overadvance” means, as of any date of determination, that the Revolver Usage is greater than any of the limitations set forth in Section 2.1 or Section 2.11 of this Agreement.

“Parent” has the meaning specified in the preamble to this Agreement.

“Participant” has the meaning specified in Section 13.1(e) of this Agreement.

“Participant Register” has the meaning set forth in Section 13.1(i) of this Agreement.

“Patent Security Agreement” has the meaning specified in the Guaranty and Security Agreement.

“Patriot Act” has the meaning specified in Section 4.13 of this Agreement.

“Payment Conditions”  means, at the time of determination with respect to a proposed payment to fund a Specified Transaction, that:

(a)         no Default or Event of Default then exists or would arise as a result of the consummation of such Specified Transaction,

(b)         either

(i)          Excess Availability, (x) at all times during the 30 consecutive days immediately preceding the date of such proposed payment and the consummation of such Specified Transaction, calculated on a pro forma basis as if such proposed payment was made, and the Specified Transaction was consummated, on the first day of such period, and (y) after giving effect to such

-33-

proposed payment and Specified Transaction, in each case, is not less than the greater of (1) 25% of the Maximum Revolver Amount, and (2) $16,250,000, or

(ii)         both (A) the Fixed Charge Coverage Ratio is equal to or greater than 1.10:1.00  for the trailing 12 month period most recently ended for which financial statements are required to have been delivered to Agent pursuant to Schedule 5.1 to this Agreement (calculated on a pro forma basis as if such proposed payment is a Fixed Charge made on the last day of such 12 month period (it being understood that such proposed payment shall also be a Fixed Charge made on the last day of such 12 month period for purposes of calculating the Fixed Charge Coverage Ratio under this clause (ii) for any subsequent proposed payment to fund a Specified Transaction)), and (B) Excess Availability, (x) at all times during the 30 consecutive days immediately preceding the date of such proposed payment and the consummation of such Specified Transaction, calculated on a pro forma basis as if such proposed payment was made, and the Specified Transaction was consummated, on the first day of such period, and (y) after giving effect to such proposed payment and Specified Transaction, in each case, is not less than the greater of (1) 20% of the Maximum Revolver Amount, and (2) $13,000,000, and

(c)         Administrative Borrower has delivered a certificate to Agent, in form and substance reasonably satisfactory to Agent, certifying that all conditions described in clauses (a) and (b) above have been satisfied.

“PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

“Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV or Section 302 of ERISA or Sections 412 or 430 of the IRC sponsored, maintained, or contributed to by any Loan Party or ERISA Affiliate or to which any Loan Party or ERISA Affiliate has any liability, contingent or otherwise.

“Perfection Certificate” means a certificate in the form of Exhibit P-1 to this Agreement.

“Permitted Acquisition” means any Acquisition so long as:

(a)         no Default or Event of Default shall have occurred and be continuing or would result from the consummation of the proposed Acquisition and the proposed Acquisition is consensual,

(b)         no Indebtedness will be incurred, assumed, or would exist with respect to any Loan Party or its Subsidiaries as a result of such Acquisition, other than Permitted Indebtedness and no Liens will be incurred, assumed, or would exist with respect to the assets of any Loan Party or its Subsidiaries as a result of such Acquisition other than Permitted Liens,

(c)         with respect to any Permitted Acquisition (whether or not consummated) that will have a purchase price and any other consideration payable in connection therewith in excess of $50,000,000,  Borrowers have provided Agent with written confirmation, supported by reasonably detailed calculations, that on a pro forma basis (including pro forma adjustments arising out of events which are directly attributable to such proposed Acquisition, are factually supportable, and are expected to have a continuing impact, in each case, determined as if the combination had been accomplished at the beginning of the relevant period; such eliminations and inclusions determined on a basis consistent with Article 11 of Regulation S‑X promulgated under the Securities Act and as interpreted by the staff of the SEC) created by adding the historical combined financial statements of Parent (including the combined financial statements of any other Person or assets that were the subject of a prior Permitted Acquisition during the relevant period) to the historical consolidated financial statements of the Person to be acquired (or the historical financial statements related to the assets to be acquired) pursuant to the proposed

-34-

Acquisition, the Loan Parties and their Subsidiaries (i) would have been in compliance with the financial covenant in Section 7 of this Agreement for the fiscal month ended immediately prior to the proposed date of consummation of such proposed Acquisition regardless of whether the financial covenant is required to be tested for such fiscal month, and (ii) are projected to be in compliance with the financial covenant in Section 7 of this Agreement for each of the twelve fiscal months in the period ended one year after the proposed date of consummation of such proposed Acquisition assuming that the financial covenant will be required to be tested in each such fiscal month,

(d)         with respect to any Permitted Acquisition (whether or not consummated) that will have a purchase price and any other consideration payable in connection therewith in excess of $50,000,000,  Borrowers have provided Agent with its due diligence package relative to the proposed Acquisition, including forecasted balance sheets, profit and loss statements, and cash flow statements of the Person or assets to be acquired, all prepared on a basis consistent with such Person’s (or assets’) historical financial statements, together with appropriate supporting details and a statement of underlying assumptions for the one year period following the date of the proposed Acquisition, on a quarter by quarter basis), in form and substance (including as to scope and underlying assumptions) reasonably satisfactory to Agent,

(e)         Borrowers have provided Agent with written notice of the proposed Acquisition at least 10 Business Days prior to the anticipated closing date of the proposed Acquisition (or such shorter time period as may be acceptable to Agent) and, not later than five Business Days prior to the anticipated closing date of the proposed Acquisition, copies of the acquisition agreement and other material documents relative to the proposed Acquisition, which agreement and documents must be reasonably acceptable to Agent,

(f)         the assets being acquired (other than a de minimis amount of assets in relation to Parent’s and its Subsidiaries’ total assets), or the Person whose Equity Interests are being acquired, are useful in or engaged in, as applicable, the business of the Loan Parties and their Subsidiaries or a business reasonably related thereto or constitutes a reasonable extension thereof,

(g)         the assets being acquired (other than a de minimis amount of assets in relation to the assets being acquired) are located within the United States or the Person whose Equity Interests are being acquired is organized in a jurisdiction located within the United States,

(h)         the subject assets or Equity Interests, as applicable, are being acquired directly by a Borrower or one of its Subsidiaries that is a Loan Party, and, in connection therewith, the applicable Loan Party shall have complied or will comply with Section 5.11 or 5.12 of this Agreement, as applicable, within the time periods provided therein, and, in the case of an acquisition of Equity Interests, the Person whose Equity Interests are acquired shall become a Loan Party, and

(i)          the Payment Conditions are satisfied.

“Permitted Discretion” means a determination made in the exercise of commercially reasonable (from the perspective of a secured asset-based lender) business judgment in good faith.

“Permitted Dispositions” means:

(a)         sales, abandonment, or other dispositions of Equipment that is substantially worn, damaged, surplus, or obsolete or no longer used or useful in the ordinary course of business and leases or subleases of Real Property which do not materially interfere with the conduct of the business of the Loan Parties and their Subsidiaries as conducted immediately prior to such lease or sublease,

-35-

(b)         sales of Inventory to buyers in the ordinary course of business,

(c)         the use or transfer of money or Cash Equivalents in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents,

(d)         the licensing or sublicensing (including intercompany licenses and sublicenses), on a non-exclusive basis, of patents, trademarks, copyrights, and other intellectual property rights in a manner which does not materially interfere with the conduct of the business of the Loan Parties and their Subsidiaries as conducted immediately prior to such license or sublicense,

(e)         the granting or creation of Permitted Liens,

(f)         the sale or discount, in each case without recourse, of accounts receivable (other than Eligible Accounts) arising in the ordinary course of business, but only in connection with the compromise or collection thereof,

(g)         any involuntary loss, damage or destruction of property,

(h)         any involuntary condemnation, seizure or taking, by exercise of the power of eminent domain or otherwise, or confiscation or requisition of use of property,

(i)          the leasing or subleasing of assets of any Loan Party or its Subsidiaries in the ordinary course of business,

(j)          the sale or issuance of Equity Interests (other than Disqualified Equity Interests) of Parent,

(k)         (i) the lapse of registered patents, trademarks, copyrights and other intellectual property of any Loan Party or any of its Subsidiaries to the extent not economically desirable in the conduct of its business, or (ii) the abandonment of patents, trademarks, copyrights, or other intellectual property rights in the ordinary course of business, so long as (in each case under clauses (i) and (ii)), (A) with respect to copyrights, such copyrights are not material revenue generating copyrights and (B) such lapse or abandonment is not materially adverse to the interests of the Loan Parties and their Subsidiaries (as determined in good faith by Parent),

(l)          the making of Restricted Payments that are expressly permitted to be made pursuant to this Agreement,

(m)        the making of Permitted Investments,

(n)         so long as no Event of Default has occurred and is continuing or would immediately result therefrom, transfers of assets (i) from any Loan Party or any of its Subsidiaries (other than any Borrower) to a Loan Party, (ii) from any Subsidiary of any Loan Party that is not a Loan Party to any other Subsidiary of any Loan Party or to Parent, (iii) from any Borrower to another Borrower, and (iv) from any Loan Party to any Subsidiary that is not a Loan Party,  so long as (A) the aggregate fair market value of all assets transferred to any Subsidiary that is not a Loan Party in a fiscal year (including the proposed transfer pursuant to this clause (iv)) would not exceed $2,000,000, (B) no Event of Default has occurred and is continuing or would immediately result from such transfer, and (C) the assets to be transferred do not contribute to the Borrowing Base,

(o)         dispositions of Equipment or Real Property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, or (ii) the proceeds of

-36-

such disposition are promptly applied to the purchase price of such replacement property; provided, that to the extent the property being transferred constitutes Collateral, such replacement property shall constitute Collateral,

(p)         dispositions of assets acquired by the Loan Parties and their Subsidiaries pursuant to a Permitted Acquisition consummated within 12 months of the date of the proposed disposition so long as (i) the consideration received for the assets to be so disposed is at least equal to the fair market value of such assets, (ii) the assets to be so disposed are not necessary or economically desirable in connection with the business of the Loan Parties and their Subsidiaries, and (iii) the assets to be so disposed are readily identifiable as assets acquired pursuant to the subject Permitted Acquisition,

(q)         the voluntary termination or unwinding of Hedge Agreements,

(r)         the surrender or waiver of contract rights or litigation rights in the ordinary course of business or the settlement, release or surrender of tort or litigation claims of any kind,

(s)         the transfer of improvements, additions or alterations in connection with the lease of any property,

(t)          [reserved],

(u)         operating leases in the ordinary course of business,

(v)         to the extent allowable under Section 1031 of the IRC, any exchange of like Real Property (excluding any boot thereon) for use in a business permitted by Section 6.5,

(w)        a Sale/Leaseback Transaction that is made for cash consideration in an amount not less than the cost of the underlying fixed or capital asset and is consummated within 180 days after Parent or any of its Subsidiaries acquires or completes the acquisition of such fixed or capital asset,

(x)         Sale/Leaseback Transactions of any real property (including, without limitation, land, buildings and fixtures) by Parent or any of its Subsidiaries for an aggregate consideration not to exceed $75,000,000 during the term of this Agreement, and

(y)         sales or dispositions of fixed assets (including intangible property related to such fixed assets) not otherwise permitted in clauses (a) through (x) above, so long as made at fair market value and the aggregate fair market value of all assets disposed of in a fiscal year (including the proposed disposition pursuant to this clause (y))  would not exceed $10,000,000.

“Permitted Indebtedness” means:

(a)         Indebtedness in respect of the Obligations,

(b)         Indebtedness as of the Closing Date set forth on Schedule 4.14 to the Disclosure Letter and any Refinancing Indebtedness in respect of such Indebtedness,

(c)         Permitted Purchase Money Indebtedness and any Refinancing Indebtedness in respect of such Indebtedness,

(d)         Indebtedness arising in connection with the endorsement of instruments or other payment items for deposit,

-37-

(e)         Indebtedness consisting of (i) unsecured guarantees and obligations incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds, bid bonds, appeal bonds, completion guarantee and similar obligations; and (ii) unsecured obligations arising with respect to customary indemnification obligations to purchasers in connection with Permitted Dispositions,

(f)         unsecured Indebtedness of any Loan Party that is incurred on the date of the consummation of a Permitted Acquisition solely for the purpose of consummating such Permitted Acquisition so long as (i) no Event of Default has occurred and is continuing or would result therefrom, (ii) such unsecured Indebtedness is not incurred for working capital purposes, (iii) such unsecured Indebtedness does not have a stated maturity date (or otherwise provide for the maturity thereof on a non-accelerated basis) date prior to the date that is 12 months after the Maturity Date, (iv) such unsecured Indebtedness does not amortize until 12 months after the Maturity Date, (v) such unsecured Indebtedness does not provide for the payment of interest thereon in cash or Cash Equivalents prior to the date that is 12 months after the Maturity Date, and (vi) such Indebtedness is subordinated in right of payment to the Obligations on terms and conditions reasonably satisfactory to Agent and is otherwise on terms and conditions (including economic terms and absence of covenants) reasonably satisfactory to Agent,

(g)         Acquired Indebtedness in an amount not to exceed $25,000,000 outstanding at any one time,

(h)         Indebtedness incurred in the ordinary course of business under performance, surety, statutory, bid or appeal bonds,

(i)          Indebtedness owed to any Person providing property, casualty, liability, or other insurance to any Loan Party or any of its Subsidiaries, so long as the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such year,

(j)          the incurrence by any Loan Party or its Subsidiaries of Indebtedness under Hedge Agreements that is incurred for the bona fide purpose of hedging the interest rate, commodity, or foreign currency risks associated with such Loan Party’s or such Subsidiary’s  operations and not for speculative purposes,

(k)         Indebtedness incurred in the ordinary course of business in respect of credit cards, credit card processing services, debit cards, stored value cards, commercial cards (including so-called “purchase cards”,  “procurement cards” or “p-cards”), or Cash Management Services,

(l)          unsecured Indebtedness of any Loan Party owing to employees, former employees, former officers, directors, or former directors (or any spouses, ex-spouses, or estates of any of the foregoing) incurred in connection with the repurchase or redemption by such Loan Party of the Equity Interests of Parent that has been issued to such Persons, so long as (i) no Default or Event of Default has occurred and is continuing or would result from the incurrence of such Indebtedness, (ii) the aggregate amount of all such Indebtedness outstanding at any one time does not exceed $5,000,000 and (iii) such Indebtedness is subordinated in right of payment to the Obligations on terms and conditions reasonably acceptable to Agent,

(m)        contingent liabilities in respect of any indemnification obligation, adjustment of purchase price, non-compete, or similar obligation of any Loan Party incurred in connection with the consummation of one or more Permitted Acquisitions,

(n)         Indebtedness composing Permitted Investments,

-38-

(o)         unsecured Indebtedness incurred in respect of netting services, overdraft protection, and other like services, in each case, incurred in the ordinary course of business,

(p)         unsecured Indebtedness of any Loan Party or its Subsidiaries in respect of Earn-Outs owing to sellers of assets or Equity Interests to such Loan Party or its Subsidiaries that is incurred in connection with the consummation of one or more Permitted Acquisitions so long as such unsecured Indebtedness is on terms reasonably acceptable to Agent and does not exceed $10,000,000 in the aggregate at any time outstanding,

(q)         Indebtedness in an aggregate outstanding principal amount not to exceed $2,000,000 at any time outstanding for all Subsidiaries of each Loan Party that are Foreign Subsidiaries or CFCs;  provided, that such Indebtedness is not directly or indirectly recourse to any of the Loan Parties or of their respective assets,

(r)         accrual of interest, accretion or amortization of original issue discount, or the payment of interest in kind, in each case, on Indebtedness that otherwise constitutes Permitted Indebtedness,

(s)         Indebtedness in respect of the Senior Secured Notes Documents, in an aggregate principal amount not to exceed $310,000,000 minus the amount of any mandatory repayment, prepayment or redemption of the Senior Secured Notes on or prior to any date of determination,  so long as such Indebtedness is subject to the terms of the Senior Secured Notes Intercreditor Agreement,

(t)          Indebtedness in respect of the Junior Lien Term Loan Documents, in an aggregate principal amount not to exceed the sum of (i) (A) $157,100,000 with respect to the Junior Lien Tranche A Loan or any Junior Lien Exchange Notes issued in exchange therefor (so long as such Indebtedness is subject to the terms of a Junior Lien Intercreditor Agreement)  and (B) $193,500,000 with respect to the Junior Lien Initial Tranche B Loan or any Junior Lien Exchange Notes issued in exchange therefor (so long as such Indebtedness is subject to the terms of a Junior Lien Intercreditor Agreement)  and (ii) on and after any Existing 2029 Debentures Conversion,  Indebtedness in respect of any Permitted Junior Conversion Debt, so long as (x)  such Indebtedness is subject to a Junior Lien Intercreditor Agreement,  (y) the aggregate principal amount of Indebtedness permitted by this clause (t)(ii) does not exceed $75,000,000 and (z) the Borrowers provide Agent at least 5 Business Days’ prior written notice of any such Existing 2029 Debentures Conversion,

(u)         unsecured Indebtedness in respect of the Existing Unsecured 2029 Debentures in an aggregate principal amount outstanding not in excess of $82,764,000 less the aggregate principal amount of any Permitted Junior Conversion Debt following any Existing 2029 Debentures Conversion,

(v)         unsecured Indebtedness in respect of the Existing Unsecured 2027 Debentures in an aggregate principal amount outstanding not in excess of $7,105,000,

(w)        any other unsecured Indebtedness incurred by any Loan Party or any of its Subsidiaries in an aggregate outstanding amount not to exceed $30,000,000 at any one time,

(x)         Indebtedness incurred in respect of workers’ compensation claims, health, disability or other employee benefit or property, casualty or liability insurance, self-insurance obligations or security deposits, banker’s guarantees or banker’s acceptances, in each case in the ordinary course of business,

(y)         Indebtedness incurred in connection with (i) insurance premium financing arrangements not to exceed $10,000,000 at any time outstanding and in the ordinary course of business on

-39-

an unsecured basis or secured solely by the insurance policies financed or (ii) take-or-pay obligations in supply agreements in the ordinary course of business,

(z)         Indebtedness consisting of guarantees in respect of obligations of joint ventures, in an aggregate amount not to exceed $20,000,000 at any time outstanding, and

(aa)       unsecured guarantees by (i) Parent or any Loan Party of Indebtedness of Parent or any Loan Party permitted by clauses (a) through (z) above, (ii) any Subsidiary that is not a Loan Party of any Indebtedness of any Subsidiary that is not a Loan Party, and (iii) any Loan Party (other than Parent) of Indebtedness of a Subsidiary that is not a Loan Party in an aggregate principal amount at any time outstanding not to exceed $2,000,000.

“Permitted Intercompany Advances” means loans (other than short-term intercompany payables arising under shared services arrangements (as among any of Parent and its Subsidiaries) in the ordinary course of business) made by (a) a Loan Party to another Loan Party, (b) a Subsidiary of a Loan Party that is not a Loan Party to another Subsidiary of a Loan Party that is not a Loan Party, (c) a Subsidiary of a Loan Party that is not a Loan Party to a Loan Party, so long as the parties thereto are party to the Intercompany Subordination Agreement, and (d) a Loan Party to a Subsidiary of a Loan Party that is not a Loan Party so long as (i) the aggregate amount of all such loans (by type, not by the borrower) pursuant to this clause (d)  does not exceed $2,000,000 outstanding at any one time, (ii) at the time of the making of such loan, no Event of Default has occurred and is continuing or would result therefrom, and (iii) Borrowers shall have Excess Availability in an amount not less than the greater of (A) 20% of the Maximum Revolver Amount and (B) $13,000,000,  immediately after giving effect to each such loan.

“Permitted Investments” means:

(a)         Investments in cash and Cash Equivalents,

(b)         Investments in negotiable instruments deposited or to be deposited for collection in the ordinary course of business,

(c)         advances made in connection with, and accounts receivable or notes receivable arising from, sales of goods or services in the ordinary course of business,

(d)         Investments received in settlement of amounts due to any Loan Party or any of its Subsidiaries effected in the ordinary course of business or owing to any Loan Party or any of its Subsidiaries as a result of Insolvency Proceedings involving an account debtor or upon the foreclosure or enforcement of any Lien in favor of a Loan Party or its Subsidiaries,

(e)         Investments owned by any Loan Party or any of its Subsidiaries on the Closing Date and set forth on Schedule P-1 to the Disclosure Letter,

(f)         guarantees permitted under the definition of Permitted Indebtedness and guarantees of obligations not constituting Indebtedness in the ordinary course of business,

(g)         Permitted Intercompany Advances,

(h)         Investments acquired in connection with the satisfaction or enforcement of Indebtedness or claims due or owing to a Loan Party or its Subsidiaries (in bankruptcy of customers or suppliers or otherwise outside the ordinary course of business) or as security for any such Indebtedness or claims,

-40-

(i)          deposits of cash made in the ordinary course of business to secure performance of operating leases,

(j)          (i) non-cash loans and advances to employees, officers, and directors of a Loan Party or any of its Subsidiaries for the purpose of purchasing Equity Interests in Parent so long as the proceeds of such loans are used in their entirety to purchase such Equity Interests in Parent, (ii) commission, relocation, entertainment, payroll, travel and similar advances to cover matters that are expected at the time of such advance ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business, and (iii) loans and advances to employees and officers of a Loan Party or any of its Subsidiaries in the ordinary course of business for any other business purpose and in an aggregate amount not to exceed $5,000,000 at any one time,

(k)         Permitted Acquisitions,

(l)          Investments in the form of capital contributions and the acquisition of Equity Interests made by any Loan Party in any other Loan Party (other than capital contributions to or the acquisition of Equity Interests of Parent),

(m)        Investments resulting from entering into (i) Bank Product Agreements, or (ii) agreements relative to obligations permitted under clause (j) of the definition of Permitted Indebtedness,

(n)         (i) equity Investments by any Loan Party in any other Loan Party (other than Parent), (ii) equity Investments made by any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party, (iii) equity Investments made by any Loan Party in any Subsidiary that is not a Loan Party in an aggregate amount not to exceed $10,000,000 for all such Investments, so long as at the time of the making of such Investment, no Event of Default has occurred and is continuing or would result therefrom, and (iv) other equity Investments by a Loan Party in any Subsidiary that is not a Loan Party as may be agreed by Agent in writing,

(o)         Investments held by a Person acquired in a Permitted Acquisition to the extent that such Investments were not made in contemplation of or in connection with such Permitted Acquisition and were in existence on the date of such Permitted Acquisition,

(p)         Investments consisting of prepaid expenses, negotiable instruments held for collection and lease, utility, unemployment insurance, workers’ compensation, performance and other deposits made in the ordinary course of business by Parent or any of its Subsidiaries,

(q)         Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan, including, without limitation, split-dollar insurance policies, in an amount not to exceed the amount of compensation expense recognized by Parent and its Subsidiaries in connection with such plans,

(r)         prepayments and other credits to suppliers made in the ordinary course of business,

(s)         Investments by Parent in connection with joint production arrangements in the form of dispositions of equipment to a joint venture entity in exchange for Equity Interests or Indebtedness of the joint venture entity so long as within 30 days after such disposition, Parent’s or the applicable Subsidiary’s Equity Interests or Indebtedness in such entity are pledged to Agent, and

(t)          other Investments (other than Acquisitions) so long as the Payment Conditions are satisfied.

-41-

“Permitted Junior Conversion Debt” means any Junior Lien Additional Tranche B Loan or Junior Lien Exchange Notes issued by the Parent; provided that (a) the stated final maturity thereof shall be no earlier than July 15, 2031, and shall not be subject to any conditions that could result in such stated final maturity occurring on a date that precedes July 15, 2031, (b) the terms, conditions and covenants of any such (A) Junior Lien Additional Tranche B Loan and Debenture Junior Lien Exchange Notes shall be substantially identical to the terms of the Junior Lien Initial Tranche B Loan made on the Closing Date and (B) Alternative Junior Lien Exchange Notes shall be substantially identical to the terms of the Junior Lien Tranche A Loan made on the Closing Date or the Junior Lien Initial Tranche B Loan made on the Closing Date, as applicable (other than in the case of the rate of interest on (A) any Debenture Junior Lien Exchange Notes shall be the rate of interest on the Existing Unsecured 2029 Debentures and (B) any Alternative Junior Lien Exchange Notes shall be the rate of interest on the Junior Lien Tranche A Loan or the Junior Lien Initial Tranche B Loan, as applicable and in each case, as set forth under the Junior Lien Term Credit Agreement), (c) no Subsidiary that is not a Loan Party shall guarantee obligations of the Parent thereunder, and each guarantee shall provide for the release and termination thereof, without action by any Person, upon release and termination of the guarantee by such Subsidiary of the Obligations, and (d) the obligations in respect thereof (and any guarantee thereof) shall not be secured by any (i) Lien on any asset of Parent or any Subsidiary which Lien is not subject to the Junior Lien Intercreditor Agreement or (ii) Lien on any asset of Parent or any Subsidiary which asset is not also subject to a Lien in favor of Agent securing the Obligations.

“Permitted Junior Conversion Debt Documents” means the Junior Lien Term Loan Credit Agreement and all other documents executed and delivered in connection with the Permitted Junior Conversion Debt.

“Permitted Liens” means:

(a)         Liens granted to, or for the benefit of, Agent to secure the Obligations,

(b)         Liens for unpaid taxes, assessments, or other governmental charges or levies that either (i) are not yet delinquent,  (ii) are not yet subject to penalties for non-payment and the underlying taxes, assessments, or charges or levies are the subject of Permitted Protests or (iii) do not have priority over Agent’s Liens and the underlying taxes, assessments, or charges or levies are the subject of Permitted Protests,

(c)         judgment Liens arising solely as a result of the existence of judgments, orders, or awards that do not constitute an Event of Default under Section 8.3 of this Agreement,

(d)         Liens set forth on Schedule P-2 to the Disclosure Letter;  provided, that to qualify as a Permitted Lien, any such Lien described on Schedule P-2 to the Disclosure Letter shall only secure the Indebtedness or other obligations that it secures on the Closing Date and any Refinancing Indebtedness in respect thereof,

(e)         the interests of lessors under operating leases and non-exclusive licensors under license agreements,

(f)         purchase money Liens on fixed assets or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as (i) such Lien attaches only to the fixed asset purchased or acquired and the proceeds thereof, and (ii) such Lien only secures the Indebtedness that was incurred to acquire the fixed asset purchased or acquired or any Refinancing Indebtedness in respect thereof,

-42-

(g)         Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers or suppliers, incurred in the ordinary course of business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests,

(h)         Liens (other than Liens imposed under ERISA and excluding any deposits of cash or cash collateral) on amounts deposited in the ordinary course of business to secure Parent’s  and its Subsidiaries’ obligations in connection with worker’s compensation, unemployment, general insurance and other insurance laws, old age pensions and other social security or retirement benefits, in each case not in relation to borrowed money,

(i)          Liens on amounts deposited to secure Parent’s  and its Subsidiaries’ obligations in connection with the making or entering into of bids, tenders, or leases in the ordinary course of business and not in connection with the borrowing of money,

(j)          Liens on amounts deposited to secure Parent’s  and its Subsidiaries’ reimbursement obligations with respect to surety, performance or appeal bonds obtained in the ordinary course of business,

(k)         with respect to any Real Property, minor survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties, in each case, that does not secure an obligation for borrowed money and that does not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of Parent or any of its Subsidiaries,

(l)          non-exclusive licenses of patents, trademarks, copyrights, and other intellectual property rights in the ordinary course of business,

(m)        Liens that are replacements of Permitted Liens to the extent that the original Indebtedness is the subject of permitted Refinancing Indebtedness and so long as the replacement Liens only encumber those assets that secured the original Indebtedness,

(n)         rights of setoff or bankers’ liens upon deposits of funds in favor of banks or other depository institutions, solely to the extent incurred in connection with the maintenance of such Deposit Accounts in the ordinary course of business,

(o)         Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance premiums to the extent the financing is permitted under the definition of Permitted Indebtedness,

(p)         Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business,

(q)         Liens solely on any cash earnest money deposits made by a Loan Party or any of its Subsidiaries in connection with any letter of intent or purchase agreement with respect to a Permitted Acquisition,

-43-

(r)         Liens assumed by, or existing on property at the time acquired by, any Loan Party or its Subsidiaries in connection with a Permitted Acquisition that secure Acquired Indebtedness that is Permitted Indebtedness;  provided,  however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such Permitted Acquisition;  provided further,  however, that such Liens may not extend to any other property owned by Parent or any of its Subsidiaries,

(s)         Liens granted under the Senior Secured Notes Documents, to, or for the benefit of, the Senior Secured Notes Agent in order to secure the Senior Secured Notes Obligations pursuant to clause (s) of the definition of Permitted Indebtedness (so long as such Liens are subject to the terms of the Senior Secured Notes Intercreditor Agreement),

(t)          (i) Liens granted under the Junior Lien Term Loan Documents in order to secure the Junior Lien Term Loan Obligations pursuant to clause (t)(i) of the definition of Permitted Indebtedness (so long as such Liens are subject to the terms of any Junior Lien Intercreditor Agreement) and (ii) Liens granted under the Permitted Junior Conversion Debt Documents in order to secure the Permitted Junior Conversion Debt pursuant to clause (t)(ii) of the definition of Permitted Indebtedness (so long as such Liens are subject to the terms of any Junior Lien Intercreditor Agreement),

(u)         leases, licenses, subleases and sublicenses of assets (including, without limitation, Real Property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of Parent or any of its Subsidiaries and to the extent any such lease, license, sublease or sublicense is not prohibited hereunder,

(v)         Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary pursuant to a Permitted Acquisition; provided, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further that any such Lien may not extend to any other property owned by Parent or any other Subsidiary,

(w)        Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods directly related thereto in the ordinary course of business,

(x)         Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by Parent or any of its Subsidiaries in the ordinary course of business solely with respect to the specific assets subject to such arrangements,

(y)         Liens arising in connection with Cash Equivalents describe in clause (f) of the definition of Cash Equivalents,

(z)         Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by Parent and its Subsidiaries in the ordinary course of business,

(aa)       Liens securing Indebtedness or other obligations in respect of Cash Management Services or Other Hedge Obligations,  in each case, incurred in the ordinary course of business and so long as the related Indebtedness or other obligations are (A) permitted under this Agreement and (B) in an aggregate value not in excess of $5,000,000 at any time,

(bb)       Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction covering only the items being collected upon,

-44-

(cc)       statutory, common law or contractual Liens of landlords,

(dd)       customary Liens granted in favor of a trustee to secure customary administrative fees and other amounts owing to such trustee under an indenture or other agreement in respect of Permitted Indebtedness,

(ee)       Liens in favor of credit card processors granted in the ordinary course of business, and

(ff)        other Liens which do not secure Indebtedness for borrowed money or letters of credit and as to which the aggregate amount of the obligations secured thereby does not exceed $25,000,000.

“Permitted Protest” means the right of any Loan Party or any of its Subsidiaries to protest any Lien (other than any Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental payment;  provided, that (a) a reserve with respect to such obligation is established on such Loan Party’s or its Subsidiaries’ books and records in such amount as is required under GAAP, (b) any such protest is instituted promptly and prosecuted diligently by such Loan Party or its Subsidiary, as applicable, in good faith, and (c) Agent is satisfied that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination, Indebtedness (other than the Obligations, but including Capitalized Lease Obligations), incurred after the Closing Date and at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof, in an aggregate principal amount outstanding at any one time not in excess of $30,000,000.

“Permitted Residuary Beneficiary” means any Person who is a beneficiary of a Qualified Trust and, under the terms of the Qualified Trust, is entitled to distributions out of the capital of such Qualified Trust only after the death of all of the Qualified Persons who are beneficiaries of such Qualified Trust.

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“Platform” has the meaning specified in Section 17.9(c) of this Agreement.

“Pledged Cash” means the funds maintained with Wells Fargo Bank, N.A. in a blocked Deposit Account of Administrative Borrower subject to a Control Agreement  (the “Pledged L/C Account”), which gives Agent at all times exclusive access and control for withdrawal purposes to the exclusion of the Borrowers and precluding the Borrowers from withdrawing or otherwise giving any instructions in connection therewith and which may not be withdrawn without Agent’s prior written consent (provided that such consent shall not be unreasonably withheld if (i) upon and after giving effect to such withdrawal, no Default or Event of Default shall have occurred and be continuing and (ii) immediately after such withdrawal, the aggregate amount of remaining Pledged Cash is greater than or equal to the Pledged Cash L/C Usage, and for the avoidance of doubt, any such funds that are withdrawn shall no longer be “Pledged Cash” pursuant to this definition), and which are subject to effective security documents, in form and substance satisfactory to Agent, that provide Agent with an unencumbered perfected first priority/ranking security interest in and Lien on such funds.

-45-

“Pledged Cash Letter of Credit” means a Letter of Credit (for the avoidance of doubt, a portion or fraction of a Letter of Credit may not be a Pledged Cash Letter of Credit) so long as (i) prior to the issuance of such Letter of Credit, Administrative Borrower notifies Agent in writing that such Letter of Credit is being designated in full by Borrowers as a “Pledged Cash Letter of Credit” and (ii) at all times if any such Letter of Credit has been issued and is outstanding, Borrowers have Pledged Cash in an aggregate amount not less than 100% (or such higher percentage as otherwise specified in this Agreement) of the aggregate undrawn amount of all of such outstanding Letters of Credit.

“Pledged Cash Letter of Credit Commitment” means thirty-five million Dollars ($35,000,000).

“Pledged Cash Letter of Credit Issuing Bank” means Wells Fargo, in its capacity as an Issuing Bank with respect to any Pledged Cash Letter of Credit, together with its successors and assigns.

“Pledged Cash Letter of Credit Unused Line Fee”  has the meaning specified in Section 2.10(b)(ii) of this Agreement.

“Pledged Cash L/C Usage” means as of any date of determination, the aggregate undrawn amount of all outstanding Pledged Cash Letters of Credit.

“Pledged L/C Account” has the meaning set forth in the definition of Pledged Cash.

“Pledged L/C Collateral” has the meaning specified in Section 2.11(t) of this Agreement.

“Post-Increase Revolver Lenders” has the meaning specified in Section 2.14(d) of this Agreement.

“Pre-Increase Revolver Lenders” has the meaning specified in Section 2.14(d) of this Agreement.

“Projections” means Parent’s and its Subsidiaries forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, all prepared on a basis consistent with Parent’s historical financial statements, together with appropriate supporting details and a statement of underlying assumptions.

“Proportionate Equity Share” means, with respect to Parent’s equity in the net income of any Person included in Parent’s Consolidated Net Income pursuant to clause (1) of the definition thereof, the ratio of Parent’s equity in the net income of such Person during the applicable period to the total net income of such Person for such period.

“Pro Rata Share” means, as of any date of determination:

(a)         with respect to a Lender’s obligation to make all or a portion of the Revolving Loans, with respect to such Lender’s right to receive payments of interest, fees, and principal with respect to the Revolving Loans, and with respect to all other computations and other matters related to the Revolver Commitments or the Revolving Loans, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders,

(b)         with respect to a Lender’s obligation to participate in the Letters of Credit, with respect to such Lender’s obligation to reimburse Issuing Bank, and with respect to such Lender’s right to receive payments of Letter of Credit Fees, and with respect to all other computations and other matters

-46-

related to the Letters of Credit, the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders; provided, that if all of the Revolving Loans have been repaid in full and all Revolver Commitments have been terminated, but Letters of Credit remain outstanding, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders, and

(c)         with respect to all other matters and for all other matters as to a particular Lender (including the indemnification obligations arising under Section 15.7 of this Agreement), the percentage obtained by dividing (i) the Revolving Loan Exposure of such Lender, by (ii) the aggregate Revolving Loan Exposure of all Lenders, in any such case as the applicable percentage may be adjusted by assignments permitted pursuant to Section 13.1;  provided, that if all of the Loans have been repaid in full and all Commitments have been terminated, Pro Rata Share under this clause shall be the percentage obtained by dividing (A) the Letter of Credit Exposure of such Lender, by (B) the Letter of Credit Exposure of all Lenders.

“Protective Advances” has the meaning specified in Section 2.3(d)(i) of this Agreement.

“Public Lender” has the meaning specified in Section 17.9(c) of this Agreement.

“Purchase Price” means, with respect to any Acquisition, an amount equal to the aggregate consideration, whether cash, property or securities (including the fair market value of any Equity Interests of Parent issued in connection with such Acquisition and including the maximum amount of Earn-Outs), paid or delivered by a Loan Party or one of its Subsidiaries in connection with such Acquisition (whether paid at the closing thereof or payable thereafter and whether fixed or contingent), but excluding therefrom (a) any cash of the seller and its Affiliates used to fund any portion of such consideration, and (b) any cash or Cash Equivalents acquired in connection with such Acquisition.

“Qualified Cash” means, as of any date of determination, the amount of unrestricted cash and Cash Equivalents of the Loan Parties that is in Deposit Accounts or in Securities Accounts, or any combination thereof, and which such Deposit Account or Securities Account is the subject of a Control Agreement and is maintained by a branch office Wells Fargo Bank, N.A. located within the United States.

“Qualified Equity Interests” means and refers to any Equity Interests issued by Parent (and not by one or more of its Subsidiaries) that is not a Disqualified Equity Interest.

“Qualified Person” means a Person referred to in clauses (a) through (e) of the definition of “Member of the McClatchy Family” or the spouse, widow or widower for the time being and from time to time of any Person described in clause (d) or (e) of the definition of “Member of the McClatchy Family.”

“Qualified Trust” means a trust (whether testamentary or inter vivos) any beneficiary of which is a Qualified Person.

“Real Property” means any estates or interests in real property now owned or hereafter acquired by any Loan Party or one of its Subsidiaries and the improvements thereto.

“Real Property Collateral” means (a) the Real Property identified on Schedule R-1 to the Disclosure Letter, and (b) any Real Property hereafter acquired by any Loan Party or one of its Subsidiaries with a fair market value in excess of $2,000,000.  Notwithstanding the foregoing, the Real

-47-

Property Collateral shall exclude the Specified Real Property for so long as such properties are classified by Parent as “held for sale” or Parent is seeking to sell or sell and leaseback such property.

“Receivables Reserves” means, as of any date of determination, those reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including Landlord Reserves for books and records locations and reserves for rebates, discounts, warranty claims, and returns) with respect to the Eligible Accounts or Eligible Unbilled Accounts.

“Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

“Reference Period” has the meaning set forth in the definition of Fixed Charge Coverage Ratio.

“Refinancing Indebtedness” means refinancings, renewals, or extensions of Indebtedness so long as:

(a)         such refinancings, renewals, or extensions do not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, other than by the amount of premiums paid thereon and the fees and expenses incurred in connection therewith and by the amount of unfunded commitments with respect thereto,

(b)         such refinancings, renewals, or extensions do not result in a shortening of the final stated maturity or the average weighted maturity (measured as of the refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed, or extended, nor are they on terms or conditions that, taken as a whole, are or could reasonably be expected to be materially more burdensome or restrictive as to the Persons obligated with respect to such Indebtedness,

(c)         if the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, renewal, or extension must include subordination terms and conditions that are at least as favorable to the Lender Group as those that were applicable to the refinanced, renewed, or extended Indebtedness,

(d)         the Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account of the Obligations other than those Persons which were obligated (or would be required to become obligated) with respect to the Indebtedness that was refinanced, renewed, or extended,

(e)         if the Indebtedness that is refinanced, renewed or extended was unsecured, such refinancing, renewal or extension shall be unsecured, and

(f)         if the Indebtedness that is refinanced, renewed, or extended was secured (i) such refinancing, renewal, or extension shall be secured by substantially the same or less collateral as secured such refinanced, renewed or extended Indebtedness on terms no less favorable to Agent or the Lender Group and (ii) the Liens securing such refinancing, renewal or extension shall not have a priority more senior than the Liens securing such Indebtedness that is refinanced, renewed or extended.

“Register” has the meaning set forth in Section 13.1(h) of this Agreement.

“Registered Loan” has the meaning set forth in Section 13.1(h) of this Agreement.

-48-

“Related Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course and that is administered, advised or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers, advises or manages a Lender.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate, or in any way address Hazardous Materials in the indoor or outdoor environment, (b) prevent or minimize a release or threatened release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment, (c) restore or reclaim natural resources or the environment, (d) perform any pre-remedial studies, investigations, or post-remedial operation and maintenance activities, or (e) conduct any other actions with respect to Hazardous Materials required by Environmental Laws.

“Replacement Lender” has the meaning specified in Section 2.13(b) of this Agreement.

“Report” has the meaning specified in Section 15.16 of this Agreement.

“Required Lenders” means, at any time, Lenders having or holding more than 50% of the aggregate Revolving Loan Exposure of all Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Required Lenders, and (ii) at any time there are two or more Lenders (who are not Affiliates of one another or Defaulting Lenders),  “Required Lenders” must include at least two Lenders (who are not Affiliates of one another).

“Reserves” means, as of any date of determination, Inventory Reserves, Receivables Reserves, Bank Product Reserves,  and those other reserves that Agent deems necessary or appropriate, in its Permitted Discretion and subject to Section 2.1(c), to establish and maintain (including reserves with respect to (a) sums that any Loan Party or its Subsidiaries are required to pay under any Section of this Agreement or any other Loan Document (such as taxes, assessments, insurance premiums, or, in the case of leased assets, rents or other amounts payable under such leases) and has failed to pay, and (b) amounts owing by any Loan Party or its Subsidiaries to any Person to the extent secured by a Lien on, or trust over, any of the Collateral (other than a Permitted Lien), which Lien or trust, in the Permitted Discretion of Agent likely would have a priority superior to the Agent’s Liens (such as Liens or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or other taxes where given priority under applicable law) in and to such item of the Collateral) with respect to the Borrowing Base or the Maximum Revolver Amount.

“Responsible Officer” means, with respect to any Person, such Person’s chief executive officer, president, chief financial officer, vice president, general counsel, treasurer or assistant treasurer.

“Restricted Payment” means (a) any declaration or payment of any dividend or the making of any other payment or distribution, directly or indirectly, on account of Equity Interests issued by Parent or any of its Subsidiaries (including any such payment in connection with any merger or consolidation involving Parent or any of its Subsidiaries) or to the direct or indirect holders of Equity Interests issued by Parent or any of its Subsidiaries in their capacity as such (other than dividends or distributions payable in Qualified Equity Interests issued by Parent or any of its Subsidiaries), or (b) any purchase, redemption, making of any sinking fund or similar payment, or other acquisition or retirement for value (including in connection with any merger or consolidation involving Parent or any of its Subsidiaries)  of any Equity Interests issued by Parent or any of its Subsidiaries,  or (c) any making of any payment to retire, or to obtain the surrender of, any outstanding warrants, options, or other rights to acquire Equity Interests of Parent or any of its Subsidiaries now or hereafter outstanding.

-49-

“Restructuring Charges” has the meaning set forth in the definition of Consolidated EBITDA.

“Revolver Commitment” means, with respect to each Revolving Lender, its Revolver Commitment, and, with respect to all Revolving Lenders, their Revolver Commitments, in each case as such Dollar amounts are set forth beside such Revolving Lender’s name under the applicable heading on Schedule C-1 to this Agreement or in the Assignment and Acceptance or Increase Joinder pursuant to which such Revolving Lender became a Revolving Lender under this Agreement, as such amounts may be reduced or increased from time to time pursuant to assignments made in accordance with the provisions of Section 13.1 of this Agreement, and as such amounts may be decreased by the amount of reductions in the Revolver Commitments made in accordance with Section 2.4(c) hereof.

“Revolver Usage” means, as of any date of determination, the sum of (a) the amount of outstanding Revolving Loans (inclusive of Swing Loans and Protective Advances), plus (b) the amount of the Letter of Credit Usage (other than Pledged Cash L/C Usage).

“Revolving Lender” means a Lender that has a Revolving Loan Exposure or Letter of Credit Exposure.

“Revolving Loan Exposure” means, with respect to any Revolving Lender, as of any date of determination (a) prior to the termination of the Revolver Commitments, the amount of such Lender’s Revolver Commitment, and (b) after the termination of the Revolver Commitments, the aggregate outstanding principal amount of the Revolving Loans of such Lender.

“Revolving Loans” has the meaning specified in Section 2.1(a) of this Agreement.

“Sale/Leaseback Transaction”  means any direct or indirect arrangement relating to real property now owned or hereafter acquired by Parent or any of its Subsidiaries whereby Parent or any of its Subsidiaries transfers such property to a Person (other than the Parent or any of its Subsidiaries) and Parent or a Subsidiary of Parent leases it from such Person.

“Sanctioned Entity”  means (a) a country or territory or a government of a country or territory, (b) an agency of the government of a country or territory, (c) an organization directly or indirectly controlled by a country or territory or its government, or (d) a Person resident in or determined to be resident in a country or territory, in each case of clauses (a) through (d) that is a target of Sanctions, including a target of any country sanctions program administered and enforced by OFAC.

“Sanctioned Person”  means, at any time (a) any Person named on the list of Specially Designated Nationals and Blocked Persons maintained by OFAC, OFAC’s consolidated Non-SDN list or any other Sanctions-related list maintained by any Governmental Authority, (b) a Person or legal entity that is a target of Sanctions, (c) any Person operating, organized or resident in a Sanctioned Entity, or (d) any Person directly or indirectly owned or controlled (individually or in the aggregate) by or acting on behalf of any such Person or Persons described in clauses (a) through (c) above.

“Sanctions”  means individually and collectively, respectively, any and all economic sanctions, trade sanctions, financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes anti-terrorism laws and other sanctions laws, regulations or embargoes, including those imposed, administered or enforced from time to time by:  (a) the United States of America, including those administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, or through any existing or future executive order, (b) the United Nations Security Council, (c) the European Union or any European Union member state, (d) Her Majesty’s Treasury of the United Kingdom, or (d) any other

-50-

Governmental Authority with jurisdiction over any member of Lender Group or any Loan Party or any of their respective Subsidiaries or Affiliates.

“S&P” has the meaning specified in the definition of Cash Equivalents.

“SEC” means the United States Securities and Exchange Commission and any successor thereto.

“Securities Account” means a securities account (as that term is defined in the Code).

“Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“Senior Secured Notes” means $310,000,000 aggregate principal amount of Parent’s 9.000% Senior Secured Notes due July 15, 2026 and issued by Parent pursuant to the Senior Secured Notes Indenture.

“Senior Secured Notes Agent”  means The Bank of New York Mellon Trust Company, N.A., in its capacities as trustee and as notes collateral agent under the Senior Secured Notes Indenture and the other Senior Secured Notes Documents, together with any successor trustee or notes collateral agent appointed pursuant to the Senior Secured Notes Documents and the Senior Secured Notes Intercreditor Agreement.

“Senior Secured Notes Documents” means the Senior Secured Notes, the Senior Secured Notes Indenture and all other guarantees, security documents and other documents executed and delivered with respect to the Senior Secured Notes.

“Senior Secured Notes Intercreditor Agreement” means the ABL/Notes Intercreditor Agreement, dated as of the Closing Date, between the Senior Secured Notes Agent and Agent, and acknowledged by the Loan Parties.

“Senior Secured Notes Obligations” means the “Notes Obligations” as such term is defined in the Senior Secured Notes Indenture or any equivalent term used to describe the obligations arising thereunder and in connection therewith.

“Senior Secured Notes Indenture” means that certain Indenture, dated as of the Closing Date, among Parent, as issuer, the Subsidiaries of Parent party thereto, as subsidiary guarantors, and the Senior Secured Notes Agent.

“Settlement” has the meaning specified in Section 2.3(e)(i) of this Agreement.

“Settlement Date” has the meaning specified in Section 2.3(e)(i) of this Agreement.

“Solvent” means, with respect to any Person as of any date of determination, that (a) at fair valuations, the sum of such Person’s debts (including contingent liabilities) is less than all of such Person’s assets, (b) such Person is not engaged or about to engage in a business or transaction for which the remaining assets of such Person are unreasonably small in relation to the business or transaction or for which the property remaining with such Person is an unreasonably small capital, (c) such Person has not incurred and does not intend to incur, or reasonably believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise), and (d) such Person is “solvent” or not “insolvent”, as applicable within the meaning given those terms and similar terms under applicable

-51-

laws relating to fraudulent transfers and conveyances.  For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under ASC 450 - Contingencies).

“Specified Event of Default” means any Event of Default described in any of Sections 8.1,  8.2(a)(iii), 8.4,  or 8.5.

“Specified Real Property” means the real property and improvements owned by the Parent or any Subsidiary at (i) 1601 McGee Street and 1701 Locust Street, Kansas City, Missouri 64108, bearing assessor’s parcel numbers 29-240-19-11 and 29-240-36-08 and (ii) 100 Midland Avenue, Lexington, Kentucky 40508-1999 bearing assessor’s parcel number 11252975.

“Specified Transaction” means, any Investment  (including any Permitted Acquisition), prepayment of Indebtedness or Restricted Payment (or declaration of any prepayment or Restricted Payment).

“Standard Letter of Credit Practice” means, for Issuing Bank, any domestic or foreign law or letter of credit practices applicable in the city in which Issuing Bank issued the applicable Letter of Credit or, for its branch or correspondent, such laws and practices applicable in the city in which it has advised, confirmed or negotiated such Letter of Credit, as the case may be, in each case, (a) which letter of credit practices are of banks that regularly issue letters of credit in the particular city, and (b) which laws or letter of credit practices are required or permitted under ISP or UCP, as chosen in the applicable Letter of Credit.

“Subsidiary” of a Person means a corporation, partnership, limited liability company, or other entity in which that Person directly or indirectly owns or controls the Equity Interests having ordinary voting power to elect a majority of the Board of Directors of such corporation, partnership, limited liability company, or other entity.  Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of Parent.

“Sub-facility Letter of Credit” means a Letter of Credit other than a Pledged Cash Letter of Credit.

“Supermajority Lenders” means, at any time, Revolving Lenders having or holding more than 66 2/3% of the aggregate Revolving Loan Exposure of all Revolving Lenders; provided, that (i) the Revolving Loan Exposure of any Defaulting Lender shall be disregarded in the determination of the Supermajority Lenders, and (ii) at any time there are two or more Revolving Lenders (who are not Affiliates of one another), “Supermajority Lenders” must include at least two Revolving Lenders (who are not Affiliates of one another or Defaulting Lenders).

“Swap Obligation” means, with respect to any Loan Party, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swing Lender” means Wells Fargo or any other Lender that, at the request of Borrowers and with the consent of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender under Section 2.3(b) of this Agreement.

“Swing Loan” has the meaning specified in Section 2.3(b) of this Agreement.

-52-

“Swing Loan Exposure” means, as of any date of determination with respect to any Lender, such Lender’s Pro Rata Share of the Swing Loans on such date.

“Taxes” means any taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature now or hereafter imposed by any jurisdiction or by any political subdivision or taxing authority thereof or therein, and all interest, penalties or similar liabilities with respect thereto.

“Tax Lender” has the meaning specified in Section 14.2(a) of this Agreement.

“Trademark Security Agreement” has the meaning specified in the Guaranty and Security Agreement.

“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits 2007 Revision, International Chamber of Commerce Publication No. 600 and any version or revision thereof accepted by Issuing Bank for use.

“Unfinanced Capital Expenditures”  means Capital Expenditures (a) not financed with the proceeds of any incurrence of Indebtedness (other than the incurrence of any Revolving Loans), the proceeds of any sale or issuance of Equity Interests or equity contributions, the proceeds of any asset sale (other than the sale of Inventory in the ordinary course of business) or any insurance proceeds, and (b) that are not reimbursed by a third person (excluding any Loan Party or any of its Affiliates) in the period such expenditures are made pursuant to a written agreement.

“United States” means the United States of America.

“Unused Line Fee” has the meaning specified in Section 2.10(b)(i) of this Agreement.

“Voidable Transfer” has the meaning specified in Section 17.8 of this Agreement.

“Wells Fargo” means Wells Fargo Bank, National Association, a national banking association.

“Withdrawal Liability” means liability with respect to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

1.2        Accounting Terms.  All accounting terms not specifically defined herein shall be construed in accordance with GAAP; provided, that if Administrative Borrower notifies Agent that Borrowers request an amendment to any provision hereof to eliminate the effect of any Accounting Change occurring after the Closing Date or in the application thereof on the operation of such provision (or if Agent notifies Administrative Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such Accounting Change or in the application thereof, then Agent and Borrowers agree that they will negotiate in good faith amendments to the provisions of this Agreement that are directly affected by such Accounting Change with the intent of having the respective positions of the Lenders and Borrowers after such Accounting Change conform as nearly as possible to their respective positions immediately before

-53-

such Accounting Change took effect and, until any such amendments have been agreed upon and agreed to by the Required Lenders, the provisions in this Agreement shall be calculated as if no such Accounting Change had occurred.  When used herein, the term “financial statements” shall include the notes and schedules thereto.  Whenever the term “Parent”  is used in respect of a financial covenant or a related definition, it shall be understood to mean the Loan Parties and their Subsidiaries on a consolidated basis, unless the context clearly requires otherwise.  Notwithstanding anything to the contrary contained herein, (a) all financial statements delivered hereunder shall be prepared, and all financial covenants contained herein shall be calculated, without giving effect to any election under the Statement of Financial Accounting Standards Board’s Accounting Standards Codification Topic 825 (or any similar accounting principle) permitting a Person to value its financial liabilities or Indebtedness at the fair value thereof, and (b) the term “unqualified opinion” as used herein to refer to opinions or reports provided by accountants shall mean an opinion or report that is (i) unqualified, and (ii) does not include any explanation, supplemental comment, or other comment concerning the ability of the applicable Person to continue as a going concern or concerning the scope of the audit.  Notwithstanding anything to the contrary contained in this Section or in the definition of “Capitalized Lease Obligations,” in the event of an accounting change requiring all leases to be capitalized, only those leases (assuming for purposes hereof that such leases were in existence on the date hereof or entered into prior to December 31, 2018) that would constitute capital leases in conformity with GAAP on the date hereof shall be considered capital leases, and all calculations and deliverables under this Agreement or any other Loan Document shall be made or delivered, as applicable, in accordance therewith.

1.3        Code.  Any terms used in this Agreement that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein; provided, that to the extent that the Code is used to define any term herein and such term is defined differently in different Division of the Code, the definition of such term contained in Division 9 of the Code shall govern.

1.4        Construction.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and  “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.”  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement or in any other Loan Document to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties.  Any reference herein or in any other Loan Document to the satisfaction, repayment, or payment in full of the Obligations shall mean (a) the payment or repayment in full in immediately available funds of (i) the principal amount of, and interest accrued and unpaid with respect to, all outstanding Loans, together with the payment of any premium applicable to the repayment of the Loans, (ii) all Lender Group Expenses that have accrued and are unpaid regardless of whether demand has been made therefor, and (iii) all fees or charges that have accrued hereunder or under any other Loan Document (including the Letter of Credit Fee, the Unused Line Fee and the Pledged Cash Letter of Credit Unused Line Fee) and are unpaid, (b) in the case of contingent reimbursement obligations with respect to Letters of Credit, providing Letter of Credit Collateralization, (c) in the case of obligations with respect to Bank Products (other than Hedge Obligations), providing Bank Product Collateralization, (d) the receipt by Agent of cash collateral in order to secure any other contingent Obligations for which a claim or demand for payment has been made on or

-54-

prior to such time or in respect of matters or circumstances known to Agent or a Lender at such time that are reasonably expected to result in any loss, cost, damage, or expense (including attorneys’ fees and legal expenses), such cash collateral to be in such amount as Agent reasonably determines is appropriate to secure such contingent Obligations, (e) the payment or repayment in full in immediately available funds of all other outstanding Obligations (including the payment of any termination amount then applicable (or which would or could become applicable as a result of the repayment of the other Obligations) under Hedge Agreements provided by Hedge Providers) other than (i) unasserted contingent indemnification Obligations, (ii) any Bank Product Obligations (other than Hedge Obligations) that, at such time, are allowed by the applicable Bank Product Provider to remain outstanding without being required to be repaid or cash collateralized, and (iii) any Hedge Obligations that, at such time, are allowed by the applicable Hedge Provider to remain outstanding without being required to be repaid, and (f) the termination of all of the Commitments of the Lenders.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.  Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record.

1.5        Time References.  Unless the context of this Agreement or any other Loan Document clearly requires otherwise, all references to time of day refer to Pacific standard time or Pacific daylight saving time, as in effect in Los Angeles, California on such day.  For purposes of the computation of a period of time from a specified date to a later specified date, unless otherwise expressly provided, the word “from” means “from and including” and the words “to” and “until” each means “to and including”;  provided,  that with respect to a computation of fees or interest payable to Agent or any Lender, such period shall in any event consist of at least one full day.

1.6        Schedules and Exhibits.  All of the schedules and exhibits attached to this Agreement and the Disclosure Letter shall be deemed incorporated herein by reference.

2.          LOANS AND TERMS OF PAYMENT.

2.1        Revolving Loans.

(a)         Subject to the terms and conditions of this Agreement, and during the term of this Agreement, each Revolving Lender agrees (severally, not jointly or jointly and severally) to make revolving loans (“Revolving Loans”) to Borrowers in an amount at any one time outstanding not to exceed the lesser of:

(i)       such Lender’s Revolver Commitment, or

(ii)      such Lender’s Pro Rata Share of an amount equal to the lesser of:

(A)        the amount equal to (1) the Maximum Revolver Amount,  less (2) the sum of (y) the Letter of Credit Usage (other than Pledged Cash L/C Usage) at such time, plus (z) the principal amount of Swing Loans outstanding at such time, and

(B)        the amount equal to (1) the Borrowing Base as of such date (based upon the most recent Borrowing Base Certificate delivered by Borrowers to Agent,  as adjusted for Reserves established by Agent in accordance with Section 2.1(c)),  less (2) the sum of (x) the Letter of Credit Usage (other than Pledged Cash L/C Usage) at such time, plus  (y) the principal amount of Swing Loans outstanding at such time.

(b)         Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms and conditions of this Agreement, reborrowed at any time during the term of this Agreement.  The outstanding principal amount of the Revolving Loans, together with interest accrued and unpaid thereon,

-55-

shall constitute Obligations and shall be due and payable on the Maturity Date or, if earlier, on the date on which they otherwise become due and payable pursuant to the terms of this Agreement.

(c)         Anything to the contrary in this Section 2.1 notwithstanding, Agent shall have the right (but not the obligation) at any time,  in the exercise of its Permitted Discretion, to establish and increase or decrease Reserves and against the Borrowing Base.  The amount of any Reserve established by Agent, and any changes to the eligibility criteria set forth in the definitions of Eligible Accounts, Eligible Unbilled Accounts and Eligible Inventory shall have a reasonable relationship to the event, condition, other circumstance, or fact that is the basis for such reserve or change in eligibility and shall not be duplicative of any other reserve established and currently maintained or eligibility criteria.

2.2        [Reserved].

2.3        Borrowing Procedures and Settlements.

(a)         Procedure for Borrowing Revolving Loans.  Each Borrowing shall be made by a written request by an Authorized Person delivered to Agent (which may be delivered through Agent’s electronic platform or portal) and received by Agent no later than 11:00 a.m. (i) on the Business Day that is the requested Funding Date in the case of a request for a Swing Loan, (ii) on the Business Day that is one Business Day prior to the requested Funding Date in the case of a request for a Base Rate Loan, and (iii) on the Business Day that is three Business Days prior to the requested Funding Date in the case of all other requests, specifying (A) the amount of such Borrowing, and (B) the requested Funding Date (which shall be a Business Day); provided, that Agent may, in its sole discretion, elect to accept as timely requests that are received later than 11:00 a.m. on the applicable Business Day.  All Borrowing requests which are not made on-line via Agent’s electronic platform or portal shall be subject to (and unless Agent elects otherwise in the exercise of its sole discretion, such Borrowings shall not be made until the completion of) Agent’s authentication process (with results satisfactory to Agent) prior to the funding of any such requested Revolving Loan.

(b)         Making of Swing Loans.  In the case of a Revolving Loan and so long as any of (i) the aggregate amount of Swing Loans made since the last Settlement Date, minus all payments or other amounts applied to Swing Loans since the last Settlement Date, plus the amount of the requested Swing Loan does not exceed $10,000,000, or (ii) Swing Lender, in its sole discretion, agrees to make a Swing Loan notwithstanding the foregoing limitation, upon the request of the Borrowers,  Swing Lender shall make a Revolving Loan (any such Revolving Loan made by Swing Lender pursuant to this Section 2.3(b) being referred to as a “Swing Loan” and all such Revolving Loans being referred to as “Swing Loans”) available to Borrowers on the Funding Date applicable thereto by transferring immediately available funds in the amount of such Borrowing to the Designated Account.  Each Swing Loan shall be deemed to be a Revolving Loan hereunder and shall be subject to all the terms and conditions (including Section 3) applicable to other Revolving Loans, except that all payments (including interest) on any Swing Loan shall be payable to Swing Lender solely for its own account.  Subject to the provisions of Section 2.3(d)(ii), Swing Lender shall not make and shall not be obligated to make any Swing Loan if Swing Lender has actual knowledge that (i) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (ii) the requested Borrowing would exceed the Availability on such Funding Date.  Swing Lender shall not otherwise be required to determine whether the applicable conditions precedent set forth in Section 3 have been satisfied on the Funding Date applicable thereto prior to making any Swing Loan.  The Swing Loans shall be secured by Agent’s Liens, constitute Revolving Loans and Obligations, and bear interest at a per annum rate equal to Daily One Month LIBOR plus the LIBOR Rate Margin, or at the Administrative Borrower’s election, at the rate applicable from time to time to Revolving Loans that are Base Rate Loans.

-56-

(c)         Making of Revolving Loans.

(i)       In the event that Swing Lender is not obligated to make a Swing Loan or the requested Borrowing is not a Swing Loan, then after receipt of a request for a Borrowing pursuant to Section 2.3(a)(i), Agent shall notify the Lenders by telecopy, telephone, email, or other electronic form of transmission, of the requested Borrowing; such notification to be sent on the Business Day that is (A) in the case of a Base Rate Loan, at least one Business Day prior to the requested Funding Date, or (B) in the case of a LIBOR Rate Loan, prior to 11:00 a.m. at least three Business Days prior to the requested Funding Date.  If Agent has notified the Lenders of a requested Borrowing on the Business Day that is one Business Day prior to the Funding Date, then each Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, not later than 10:00 a.m. on the Business Day that is the requested Funding Date.  After Agent’s receipt of the proceeds of such Revolving Loans from the Lenders, Agent shall make the proceeds thereof available to Borrowers on the applicable Funding Date by transferring immediately available funds equal to such proceeds received by Agent to the Designated Account; provided, that subject to the provisions of Section 2.3(d)(ii), no Lender shall have an obligation to make any Revolving Loan, if (1) one or more of the applicable conditions precedent set forth in Section 3 will not be satisfied on the requested Funding Date for the applicable Borrowing unless such condition has been waived, or (2) the requested Borrowing would exceed the Availability on such Funding Date.

(ii)      Unless Agent receives notice from a Lender prior to 9:30 a.m. on the Business Day that is the requested Funding Date relative to a requested Borrowing as to which Agent has notified the Lenders of a requested Borrowing that such Lender will not make available as and when required hereunder to Agent for the account of Borrowers the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has made or will make such amount available to Agent in immediately available funds on the Funding Date and Agent may (but shall not be so required), in reliance upon such assumption, make available to Borrowers a corresponding amount.  If, on the requested Funding Date, any Lender shall not have remitted the full amount that it is required to make available to Agent in immediately available funds and if Agent has made available to Borrowers such amount on the requested Funding Date, then such Lender shall make the amount of such Lender’s Pro Rata Share of the requested Borrowing available to Agent in immediately available funds, to Agent’s Account, no later than 10:00 a.m. on the Business Day that is the first Business Day after the requested Funding Date (in which case, the interest accrued on such Lender’s portion of such Borrowing for the Funding Date shall be for Agent’s separate account).  If any Lender shall not remit the full amount that it is required to make available to Agent in immediately available funds as and when required hereby and if Agent has made available to Borrowers such amount, then that Lender shall be obligated to immediately remit such amount to Agent, together with interest at the Defaulting Lender Rate for each day until the date on which such amount is so remitted.  A notice submitted by Agent to any Lender with respect to amounts owing under this Section 2.3(c)(ii) shall be conclusive, absent manifest error.  If the amount that a Lender is required to remit is made available to Agent, then such payment to Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement.  If such amount is not made available to Agent on the Business Day following the Funding Date, Agent will notify Administrative Borrower of such failure to fund and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Revolving Loans composing such Borrowing.

(d)         Protective Advances and Optional Overadvances.

(i)       Any contrary provision of this Agreement or any other Loan Document notwithstanding (but subject to Section 2.3(d)(iv)), at any time (A) after the occurrence and during the

-57-

continuance of a Default or an Event of Default, or (B) that any of the other applicable conditions precedent set forth in Section 3 are not satisfied, Agent hereby is authorized by Borrowers and the Lenders, from time to time, in Agent’s sole discretion, to make Revolving Loans to, or for the benefit of, Borrowers, on behalf of the Revolving Lenders, that Agent, in its Permitted Discretion, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, or (2) to enhance the likelihood of repayment of the Obligations (other than the Bank Product Obligations) (the Revolving Loans described in this Section 2.3(d)(i) shall be referred to as “Protective Advances”).

(ii)      Any contrary provision of this Agreement or any other Loan Document notwithstanding, the Loan Parties and the Lenders hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly and intentionally, continue to make Revolving Loans (including Swing Loans) to Borrowers notwithstanding that an Overadvance exists or would be created thereby, so long as (A) after giving effect to such Revolving Loans, the outstanding Revolver Usage does not exceed the Borrowing Base by more than 10% of the Borrowing Base, and (B) subject to Section 2.3(d)(iv) below, after giving effect to such Revolving Loans, the outstanding Revolver Usage (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) does not exceed the Maximum Revolver Amount.  In the event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts permitted by this Section 2.3(d), regardless of the amount of, or reason for, such excess, Agent shall notify the Lenders as soon as practicable (and prior to making any (or any additional) intentional Overadvances (except for and excluding amounts charged to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent determines that prior notice would result in imminent harm to the Collateral or its value, in which case Agent may make such Overadvances and provide notice as promptly as practicable thereafter), and the Lenders with Revolver Commitments thereupon shall, together with Agent, jointly determine the terms of arrangements that shall be implemented with Borrowers intended to reduce, within a reasonable time, the outstanding principal amount of the Revolving Loans to Borrowers to an amount permitted by the preceding sentence.  In such circumstances, if any Lender with a Revolver Commitment objects to the proposed terms of reduction or repayment of any Overadvance, the terms of reduction or repayment thereof shall be implemented according to the determination of the Required Lenders.  The foregoing provisions are meant for the benefit of the Lenders and Agent and are not meant for the benefit of Borrowers, which shall continue to be bound by the provisions of Section 2.4(e).

(iii)     Each Protective Advance and each Overadvance (each, an “Extraordinary Advance”) shall be deemed to be a Revolving Loan hereunder, except that no Extraordinary Advance shall be eligible to be a LIBOR Rate Loan.  Prior to Settlement of any Extraordinary Advance, all payments with respect thereto, including interest thereon, shall be payable to Agent solely for its own account. Each Revolving Lender shall be obligated to settle with Agent as provided in Section 2.3(e) (or Section 2.3(g), as applicable) for the amount of such Lender’s Pro Rata Share of any Extraordinary Advance.  The Extraordinary Advances shall be repayable on demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear interest at the rate applicable from time to time to Revolving Loans that are Base Rate Loans.  The provisions of this Section 2.3(d) are for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not intended to benefit Borrowers (or any other Loan Party) in any way.

(iv)     Notwithstanding anything contained in this Agreement or any other Loan Document to the contrary,  no Extraordinary Advance may be made by Agent if such Extraordinary Advance would cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or any Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments;  provided that Agent may make Extraordinary Advances in excess of the foregoing limitations so long as such Extraordinary Advances that cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver

-58-

Commitments are for Agent’s sole and separate account and not for the account of any Lender.  No Lender shall have an obligation to settle with Agent for such Extraordinary Advances that cause the aggregate Revolver Usage to exceed the Maximum Revolver Amount or a Lender’s Pro Rata Share of the Revolver Usage to exceed such Lender’s Revolver Commitments as provided in Section 2.3(e) (or Section 2.3(g), as applicable).

(e)         Settlement.  It is agreed that each Lender’s funded portion of the Revolving Loans is intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding Revolving Loans.  Such agreement notwithstanding, Agent, Swing Lender, and the other Lenders agree (which agreement shall not be for the benefit of Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among the Lenders as to the Revolving Loans (including Swing Loans and Extraordinary Advances) shall take place on a periodic basis in accordance with the following provisions:

(i)       Agent shall request settlement (“Settlement”) with the Lenders on a weekly basis, or on a more frequent basis if so determined by Agent in its sole discretion (1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2) for itself, with respect to the outstanding Extraordinary Advances, and (3) with respect to any Loan Party’s  or any of their Subsidiaries’ payments or other amounts received, as to each by notifying the Lenders by telecopy, telephone, or other similar form of transmission, of such requested Settlement, no later than 2:00 p.m. on the Business Day immediately prior to the date of such requested Settlement (the date of such requested Settlement being the “Settlement Date”).  Such notice of a Settlement Date shall include a summary statement of the amount of outstanding Revolving Loans (including Swing Loans and Extraordinary Advances) for the period since the prior Settlement Date.  Subject to the terms and conditions contained herein (including Section 2.3(g)):  (y) if the amount of the Revolving Loans (including Swing Loans and Extraordinary Advances) made by a Lender that is not a Defaulting Lender exceeds such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances) as of a Settlement Date, then Agent shall, by no later than 12:00 p.m. on the Settlement Date, transfer in immediately available funds to a Deposit Account of such Lender (as such Lender may designate), an amount such that each such Lender shall, upon receipt of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances), and (z) if the amount of the Revolving Loans (including Swing Loans and Extraordinary Advances) made by a Lender is less than such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances) as of a Settlement Date, such Lender shall no later than 12:00 p.m. on the Settlement Date transfer in immediately available funds to Agent’s Account, an amount such that each such Lender shall, upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances).  Such amounts made available to Agent under clause (z) of the immediately preceding sentence shall be applied against the amounts of the applicable Swing Loans or Extraordinary Advances and, together with the portion of such Swing Loans or Extraordinary Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders.  If any such amount is not made available to Agent by any Lender on the Settlement Date applicable thereto to the extent required by the terms hereof, Agent shall be entitled to recover for its account such amount on demand from such Lender together with interest thereon at the Defaulting Lender Rate.

(ii)      In determining whether a Lender’s balance of the Revolving Loans (including Swing Loans and Extraordinary Advances) is less than, equal to, or greater than such Lender’s Pro Rata Share of the Revolving Loans (including Swing Loans and Extraordinary Advances) as of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to such balance the portion of payments actually received in good funds by Agent with respect to principal, interest, fees payable by Borrowers and allocable to the Lenders hereunder, and proceeds of Collateral.

-59-

(iii)     Between Settlement Dates, Agent, to the extent Extraordinary Advances or Swing Loans are outstanding, may pay over to Agent or Swing Lender, as applicable, any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Extraordinary Advances or Swing Loans.  Between Settlement Dates, Agent, to the extent no Extraordinary Advances or Swing Loans are outstanding, may pay over to Swing Lender any payments or other amounts received by Agent, that in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to Swing Lender’s Pro Rata Share of the Revolving Loans.  If, as of any Settlement Date, payments or other amounts of the Loan Parties or their Subsidiaries received since the then immediately preceding Settlement Date have been applied to Swing Lender’s Pro Rata Share of the Revolving Loans other than to Swing Loans, as provided for in the previous sentence, Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the Lenders (other than a Defaulting Lender if Agent has implemented the provisions of Section 2.3(g)), to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each such Lender shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans.  During the period between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with respect to Extraordinary Advances, and each Lender with respect to the Revolving Loans other than Swing Loans and Extraordinary Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the daily amount of funds employed by Swing Lender, Agent, or the Lenders, as applicable.

(iv)     Anything in this Section 2.3(e) to the contrary notwithstanding, in the event that a Lender is a Defaulting Lender, Agent shall be entitled to refrain from remitting settlement amounts to the Defaulting Lender and, instead, shall be entitled to elect to implement the provisions set forth in Section 2.3(g).

(f)         Notation.  Consistent with Section 13.1(h), Agent, as a non-fiduciary agent for Borrowers, shall maintain a register showing the principal amount and stated interest of the Revolving Loans, owing to each Lender, including the Swing Loans owing to Swing Lender, and Extraordinary Advances owing to Agent, and the interests therein of each Lender, from time to time and such register shall, absent manifest error, conclusively be presumed to be correct and accurate.

(g)         Defaulting Lenders.

(i)       Notwithstanding the provisions of Section 2.4(b)(iii),  Agent shall not be obligated to transfer to a Defaulting Lender any payments made by Borrowers to Agent for the Defaulting Lender’s benefit or any proceeds of Collateral that would otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of such transfer to the Defaulting Lender, Agent shall transfer any such payments (A) first, to Agent to the extent of any Extraordinary Advances that were made by Agent and that were required to be, but were not, paid by Defaulting Lender, (B) second, to Swing Lender to the extent of any Swing Loans that were made by Swing Lender and that were required to be, but were not, paid by the Defaulting Lender, (C)  third, to Issuing Bank, to the extent of the portion of a Letter of Credit Disbursement that was required to be, but was not, paid by the Defaulting Lender, (D)  fourth, to each Non-Defaulting Lender ratably in accordance with their Commitments (but, in each case, only to the extent that such Defaulting Lender’s portion of a Revolving Loan (or other funding obligation) was funded by such other Non-Defaulting Lender), (E) fifth, in Agent’s sole discretion, to a  suspense account maintained by Agent, the proceeds of which shall be retained by Agent and may be made available to be re-advanced to or for the benefit of Borrowers (upon the request of Borrowers and subject to the conditions set forth in Section 3.2) as if such Defaulting Lender had made its portion of Revolving Loans (or other funding obligations) hereunder, and (F)  sixth, from and after the date on which all other Obligations have been paid in full, to such Defaulting Lender in accordance with tier (L) of Section 2.4(b)(iii).  Subject to the foregoing, Agent may hold and, in its discretion, re-lend to Borrowers for the

-60-

account of such Defaulting Lender the amount of all such payments received and retained by Agent for the account of such Defaulting Lender.  Solely for the purposes of voting or consenting to matters with respect to the Loan Documents (including the calculation of Pro Rata Share in connection therewith) and for the purpose of calculating the fee payable under Section 2.10(b), such Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be zero; provided, that the foregoing shall not apply to any of the matters governed by Section 14.1(a)(i) through (iii).  The provisions of this Section 2.3(g) shall remain effective with respect to such Defaulting Lender until the earlier of (y) the date on which all of the Non-Defaulting Lenders, Agent, Issuing Bank, and Borrowers shall have waived, in writing, the application of this Section 2.3(g) to such Defaulting Lender, or (z) the date on which such Defaulting Lender makes payment of all amounts that it was obligated to fund hereunder, pays to Agent all amounts owing by Defaulting Lender in respect of the amounts that it was obligated to fund hereunder, and, if requested by Agent, provides adequate assurance of its ability to perform its future obligations hereunder (on which earlier date, so long as no Event of Default has occurred and is continuing, any remaining cash collateral held by Agent pursuant to Section 2.3(g)(ii) shall be released to Borrowers).  The operation of this Section 2.3(g) shall not be construed to increase or otherwise affect the Commitment of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by any Borrower of its duties and obligations hereunder to Agent, Issuing Bank, or to the Lenders other than such Defaulting Lender.  Any failure by a Defaulting Lender to fund amounts that it was obligated to fund hereunder shall constitute a material breach by such Defaulting Lender of this Agreement and shall entitle Borrowers, at their option, upon written notice to Agent, to arrange for a substitute Lender to assume the Commitment of such Defaulting Lender, such substitute Lender to be reasonably acceptable to Agent.  In connection with the arrangement of such a substitute Lender, the Defaulting Lender shall have no right to refuse to be replaced hereunder, and agrees to execute and deliver a completed form of Assignment and Acceptance in favor of the substitute Lender (and agrees that it shall be deemed to have executed and delivered such document if it fails to do so) subject only to being paid its share of the outstanding Obligations (other than Bank Product Obligations, but including (1) all interest, fees, and other amounts that may be due and payable in respect thereof, and (2) an assumption of its Pro Rata Share of its participation in the Letters of Credit); provided, that any such assumption of the Commitment of such Defaulting Lender shall not be deemed to constitute a waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any such Defaulting Lender arising out of or in relation to such failure to fund.  In the event of a direct conflict between the priority provisions of this Section 2.3(g) and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall control and govern.

(ii)      If any Swing Loan or Letter of Credit is outstanding at the time that a Lender becomes a Defaulting Lender then:

(A)        such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares but only to the extent (x) the sum of all Non-Defaulting Lenders’  Pro Rata Share of Revolver Usage plus such Defaulting Lender’s Swing Loan Exposure and Letter of Credit Exposure does not exceed the total of all Non-Defaulting Lenders’ Revolver Commitments and (y) the conditions set forth in Section 3.2 are satisfied at such time;

(B)        if the reallocation described in clause (A) above cannot, or can only partially, be effected, Borrowers shall within one Business Day following notice by the Agent (x) first, prepay such Defaulting Lender’s Swing Loan Exposure (after giving effect to any partial reallocation pursuant to clause (A) above), and (y) second, cash collateralize such Defaulting Lender’s  

-61-

Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (A) above), pursuant to a cash collateral agreement to be entered into in form and substance reasonably satisfactory to the Agent, for so long as such Letter of Credit Exposure is outstanding; provided, that Borrowers shall not be obligated to cash collateralize any Defaulting Lender’s Letter of Credit Exposure if such Defaulting Lender is also Issuing Bank;

(C)        if Borrowers cash collateralize any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to this Section 2.3(g)(ii), Borrowers shall not be required to pay any Letter of Credit Fees to Agent for the account of such Defaulting Lender pursuant to Section 2.6(b) with respect to such cash collateralized portion of such Defaulting Lender’s Letter of Credit Exposure during the period such Letter of Credit Exposure is cash collateralized;

(D)        to the extent the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to this Section 2.3(g)(ii), then the Letter of Credit Fees payable to the Non-Defaulting Lenders pursuant to Section 2.6(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Letter of Credit Exposure;

(E)        to the extent any Defaulting Lender’s Letter of Credit Exposure is neither cash collateralized nor reallocated pursuant to this Section 2.3(g)(ii), then, without prejudice to any rights or remedies of Issuing Bank or any Lender hereunder, all Letter of Credit Fees that would have otherwise been payable to such Defaulting Lender under Section 2.6(b) with respect to such portion of such Letter of Credit Exposure shall instead be payable to Issuing Bank until such portion of such Defaulting Lender’s Letter of Credit Exposure is cash collateralized or reallocated;

(F)         so long as any Lender is a Defaulting Lender, the Swing Lender shall not be required to make any Swing Loan and Issuing Bank shall not be required to issue, amend, or increase any Letter of Credit, in each case, to the extent (x) the Defaulting Lender’s Pro Rata Share of such Swing Loans or Letter of Credit cannot be reallocated pursuant to this Section 2.3(g)(ii),  or (y) the Swing Lender or Issuing Bank, as applicable, has not otherwise entered into arrangements reasonably satisfactory to the Swing Lender or Issuing Bank, as applicable, and Borrowers to eliminate the Swing Lender’s or Issuing Bank’s risk with respect to the Defaulting Lender’s participation in Swing Loans or Letters of Credit; and

(G)        Agent may release any cash collateral provided by Borrowers pursuant to this Section 2.3(g)(ii) to Issuing Bank and Issuing Bank may apply any such cash collateral to the payment of such Defaulting Lender’s Pro Rata Share of any Letter of Credit Disbursement that is not reimbursed by Borrowers pursuant to Section 2.11(d).  Subject to Section 17.14, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation.

(h)         Independent Obligations.  All Revolving Loans (other than Swing Loans and Extraordinary Advances) shall be made by the Lenders contemporaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loan (or other extension of credit) hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligations hereunder, and (ii) no failure by any Lender to perform its obligations hereunder shall excuse any other Lender from its obligations hereunder.

-62-

2.4        Payments; Termination of Commitments; Prepayments.

(a)         Payments by Borrowers.

(i)       Except as otherwise expressly provided herein, all payments by Borrowers shall be made to Agent’s Account for the account of the Lender Group and shall be made in immediately available funds, no later than 1:30 p.m. on the date specified herein.  Any payment received by Agent later than 1:30 p.m. shall be deemed to have been received (unless Agent, in its sole discretion, elects to credit it on the date received) on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(ii)      Unless Agent receives notice from Borrowers prior to the date on which any payment is due to the Lenders that Borrowers will not make such payment in full as and when required, Agent may assume that Borrowers have made (or will make) such payment in full to Agent on such date in immediately available funds and Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent Borrowers do not make such payment in full to Agent on the date when due, each Lender severally shall repay to Agent on demand such amount distributed to such Lender, together with interest thereon at the Defaulting Lender Rate for each day from the date such amount is distributed to such Lender until the date repaid.

(b)         Apportionment and Application.

(i)       So long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all principal and interest payments received by Agent shall be apportioned ratably among the Lenders (according to the unpaid principal balance of the Obligations to which such payments relate held by each Lender) and all payments of fees and expenses received by Agent (other than fees or expenses that are for Agent’s separate account or for the separate account of Issuing Bank) shall be apportioned ratably among the Lenders having a Pro Rata Share of the type of Commitment or Obligation to which a particular fee or expense relates.

(ii)      Subject to Section 2.4(b)(v) and Section 2.4(e), all payments to be made hereunder by Borrowers shall be remitted to Agent and all such payments, and all proceeds of Collateral received by Agent, shall be applied, so long as no Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, to reduce the balance of the Revolving Loans outstanding and, thereafter, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iii)     At any time that an Application Event has occurred and is continuing and except as otherwise provided herein with respect to Defaulting Lenders, all payments remitted to Agent and all proceeds of Collateral received by Agent shall be applied as follows:

(A)        first, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to Agent under the Loan Documents and to pay interest and principal on Extraordinary Advances that are held solely by Agent pursuant to the terms of Section 2.3(d)(iv),  until paid in full,

(B)        second, to pay any fees or premiums then due to Agent under the Loan Documents, until paid in full,

(C)        third, to pay interest due in respect of all Protective Advances, until paid in full,

-63-

(D)        fourth, to pay the principal of all Protective Advances, until paid in full,

(E)        fifth, ratably, to pay any Lender Group Expenses (including cost or expense reimbursements) or indemnities then due to any of the Lenders under the Loan Documents, until paid in full,

(F)         sixth, ratably, to pay any fees or premiums then due to any of the Lenders under the Loan Documents, until paid in full,

(G)        seventh, to pay interest accrued in respect of the Swing Loans, until paid in full,

(H)        eighth, to pay the principal of all Swing Loans, until paid in full,

(I)         ninth,  ratably, to pay interest accrued in respect of the Revolving Loans (other than Protective Advances), until paid in full,

(J)         tenth,  ratably

i.         ratably, to pay the principal of all Revolving Loans, until paid in full,

ii.        to Agent, to be held by Agent, for the benefit of Issuing Bank (and for the ratable benefit of each of the Lenders that have an obligation to pay to Agent, for the account of Issuing Bank, a share of each Letter of Credit Disbursement), as cash collateral in an amount up to 102% of the Letter of Credit Usage (other than Pledged Cash L/C Usage) (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement in respect of any Sub-facility Letter of Credit as and when such disbursement occurs and, if a Sub-facility Letter of Credit expires undrawn, the cash collateral held by Agent in respect of such Letter of Credit shall, to the extent permitted by applicable law, be reapplied pursuant to this  Section 2.4(b)(iii), beginning with tier (A) hereof),

iii.       to Agent, to be held by Agent, for the benefit of Pledged Cash Letter of Credit Issuing Bank, as cash collateral in an amount up to 102% of Pledged Cash L/C Usage, such percentage taking into account the amount of any Pledged Cash at such time (to the extent permitted by applicable law, such cash collateral shall be applied to the reimbursement of any Letter of Credit Disbursement in respect of a Pledged Cash Letter of Credit as and when such disbursement occurs and, if a Pledged Cash Letter of Credit expires undrawn, the cash collateral held by Agent pursuant to this clause (iii) in excess of 100% of Pledged Cash L/C Usage at such time in respect of such Letter of Credit shall to the extent permitted by applicable law, be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof),

iv.       ratably,  to (y) the Bank Product Providers based upon amounts then certified by each applicable Bank Product Provider to Agent (in form and substance satisfactory to Agent) to be due and payable to such Bank Product Provider on account of Bank Product Obligations, and (z) with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may be released by Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral

-64-

held by Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof,

(K)        eleventh, to pay any other Obligations other than Obligations owed to Defaulting Lenders, (including being paid, ratably, to the Bank Product Providers on account of all amounts then due and payable in respect of Bank Product Obligations, with any balance to be paid to Agent, to be held by Agent, for the ratable benefit of the Bank Product Providers, as cash collateral (which cash collateral may be released by Agent to the applicable Bank Product Provider and applied by such Bank Product Provider to the payment or reimbursement of any amounts due and payable with respect to Bank Product Obligations owed to the applicable Bank Product Provider as and when such amounts first become due and payable and, if and at such time as all such Bank Product Obligations are paid or otherwise satisfied in full, the cash collateral held by Agent in respect of such Bank Product Obligations shall be reapplied pursuant to this Section 2.4(b)(iii), beginning with tier (A) hereof);

(L)        twelfth, ratably to pay any Obligations owed to Defaulting Lenders; and

(M)       thirteenth, to Borrowers (to be wired to the Designated Account) or such other Person entitled thereto under applicable law.

(iv)     Agent promptly shall distribute to each Lender, pursuant to the applicable wire instructions received from each Lender in writing, such funds as it may be entitled to receive, subject to a Settlement delay as provided in Section 2.3(e).

(v)      In each instance, so long as no Application Event has occurred and is continuing, Section 2.4(b)(ii) shall not apply to any payment made by Borrowers to Agent and specified by Borrowers to be for the payment of specific Obligations then due and payable (or prepayable) under any provision of this Agreement or any other Loan Document.

(vi)     For purposes of Section 2.4(b)(iii),  “paid in full” of a type of Obligation means payment in cash or immediately available funds of all amounts owing on account of such type of Obligation, including interest accrued after the commencement of any Insolvency Proceeding, default interest, interest on interest, and expense reimbursements, irrespective of whether any of the foregoing would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

(vii)    In the event of a direct conflict between the priority provisions of this Section 2.4 and any other provision contained in this Agreement or any other Loan Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, if the conflict relates to the provisions of Section 2.3(g) and this Section 2.4, then the provisions of Section 2.3(g) shall control and govern, and if otherwise, then the terms and provisions of this Section 2.4 shall control and govern.

(c)         Termination and Reduction of Commitments.  The Revolver Commitments shall terminate on the Maturity Date or earlier termination thereof pursuant to the terms of this Agreement.  The Pledged Cash Letter of Credit Commitment shall terminate on the Maturity Date or earlier termination thereof pursuant to the terms of this Agreement.  Borrowers may reduce the Revolver Commitments, without premium or penalty, to an amount not less than the sum of (A) the Revolver Usage as of such date, plus (B) the principal amount of all Revolving Loans not yet made as to which a request has been given by Borrowers under Section 2.3(a),  plus (C) the amount of all Letters of Credit (other than any Pledged Cash Letter of Credit) not yet issued as to which a request has been given by Borrowers pursuant to Section 2.11(a);  provided that the aggregate of all such reductions shall not be

-65-

more than $32,500,000.  Subject to the proviso in the immediately preceding sentence, each such reduction shall be in an amount which is not less than $5,000,000 and shall be made by providing not less than five Business Days prior written notice to Agent, and shall be irrevocable.  The Revolver Commitments, once reduced, may not be increased, except pursuant to Section 2.14.  Each such reduction of the Revolver Commitments shall reduce the Revolver Commitments of each Lender proportionately in accordance with its ratable share thereof.  In connection with any reduction in the Revolver Commitments prior to the Maturity Date, if any Loan Party or any of its Subsidiaries owns any Margin Stock, Borrowers shall deliver to Agent an updated Form U-1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.

(d)         Optional Prepayments.  Borrowers may prepay the principal of any Revolving Loan at any time in whole or in part, without premium or penalty.

(e)         Mandatory Prepayments.  If, at any time, (A) the Revolver Usage on such date exceeds (B) the lesser of (x) the Borrowing Base reflected in the Borrowing Base Certificate most recently delivered by Borrowers to Agent, or (y) the Maximum Revolver Amount, in all cases as adjusted for Reserves established by Agent in accordance with Section 2.1(c),  then Borrowers shall immediately prepay the Obligations in accordance with Section 2.4(f) in an aggregate amount equal to the amount of such excess.

(f)         Application of Payments.  Each prepayment pursuant to Section 2.4(e) shall, (1) so long as no Application Event shall have occurred and be continuing, be applied, first, to the outstanding principal amount of the Revolving Loans until paid in full, and second, to cash collateralize the Letters of Credit in an amount equal to 102% of the then outstanding Letter of Credit Usage (other than Pledged Cash L/C Usage), and (2) if an Application Event shall have occurred and be continuing, be applied in the manner set forth in Section 2.4(b)(iii).

2.5        Promise to Pay; Promissory Notes.

(a)         Borrowers agree to pay the Lender Group Expenses on the earlier of (i) the first day of the month following the date on which the applicable Lender Group Expenses were first incurred, or (ii) the date on which demand therefor (together with backup documentation or explanation supporting such request) is made by Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (ii)).  Borrowers promise to pay all of the Obligations (including principal, interest, premiums, if any, fees, costs, and expenses (including Lender Group Expenses)) in full on the Maturity Date or, if earlier, on the date on which the Obligations (other than the Bank Product Obligations) become due and payable pursuant to the terms of this Agreement.  Borrowers agree that their obligations contained in the first sentence of this Section 2.5(a) shall survive payment or satisfaction in full of all other Obligations.

(b)         Any Lender may request that any portion of its Commitments or the Loans made by it be evidenced by one or more promissory notes.  In such event, Borrowers shall execute and deliver to such Lender the requested promissory notes payable to the order of such Lender in a form furnished by Agent and reasonably satisfactory to Borrowers.  Thereafter, the portion of the Commitments and Loans evidenced by such promissory notes and interest thereon shall at all times be represented by one or more promissory notes in such form payable to the order of the payee named therein.

-66-

2.6        Interest Rates and Letter of Credit Fee:  Rates, Payments, and Calculations.

(a)         Interest Rates.  Except as provided in Section 2.6(c), all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest as follows:

(i)       if the relevant Obligation is (A) a LIBOR Rate Loan, at a per annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin or (B) a Swing Loan that bears interest at a rate determined by reference to Daily One Month LIBOR, at a per annum rate equal to Daily One Month LIBOR plus the LIBOR Rate Margin, and

(ii)      otherwise, at a per annum rate equal to the Base Rate plus the Base Rate Margin.

(b)         Letter of Credit Fee.  Borrowers shall pay Agent (for the (x) ratable benefit of the Revolving Lenders in the case of the following clause (i) and (y) benefit of the Pledged Cash Letter of Credit Issuing Bank in the case of the following clause (ii)) a Letter of Credit fee (the “Letter of Credit Fee”) (which fee shall be in addition to the fronting fees and commissions, other fees, charges and expenses set forth in Section 2.11(k))  that shall accrue (i) at a per annum rate equal to (A) for the period beginning with and including the Closing Date through and including the Letter of Credit Cutoff Date, 1.25% and (B) at all other times, 1.75%, in each case, times the average amount of the Letter of Credit Usage (other than Pledged Cash L/C Usage) during the immediately preceding month (or portion thereof) and (ii) at a per annum rate equal to 0.75% times the average amount of the Pledged Cash L/C Usage during the immediately preceding month (or portion thereof).

(c)         Default Rate.  (i) Automatically upon the occurrence and during the continuation of a Specified Event of Default and (ii) upon the occurrence and during the continuation of any other Event of Default (other than a Specified Event of Default), at the direction of Agent or the Required Lenders, and upon written notice by Agent to Borrowers of such direction (provided, that such notice shall not be required for any Event of Default under Section 8.1), (A) all Loans and all Obligations (except for undrawn Letters of Credit) that have been charged to the Loan Account pursuant to the terms hereof shall bear interest at a per annum rate equal to two percentage points above the per annum rate otherwise applicable thereunder, and (B) the Letter of Credit Fee described in clause(b)(i) of this Section 2.6 shall be increased to two percentage points above the per annum rate otherwise applicable hereunder.

(d)         Payment.  Except to the extent provided to the contrary in Section 2.10,  Section 2.11(k) or Section 2.12(a), (i) all interest and all other fees payable hereunder or under any of the other Loan Documents (other than Letter of Credit Fees) shall be due and payable, in arrears, on the first day of each month;  (ii) all Letter of Credit Fees payable hereunder, and all fronting fees and all commissions, other fees, charges and expenses provided for in Section 2.11(k)  shall be due and payable, in arrears, on the first Business Day of each month, and  (iii) all costs and expenses payable hereunder or under any of the other Loan Documents, and all other Lender Group Expenses shall be due and payable on (x)  with respect to Lender Group Expenses outstanding as of the Closing Date, the Closing Date, and (y) otherwise, the earlier of (A) the first day of the month following the date on which the applicable costs, expenses, or Lender Group Expenses were first incurred, or (B) the date on which demand therefor is made by Agent (it being acknowledged and agreed that any charging of such costs, expenses or Lender Group Expenses to the Loan Account pursuant to the provisions of the following sentence shall be deemed to constitute a demand for payment thereof for the purposes of this subclause (y)).  Borrowers hereby authorize Agent, from time to time without prior notice to Borrowers, to charge to the Loan Account (A) on the first day of each month, all interest accrued during the prior month on the Revolving Loans hereunder, (B) on the first Business Day of each month, all Letter of Credit Fees accrued or

-67-

chargeable hereunder during the prior month, (C) as and when incurred or accrued, all fees and costs provided for in Section 2.10(a) or (c), (D) on the first day of each month, the Unused Line Fee and the Pledged Cash Letter of Credit Unused Line Fee accrued during the prior month pursuant to Section 2.10(b), (E) as and when incurred or accrued, all non-out-of-pocket audit, appraisal, valuation, or other charges or fees payable hereunder pursuant to Section 2.10(c), (F) if Borrowers do not pay any such Lender Group Expenses within two Business Days of the date of Borrowers’ receipt of written notice thereof, all out-of-pocket audit, appraisal, valuation, or other charges or fees payable hereunder pursuant to Section 2.10(c), (G) as and when due and payable, all other fees payable hereunder or under any of the other Loan Documents, (H) with respect to other Lender Group Expenses, on the Closing Date and thereafter if Borrowers do not pay such other Lender Group Expenses within two Business Days of the date of Borrowers’ receipt of written notice thereof, and (I) as and when due and payable all other payment obligations payable under any Loan Document or any Bank Product Agreement (including any amounts due and payable to the Bank Product Providers in respect of Bank Products); provided, that if such amounts are not paid and, instead, are charged to the Loan Account, they shall be charged thereto as of the day on which the item was first due and payable or incurred or accrued without regard to the applicable delay and such amounts shall accrue interest from such original date; provided further, that the applicable delays set forth in the foregoing clauses (F) and (H) shall not be applicable (and Agent shall be entitled to immediately charge to the Loan Account) at any time that an Event of Default has occurred and is continuing.  All amounts (including interest, fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder or under any other Loan Document or under any Bank Product Agreement) charged to the Loan Account shall thereupon constitute Revolving Loans hereunder, shall constitute Obligations hereunder, and shall initially accrue interest at the rate then applicable to Revolving Loans that are Base Rate Loans (unless and until converted into LIBOR Rate Loans in accordance with the terms of this Agreement).

(e)         Computation.  All interest and fees chargeable under the Loan Documents shall be computed on the basis of a 360 day year (other than Base Rate Loans which shall be calculated on the basis of 365 or 366 day year, as applicable, and actual days elapsed), in each case, for the actual number of days elapsed in the period during which the interest or fees accrue.  In the event the Base Rate is changed from time to time hereafter, the rates of interest hereunder based upon the Base Rate automatically and immediately shall be increased or decreased by an amount equal to such change in the Base Rate.  In the event Daily One Month LIBOR is changed from time to time hereafter, the rates of interest hereunder based upon Daily One Month LIBOR automatically and immediately shall be increased or decreased by an amount equal to such change in Daily One Month LIBOR.

(f)         Intent to Limit Charges to Maximum Lawful Rate.  In no event shall the interest rate or rates payable under this Agreement, plus any other amounts paid in connection herewith, exceed the highest rate permissible under any law that a court of competent jurisdiction shall, in a final determination, deem applicable.  Borrowers and the Lender Group, in executing and delivering this Agreement, intend legally to agree upon the rate or rates of interest and manner of payment stated within it; provided, that anything contained herein to the contrary notwithstanding, if such rate or rates of interest or manner of payment exceeds the maximum allowable under applicable law, then, ipso facto, as of the date of this Agreement, Borrowers are and shall be liable only for the payment of such maximum amount as is allowed by law, and payment received from Borrowers in excess of such legal maximum, whenever received, shall be applied to reduce the principal balance of the Obligations to the extent of such excess.

2.7        Crediting Payments.  The receipt of any payment item by Agent shall not be required to be considered a payment on account unless such payment item is a wire transfer of immediately available funds made to Agent’s Account or unless and until such payment item is honored when presented for payment.  Should any payment item not be honored when presented for payment, then Borrowers shall be deemed not to have made such payment.  Anything to the contrary contained herein notwithstanding, any

-68-

payment item shall be deemed received by Agent only if it is received into Agent’s Account on a Business Day on or before 1:30 p.m.  If any payment item is received into Agent’s Account on a non-Business Day or after 1:30 p.m. on a Business Day (unless Agent, in its sole discretion, elects to credit it on the date received), it shall be deemed to have been received by Agent as of the opening of business on the immediately following Business Day.

2.8        Designated Account.  Agent is authorized to make the Revolving Loans and Issuing Bank is authorized to issue the Letters of Credit, under this Agreement based upon telephonic or other instructions received from anyone purporting to be an Authorized Person or, without instructions, if pursuant to Section 2.6(d).  Borrowers agree to establish and maintain the Designated Account with the Designated Account Bank for the purpose of receiving the proceeds of the Revolving Loans requested by Borrowers and made by Agent or the Lenders hereunder.  Unless otherwise agreed by Agent and Borrowers, any Revolving Loan or Swing Loan requested by Borrowers and made by Agent or the Lenders hereunder shall be made to the Designated Account.

2.9        Maintenance of Loan Account; Statements of Obligations.  Agent shall maintain an account on its books in the name of Borrowers (the “Loan Account”) on which Borrowers will be charged with all Revolving Loans (including Extraordinary Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to Borrowers or for Borrowers’ account, the Letters of Credit issued or arranged by Issuing Bank for Borrowers’ account, and, subject to the delays set forth in clauses (F) and (H) of Section 2.6(d) (if applicable), with all other payment Obligations hereunder or under the other Loan Documents, including, accrued interest, fees and expenses, and Lender Group Expenses.  In accordance with Section 2.7, the Loan Account will be credited with all payments received by Agent from Borrowers or for Borrowers’ account.  Agent shall make available to Borrowers monthly statements regarding the Loan Account, including the principal amount of the Revolving Loans, interest accrued hereunder, fees accrued or charged hereunder or under the other Loan Documents, and a summary itemization of all charges and expenses constituting Lender Group Expenses accrued hereunder or under the other Loan Documents, and each such statement, absent manifest error, shall be conclusively presumed to be correct and accurate and constitute an account stated between Borrowers and the Lender Group unless, within 30 days after Agent first makes such a statement available to Borrowers,  Borrowers shall deliver to Agent written objection thereto describing the error or errors contained in such statement.

2.10      Fees.

(a)         Agent Fees.  Borrowers shall pay to Agent, for the account of Agent, as and when due and payable under the terms of the Fee Letter, the fees set forth in the Fee Letter.

(b)         Unused Line Fee and Pledged Cash Letter of Credit Unused Line Fee.

(i)       Borrowers shall pay to Agent, for the ratable account of the Revolving Lenders, an unused line fee (the “Unused Line Fee”) in an amount equal to the Applicable Unused Line Fee Percentage per annum times the result of (A) the aggregate amount of the Revolver Commitments, less (B) the Average Revolver Usage during the immediately preceding month (or portion thereof), which Unused Line Fee shall be due and payable, in arrears, on the first day of each month from and after the Closing Date up to the first day of the month, prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full.

(ii)      Borrowers shall pay to Agent, for the account of the Pledged Cash Letter of Credit Issuing Bank, an unused line fee (the “Pledged Cash Letter of Credit Unused Line Fee”) in an amount equal to the Applicable Pledged Cash Letter of Credit Unused Line Fee Percentage per annum times the result of (A) the amount of the Pledged Cash Letter of Credit Commitment, less (B) the Average Pledged Cash L/C Usage during the immediately preceding month (or portion thereof), which Pledged

-69-

Cash Letter of Credit Unused Line Fee shall be due and payable, in arrears, on the first day of each month from and after the Closing Date up to the first day of the month, prior to the date on which the Obligations are paid in full and on the date on which the Obligations are paid in full.

(c)         Field Examination and Other Fees.  Subject to any applicable limitations contained in Section 5.7(c),  Borrowers shall pay or reimburse to Agent, field examination, appraisal, collateral reporting and valuation fees and charges, as and when incurred or chargeable, as follows:  (i) a fee of $1,000 per day, per examiner, plus reasonable out-of-pocket expenses for each field examination of any Loan Party or its Subsidiaries performed by or on behalf of Agent, (ii) if implemented, a fee of $1,000 per day, per person, plus reasonable out-of-pocket expenses (including travel, meals, and lodging) for the establishment of a system of electronic collateral reporting, and (iii) the reasonable fees, charges or expenses paid or incurred by Agent (but, in any event, no less than a charge of $1,000 per day, per Person, plus reasonable out-of-pocket expenses) if it elects to employ the services of one or more third Persons to perform field examinations, to appraise the Collateral, or any portion thereof, or to assess any Loan Party’s or its Subsidiaries’ business valuation.

2.11      Letters of Credit.

(a)         Subject to the terms and conditions of this Agreement, upon the request of Borrowers made in accordance herewith, and prior to the Maturity Date, Issuing Bank agrees to issue a requested standby Letter of Credit or a sight commercial Letter of Credit for the account of Borrowers.  By submitting a request to Issuing Bank for the issuance of a Letter of Credit, Borrowers shall be deemed to have requested that Issuing Bank issue the requested Letter of Credit.  Each request for the issuance of a Letter of Credit, or the amendment, renewal, or extension of any outstanding Letter of Credit, shall be (i) irrevocable and made in writing by an Authorized Person, (ii) delivered to Agent and Issuing Bank via telefacsimile or other electronic method of transmission reasonably acceptable to Agent and Issuing Bank and reasonably in advance of the requested date of issuance, amendment, renewal, or extension, and (iii) subject to Issuing Bank’s authentication procedures with results satisfactory to Issuing Bank.  Each such request shall be in form and substance reasonably satisfactory to Agent and Issuing Bank and (i) shall specify (A) the amount of such Letter of Credit, (B) the date of issuance, amendment, renewal, or extension of such Letter of Credit, (C) the proposed expiration date of such Letter of Credit, (D) the name and address of the beneficiary of the Letter of Credit, (E) if such Letter of Credit in full is designated by Borrowers as a “Pledged Cash Letter of Credit”, and (F) such other information (including, the conditions to drawing, and, in the case of an amendment, renewal, or extension, identification of the Letter of Credit to be so amended, renewed, or extended) as shall be necessary to prepare, amend, renew, or extend such Letter of Credit, and (ii) shall be accompanied by such Issuer Documents as Agent or Issuing Bank may request or require, to the extent that such requests or requirements are consistent with the Issuer Documents that Issuing Bank generally requests for Letters of Credit in similar circumstances.  Issuing Bank’s records of the content of any such request will be conclusive.  Anything contained herein to the contrary notwithstanding, Issuing Bank may, but shall not be obligated to, issue a Letter of Credit that supports the obligations of a Loan Party or one of its Subsidiaries in respect of (x) a lease of real property, or (y) an employment contract.

(b)         Issuing Bank shall have no obligation to issue a Letter of Credit if any of the following would result after giving effect to the requested issuance:

(i)       with respect to the issuance of a Sub-facility Letter of Credit,  the Letter of Credit Usage (other than Pledged Cash L/C Usage) would exceed the Letter of Credit Sublimit, or

(ii)      with respect to the issuance of a Pledged Cash Letter of Credit, the Pledged Cash L/C Usage would exceed the balance of the Pledged Cash,

-70-

(iii)     with respect to the issuance of a Sub-facility Letter of Credit,  the Letter of Credit Usage (other than Pledged Cash L/C Usage) would exceed the Maximum Revolver Amount less the outstanding amount of Revolving Loans (including Swing Loans), or

(iv)     with respect to the issuance of a Sub-facility Letter of Credit,  the Letter of Credit Usage (other than Pledged Cash L/C Usage) would exceed the Borrowing Base at such time less the outstanding principal balance of the Revolving Loans (inclusive of Swing Loans) at such time.

(c)         In the event there is a Defaulting Lender as of the date of any request for the issuance of a Letter of Credit, Issuing Bank shall not be required to issue or arrange for such Letter of Credit to the extent (i) the Defaulting Lender’s Letter of Credit Exposure with respect to such Letter of Credit may not be reallocated pursuant to Section 2.3(g)(ii), or (ii) Issuing Bank has not otherwise entered into arrangements reasonably satisfactory to it and Borrowers to eliminate Issuing Bank’s risk with respect to the participation in such Letter of Credit of the Defaulting Lender, which arrangements may include Borrowers cash collateralizing such Defaulting Lender’s Letter of Credit Exposure in accordance with Section 2.3(g)(ii).  Additionally, Issuing Bank shall have no obligation to issue or extend a Letter of Credit if (A) any order, judgment, or decree of any Governmental Authority or arbitrator shall, by its terms, purport to enjoin or restrain Issuing Bank from issuing such Letter of Credit, or any law applicable to Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over Issuing Bank shall prohibit or request that Issuing Bank refrain from the issuance of letters of credit generally or such Letter of Credit in particular, (B) the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally, or (C) if amounts demanded to be paid under any Letter of Credit will not or may not be in United States Dollars.

(d)         Any Issuing Bank (other than Wells Fargo or any of its Affiliates) shall notify Agent in writing no later than the Business Day prior to the Business Day on which such Issuing Bank issues any Letter of Credit.  In addition, each Issuing Bank (other than Wells Fargo or any of its Affiliates) shall, on the first Business Day of each week, submit to Agent a report detailing the daily undrawn amount of each Letter of Credit issued by such Issuing Bank during the prior calendar week.  Each Letter of Credit shall be in form and substance reasonably acceptable to Issuing Bank, including the requirement that the amounts payable thereunder must be payable in Dollars.  If Issuing Bank makes a payment under a Letter of Credit, Borrowers shall pay to Agent an amount equal to the applicable Letter of Credit Disbursement on the Business Day such Letter of Credit Disbursement is made and, in the absence of such payment in respect of a Sub-facility Letter of Credit, the amount of the Letter of Credit Disbursement immediately and automatically shall be deemed to be a Revolving Loan hereunder (notwithstanding any failure to satisfy any condition precedent set forth in Section 3) and, initially, shall bear interest at the rate then applicable to Revolving Loans that are Base Rate Loans.  If a Letter of Credit Disbursement in respect of a Sub-facility Letter of Credit is deemed to be a Revolving Loan hereunder, Borrowers’ obligation to pay the amount of such Letter of Credit Disbursement to Issuing Bank shall be automatically converted into an obligation to pay the resulting Revolving Loan.  Promptly following receipt by Agent of any payment from Borrowers pursuant to this paragraph, Agent shall distribute such payment to Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to Section 2.11(e) to reimburse Issuing Bank, then to such Revolving Lenders and Issuing Bank as their interests may appear.

(e)         Promptly following receipt of a notice of a Letter of Credit Disbursement in respect of a Sub-facility Letter of Credit pursuant to Section 2.11(d), each Revolving Lender agrees to fund its Pro Rata Share of any Revolving Loan deemed made pursuant to Section 2.11(d) on the same terms and conditions as if Borrowers had requested the amount thereof as a Revolving Loan and Agent shall promptly pay to Issuing Bank the amounts so received by it from the Revolving Lenders.  By the

-71-

issuance of a Sub-facility Letter of Credit (or an amendment, renewal, or extension of any such Letter of Credit) and without any further action on the part of Issuing Bank or the Revolving Lenders, Issuing Bank shall be deemed to have granted to each Revolving Lender, and each Revolving Lender shall be deemed to have purchased, a participation in each such Sub-facility Letter of Credit issued by Issuing Bank, in an amount equal to its Pro Rata Share of such Sub-facility Letter of Credit, and each such Revolving Lender agrees to pay to Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of any Letter of Credit Disbursement made by Issuing Bank under the applicable Sub-facility Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to Agent, for the account of Issuing Bank, such Revolving Lender’s Pro Rata Share of each Letter of Credit Disbursement in respect of a Sub-facility Letter of Credit made by Issuing Bank and not reimbursed by Borrowers on the date due as provided in Section 2.11(d), or of any reimbursement payment that is required to be refunded (or that Agent or Issuing Bank elects, based upon the advice of counsel, to refund) to Borrowers for any reason.  Each Revolving Lender acknowledges and agrees that its obligation to deliver to Agent, for the account of Issuing Bank, an amount equal to its respective Pro Rata Share of each Letter of Credit Disbursement in respect of a Sub-facility Letter of Credit pursuant to this Section 2.11(e) shall be absolute and unconditional and such remittance shall be made notwithstanding the occurrence or continuation of an Event of Default or Default or the failure to satisfy any condition set forth in Section 3.  If any such Revolving Lender fails to make available to Agent the amount of such Revolving Lender’s Pro Rata Share of a Letter of Credit Disbursement in respect of a Sub-facility Letter of Credit as provided in this Section, such Revolving Lender shall be deemed to be a Defaulting Lender and Agent (for the account of Issuing Bank) shall be entitled to recover such amount on demand from such Revolving Lender together with interest thereon at the Defaulting Lender Rate until paid in full.

(f)         Each Borrower agrees to indemnify, defend and hold harmless each member of the Lender Group (including Issuing Bank and its branches, Affiliates, and correspondents) and each such Person’s respective directors, officers, employees, attorneys and agents (each, including Issuing Bank, a “Letter of Credit Related Person”)  (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable fees and disbursements of attorneys, experts, or consultants and all other costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), which may be incurred by or awarded against any such Letter of Credit Related Person (other than Taxes, which shall be governed by Section 16) (the “Letter of Credit Indemnified Costs”), and which arise out of or in connection with, or as a result of:

(i)       any Letter of Credit or any pre-advice of its issuance;

(ii)      any transfer, sale, delivery, surrender or endorsement (or lack thereof) of any Drawing Document at any time(s) held by any such Letter of Credit Related Person in connection with any Letter of Credit;

(iii)     any action or proceeding arising out of, or in connection with, any Letter of Credit (whether administrative, judicial or in connection with arbitration), including any action or proceeding to compel or restrain any presentation or payment under any Letter of Credit, or for the wrongful dishonor of, or honoring a presentation under, any Letter of Credit;

(iv)     any independent undertakings issued by the beneficiary of any Letter of Credit;

(v)      any unauthorized instruction or request made to Issuing Bank in connection with any Letter of Credit or requested Letter of Credit,  or any error, omission, interruption or delay in

-72-

such instruction or request, whether transmitted by mail, courier, electronic transmission, SWIFT, or any other telecommunication including communications through a correspondent;

(vi)     an adviser, confirmer or other nominated person seeking to be reimbursed, indemnified or compensated;

(vii)    any third party seeking to enforce the rights of an applicant, beneficiary, nominated person, transferee, assignee of Letter of Credit proceeds or holder of an instrument or document;

(viii)   the fraud, forgery or illegal action of parties other than the Letter of Credit Related Person;

(ix)     any prohibition on payment or delay in payment of any amount payable by Issuing Bank to a beneficiary or transferee beneficiary of a Letter of Credit arising out of Anti-Corruption Laws, Anti-Money Laundering Laws, or Sanctions;

(x)      Issuing Bank’s performance of the obligations of a confirming institution or entity that wrongfully dishonors a confirmation;

(xi)     any foreign language translation provided to Issuing Bank in connection with any Letter of Credit;

(xii)    any foreign law or usage as it relates to Issuing Bank’s issuance of a Letter of Credit in support of a foreign guaranty including the expiration of such guaranty after the related Letter of Credit expiration date and any resulting drawing paid by Issuing Bank in connection therewith; or

(xiii)   the acts or omissions, whether rightful or wrongful, of any present or future de jure or de facto governmental or regulatory authority or cause or event beyond the control of the Letter of Credit Related Person;

provided, that such indemnity shall not be available to any Letter of Credit Related Person claiming indemnification under clauses (i) through (x) above to the extent that such Letter of Credit Indemnified Costs may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction to have resulted directly from the gross negligence or willful misconduct of the Letter of Credit Related Person claiming indemnity.  Borrowers hereby agree to pay the Letter of Credit Related Person claiming indemnity on demand from time to time all amounts owing under this Section 2.11(f).  If and to the extent that the obligations of Borrowers under this Section 2.11(f) are unenforceable for any reason, Borrowers agree to make the maximum contribution to the Letter of Credit Indemnified Costs permissible under applicable law.  This indemnification provision shall survive termination of this Agreement and all Letters of Credit.

(g)         The liability of Issuing Bank (or any other Letter of Credit Related Person) under, in connection with or arising out of any Letter of Credit (or pre-advice), regardless of the form or legal grounds of the action or proceeding, shall be limited to direct damages suffered by Borrowers that are caused directly by Issuing Bank’s gross negligence or willful misconduct in (i) honoring a presentation under a Letter of Credit that on its face does not at least substantially comply with the terms and conditions of such Letter of Credit, (ii) failing to honor a presentation under a Letter of Credit that strictly complies with the terms and conditions of such Letter of Credit, or (iii) retaining Drawing Documents presented under a Letter of Credit.  Borrowers’ aggregate remedies against Issuing Bank and any Letter of Credit Related Person for wrongfully honoring a presentation under any Letter of Credit or wrongfully retaining honored Drawing Documents shall in no event exceed the aggregate amount paid by

-73-

Borrowers to Issuing Bank in respect of the honored presentation in connection with such Letter of Credit under Section 2.11(d),  plus interest at the rate then applicable to Base Rate Loans hereunder.  Borrowers shall take action to avoid and mitigate the amount of any damages claimed against Issuing Bank or any other Letter of Credit Related Person, including by enforcing its rights against the beneficiaries of the Letters of Credit.  Any claim by Borrowers under or in connection with any Letter of Credit shall be reduced by an amount equal to the sum of (x) the amount (if any) saved by Borrowers as a result of the breach or alleged wrongful conduct complained of, and (y) the amount (if any) of the loss that would have been avoided had Borrowers taken all reasonable steps to mitigate any loss, and in case of a claim of wrongful dishonor, by specifically and timely authorizing Issuing Bank to effect a cure.

(h)         Borrowers are responsible for the final text of the Letter of Credit as issued by Issuing Bank, irrespective of any assistance Issuing Bank may provide such as drafting or recommending text or by Issuing Bank’s use or refusal to use text submitted by Borrowers.  Borrowers understand that the final form of any Letter of Credit may be subject to such revisions and changes as are deemed necessary or appropriate by Issuing Bank, and Borrowers hereby consent to such revisions and changes not materially different from the application executed in connection therewith. Borrowers are solely responsible for the suitability of the Letter of Credit for Borrowers’ purposes.  If Borrowers request Issuing Bank to issue a Letter of Credit for an affiliated or unaffiliated third party (an “Account Party”), (i) such Account Party shall have no rights against Issuing Bank; (ii) Borrowers shall be responsible for the application and obligations under this Agreement; and (iii) communications (including notices) related to the respective Letter of Credit shall be among Issuing Bank and Borrowers.  Borrowers will examine the copy of the Letter of Credit and any other documents sent by Issuing Bank in connection therewith and shall promptly notify Issuing Bank (not later than three (3) Business Days following Borrowers’ receipt of documents from Issuing Bank) of any non-compliance with Borrowers’ instructions and of any discrepancy in any document under any presentment or other irregularity.  Borrowers understand and agree that Issuing Bank is not required to extend the expiration date of any Letter of Credit for any reason. With respect to any Letter of Credit containing an “automatic amendment” to extend the expiration date of such Letter of Credit, Issuing Bank, in its sole and absolute discretion, may give notice of nonrenewal of such Letter of Credit and, if Borrowers do not at any time want the then current expiration date of such Letter of Credit to be extended, Borrowers will so notify Agent and Issuing Bank at least 30 calendar days before Issuing Bank is required to notify the beneficiary of such Letter of Credit or any advising bank of such non-extension pursuant to the terms of such Letter of Credit.

(i)          Borrowers’ reimbursement and payment obligations under this Section 2.11 are absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever, including:

(i)    any lack of validity, enforceability or legal effect of any Letter of Credit, any Issuer Document, this Agreement, or any Loan Document, or any term or provision therein or herein;

(ii)   payment against presentation of any draft, demand or claim for payment under any Drawing Document that does not comply in whole or in part with the terms of the applicable Letter of Credit or which proves to be fraudulent, forged or invalid in any respect or any statement therein being untrue or inaccurate in any respect, or which is signed, issued or presented by a Person or a transferee of such Person purporting to be a successor or transferee of the beneficiary of such Letter of Credit;

(iii)  Issuing Bank or any of its branches or Affiliates being the beneficiary of any Letter of Credit;

-74-

(iv)  Issuing Bank or any correspondent honoring a drawing against a Drawing Document up to the amount available under any Letter of Credit even if such Drawing Document claims an amount in excess of the amount available under the Letter of Credit;

(v)    the existence of any claim, set-off, defense or other right that any Loan Party or any of its Subsidiaries may have at any time against any beneficiary or transferee beneficiary, any assignee of proceeds, Issuing Bank or any other Person;

(vi)  Issuing Bank or any correspondent honoring a drawing upon receipt of an electronic presentation under a Letter of Credit requiring the same, regardless of whether the original Drawing Documents arrive at Issuing Bank’s counters or are different from the electronic presentation;

(vii) any other event, circumstance or conduct whatsoever, whether or not similar to any of the foregoing that might, but for this Section 2.11(i), constitute a legal or equitable defense to or discharge of, or provide a right of set-off against, any Borrower’s or any of its Subsidiaries’ reimbursement and other payment obligations and liabilities, arising under, or in connection with, any Letter of Credit, whether against Issuing Bank, the beneficiary or any other Person; or

(viii) the fact that any Default or Event of Default shall have occurred and be continuing;

provided, that subject to Section 2.11(g) above, the foregoing shall not release Issuing Bank from such liability to Borrowers as may be finally determined in a final, non-appealable judgment of a court of competent jurisdiction against Issuing  Bank following reimbursement or payment of the obligations and liabilities, including reimbursement and other payment obligations, of Borrowers to Issuing Bank arising under, or in connection with, this Section 2.11 or any Letter of Credit.

(j)          Without limiting any other provision of this Agreement, Issuing Bank and each other Letter of Credit Related Person (if applicable) shall not be responsible to Borrowers for, and Issuing Bank’s rights and remedies against Borrowers and the obligation of Borrowers to reimburse Issuing Bank for each drawing under each Letter of Credit shall not be impaired by:

(i)       honor of a presentation under any Letter of Credit that on its face substantially complies with the terms and conditions of such Letter of Credit, even if the Letter of Credit requires strict compliance by the beneficiary;

(ii)      honor of a presentation of any Drawing Document that appears on its face to have been signed, presented or issued (A) by any purported successor or transferee of any beneficiary or other Person required to sign, present or issue such Drawing Document or (B) under a new name of the beneficiary;

(iii)     acceptance as a draft of any written or electronic demand or request for payment under a Letter of Credit, even if nonnegotiable or not in the form of a draft or notwithstanding any requirement that such draft, demand or request bear any or adequate reference to the Letter of Credit;

(iv)     the identity or authority of any presenter or signer of any Drawing Document or the form, accuracy, genuineness or legal effect of any Drawing Document (other than Issuing Bank’s determination that such Drawing Document appears on its face substantially to comply with the terms and conditions of the Letter of Credit);

-75-

(v)      acting upon any instruction or request relative to a Letter of Credit or requested Letter of Credit that Issuing Bank in good faith believes to have been given by a Person authorized to give such instruction or request;

(vi)     any errors, omissions, interruptions or delays in transmission or delivery of any message, advice or document (regardless of how sent or transmitted) or for errors in interpretation of technical terms or in translation or any delay in giving or failing to give notice to any Borrower;

(vii)    any acts, omissions or fraud by, or the insolvency of, any beneficiary, any nominated person or entity or any other Person or any breach of contract between any beneficiary and any Borrower or any of the parties to the underlying transaction to which the Letter of Credit relates;

(viii)   assertion or waiver of any provision of the ISP or UCP that primarily benefits an issuer of a letter of credit, including any requirement that any Drawing Document be presented to it at a particular hour or place;

(ix)     payment to any presenting bank (designated or permitted by the terms of the applicable Letter of Credit) claiming that it rightfully honored or is entitled to reimbursement or indemnity under Standard Letter of Credit Practice applicable to it;

(x)      acting or failing to act as required or permitted under Standard Letter of Credit Practice applicable to where Issuing Bank has issued, confirmed, advised or negotiated such Letter of Credit, as the case may be;

(xi)     honor of a presentation after the expiration date of any Letter of Credit notwithstanding that a presentation was made prior to such expiration date and dishonored by Issuing Bank if subsequently Issuing Bank or any court or other finder of fact determines such presentation should have been honored;

(xii)    dishonor of any presentation that does not strictly comply or that is fraudulent, forged or otherwise not entitled to honor; or

(xiii)   honor of a presentation that is subsequently determined by Issuing Bank to have been made in violation of international, federal, state or local restrictions on the transaction of business with certain prohibited Persons.

(k)         Borrowers shall pay immediately upon demand to Agent for the account of Issuing Bank as non-refundable fees, commissions, and charges (it being acknowledged and agreed that any charging of such fees, commissions, and charges to the Loan Account pursuant to the provisions of Section 2.6(d) shall be deemed to constitute a demand for payment thereof for the purposes of this Section 2.11(k)):  (i) a fronting fee which shall be imposed by Issuing Bank equal to 0.125%  per annum times the average amount of the Letter of Credit Usage during the immediately preceding month,  plus (ii) any and all other customary commissions, fees and charges then in effect imposed by, and any and all documented expenses incurred by, Issuing Bank, or by any adviser, confirming institution or entity or other nominated person, relating to Letters of Credit, at the time of issuance of any Letter of Credit and upon the occurrence of any other activity with respect to any Letter of Credit (including transfers, assignments of proceeds, amendments, drawings, renewals or cancellations).

(l)          If by reason of (x) any Change in Law, or (y) compliance by Issuing Bank or any other member of the Lender Group with any direction, request, or requirement (irrespective of whether having the force of law) of any Governmental Authority or monetary authority including, Regulation D of the Board of Governors as from time to time in effect (and any successor thereto):

-76-

(i)       any reserve, deposit, or similar requirement is or shall be imposed or modified in respect of any Letter of Credit issued or caused to be issued hereunder or hereby, or any Loans or obligations to make Loans hereunder or hereby, or

(ii)      there shall be imposed on Issuing Bank or any other member of the Lender Group any other condition regarding any Letter of Credit, Loans, or obligations to make Loans hereunder (other than Taxes, which shall be governed by Section 16),

and the result of the foregoing is to increase, directly or indirectly, the cost to Issuing Bank or any other member of the Lender Group of issuing, making, participating in, or maintaining any Letter of Credit or to reduce the amount receivable in respect thereof, then, and in any such case, Agent may, at any time within a reasonable period after the additional cost is incurred or the amount received is reduced, notify Borrowers, and Borrowers shall pay within 30 days after demand therefor, such amounts as Agent may specify to be necessary to compensate Issuing Bank or any other member of the Lender Group for such additional cost or reduced receipt, together with interest on such amount from the date of such demand until payment in full thereof at the rate then applicable to Base Rate Loans hereunder; provided, that (A) Borrowers shall not be required to provide any compensation pursuant to this Section 2.11(l) for any such amounts incurred more than 180 days prior to the date on which the demand for payment of such amounts is first made to Borrowers, and (B) if an event or circumstance giving rise to such amounts is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.  The determination by Agent of any amount due pursuant to this Section 2.11(l), as set forth in a certificate setting forth the calculation thereof in reasonable detail, shall, in the absence of manifest or demonstrable error, be final and conclusive and binding on all of the parties hereto.

(m)        Each standby Letter of Credit shall expire not later than the date that is 12 months after the date of the issuance of such Letter of Credit; provided,  that any standby Letter of Credit may provide for the automatic extension thereof for any number of additional periods each of up to one year in duration; provided further,  that with respect to any Letter of Credit which extends beyond the Maturity Date, Letter of Credit Collateralization shall be provided therefor on or before the date that is five Business Days prior to the Maturity Date.  Each commercial Letter of Credit shall expire on the earlier of (i) 120 days after the date of the issuance of such commercial Letter of Credit and (ii) five Business Days prior to the Maturity Date.

(n)         If (i) any Event of Default shall occur and be continuing, or (ii) Availability shall at any time be less than zero, then on the Business Day following the date when Administrative Borrower receives notice from Agent or the Required Lenders (or, if the maturity of the Obligations has been accelerated, Revolving Lenders with Letter of Credit Exposure representing greater than 50% of the total Letter Credit Exposure) demanding Letter of Credit Collateralization pursuant to this Section 2.11(n) upon such demand, Borrowers shall provide Letter of Credit Collateralization with respect to the then existing Letter of Credit Usage.  If Borrowers fail to provide Letter of Credit Collateralization as required by this Section 2.11(n), the Revolving Lenders may (and, upon direction of Agent, shall) advance, as Revolving Loans the amount of the cash collateral required pursuant to the Letter of Credit Collateralization provision so that the then existing Letter of Credit Usage (other than Pledged Cash L/C Usage) is cash collateralized in accordance with the Letter of Credit Collateralization provision (whether or not the Revolver Commitments have terminated, an Overadvance exists or the conditions in Section 3 are satisfied).

(o)         Unless otherwise expressly agreed by Issuing Bank and Borrowers when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the UCP shall apply to each commercial Letter of Credit.

-77-

(p)         Issuing Bank shall be deemed to have acted with due diligence and reasonable care if Issuing Bank’s conduct is in accordance with Standard Letter of Credit Practice or in accordance with this Agreement.

(q)         In the event of a direct conflict between the provisions of this Section 2.11 and any provision contained in any Issuer Document, it is the intention of the parties hereto that such provisions be read together and construed, to the fullest extent possible, to be in concert with each other.  In the event of any actual, irreconcilable conflict that cannot be resolved as aforesaid, the terms and provisions of this Section 2.11 shall control and govern.

(r)         The provisions of this Section 2.11 shall survive the termination of this Agreement and the repayment in full of the Obligations with respect to any Letters of Credit that remain outstanding.

(s)         At Borrowers’ costs and expense, Borrowers shall execute and deliver to Issuing Bank such additional certificates, instruments and/or documents and take such additional action as may be reasonably requested by Issuing Bank to enable Issuing Bank to issue any Letter of Credit pursuant to this Agreement and related Issuer Document, to protect, exercise and/or enforce Issuing Banks’ rights and interests under this Agreement or to give effect to the terms and provisions of this Agreement or any Issuer Document.  Each Borrower irrevocably appoints  Issuing Bank as its attorney-in-fact and authorizes Issuing Bank, without notice to Borrowers, to execute and deliver ancillary documents and letters customary in the letter of credit business that may include but are not limited to advisements, indemnities, checks, bills of exchange and issuance documents.  The power of attorney granted by the Borrowers is limited solely to such actions related to the issuance, confirmation or amendment of any Letter of Credit and to ancillary documents or letters customary in the letter of credit business.  This appointment is coupled with an interest.

(t)          Each Borrower hereby pledges to Agent, and grants to Agent (for the benefit of the Pledged Cash Letter of Credit Issuing Bank) a security interest in, and express right of setoff against, all of the right, title and interest of each Borrower in, to and under the following property, whether now owned or existing or hereafter from time to time acquired or coming into existence (collectively, the “Pledged L/C Collateral”): (i) the Pledged L/C Account, all funds held therein or credited thereto, all rights to renew or withdraw the same, and all certificates and instruments, if any, from time to time representing or evidencing the Pledged L/C Account; (ii) any interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange  for any or all of the then existing Pledged L/C Collateral; and (iii) all proceeds of any and all of the Pledged L/C Collateral.  The Pledged L/C Collateral shall be held by Agent, on behalf of the Pledged Cash Letter of Credit Issuing Bank, as collateral for the payment and performance of the obligations of the Borrowers under the Pledged Cash Letters of Credit (including any related applications).

2.12      LIBOR Option.

(a)         Interest and Interest Payment Dates.  In lieu of having interest charged at the rate based upon the Base Rate, Borrowers shall have the option, subject to Section 2.12(b) below (the “LIBOR Option”) to have interest on all or a portion of the Revolving Loans be charged (whether at the time when made (unless otherwise provided herein), upon conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR Rate.  Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the last day of the Interest Period applicable thereto; provided, that subject to the following clauses (ii) and (iii), in the case of any Interest Period greater than three months in duration, interest shall be payable at three month intervals after the commencement of the applicable Interest Period and on the last day of such Interest Period), (ii) the date on which all or any portion of the Obligations are accelerated pursuant to the terms

-78-

hereof, or (iii) the date on which this Agreement is terminated pursuant to the terms hereof.  On the last day of each applicable Interest Period, unless Borrowers have properly exercised the LIBOR Option with respect thereto, the interest rate applicable to such LIBOR Rate Loan automatically shall convert to the rate of interest then applicable to Base Rate Loans of the same type hereunder.  At any time that an Event of Default has occurred and is continuing,  at the written election of Agent or Required Lenders, Borrowers no longer shall have the option to request that Revolving Loans bear interest at a rate based upon the LIBOR Rate.

(b)         LIBOR Election.

(i)       Borrowers may, at any time and from time to time, so long as Borrowers have not received a notice from Agent (which notice Agent may elect to give or not give in its discretion unless Agent is directed to give such notice by the Required Lenders, in which case, it shall give the notice to Borrowers), after the occurrence and during the continuance of an Event of Default, to terminate the right of Borrowers to exercise the LIBOR Option during the continuance of such Event of Default, elect to exercise the LIBOR Option by notifying Agent prior to 11:00 a.m. at least three Business Days prior to the commencement of the proposed Interest Period (the “LIBOR Deadline”).  Notice of Borrowers’ election of the LIBOR Option for a permitted portion of the Revolving Loans and an Interest Period pursuant to this Section shall be made by delivery to Agent of a LIBOR Notice received by Agent before the LIBOR Deadline.  Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of the affected Lenders.

(ii)      Each LIBOR Notice shall be irrevocable and binding on Borrowers.  In connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and hold Agent and the Lenders harmless against any loss, cost, or expense actually incurred by Agent or any Lender as a result of (A) the payment or required assignment of any principal of any LIBOR Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (B) the conversion of any LIBOR Rate Loan other than on the last day of the Interest Period applicable thereto, or (C) the failure to borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding Losses”).  A certificate of Agent or a Lender delivered to Borrowers setting forth in reasonable detail any amount or amounts that Agent or such Lender is entitled to receive pursuant to this Section 2.12 shall be conclusive absent manifest error.  Borrowers shall pay such amount to Agent or the Lender, as applicable, within 30 days of the date of its receipt of such certificate.  If a payment of a LIBOR Rate Loan on a day other than the last day of the applicable Interest Period would result in a Funding Loss, Agent may, in its sole discretion at the request of Borrowers, hold the amount of such payment as cash collateral in support of the Obligations until the last day of such Interest Period and apply such amounts to the payment of the applicable LIBOR Rate Loan on such last day, it being agreed that Agent has no obligation to so defer the application of payments to any LIBOR Rate Loan and that, in the event that Agent does not defer such application, Borrowers shall be obligated to pay any resulting Funding Losses.

(iii)     Unless Agent, in its sole discretion, agrees otherwise, Borrowers shall have not more than five LIBOR Rate Loans in effect at any given time.  Borrowers may only exercise the LIBOR Option for proposed LIBOR Rate Loans of at least $500,000.

(c)         Conversion; Prepayment.  Borrowers may convert LIBOR Rate Loans to Base Rate Loans or prepay LIBOR Rate Loans at any time; provided, that in the event that LIBOR Rate Loans are converted or prepaid on any date that is not the last day of the Interest Period applicable thereto, including as a result of any prepayment through the required application by Agent of any payments or proceeds of Collateral in accordance with Section 2.4(b) or for any other reason, including early termination of the term of this Agreement or acceleration of all or any portion of the Obligations pursuant

-79-

to the terms hereof, each Borrower shall indemnify, defend, and hold Agent and the Lenders and their Participants harmless against any and all Funding Losses in accordance with Section 2.12 (b)(ii).

(d)         Special Provisions Applicable to LIBOR Rate.

(i)       The LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes which shall be governed by Section 16), in each case, due to changes in applicable law occurring subsequent to the commencement of the then applicable Interest Period, including any Change in Law and changes in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at the LIBOR Rate.  In any such event, the affected Lender shall promptly give Borrowers and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such LIBOR Rate and the method for determining the amount of such adjustment, or (B) notwithstanding anything to the contrary herein, repay the LIBOR Rate Loans of such Lender with respect to which such adjustment is made (together with any amounts due under Section 2.12(b)(ii)).

(ii)      In the event that any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to determine or charge interest rates at the LIBOR Rate, such Lender shall give prompt notice of such changed circumstances to Agent and Borrowers and Agent promptly shall transmit the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the date specified in such Lender’s notice shall be deemed to be the last day of the Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrue interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR Option until such Lender determines that it would no longer be unlawful or impractical to do so.

(e)         Special Provisions Applicable to Daily One Month LIBOR.

(i)       Daily One Month LIBOR may be adjusted by Agent with respect to any Lender on a prospective basis to take into account any additional or increased costs to such Lender of maintaining or obtaining any eurodollar deposits or increased costs (other than Taxes which shall be governed by Section 16), in each case, due to changes in applicable law, including any Change in Law and changes in the reserve requirements imposed by the Board of Governors, which additional or increased costs would increase the cost of funding or maintaining loans bearing interest at Daily One Month LIBOR.  In any such event, the affected Lender shall promptly give Borrowers and Agent notice of such a determination and adjustment and Agent promptly shall transmit the notice to each other Lender and, upon its receipt of the notice from the affected Lender, Borrowers may, by notice to such affected Lender (A) require such Lender to furnish to Borrowers a statement setting forth in reasonable detail the basis for adjusting such Daily One Month LIBOR and the method for determining the amount of such adjustment, or (B) notwithstanding anything to the contrary herein, repay the Swing Loans with interest based on Daily One Month LIBOR of such Lender with respect to which such adjustment is made.

(ii)      In the event that (A) any change in market conditions or any Change in Law shall at any time after the date hereof, in the reasonable opinion of any Lender, make it unlawful or impractical for such Lender to fund or maintain Swing Loans with interest based on Daily One Month LIBOR or to continue such funding or maintaining, or to determine or charge interest rates based on Daily

-80-

One Month LIBOR, or (B)  such Lender determines that the interest rate hereunder based on Daily One Month LIBOR will not adequately and fairly reflect the cost to such Lender of maintaining or funding any Swing Loans based upon Daily One Month LIBOR, then (x) such Lender shall give notice of such changed circumstances to Agent and Borrowers and Agent promptly shall transmit the notice to each other Lender, (y) such Swing Loans shall thereafter bear interest at a per annum rate equal to the Base Rate plus the Base Rate Margin, and (z) interest based on Daily One Month LIBOR shall not be available until such Lender determines that it is again available.  At any time that an Event of Default has occurred and is continuing, at the written election of Agent or Required Lenders, Borrowers no longer shall have the option to request that Swing Loans bear interest at a rate based upon Daily One Month LIBOR.

(f)         No Requirement of Matched Funding.  Anything to the contrary contained herein notwithstanding, neither Agent, nor any Lender, nor any of their Participants, is required actually to acquire eurodollar deposits to fund or otherwise match fund any Obligation as to which interest accrues at the LIBOR Rate or Daily One Month LIBOR.

2.13      Capital Requirements.

(a)         If, after the date hereof, Issuing Bank or any Lender determines that (i) any Change in Law regarding capital, liquidity or reserve requirements for banks or bank holding companies, or (ii) compliance by Issuing Bank or such Lender, or their respective parent bank holding companies, with any guideline, request or directive of any Governmental Authority regarding capital adequacy or liquidity requirements (whether or not having the force of law), has the effect of reducing the return on Issuing Bank’s, such Lender’s, or such holding companies’ capital or liquidity as a consequence of Issuing Bank’s or such Lender’s  commitments, Loans, participations or other obligations hereunder to a level below that which Issuing Bank, such Lender, or such holding companies could have achieved but for such Change in Law or compliance (taking into consideration Issuing Bank’s, such Lender’s, or such holding companies’ then existing policies with respect to capital adequacy or liquidity requirements and assuming the full utilization of such entity’s capital) by any amount deemed by Issuing Bank or such Lender to be material, then Issuing Bank or such Lender may notify Borrowers and Agent thereof.  Following receipt of such notice, Borrowers agree to pay Issuing Bank or such Lender on demand the amount of such reduction of return of capital as and when such reduction is determined, which amount shall be payable within 30 days after presentation by Issuing Bank or such Lender of a statement in the amount and setting forth in reasonable detail Issuing Bank’s or such Lender’s calculation thereof and the assumptions upon which such calculation was based (which statement shall be deemed true and correct absent manifest error).  In determining such amount, Issuing Bank or such Lender may use any reasonable averaging and attribution methods.  Failure or delay on the part of Issuing Bank or any Lender to demand compensation pursuant to this Section shall not constitute a waiver of Issuing Bank’s or such Lender’s right to demand such compensation; provided,  that Borrowers shall not be required to compensate Issuing Bank or a Lender pursuant to this Section for any reductions in return incurred more than 180 days prior to the date that Issuing Bank or such Lender notifies Borrowers of such Change in Law giving rise to such reductions and of such Lender’s intention to claim compensation therefor; provided further,  that if such claim arises by reason of the Change in Law that is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

(b)         If Issuing Bank or any Lender requests additional or increased costs referred to in Section 2.11(l) or  Section 2.12(d)(i) or amounts under Section 2.13(a) or sends a notice under Section 2.12(d)(ii) relative to changed circumstances (such Issuing Bank or Lender, an “Affected Lender”), then, at the request of Administrative Borrower, such Affected Lender shall use reasonable efforts to promptly designate a different one of its lending offices or to assign its rights and obligations hereunder to another of its offices or branches, if (i) in the reasonable judgment of such Affected Lender, such designation or assignment would eliminate or reduce amounts payable pursuant to Section 2.11(l),  Section 2.12(d)(i) or

-81-

Section 2.13(a), as applicable, or would eliminate the illegality or impracticality of funding or maintaining LIBOR Rate Loans or Swing Loans with interest based on Daily One Month LIBOR, as applicable, and (ii) in the reasonable judgment of such Affected Lender, such designation or assignment would not subject it to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to it.  Borrowers agree to pay all reasonable out-of-pocket costs and expenses incurred by such Affected Lender in connection with any such designation or assignment.  If, after such reasonable efforts, such Affected Lender does not so designate a different one of its lending offices or assign its rights to another of its offices or branches so as to eliminate Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant to Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable, or to enable Borrowers to obtain LIBOR Rate Loans, then Borrowers (without prejudice to any amounts then due to such Affected Lender under Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable) may, unless prior to the effective date of any such assignment the Affected Lender withdraws its request for such additional amounts under Section 2.11(l),  Section 2.12(d)(i) or Section 2.13(a), as applicable, or indicates that it is no longer unlawful or impractical to fund or maintain LIBOR Rate Loans, may designate a  different Issuing Bank or substitute a Lender or prospective Lender, in each case, reasonably acceptable to Agent to purchase the Obligations owed to such Affected Lender and such Affected Lender’s  commitments hereunder (a “Replacement Lender”), and if such Replacement Lender agrees to such purchase, such Affected Lender shall assign to the Replacement Lender its Obligations and commitments, and upon such purchase by the Replacement Lender, which such Replacement Lender shall be deemed to be “Issuing Bank” or a  “Lender”  (as the case may be) for purposes of this Agreement and such Affected Lender shall cease to be “Issuing Bank” or a “Lender”  (as the case may be) for purposes of this Agreement.

(c)         Notwithstanding anything herein to the contrary, the protection of Sections 2.11(l),  2.12(d), and 2.13 shall be available to Issuing Bank and each Lender (as applicable) regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, judicial ruling, judgment, guideline, treaty or other change or condition which shall have occurred or been imposed, so long as it shall be customary for issuing banks or lenders affected thereby to comply therewith.  Notwithstanding any other provision herein, neither Issuing Bank nor any Lender shall demand compensation pursuant to this Section 2.13 if it shall not at the time be the general policy or practice of Issuing Bank or such Lender (as the case may be) to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any.

2.14      Incremental Facilities.

(a)         At any time during the period from and after the Closing Date through but excluding the date that is the 4 year anniversary of the Closing Date, at the option of Borrowers (but subject to the conditions set forth in clause (b) below), the Revolver Commitments and the Maximum Revolver Amount may be increased by an amount in the aggregate for all such increases of the Revolver Commitments and the Maximum Revolver Amount not to exceed the Available Increase Amount (each such increase, an “Increase”).  Agent shall invite each Lender to increase its Revolver Commitments (it being understood that no Lender shall be obligated to increase its Revolver Commitments) in connection with a proposed Increase at the interest margin proposed by Borrowers, and if sufficient Lenders do not agree to increase their Revolver Commitments in connection with such proposed Increase, then Agent or Borrowers may invite any prospective lender who is reasonably satisfactory to Agent and Borrowers to become a Lender in connection with a proposed Increase.  Any Increase shall be in an amount of at least $5,000,000 and integral multiples of $1,000,000 in excess thereof.  In no event may the Revolver Commitments and the Maximum Revolver Amount be increased pursuant to this Section 2.14 on more than 2  occasions in the aggregate for all such Increases.  Additionally, for the avoidance of doubt, it is understood and agreed that in no event shall the aggregate amount of the Increases to the Revolver Commitments exceed $10,000,000.

-82-

(b)         Each of the following shall be conditions precedent to any Increase of the Revolver Commitments and the Maximum Revolver Amount in connection therewith:

(i)       Agent or Borrowers have obtained the commitment of one or more Lenders (or other prospective lenders) reasonably satisfactory to Agent and Borrowers to provide the applicable Increase and any such Lenders (or prospective lenders), Borrowers, and Agent have signed a joinder agreement to this Agreement (an “Increase Joinder”), in form and substance reasonably satisfactory to Agent, to which such Lenders (or prospective lenders), Borrowers, and Agent are party,

(ii)      each of the conditions precedent set forth in Section 3.2 are satisfied on the date of such Increase Joinder,

(iii)     in connection with any Increase, if any Loan Party or any of its Subsidiaries owns or will acquire any Margin Stock, Borrowers shall deliver to Agent an updated Form U‑1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board,

(iv)     the interest rate margins with respect to the Revolving Loans to be made pursuant to the increased Revolver Commitments shall be the same as the interest rate margin applicable to Revolving Loans hereunder immediately prior to the applicable Increase Date, and

(v)      if any Loan Party or any of its Subsidiaries owns any Margin Stock or is acquiring any Margin Stock in connection with the transactions that are contemplated to be consummated in connection with such Increase, Borrowers shall deliver to Agent a description of any such Margin Stock being acquired, together with a Form U-1 (with sufficient additional originals thereof for each Lender), duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.

(c)         Unless otherwise specifically provided herein, all references in this Agreement and any other Loan Document to Revolving Loans shall be deemed, unless the context otherwise requires, to include Revolving Loans made pursuant to the increased Revolver Commitments and Maximum Revolver Amount pursuant to this Section 2.14.

(d)         Each of the Lenders having a Revolver Commitment prior to the Increase Date (the “Pre‑Increase Revolver Lenders”)  shall assign to any Lender which is acquiring a new or additional Revolver Commitment on the Increase Date (the “Post-Increase Revolver Lenders”), and such Post‑Increase Revolver Lenders shall purchase from each Pre-Increase Revolver Lender, at the principal amount thereof, such interests in the Revolving Loans and participation interests in Letters of Credit on such Increase Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans and participation interests in Letters of Credit will be held by Pre‑Increase Revolver Lenders and Post‑Increase Revolver Lenders ratably in accordance with their Pro Rata Share after giving effect to such increased Revolver Commitments.

(e)         The Revolving Loans, Revolver Commitments, and Maximum Revolver Amount established pursuant to this Section 2.14 shall constitute Revolving Loans, Revolver Commitments, and Maximum Revolver Amount under, and shall be entitled to all the benefits afforded by, this Agreement and the other Loan Documents, and shall, without limiting the foregoing, benefit equally and ratably from any guarantees and the security interests created by the Loan Documents.  Borrowers shall take any actions reasonably required by Agent to ensure and demonstrate that the Liens and security interests

-83-

granted by the Loan Documents continue to be perfected under the Code or otherwise after giving effect to the establishment of any such new Revolver Commitments and Maximum Revolver Amount.

2.15      Joint and Several Liability of Borrowers.

(a)         Each Borrower is accepting joint and several liability hereunder and under the other Loan Documents in consideration of the financial accommodations to be provided by the Lender Group under this Agreement, for the mutual benefit, directly and indirectly, of each Borrower and in consideration of the undertakings of the other Borrowers to accept joint and several liability for the Obligations.

(b)         Each Borrower, jointly and severally, hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrowers, with respect to the payment and performance of all of the Obligations (including any Obligations arising under this Section 2.15), it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of each Borrower without preferences or distinction among them.  Accordingly, each Borrower hereby waives to the extent permitted by applicable law any and all suretyship defenses that would otherwise be available to such Borrower under applicable law.

(c)         If and to the extent that any Borrower shall fail to make any payment with respect to any of the Obligations as and when due, whether upon maturity, acceleration, or otherwise, or to perform any of the Obligations in accordance with the terms thereof, then in each such event the other Borrowers will make such payment with respect to, or perform, such Obligations until such time as all of the Obligations are paid in full, and without the need for demand, protest, or any other notice or formality.

(d)         The Obligations of each Borrower under the provisions of this Section 2.15 constitute the absolute and unconditional, full recourse Obligations of each Borrower enforceable against each Borrower to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of the provisions of this Agreement (other than this Section 2.15(d)) or any other circumstances whatsoever.

(e)         Without limiting the generality of the foregoing and except as otherwise expressly provided in this Agreement, each Borrower hereby waives to the extent permitted by applicable law presentments, demands for performance, protests and notices, including notices of acceptance of its joint and several liability, notice of any Revolving Loans or any Letters of Credit issued under or pursuant to this Agreement, notice of the occurrence of any Default, Event of Default, notices of nonperformance, notices of protest, notices of dishonor, notices of acceptance of this Agreement, notices of the existence, creation, or incurring of new or additional Obligations or other financial accommodations or of any demand for any payment under this Agreement, notice of any action at any time taken or omitted by Agent or Lenders under or in respect of any of the Obligations, any right to proceed against any other Borrower or any other Person, to proceed against or exhaust any security held from any other Borrower or any other Person, to protect, secure, perfect, or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against any other Borrower, any other Person, or any collateral, to pursue any other remedy in any member of the Lender Group’s or any Bank Product Provider’s power whatsoever, any requirement of diligence or to mitigate damages and, generally, to the extent permitted by applicable law, all demands, notices and other formalities of every kind in connection with this Agreement (except as otherwise provided in this Agreement), any right to assert against any member of the Lender Group or any Bank Product Provider, any defense (legal or equitable), set-off, counterclaim, or claim which each Borrower may now or at any time hereafter have against any other Borrower or any other party liable to any member of the Lender Group or any Bank Product Provider, any defense, set-off, counterclaim, or claim, of any kind or nature, arising directly or indirectly from the

-84-

present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor, and any right or defense arising by reason of any claim or defense based upon an election of remedies by any member of the Lender Group or any Bank Product Provider including any defense based upon an impairment or elimination of such Borrower’s rights of subrogation, reimbursement, contribution, or indemnity of such Borrower against any other Borrower.  Without limiting the generality of the foregoing, to the extent permitted by applicable law each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by Agent or Lenders at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement, any and all other indulgences whatsoever by Agent or Lenders in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations or the addition, substitution or release, in whole or in part, of any Borrower.  Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of any Agent or Lender with respect to the failure by any Borrower to comply with any of its respective Obligations, including any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 2.15 afford grounds for terminating, discharging or relieving any Borrower, in whole or in part, from any of its Obligations under this Section 2.15, it being the intention of each Borrower that, so long as any of the Obligations hereunder remain unsatisfied, the Obligations of each Borrower under this Section 2.15 shall not be discharged except by performance and then only to the extent of such performance.  The Obligations of each Borrower under this Section 2.15 shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower or any Agent or Lender.  Each of the Borrowers waives, to the fullest extent permitted by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement hereof.  Any payment by any Borrower or other circumstance which operates to toll any statute of limitations as to any Borrower shall operate to toll the statute of limitations as to each of the Borrowers.  Each of the Borrowers waives to the extent permitted by applicable law any defense based on or arising out of any defense of any Borrower or any other Person, other than payment of the Obligations to the extent of such payment, based on or arising out of the disability of any Borrower or any other Person, or the validity, legality, or unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any Borrower other than payment of the Obligations to the extent of such payment.  Agent may, at the election of the Required Lenders, foreclose upon any Collateral held by Agent by one or more judicial or nonjudicial sales or other dispositions, whether or not every aspect of any such sale is commercially reasonable or otherwise fails to comply with applicable law or may exercise any other right or remedy Agent, any other member of the Lender Group, or any Bank Product Provider may have against any Borrower or any other Person, or any security, in each case, without affecting or impairing in any way the liability of any of the Borrowers hereunder except to the extent the Obligations have been paid.

(f)         Each Borrower represents and warrants to Agent and Lenders that such Borrower is currently informed of the financial condition of Borrowers and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations.  Each Borrower further represents and warrants to Agent and Lenders that such Borrower has read and understands the terms and conditions of the Loan Documents.  Each Borrower hereby covenants that such Borrower will continue to keep informed of Borrowers’ financial condition and of all other circumstances which bear upon the risk of nonpayment or nonperformance of the Obligations.

(g)         The provisions of this Section 2.15 are made for the benefit of Agent, each member of the Lender Group, each Bank Product Provider, and their respective successors and assigns,

-85-

and may be enforced by it or them from time to time against any or all Borrowers as often as occasion therefor may arise and without requirement on the part of Agent, any member of the Lender Group, any Bank Product Provider, or any of their successors or assigns first to marshal any of its or their claims or to exercise any of its or their rights against any Borrower or to exhaust any remedies available to it or them against any Borrower or to resort to any other source or means of obtaining payment of any of the Obligations hereunder or to elect any other remedy.  The provisions of this Section 2.15 shall remain in effect until all of the Obligations shall have been paid in full or otherwise fully satisfied.  If at any time, any payment, or any part thereof, made in respect of any of the Obligations, is rescinded or must otherwise be restored or returned by Agent or any Lender upon the insolvency, bankruptcy or reorganization of any Borrower, or otherwise, the provisions of this Section 2.15 will forthwith be reinstated in effect, as though such payment had not been made.

(h)         Each Borrower hereby agrees that it will not enforce any of its rights that arise from the existence, payment, performance or enforcement of the provisions of this Section 2.15,  including rights of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Agent, any other member of the Lender Group, or any Bank Product Provider against any Borrower, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including the right to take or receive from any Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or right, unless and until such time as all of the Obligations have been paid in full in cash.  Any claim which any Borrower may have against any other Borrower with respect to any payments to any Agent or any member of the Lender Group hereunder or under any of the Bank Product Agreements are hereby expressly made subordinate and junior in right of payment, without limitation as to any increases in the Obligations arising hereunder or thereunder, to the prior payment in full in cash of the Obligations and, in the event of any insolvency, bankruptcy, receivership, liquidation, reorganization or other similar proceeding under the laws of any jurisdiction relating to any Borrower, its debts or its assets, whether voluntary or involuntary, all such Obligations shall be paid in full in cash before any payment or distribution of any character, whether in cash, securities or other property, shall be made to any other Borrower therefor.  If any amount shall be paid to any Borrower in violation of the immediately preceding sentence, such amount shall be held in trust for the benefit of Agent, for the benefit of the Lender Group and the Bank Product Providers, and shall forthwith be paid to Agent to be credited and applied to the Obligations and all other amounts payable under this Agreement, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as Collateral for any Obligations or other amounts payable under this Agreement thereafter arising.  Notwithstanding anything to the contrary contained in this Agreement, no Borrower may exercise any rights of subrogation, contribution, indemnity, reimbursement or other similar rights against, and may not proceed or seek recourse against or with respect to any property or asset of, any other Borrower (the “Foreclosed Borrower”), including after payment in full of the Obligations, if all or any portion of the Obligations have been satisfied in connection with an exercise of remedies in respect of the Equity Interests of such Foreclosed Borrower whether pursuant to this Agreement or otherwise.

(i)          Each of the Borrowers hereby acknowledges and affirms that it understands that to the extent the Obligations are secured by Real Property located in California, the Borrowers shall be liable for the full amount of the liability hereunder notwithstanding the foreclosure on such Real Property by trustee sale or any other reason impairing such Borrower’s right to proceed against any other Loan Party.  In accordance with Section 2856 of the California Civil Code or any similar laws of any other applicable jurisdiction, each of the Borrowers hereby waives, to the extent permitted by applicable law, until such time as the Obligations have been paid in full:

(i)       all rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to the Borrowers by reason of

-86-

Sections 2787 to 2855, inclusive, 2899, and 3433 of the California Civil Code or any similar laws of any other applicable jurisdiction;

(ii)      all rights and defenses that the Borrowers may have because the Obligations are secured by Real Property located in California, meaning, among other things, that:  (A) Agent, the other members of the Lender Group, and the Bank Product Providers may collect from the Borrowers without first foreclosing on any real or personal property collateral pledged by any Loan Party, and (B) if Agent, on behalf of the Lender Group, forecloses on any Real Property Collateral pledged by any Loan Party, (1) the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (2) the Lender Group may collect from the Loan Parties even if, by foreclosing on the Real Property Collateral, Agent or the other members of the Lender Group have destroyed or impaired any right the Borrowers may have to collect from any other Loan Party, it being understood that this is an unconditional and irrevocable waiver of any rights and defenses the Borrowers may have because the Obligations are secured by Real Property (including any rights or defenses based upon Sections 580a, 580d, or 726 of the California Code of Civil Procedure or any similar laws of any other applicable jurisdiction); and

(iii)     all rights and defenses arising out of an election of remedies by Agent, the other members of the Lender Group, and the Bank Product Providers, even though that election of remedies, such as a non-judicial foreclosure with respect to security for the Obligations, has destroyed the Borrowers’ rights of subrogation and reimbursement against any other Loan Party by the operation of Section 580d of the California Code of Civil Procedure or any similar laws of any other applicable jurisdiction or otherwise.

3.          CONDITIONS; TERM OF AGREEMENT.

3.1        Conditions Precedent to Initial Extensions of Credit.  The obligation of each Lender to make the initial extensions of credit provided for hereunder is subject to the fulfillment, to the satisfaction of Agent and each Lender, of each of the conditions precedent set forth on Schedule 3.1 to this Agreement (the making of such initial extensions of credit by a Lender being conclusively deemed to be its satisfaction or waiver of the conditions precedent).

3.2        Conditions Precedent to all Extensions of Credit.  The obligation of the Lender Group (or any member thereof) to make any Revolving Loans hereunder (or to extend any other credit hereunder, including the issuance of any Letter of Credit) at any time shall be subject to the following conditions precedent:

(a)         the representations and warranties of each Loan Party or its Subsidiaries contained in this Agreement or in the other Loan Documents shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date of such extension of credit, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date);

(b)         no Default or Event of Default shall have occurred and be continuing on the date of such extension of credit, nor shall either result from the making thereof; and

(c)         immediately after giving effect to any such extension of credit, (i) the amount of outstanding Obligations (other than in respect of any Pledged Cash Letters of Credit) would not be in

-87-

excess of (A) the “Borrowing Base” as defined in the Senior Secured Notes Indenture (to the extent the corresponding covenant in the Senior Secured Notes Indenture is then in effect) and (B) the “Borrowing Base” as defined in the Junior Lien Term Loan Credit Agreement (to the extent the corresponding covenant in the Junior Lien Term Loan Credit Agreement is then in effect) and (ii) such extension of credit and the outstanding Obligations would otherwise be permitted under the Senior Secured Notes Documents (to the extent then in effect),the Junior Lien Term Loan Documents (to the extent then in effect) and any Permitted Junior Conversion Debt Documents (to the extent then in effect).

3.3        Maturity.  The Commitments shall continue in full force and effect for a term ending on the Maturity Date (unless terminated earlier in accordance with the terms hereof).

3.4        Effect of Maturity.  On the Maturity Date, all commitments of the Lender Group to provide additional credit hereunder shall automatically be terminated and all of the Obligations (other than Hedge Obligations) immediately shall become due and payable without notice or demand and Borrowers shall be required to repay all of the Obligations (other than Hedge Obligations) in full.  No termination of the obligations of the Lender Group (other than payment in full of the Obligations and termination of the Commitments) shall relieve or discharge any Loan Party of its duties, obligations, or covenants hereunder or under any other Loan Document and Agent’s Liens in the Collateral shall continue to secure the Obligations and shall remain in effect until all Obligations have been paid in full and the Commitments have been terminated.  When all of the Obligations have been paid in full and the Lender Group’s obligations to provide additional credit under the Loan documents have been terminated irrevocably, Agent will, at Borrowers’ sole expense, execute and deliver any termination statements, lien releases, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release, as of record, Agent’s Liens and all notices of security interests and liens previously filed by Agent.

3.5        Early Termination by Borrowers.  Borrowers have the option, at any time upon five Business Days prior written notice to Agent, to repay all of the Obligations in full and terminate the Commitments.  The foregoing notwithstanding, (a) Borrowers may rescind termination notices relative to proposed payments in full of the Obligations with the proceeds of third party Indebtedness or other third party funds if the closing for such issuance or incurrence (with respect to any such third party Indebtedness or other third party funds) does not happen on or before the date of the proposed termination (in which case, a new notice shall be required to be sent in connection with any subsequent termination), and (b) Borrowers may extend the date of termination at any time with the consent of Agent (which consent shall not be unreasonably withheld or delayed).

3.6        Conditions Subsequent.  The obligation of the Lender Group (or any member thereof) to continue to make Revolving Loans (or otherwise extend credit hereunder) is subject to the fulfillment, on or before the date applicable thereto (as such date may be extended by Agent in its discretion), of the conditions subsequent set forth on Schedule 3.6 to this Agreement (the failure by Parent or Borrowers, as applicable, to so perform or cause to be performed such conditions subsequent as and when required by the terms thereof (unless such date is extended, in writing, by Agent, which Agent may do without obtaining the consent of the other members of the Lender Group), shall constitute an Event of Default).

4.          REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each of Parent and each Borrower makes the following representations and warranties to the Lender Group which shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof), as of the Closing Date, and shall be true, correct, and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that

-88-

already are qualified or modified by materiality in the text thereof), as of the date of the making of each Revolving Loan (or any other extension of credit hereunder, including the issuance of any Letter of Credit)  made thereafter, as though made on and as of the date of such Revolving Loan (or any other extension of credit hereunder, including the issuance of any Letter of Credit) (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date), and such representations and warranties shall survive the execution and delivery of this Agreement:

4.1        Due Organization and Qualification; Subsidiaries.

(a)         Each Loan Party and each of its Subsidiaries (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated thereby.

(b)         Set forth on Schedule 4.1(b) to the Disclosure Letter is a complete and accurate description as of the Closing Date of the authorized Equity Interests of each Loan Party (other than Parent), showing: (i) the number of shares of each class of common and preferred Equity Interests authorized for each such Loan Party, and (ii) the number and the percentage of the outstanding shares of each such class owned directly or indirectly by Parent and each other Loan Party.  All of the outstanding Equity Interests of each such Loan Party has been validly issued and, to the extent applicable, is fully paid and non-assessable.  Also set forth on Schedule 4.1(b) (as such schedule may be updated from time to time to reflect changes resulting from transactions permitted under this Agreement) is a complete and accurate list of the Loan Parties’ direct and indirect Subsidiaries.

(c)         Except as set forth on Schedule 4.1(c) to the Disclosure Letter,  as of the Closing Date there are no subscriptions, options, warrants, or calls relating to any shares of any Loan Party’s  (other than Parent) or any of its Subsidiaries’ Equity Interests, including any right of conversion or exchange under any outstanding security or other instrument.  Except as set forth on Schedule 4.1(c) to the Disclosure Letter, as of the Closing Date,  no Loan Party is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Equity Interests or any security convertible into or exchangeable for any of its Equity Interests.

4.2        Due Authorization; No Conflict.

(a)         As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party have been duly authorized by all necessary action on the part of such Loan Party.

(b)         As to each Loan Party, the execution, delivery, and performance by such Loan Party of the Loan Documents to which it is a party do not and will not (i) violate any material provision of federal, state, or local law or regulation applicable to any Loan Party or its Subsidiaries, the Governing Documents of any Loan Party or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on any Loan Party or its Subsidiaries, (ii) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of any Loan Party or its Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (iii) result in or require the

-89-

creation or imposition of any Lien of any nature whatsoever upon any assets of any Loan Party, other than Permitted Liens, or (iv) require any approval of any holder of Equity Interests of a Loan Party or any approval or consent of any Person under any material agreement of any Loan Party, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect.

4.3        Governmental Consents.  The execution, delivery, and performance by each Loan Party of the Loan Documents to which such Loan Party is a party and the consummation by each Loan Party of the transactions contemplated by the Loan Documents do not and will not require on the part of any Loan Party any registration with, consent, or approval of, or notice to, or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation, as of the Closing Date.

4.4        Binding Obligations; Perfected Liens.

(a)         Each Loan Document has been duly executed and delivered by each Loan Party that is a party thereto and is the legally valid and binding obligation of such Loan Party, enforceable against such Loan Party in accordance with its respective terms, except as enforcement may be limited by equitable principles (regardless of whether enforcement is sought in equity or at law) or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(b)         Agent’s Liens are validly created, perfected (other than (i) in respect of motor vehicles that are subject to a certificate of title, (ii) money, (iii) letter-of-credit rights (other than supporting obligations), (iv) commercial tort claims (other than those that, by the terms of the Guaranty and Security Agreement, are required to be perfected), and (v) any Deposit Accounts and Securities Accounts not subject to a Control Agreement as permitted by Section 7(k)(iv) of the Guaranty and Security Agreement, and subject only to, and to the extent such perfection may occur by, the filing of financing statements, the recordation of the Copyright Security Agreement, the Patent Security Agreement and the Trademark Security Agreement, and the recordation of the Mortgages, in each case, in the appropriate filing offices), and first priority Liens, subject only to Permitted Liens.

4.5        Title to Assets; No Encumbrances.  Each of the Loan Parties has (a) good, sufficient and legal title to (in the case of fee interests in Real Property), (b) valid leasehold interests in (in the case of leasehold interests in real or personal property), and (c) good and marketable title to (in the case of all other personal property), all of their respective assets reflected in their most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements to the extent permitted hereby.  All of such assets are free and clear of Liens except for Permitted Liens.

4.6        Litigation.  Except as set forth on Schedule 4.6 to the Disclosure Letter, there are no actions, suits, or proceedings pending or, to the knowledge of any Borrower, threatened in writing against a Loan Party or any of its Subsidiaries that either individually or in the aggregate could reasonably be expected to result in a Material Adverse Effect.

4.7        Compliance with Laws.  No Loan Party nor any of its Subsidiaries (a) is in violation of any applicable laws, rules, regulations, executive orders, or codes (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission,

-90-

board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

4.8        No Material Adverse Effect.  All historical financial statements relating to the Loan Parties and their Subsidiaries that have been delivered by Borrowers to Agent have been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for the lack of footnotes and being subject to year-end audit adjustments) and present fairly in all material respects, the Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the date thereof and results of operations for the period then ended.  Since December 31, 2017, no event, circumstance, or change has occurred that has or could reasonably be expected to result in a Material Adverse Effect.

4.9        Solvency.

(a)         The Loan Parties, taken as a whole, are Solvent.

(b)         No transfer of property is being made by any Loan Party and no obligation is being incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of such Loan Party.

4.10      Employee Benefits.

(a)         Except as set forth on Schedule 4.10(a) to the Disclosure Letter, as of the Closing Date no Loan Party, none of their Subsidiaries, nor any of their ERISA Affiliates maintains or contributes to any Pension Plan.

(b)         Each Loan Party and each of the ERISA Affiliates has complied in all material respects with ERISA, and where applicable the IRC and all applicable laws regarding each Employee Benefit Plan.

(c)         Each Employee Benefit Plan is, and has been, maintained in substantial compliance with ERISA, the IRC, all applicable laws and the terms of each such Employee Benefit Plan.

(d)         No liability to the PBGC (other than for the payment of current premiums which are not past due) by any Loan Party or ERISA Affiliate has been incurred or is expected by any Loan Party or ERISA Affiliate to be incurred with respect to any Pension Plan that could reasonably be expected to have a Material Adverse Effect.

(e)         No Notification Event exists or has occurred in the past six (6) years that could reasonably be expected to have a Material Adverse Effect.

(f)         No Loan Party or ERISA Affiliate has provided any security under Section 436 of the IRC.

(g)         No Loan Party or any of its ERISA Affiliates nor any fiduciary of any Employee Benefit Plan has engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the IRC except for liability that could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

(h)         Except as set forth on Schedule 4.10(h) to the Disclosure Letter, no Loan Party, nor any ERISA Affiliate sponsors, maintains, participates in, contributes to, or has any obligation to contribute to any Multiemployer Plan.  There does not now exist, nor do any circumstances exist pursuant

-91-

to which a Loan Party or any ERISA Affiliate, could reasonably be expected to have any Withdrawal Liability in respect of any Multiemployer Plan that could reasonably be expected to have a Material Adverse Effect.

4.11      Environmental Condition.  Except as set forth on Schedule 4.11 to the Disclosure Letter,  as of the Closing Date (a) to each Borrower’s  knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been used by a Loan Party, its Subsidiaries, or by previous owners or operators in the disposal of, or to produce, store, handle, treat, release, or transport, any Hazardous Materials, where such disposal, production, storage, handling, treatment, release or transport was in violation, in any material respect, of any applicable Environmental Law, (b) to each Borrower’s knowledge, no Loan Party’s nor any of its Subsidiaries’ properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor any of its Subsidiaries has received notice that a Lien arising under any Environmental Law has attached to any revenues or to any Real Property owned or operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any of its Subsidiaries nor any of their respective facilities or operations is subject to any outstanding written order, consent decree, or settlement agreement with any Person relating to any Environmental Law or Environmental Liability that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

4.12      Complete Disclosure.  All factual information furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender (including all information contained in the Schedules hereto, the Disclosure Letter or in the other Loan Documents) for purposes of or in connection with this Agreement, the Disclosure Letter or the other Loan Documents, taken as a whole and together with Parent’s filings with the SEC (other than forward-looking information and projections and information of a general economic nature and general information about the industry of any Loan Party or its Subsidiaries), and all other such factual information hereafter furnished by or on behalf of a Loan Party or its Subsidiaries in writing to Agent or any Lender in connection with this Agreement, the Disclosure Letter or the other Loan Documents, taken as a whole and together with Parent’s filings with the SEC (other than forward-looking information and projections and information of a general economic nature and general information about the industry of any Loan Party or its Subsidiaries), will be, true and accurate, in all material respects, on the date as of which such information is dated or certified and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided.  The Projections delivered to Agent on May 3, 2018 represent, and as of the date on which any other Projections are delivered to Agent, such additional Projections represent, Borrowers’ good faith estimate, on the date such Projections are delivered, of the Loan Parties’ and their Subsidiaries’  projected performance for the periods covered thereby based upon assumptions believed by Borrowers to be reasonable at the time of the delivery thereof to Agent (it being understood that such Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties and their Subsidiaries, and no assurances can be given that such Projections will be realized, and although reflecting Borrowers’ good faith estimate, projections or forecasts based on methods and assumptions which Borrowers believed to be reasonable at the time such Projections were prepared, are not to be viewed as facts, and that actual results during the period or periods covered by the Projections may differ materially from projected or estimated results).

4.13      Patriot Act.  To the extent applicable, each Loan Party is in compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001, as amended) (the “Patriot Act”).

-92-

4.14      Indebtedness.  Set forth on Schedule 4.14 to the Disclosure Letter is a true and complete list of all Indebtedness of each Loan Party and each of its Subsidiaries outstanding immediately prior to the Closing Date ‎(other than unsecured Permitted Indebtedness outstanding immediately prior to the Closing Date with respect to any ‎one transaction or a series of related transactions in an amount not to exceed $2,000,000; provided, that all ‎such Permitted Indebtedness, in the aggregate, shall not exceed $10,000,000) that is to remain outstanding immediately after giving effect to the closing hereunder on the Closing Date and such Schedule accurately sets forth the aggregate principal amount of such Indebtedness as of the Closing Date.

4.15      Payment of Taxes.  Except as otherwise permitted under Section 5.5, all income and other material Tax returns and reports of each Loan Party and its Subsidiaries required to be filed by any of them have been timely filed, and all Taxes shown on such Tax returns to be due and payable and all other material Taxes upon a Loan Party and its Subsidiaries and upon their respective assets, income, businesses and franchises that are due and payable have been paid when due and payable.  Each Loan Party and each of its Subsidiaries have made appropriate provision in accordance with GAAP for all Taxes not yet due and payable.  No Borrower knows of any Tax assessment proposed in writing against a Loan Party or any of its Subsidiaries that is not being actively contested by such Loan Party or such Subsidiary diligently, in good faith, and by appropriate proceedings; provided, that such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.

4.16      Margin Stock.  Neither any Loan Party nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock.  No part of the proceeds of the Loans made by the Lender Group to Borrowers will be used to purchase or carry any Margin Stock or to extend credit to others for the purpose of purchasing or carrying any Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors.

4.17      Governmental Regulation.  No Loan Party nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable.  No Loan Party nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” or a “principal underwriter” of a “registered investment company” as such terms are defined in the Investment Company Act of 1940.

4.18      OFAC;  Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.  No Loan Party or any of its Subsidiaries is in violation of any Sanctions.  No Loan Party nor any of its Subsidiaries nor, to the knowledge of such Loan Party, any director, officer, employee, agent or Affiliate of such Loan Party or such Subsidiary (a) is a Sanctioned Person or a Sanctioned Entity, (b) has any assets located in Sanctioned Entities, or (c) derives revenues from investments in, or transactions with Sanctioned Persons or Sanctioned Entities.  Each of the Loan Parties and its Subsidiaries has implemented and maintains in effect policies and procedures designed to ensure compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties and its Subsidiaries, and to the knowledge of each such Loan Party, each director, officer, employee, agent and Affiliate of each such Loan Party and each such Subsidiary, is in compliance with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  No proceeds of any Loan made or Letter of Credit issued hereunder will be used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity, or otherwise used in any manner that would result in a violation of any Sanction, Anti-Corruption Law or Anti-Money Laundering Law by any Person (including any Lender, Bank Product Provider, or other individual or entity participating in any transaction).

-93-

4.19      Employee and Labor Matters.  There is (i) no unfair labor practice complaint pending or, to the knowledge of any Borrower, threatened in writing against any Loan Party or its Subsidiaries before any Governmental Authority and no grievance or arbitration proceeding pending or, to the knowledge of any Borrower, threatened in writing against any Loan Party or its Subsidiaries which arises out of or under any collective bargaining agreement and that could reasonably be expected to result in a Material Adverse Effect, (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or, to the knowledge of any Borrower, threatened in writing against any Loan Party or its Subsidiaries that could reasonably be expected to result in a Material Adverse Effect, or (iii) to the knowledge of any Borrower, no union representation question existing with respect to the employees of any Loan Party or its Subsidiaries and no union organizing activity taking place with respect to any of the employees of any Loan Party or its Subsidiaries that could reasonably be expected to have a Material Adverse Effect.  None of any Loan Party or its Subsidiaries has incurred any material liability or obligation under the Worker Adjustment and Retraining Notification Act or similar state law, which remains unpaid or unsatisfied past the applicable payment date or date due.  The hours worked and payments made to employees of each Loan Party and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable legal requirements, except to the extent such violations could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  All material payments due from any Loan Party or its Subsidiaries on account of wages and employee health and welfare insurance and other benefits have been paid or accrued as a liability on the books of Parent and the other Loan Parties and their respective Subsidiaries, except where the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

4.20      [Reserved.]

4.21      Leases.  Each Loan Party and its Subsidiaries enjoy peaceful and undisturbed possession under all leases material to their business and to which they are parties or under which they are operating, and, subject to Permitted Protests, all of such material leases are valid and subsisting and no material default by the applicable Loan Party or its Subsidiaries exists under any of them.

4.22      Eligible Accounts and Eligible Unbilled Accounts.  As to each Account that is identified by Borrowers as an Eligible Account or Eligible Unbilled Account in a Borrowing Base Certificate submitted to Agent, such Account is (a) a bona fide existing payment obligation of the applicable Account Debtor created by the sale and delivery of Inventory or the rendition of services to such Account Debtor in the ordinary course of a  Borrower’s business, (b) owed to a Borrower without any known defenses, disputes, offsets, counterclaims, or rights of return or cancellation, and (c) not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Accounts or Eligible Unbilled Accounts.

4.23      Eligible Inventory.  As to each item of Inventory that is identified by Borrowers as Eligible Inventory in a Borrowing Base Certificate submitted to Agent, such Inventory is (a) of good and merchantable quality, free from known defects, and (b) not excluded as ineligible by virtue of one or more of the excluding criteria (other than any Agent-discretionary criteria) set forth in the definition of Eligible Inventory.

4.24      Immaterial Subsidiaries.  No Immaterial Subsidiary, as of any date (a) owns any assets, as of such date, that are greater than $5,000,000 or (b) has total revenues for the most recent 12‑month period prior to such date in excess of $5,000,000.

4.25      Location of Inventory.  The Inventory of Borrowers and their Subsidiaries is not stored with a bailee, warehouseman, or similar party and is located only at, or in-transit between, the locations identified on Schedule 4.25 to the Disclosure Letter (as such Schedule may be updated pursuant to Section 5.14).

-94-

4.26      Inventory Records.  Each Loan Party keeps correct and accurate records itemizing and describing the type, quality, and quantity of its and its Subsidiaries’ Inventory and the book value thereof.

4.27      Material Contracts.  Except for matters which, either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, each Material Contract (other than those which have expired, terminated or are otherwise no longer in effect) (a) is in full force and effect and is binding upon and enforceable against the applicable Loan Party or its Subsidiary and, to each Borrower’s knowledge, each other Person that is a party thereto in accordance with its terms and (b)  no material default exists thereunder due to the action or inaction of the applicable Loan Party or its Subsidiary.

4.28      Other Documents.  Borrowers have delivered to Agent a complete and correct copy of the Junior Lien Term Loan Documents and the Senior Secured Notes Documents, including all schedules and exhibits thereto.  The execution, delivery and performance of each of the Junior Lien Term Loan Documents and the Senior Secured Notes Documents has been duly authorized by all necessary action on the part of each Loan Party who is a party thereto.  Each of the Junior Lien Term Loan Documents and the Senior Secured Notes Documents Document is the legal, valid and binding obligation of each Loan Party who is a party thereto, enforceable against each such Loan Party in accordance with its terms, in each case, except (i) as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting generally the enforcement of creditors’ rights (regardless of whether enforcement in sought in equity or at law), and (ii) the availability of the remedy of specific performance or injunctive or other equitable relief is subject to the discretion of the court before which any proceeding therefor may be brought.

4.29      Hedge Agreements.  On each date that any Hedge Agreement is executed by any Hedge Provider and any Loan Party,  the Loan Party entering into such Hedge Agreement satisfy all eligibility, suitability and other requirements under the Commodity Exchange Act (7 U.S.C. § 1, et seq., as in effect from time to time) and the Commodity Futures Trading Commission regulations.

5.          AFFIRMATIVE COVENANTS.

Each of Parent and each Borrower covenants and agrees that, until the termination of all of the Commitments and payment in full of the Obligations:

5.1        Financial Statements, Reports, Certificates.  Parent and Borrowers (a) will deliver to Agent, each of the financial statements, reports, and other items set forth on Schedule 5.1 to this Agreement no later than the times specified therein, (b) agree that no Subsidiary of a Loan Party will have a fiscal year different from that of Parent (it being understood that any Person acquired in a Permitted Acquisition may have a different fiscal year end than Parent and its fiscal year end may be changed to match that of Parent), (c) agree to maintain a system of accounting that enables Parent and Borrowers to produce financial statements prepared in accordance with GAAP, and (d) agree that they will, and will cause each other Loan Party to, (i) keep a reporting system that shows all additions, sales, claims, returns, and allowances with respect to their and their Subsidiaries’ sales, and (ii) maintain their billing systems and practices substantially as in effect as of the Closing Date and shall only make material modifications thereto with notice to, and with the consent of, Agent (such consent not to be unreasonably withheld).  Documents required to be delivered pursuant to items (a), (c), (d), (h) or (i) of Schedule 5.1 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date that (i) Parent has posted such documents, or provides a link thereto, on Parent’s website on the Internet at the website address www.mcclatchy.com or (ii) such documents have been posted on Parent’s behalf on an Internet website, if any, to which each Lender and Agent have access (whether a commercial, third-party website

-95-

or whether sponsored by Agent) provided, that: (x) Parent shall deliver paper copies of all such documents to Agent or any Lender that requests Parent to deliver such paper copies until a written request to cease delivering paper copies is given by Agent or such Lender and (y) Parent shall notify (which may be by telecopy or email) Agent and each Lender of the posting of any such documents.

5.2        Reporting.  Borrowers (a) will deliver to Agent  each of the reports set forth on Schedule 5.2 to this Agreement at the times specified therein, and (b) agree to use commercially reasonable efforts in cooperation with Agent to facilitate and implement a system of electronic collateral reporting in order to provide electronic reporting of each of the items set forth on such Schedule.

5.3        Existence.  Except as otherwise permitted under Section 6.3 or Section 6.4, each Loan Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect such Person’s (i) valid existence, (ii) except as could not reasonably be expected to result in a Material Adverse Effect in each case, good standing in its jurisdiction of organization and good standing with respect to all other jurisdictions in which it is qualified to do business and (iii) any rights, franchises, permits, licenses, accreditations, authorizations, or other approvals material to their businesses.

5.4        Maintenance of Properties.  Each Loan Party will, and will cause each of its Subsidiaries to, maintain and preserve all of its assets that are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear, tear, casualty, and condemnation and Permitted Dispositions excepted and except where the failure to so maintain or preserve could not reasonably be expected to have a Material Adverse Effect.

5.5        Taxes.  Each Loan Party will, and will cause each of its Subsidiaries  to, pay in full before delinquency or before the expiration of any extension period all material Taxes imposed, levied, or assessed against it, or any of its assets or in respect of any of its income, businesses, or franchises, other than to the extent that the validity of such Tax is the subject of a Permitted Protest.

5.6        Insurance.  Each Loan Party will, and will cause each of its Subsidiaries to, at Borrowers’ expense, maintain insurance respecting each of each Loan Party’s and its Subsidiaries’ assets wherever located, covering liabilities, losses or damages as are customarily are insured against by other Persons engaged in same or similar businesses and similarly situated and located.  All such policies of insurance shall be with financially sound and reputable insurance companies reasonably acceptable to Agent and in such amounts as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated and located and, in any event, in amount, adequacy, and scope reasonably satisfactory to Agent (it being agreed that the amount, adequacy, and scope of the policies of insurance of Borrowers in effect as of the Closing Date are acceptable to Agent).  All property insurance policies are to be made payable to Agent for the benefit of Agent and the Lenders, as their interests may appear, in case of loss, pursuant to a standard lender’s loss payable endorsement with a standard non-contributory “lender” or “secured party” clause.  All certificates of property and general liability insurance are to be delivered to Agent, with the lender’s loss payable and additional insured endorsements in favor of Agent and shall provide for not less than thirty days (ten days in the case of non-payment) prior written notice to Agent of the exercise of any right of cancellation.  If any Loan Party or its Subsidiaries fails to maintain such insurance, Agent may arrange for such insurance, but at Borrowers’ expense and without any responsibility on Agent’s part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims.  Borrowers shall give Agent prompt notice of any loss exceeding $1,000,000 covered by the casualty or business interruption insurance of any Loan Party or its Subsidiaries.  Upon the occurrence and during the continuance of an Event of Default, Agent shall have the sole right to file claims under any property and general liability insurance policies in respect of the Collateral, to receive, receipt and give acquittance for any payments that may be payable thereunder, and to execute any and all endorsements, receipts, releases, assignments,

-96-

reassignments or other documents that may be necessary to effect the collection, compromise or settlement of any claims under any such insurance policies.

5.7        Inspection.

(a)         Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent, any Lender, and each of their respective duly authorized representatives or agents to visit any of its properties and inspect any of its assets or books and records, to examine and make copies of its books and records, and to discuss its affairs, finances, and accounts with, its officers and employees (provided, that an authorized representative of the Administrative Borrower shall be allowed to be present) at such reasonable times and intervals as Agent or any Lender, as applicable, may designate and, so long as no Default or Event of Default has occurred and is continuing, with reasonable prior notice to the Administrative Borrower and during regular business hours, at Borrowers’ expense, subject to any applicable reimbursement limitations set forth below in Section 5.7(c).

(b)         Each Loan Party will, and will cause each of its Subsidiaries to, permit Agent and each of its duly authorized representatives or agents to conduct field examinations, appraisals or valuations at such reasonable times and intervals as Agent may designate at Borrowers’ expense, subject to the limitations set forth below in Section 5.7(c).

(c)         So long as no Event of Default shall have occurred and be continuing during any calendar year, (i) Borrowers shall not be obligated to reimburse Agent for more than one (1) field examination in such calendar year (increasing to two (2) field examinations if at any time during such calendar year Excess Availability is less than the greater of (x) 17.5% of the Maximum Revolver Amount and (y) $11,375,000 at any time during such calendar year) and (ii) Borrowers shall not be obligated to reimburse Agent for any inventory appraisals during such calendar year (increasing to one (1) inventory appraisal if at any time during such calendar year Excess Availability is less than the greater of (x) 17.5% of the Maximum Revolver Amount and (y) $11,375,000 at any time during such calendar year), in each case, except for field examinations and inventory appraisals conducted in connection with a proposed Permitted Acquisition (whether or not consummated) or any field examinations and inventory appraisals conducted prior to the Closing Date.  Additional field examinations and inventory appraisals beyond those reimbursed pursuant to this Agreement may be permitted at Agent’s reasonable request and expense.

5.8        Compliance with Laws.  Each Loan Party will, and will cause each of its Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations, and orders of any Governmental Authority, other than laws, rules, regulations, and orders the non-compliance with which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

5.9        Environmental.  Each Loan Party will, and will cause each of its Subsidiaries to,

(a)         Keep any property either owned or operated by any Loan Party or its Subsidiaries free of any Environmental Liens or post bonds or other financial assurances sufficient to satisfy the obligations or liability evidenced by such Environmental Liens in each case other than Permitted Liens,

(b)         Comply, in all material respects, with applicable Environmental Laws and provide to Agent documentation of such compliance which Agent reasonably requests,

(c)         Promptly notify Agent of any release of which any Loan Party has knowledge of a Hazardous Material in any reportable quantity from or onto property owned or operated by any Loan Party or its Subsidiaries and take any Remedial Actions required to abate said release or otherwise to come into compliance, in all material respects, with applicable Environmental Law, and

-97-

(d)         Promptly, but in any event within five Business Days of its receipt thereof, provide Agent with written notice of any of the following:  (i) notice that an Environmental Lien has been filed against any of the real or personal property of a Loan Party or its Subsidiaries, (ii) commencement of any Environmental Action or written notice that an Environmental Action will be filed against a Loan Party or its Subsidiaries except as could not reasonably be expected to result in a Material Adverse Effect, and (iii) written notice of a violation, citation, or other administrative order from a Governmental Authority in respect of Environmental Laws.

5.10      Disclosure Updates.  Each Loan Party will, promptly and in no event later than five Business Days after a Responsible Officer of Parent obtaining knowledge thereof, notify Agent if any written information, exhibit, or report furnished to Agent or the Lenders contained, at the time it was furnished, any untrue statement of a material fact or omitted to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances in which made.  The foregoing to the contrary notwithstanding, any notification pursuant to the foregoing provision will not cure or remedy the effect of the prior untrue statement of a material fact or omission of any material fact nor shall any such notification have the effect of amending or modifying this Agreement or any of the Schedules hereto.

5.11      Formation of Subsidiaries.  Each Loan Party will, at the time that any Loan Party forms any direct or indirect Subsidiary, acquires any direct or indirect Subsidiary after the Closing Date, or at any time when any direct or indirect Subsidiary of a Loan Party that previously was an Immaterial Subsidiary becomes a Material Subsidiary, within thirty days of such event (or such later date as permitted by Agent in its sole discretion) (a)  unless such Subsidiary is an Excluded Subsidiary, cause such new Subsidiary (i) if Administrative Borrower requests, subject to the consent of Agent, that such Subsidiary be joined as a Borrower hereunder, to provide to Agent a Joinder to this Agreement, and (ii)  to provide to Agent a joinder to the Guaranty and Security Agreement, in each case, together with such other security agreements (including Mortgages with respect to any Real Property owned in fee of such new Subsidiary with a fair market value of greater than $2,000,000), which, notwithstanding the foregoing, shall be provided within 90 days of such event (or such longer period of time as may be agreed by Agent)), as well as appropriate financing statements (and with respect to all property subject to a Mortgage, fixture filings), all in form and substance reasonably satisfactory to Agent (including being sufficient to grant Agent a first priority Lien (subject to Permitted Liens) in and to the assets of such newly formed or acquired Subsidiary constituting Collateral); (b) provide, or cause the applicable Loan Party to provide, to Agent a pledge agreement (or an addendum to the Guaranty and Security Agreement) and appropriate certificates and powers or financing statements, pledging all of the direct or beneficial ownership interest in such new Subsidiary in form and substance reasonably satisfactory to Agent; provided, that only 65% of the total outstanding voting Equity Interests of any first tier Subsidiary of a Loan Party that is a Foreign Subsidiary or a FSHCO (and none of the Equity Interests of any Subsidiary of such Foreign Subsidiary or FSHCO) shall be required to be pledged, and (c) provide to Agent all other documentation, including the Governing Documents of such Subsidiary and one or more opinions of counsel reasonably satisfactory to Agent, which, in its opinion, which Agent shall reasonably request with respect to the execution and delivery of the applicable documentation referred to above (including policies of title insurance, flood certification documentation or other documentation with respect to all Real Property owned in fee and subject to a mortgage which, notwithstanding the foregoing, shall be provided within 90 days of such event (or such longer period of time as may be agreed by Agent)).  Any document, agreement, or instrument executed by any Loan Party pursuant to this Section 5.11 shall constitute a Loan Document.

5.12      Further Assurances.  Each Loan Party will, and will cause each of the other Loan Parties to, at any time upon the reasonable request of Agent and in accordance with the Guaranty and Security Agreement and subject to the limitations and qualifications set forth therein, execute or deliver to

-98-

Agent any and all financing statements, fixture filings, security agreements, pledges, collateral assignments, mortgages, deeds of trust, opinions of counsel, and all other documents (the “Additional Documents”) that Agent may reasonably request in form and substance reasonably satisfactory to Agent, to create, perfect, and continue perfected or to better perfect Agent’s Liens in all of the assets of each of the Loan Parties (whether now owned or hereafter arising or acquired, tangible or intangible, real or personal) (other than any assets expressly excluded from the Collateral (as defined in the Guaranty and Security Agreement) pursuant to Section 3 of the Guaranty and Security Agreement), to create and perfect Liens in favor of Agent in any Real Property acquired by any other Loan Party with a fair market value in excess of $2,000,000, and in order to fully consummate all of the transactions contemplated hereby and under the other Loan Documents; provided, that the foregoing shall not apply to any Subsidiary of a Loan Party that is a Foreign Subsidiary or FSHCO.  To the maximum extent permitted by applicable law, if any Borrower  or any other Loan Party refuses or fails to execute or deliver any reasonably requested Additional Documents within 30 days following the request to do so, each Borrower and each other Loan Party hereby authorizes Agent to execute any such Additional Documents in the applicable Loan Party’s name and authorizes Agent to file such executed Additional Documents in any appropriate filing office.  In furtherance of, and not in limitation of, the foregoing, each Loan Party shall take such actions as Agent may reasonably request from time to time to ensure that the Obligations are guaranteed by the Guarantors and are secured by substantially all of the assets of the Loan Parties, including all of the outstanding capital Equity Interests of Parent’s Subsidiaries (in each case, other than with respect to any assets expressly excluded from the Collateral (as defined in the Guaranty and Security Agreement) pursuant to Section 3 of the Guaranty and Security Agreement).

5.13      Lender Meetings.  Parent will, within 90 days after the close of each fiscal year of Parent, at the request of Agent or of the Required Lenders and upon reasonable prior notice, hold a meeting (at a mutually agreeable location and time or, at the option of Agent, by conference call) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of the Loan Parties and their Subsidiaries and the projections presented for the current fiscal year of Parent.

5.14      Location of Inventory; Chief Executive Office.  Each Loan Party will, and will cause each of its Subsidiaries to, keep (a) their Inventory only at, or in-transit between, the locations identified on Schedule 4.25 to the Disclosure Letter (provided that Borrowers may amend Schedule 4.25 to the Disclosure Letter at any time so long as such amendment occurs by written notice to Agent not less than five days (or such shorter period as may be agreed by Agent) prior to the date on which such Inventory is moved to such new location and so long such new location is within the continental United States), and (b) their respective chief executive offices only at the locations identified on Schedule 7 to the Guaranty and Security Agreement or such other locations as may be identified by Parent or such Loan Party to Agent upon not less than five days (or such shorter period as may be agreed by Agent) prior written notice.  Each Loan Party will, and will cause each of its Subsidiaries to, use their commercially reasonable efforts to obtain Collateral Access Agreements for each of the locations at which any Borrower stores inventory having a value of $100,000 or more.

5.15      OFAC; Sanctions; Anti-Corruption Laws; Anti-Money Laundering Laws.  Each Loan Party will, and will cause each of its Subsidiaries to comply with all applicable Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties and its Subsidiaries shall implement and maintain in effect policies and procedures designed to ensure compliance by the Loan Parties and their Subsidiaries and their respective directors, officers, employees, agents and Affiliates with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.  Each of the Loan Parties shall and shall cause their respective Subsidiaries to comply with all Sanctions, Anti-Corruption Laws and Anti-Money Laundering Laws.

-99-

5.16      Compliance with ERISA and the IRC.  In addition to and without limiting the generality of Section 5.8, each Loan Party will, and will cause each of its Subsidiaries to (a) comply in all material respects with applicable provisions of ERISA and the IRC with respect to all Pension Plans, (b) without the prior written consent of Agent and the Required Lenders, not take any action or fail to take action the result of which could result in a Loan Party or ERISA Affiliate incurring a material liability to the PBGC or to a Multiemployer Plan (other than to pay contributions or premiums payable in the ordinary course), (c) not participate in any prohibited transaction that could result in other than a de minimis civil penalty excise tax, fiduciary liability or correction obligation under ERISA or the IRC, (d) operate each Employee Benefit Plan in such a manner that will not incur any material tax liability under the IRC (including Section 4980B of the IRC), (e) not allow a Notification Event to occur that, in the aggregate, reasonably could be expected to result in a Material Adverse Effect, and (f) furnish to Agent upon Agent’s written request such additional information about any Employee Benefit Plan for which any Loan Party or ERISA Affiliate could reasonably expect to incur any material liability.  With respect to each Pension Plan (other than a Multiemployer Plan) except as could not reasonably be expected to result in liability to the Loan Parties, the Loan Parties and the ERISA Affiliates shall (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of the IRC and of ERISA, and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to ERISA.

5.17      Pledged Cash.  The Borrowers shall at all times maintain Pledged Cash in an amount equal to 100% (or such higher percentage as otherwise specified in this Agreement) of the Pledged Cash L/C Usage outstanding at any time.  If at any time the aggregate amount of Pledged Cash of Borrowers is less than the Pledged Cash L/C Usage, then Borrowers shall immediately deposit funds in the Pledged L/C Account in an aggregate amount not less than such shortfall (unless such deposit is otherwise waived by Agent in its sole discretion).

5.18      Reserved.

5.19      Bank Products.  On or before the 120th day (or such longer period as agreed to by Agent in its sole discretion) after the Closing Date, the Loan Parties shall establish their primary depository and treasury account relationships with Wells Fargo or one or more of its Affiliates and will maintain such depository and treasury account relationships at all times during the term of this Agreement.  Notwithstanding the foregoing and subject to the terms of the Guaranty and Security Agreement, Agent understands the Loan Parties will have accounts in locations where such Loan Party has a location and Agent or its Affiliates do not have a branch or retail location within the geographical vicinity.

5.20      Enhancements to Senior Secured Notes Documents or Junior Lien Term Loan Documents.  If any holder, lender, secured party or equivalent Person (or any trustee or agent acting for or on behalf of any such holder, lender, secured party or equivalent Person), in its capacity as such, in respect of the Senior Secured Notes Documents or the Junior Lien Term Loan Documents, as applicable, receives any additional assets as collateral that do not already constitute Collateral, or any Subsidiary of Parent becomes a guarantor in respect thereof, on and after the Closing Date, Parent and other Loan Parties shall cause the same to be granted to Agent for its own benefit and the benefit of the Lenders (pursuant to the terms of the applicable Intercreditor Agreement).

6.          NEGATIVE COVENANTS.

Each of Parent and each Borrower covenants and agrees that, until the termination of all of the Commitments and the payment in full of the Obligations:

-100-

6.1        Indebtedness.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  create, incur, assume, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, except for Permitted Indebtedness.

6.2        Liens.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  create, incur, assume, directly or indirectly, any Lien on or with respect to any of its assets, of any kind, whether now owned or hereafter acquired, or any income or profits therefrom, except for Permitted Liens.

6.3        Restrictions on Fundamental Changes.  Each Loan Party will not, and will not permit any of its Subsidiaries to,

(a)         consummate any merger or consolidation, except for (i) any merger or consolidation between Loan Parties;  provided, that a Borrower must be the surviving entity of any such merger or consolidation to which it is a party and no merger or consolidation may occur between Parent and any other Loan Party, (ii) any merger or consolidation between or among a Loan Party (other than Parent) and a Subsidiary of such Loan Party that is not a Loan Party so long as such Loan Party or a Person that becomes a Loan Party is the surviving entity of any such merger or consolidation, (iii) any merger or consolidation between or among Subsidiaries of any Loan Party that are not Loan Parties and (iv) Permitted Acquisitions,

(b)         liquidate, wind up, or dissolve itself, except for (i) the liquidation, winding-up or dissolution of non-operating Subsidiaries of any Loan Party with nominal assets and nominal liabilities, (ii) the liquidation, winding-up or dissolution of a Loan Party (other than Parent or any Borrower) or any Loan Party’s direct, wholly-owned Subsidiaries so long as all of the assets (including any interest in any Equity Interests) of such liquidating or dissolving Loan Party or Subsidiary are transferred to a Loan Party that is not liquidating or dissolving, or (iii) the liquidation or dissolution of a Subsidiary of any Loan Party that is not a Loan Party, unless all of the assets of such liquidating or dissolving Subsidiary are transferred to a Subsidiary of a Loan Party that is not liquidating or dissolving and the Equity Interests of which are subject to at least an equivalent Lien in favor of Agent,

(c)         suspend or cease operating a substantial portion of the businesses of Parent and its Subsidiaries, taken as a whole, for more than ten (10) Business Days, except as permitted pursuant to clauses (a) or (b) above or in connection with a transaction permitted under Section 6.4, or

(d)         change its classification/status for U.S. federal income tax purposes.

6.4        Disposal of Assets.  Other than Permitted Dispositions or transactions expressly permitted by Sections 6.3 or 6.9,  each Loan Party will not, and will not permit any of its Subsidiaries to,  convey, sell, lease, license, assign, transfer, or otherwise dispose of any of its or their assets.

6.5        Nature of Business.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  make any change in the nature of its or their business as described in Schedule 6.5 to the Disclosure Letter or acquire any properties or assets that are not reasonably related to the conduct of such business activities; provided, that the foregoing shall not prevent any Loan Party and its Subsidiaries from engaging in any business that is reasonably related or ancillary to its or their business or that constitutes a reasonable extension thereof.

6.6        Prepayments and Amendments.  Each Loan Party will not, and will not permit any of its Subsidiaries to,

(a)         Except in connection with Refinancing Indebtedness permitted by Section 6.1,

-101-

(i)       optionally prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of any Loan Party or its Subsidiaries, other than (A) the Obligations in accordance with this Agreement, (B) Hedge Obligations,  (C) Permitted Intercompany Advances, or (D) so long as the Payment Conditions are satisfied, other Permitted Indebtedness (other than Indebtedness evidenced by the Senior Secured Notes Documents, the Permitted Junior Conversion Debt Documents, and the Junior Term Loan Documents, if such prepayment, redemption, defeasement, purchase or acquisition is prohibited from being made under the Senior Secured Notes Intercreditor Agreement or any Junior Lien Intercreditor Agreement, as applicable),  or

(ii)      make any payment on account of Indebtedness that has been contractually subordinated in right of payment to the Obligations if such payment is not permitted at such time under the subordination terms and conditions.

(b)         Directly or indirectly, amend, modify, or change any of the terms or provisions of:

(i)       any agreement, instrument, document, indenture, or other writing evidencing or concerning Permitted Indebtedness if the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of Agent or the Lenders,

(ii)      (A) the Senior Secured Notes Documents to the extent any such amendment, modification, or change (I) would make any of the covenants or defaults or events of default set forth in the Senior Secured Notes Documents more restrictive as to Parent or any of its Subsidiaries than the covenants and defaults or events of default set forth in the Senior Secured Notes Documents, in each case, as in effect on the Closing Date, (II) would change to earlier dates any dates upon which payments of principal or interest are due thereon, (III) would change any redemption, mandatory prepayment, or defeasance provisions thereof, (IV) would restrict any Loan Party from making payments of the Obligations that would otherwise be permitted under the Senior Secured Notes Documents as in effect on the Closing Date, (V) would increase the cash pay portion of any interest rate thereunder by more than 2.00 percentage points per annum or add any recurring fees or (VI) is in contravention of the Senior Secured Notes Intercreditor Agreement, (B) the Junior Lien Term Loan Documents to the extent any such amendment, modification, or change (I) would make any of the covenants or defaults or events of default set forth in the Junior Lien Term Loan Documents more restrictive as to Parent or any of its Subsidiaries than the covenants and defaults or events of default set forth in the Junior Lien Term Loan Documents, in each case, as in effect on the Closing Date, (II) would change to earlier dates any dates upon which payments of principal or interest are due thereon, (III) would change any redemption, mandatory prepayment, or defeasance provisions thereof, (IV) would restrict any Loan Party from making payments of the Obligations that would otherwise be permitted under the Junior Lien Term Loan Documents as in effect on the Closing Date, (V) would increase the cash pay portion of any interest rate thereunder by more than 2.00 percentage points per annum or add any recurring fees or (VI) is in contravention of any Junior Lien Intercreditor Agreement, or (C) the Permitted Junior Conversion Debt Documents to the extent any such amendment, modification, or change (I) would make any of the covenants or defaults or events of default set forth in the Permitted Junior Conversion Debt Documents more restrictive as to Parent or any of its Subsidiaries than the covenants and defaults or events of default set forth in the Junior Lien Term Loan Documents or any Permitted Junior Conversion Debt Documents, in each case, as in effect on the Closing Date, (II) would change to earlier dates any dates upon which payments of principal or interest are due thereon, (III) would change any redemption, mandatory prepayment, or defeasance provisions thereof, (IV) would restrict any Loan Party from making payments of the Obligations that would otherwise be permitted under the Junior Lien Term Loan Documents or any Permitted Junior Conversion Debt Documents, in each case, as in effect on the Closing Date, (V) would increase the cash pay portion of any interest rate thereunder by more than 2.00 percentage points per

-102-

annum or add any recurring fees or (VI) is in contravention of any Junior Lien Intercreditor Agreement, or

(iii)     the Governing Documents of any Loan Party or any of its Subsidiaries if the effect thereof, either individually or in the aggregate, could reasonably be expected to be materially adverse to the interests of Agent or the Lenders.

6.7        Restricted Payments.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  make any Restricted Payment; provided, that so long as it is permitted by law,

(a)         the purchase, repurchase, redemption or other acquisition, cancellation or retirement for value of Equity Interest, or options, warrants, equity appreciation rights or other rights to purchase or acquire Equity Interest, of Parent held by any existing or former employees, management or directors of or consultants to Parent or any Subsidiary of Parent or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other compensatory agreements approved by the Board of Directors of Parent; provided that such purchases, repurchases, redemptions, acquisitions, cancellations or retirements pursuant to this clause (a) will not exceed $5,000,000 in the aggregate during any calendar year (with any unused amount in any calendar year being available for use in the immediately succeeding calendar year only;  provided, that any such unused amount must first be used in the immediately succeeding calendar year prior to the foregoing $5,000,000 amount for such calendar year),

(b)         so long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Parent may make distributions to former employees, officers, or directors of Parent (or any spouses, ex-spouses, or estates of any of the foregoing), solely in the form of forgiveness of Indebtedness of such Persons owing to Parent on account of repurchases of the Equity Interests of Parent held by such Persons; provided,  that such Indebtedness was incurred by such Persons solely to acquire Equity Interests of Parent,

(c)         direct or indirect wholly-owned Subsidiaries of Parent may make dividends and distributions to the Loan Party that is the direct owner of the Equity Interests of any such wholly-owned Subsidiary,

(d)         cash payments (in an amount not to exceed $5,000,000 in the aggregate during the term of this Agreement)  in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of Parent or other exchanges of securities of Parent or a Subsidiary in exchange for Equity Interests of Parent,

(e)         repurchases or other acquisitions of Equity Interests  deemed to occur (i) upon the exercise of stock options, warrants, restricted stock units or other rights to purchase Equity Interests  or other convertible securities if such Equity Interests  represents a portion of the exercise price thereof or conversion price thereof or (ii) in connection with withholdings or similar taxes payable by any future, present or former employee, director or officer,

(f)         the purchase of fractional shares of Equity Interest of the Parent arising out of stock dividends, splits or combinations or mergers, consolidations or other acquisitions in an amount not to exceed $5,000,000 in the aggregate during the term of this Agreement,

(g)         in connection with any Permitted Acquisition, the receipt or acceptance of the return to Parent or any of its Subsidiaries of Equity Interest of Parent constituting a portion of the purchase price consideration in settlement of indemnification claims or as a result of a purchase price adjustment (including earn outs or similar obligations),

-103-

(h)         the distribution of rights pursuant to any shareholder rights plan or the redemption of such for nominal consideration in accordance with the terms of any shareholder rights plan not to exceed $5,000,000 in the aggregate during the term of this Agreement,  and

(i)          other Restricted Payments so long as the Payment Conditions are satisfied.

6.8        Accounting Methods and Fiscal Year.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  modify or change its fiscal year or its method of accounting (other than as may be required to conform to GAAP);  provided that any Subsidiary that is acquired pursuant to a Permitted Acquisition may change its fiscal year to the same fiscal year as Parent;  provided further that Parent and its Subsidiaries may, upon prior written notice to Agent, change its fiscal year to end on December 31.

6.9        Investments.  Each Loan Party will not, and will not permit any of its Subsidiaries to,  directly or indirectly, make or acquire any Investment,  except for Permitted Investments.

6.10      Transactions with Affiliates.  Each Loan Party will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into any transaction with any Affiliate of any Loan Party or any of its Subsidiaries except for:

(a)         transactions (other than the payment of management, consulting, monitoring, or advisory fees) between such Loan Party or its Subsidiaries, on the one hand, and any Affiliate of such Loan Party or its Subsidiaries, on the other hand, so long as such transactions (i) are fully disclosed to Agent prior to the consummation thereof, if they involve one or more payments by such Loan Party or its Subsidiaries in excess of $2,000,000 for any single transaction or series of related transactions, and (ii) are no less favorable, taken as a whole, to such Loan Party or its Subsidiaries, as applicable, than would be obtained in an arm’s length transaction with a non-Affiliate,

(b)         any indemnity provided for the benefit of directors (or comparable managers) of a Loan Party or one of its Subsidiaries so long as it has been approved by such Loan Party’s or such Subsidiary’s board of directors (or comparable governing body) in accordance with applicable law or is provided by charter, bylaw or statutory provisions,

(c)         the payment of reasonable compensation, severance, or employee benefit arrangements to employees, officers, and directors of a Loan Party or its Subsidiaries in the ordinary course of business and consistent with industry practice so long as it has been approved by such Loan Party’s or such Subsidiary’s board of directors (or comparable governing body) in accordance with applicable law,

(d)         transactions solely between or among Parent and any Subsidiary or between or among Subsidiaries of Parent,

(e)         transactions permitted by Section 6.3,  Section 6.6,  Section 6.7, or Section 6.9,

(f)         agreements for the non-exclusive licensing of intellectual property, or distribution of products, in each case, among the Loan Parties and their Subsidiaries for the purpose of the counterparty thereof operating its business, and agreements for the assignment of intellectual property from any Loan Party or any of its Subsidiaries to any Loan Party,

(g)         any issuance or sale of Equity Interests (other than Disqualified Equity Interests) to Affiliates of Parent and the granting of registration and other customary rights in connection therewith or any contribution to the Equity Interest of Parent or any Subsidiary of Parent,

-104-

(h)         any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Equity Interests  of Parent pursuant to restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans, pension plans or similar plans or agreements or arrangements approved by the Board of Directors of Parent,

(i)          any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged with or into or consolidated with Parent or a Subsidiary in accordance with this Agreement;  provided that such agreement was not entered into in contemplation of such acquisition, merger or consolidation, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Lenders, as determined in good faith by Parent, when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition or merger),

(j)          transactions with suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of the business of Parent and its Subsidiaries; provided that as determined in good faith by Parent, such transactions are on terms that are not materially less favorable to Parent or the relevant Subsidiary than those that would have been obtained in a comparable transaction on an arm’s length basis by Parent or such Subsidiary with an unrelated Person,  or

(k)         the transactions contemplated by, and the performing by the Loan Parties of their obligations under, the Junior Lien Term Loan Documents and the Permitted Junior Conversion Debt Documents.

6.11      Use of Proceeds.  Each Loan Party will not, and will not permit any of its Subsidiaries to, use the proceeds of any Loan made hereunder for any purpose other than (a) on the Closing Date, to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, the Junior Lien Term Loan Documents, the Senior Secured Notes Documents and the transactions contemplated hereby and thereby, in each case, as set forth in the final settlement and closing statement delivered by Borrowers to Agent, and (b) thereafter, consistent with the terms and conditions hereof, for their lawful and permitted working capital and general corporate purposes; provided that (x) no part of the proceeds of the Loans will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates the provisions of Regulation T, U or X of the Board of Governors, (y) no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, to make any payments to a Sanctioned Entity or a Sanctioned Person, to fund any investments, loans or contributions in, or otherwise make such proceeds available to, a Sanctioned Entity or a Sanctioned Person, to fund any operations, activities or business of a Sanctioned Entity or a Sanctioned Person, or in any other manner that would result in a violation of Sanctions by any Person, and (z) that no part of the proceeds of any Loan or Letter of Credit will be used, directly or indirectly, in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Sanctions, Anti-Corruption Laws or Anti-Money Laundering Laws.

6.12      Limitation on Issuance of Equity Interests.  Except for the issuance or sale of Qualified Equity Interests by Parent, each Loan Party will not, and will not permit any of its Subsidiaries to,  issue or sell any of its Equity Interests.

6.13      Inventory with Bailees.  Each Borrower will not, and will not permit any of its Subsidiaries to,  store its Inventory at any time with a bailee, processor, warehouseman, or similar party except as set forth on Schedule 4.25 to the Disclosure Letter (as such Schedule may be amended in accordance with Section 5.14).

-105-

6.14      [Reserved].

6.15      Immaterial Subsidiaries.  Each Loan Party will not permit any Immaterial Subsidiary to, as of any date (a) own any assets, as of such date, that are greater than $5,000,000, or (b) have total revenues for the most recent 12‑month period prior to such date in excess of $5,000,000.

6.16      Employee Benefits.  Each Loan Party will not, and will not permit any of its Subsidiaries to:

(a)         Terminate, or permit any ERISA Affiliate to terminate, any Pension Plan in a manner, or take any other action with respect to any Plan, which could reasonably be expected to result in any liability of any Loan Party or ERISA Affiliate to the PBGC that could reasonably be expected to have a Material Adverse Effect.

(b)         Fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all amounts which, under the provisions of any Pension Plan or Employee Benefit Plan that is a nonqualified deferred compensation plan or arrangement, or agreement relating thereto or applicable Law, any Loan Party or ERISA Affiliate is required to pay if such failure could reasonably be expected to have a Material Adverse Effect.

(c)         Acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to a Loan Party or with respect to any ERISA Affiliate if such Person sponsors, maintains, or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to, (i) any Pension Plan or (ii) any Multiemployer Plan.

(d)         Contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan not set forth on Schedule 6.6(e) to the Disclosure Letter.

(e)         Amend, or permit any ERISA Affiliate to amend, a Pension Plan resulting in a material increase in current liability such that a Loan Party or ERISA Affiliate is required to provide security to such Plan under the IRC.

6.17      Limitations on Layering Indebtedness.  No Loan Party shall, and no Loan Party shall permit any of its Subsidiaries to, directly or indirectly incur or suffer to exist any Indebtedness that is both (a) contractually subordinate or junior in right of payment to the obligations under this Agreement and the other Loan Documents or the Senior Secured Notes Obligations and (b) senior in right of payment to the Junior Lien Term Loan Obligations.

7.          FINANCIAL COVENANT.

Each of Parent and each Borrower covenants and agrees that, until the termination of all of the Commitments and the payment in full of the Obligations, Parent and Borrowers will maintain a Fixed Charge Coverage Ratio, calculated for each 12-month period ending on the first day of any Covenant Testing Period and the last day of each fiscal month occurring until the end of any Covenant Testing Period (including the last day thereof), in each case,  of at least 1.10 to 1.00.

8.          EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default (each, an “Event of Default”) under this Agreement:

-106-

8.1        Payments.  If Borrowers fail to pay when due and payable, or when declared due and payable, (a) all or any portion of the Obligations consisting of interest, fees, or charges due the Lender Group, reimbursement of Lender Group Expenses, or other amounts (other than any portion thereof constituting principal) constituting Obligations (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, regardless of whether allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding), and such failure continues for a period of three Business Days, (b) all or any portion of the principal of the Loans, or (c) any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit;

8.2        Covenants.  If any Loan Party or any of its Subsidiaries:

(a)         fails to perform or observe any covenant or other agreement contained in any of (i) Sections 3.6,  5.1,  5.2,  5.3 (solely if Parent or any Borrower fails to maintain its existence, except as permitted by this Agreement),  5.7 (solely if Parent or any Borrower refuses to allow Agent or its representatives or agents to visit its respective properties, inspect its assets or books or records, examine and make copies of its books and records, or discuss its affairs, finances, and accounts with officers and employees of Parent or any Borrower in accordance with such covenant), 5.10,  5.11,  5.13,  5.15,  5.17,  5.19 or 5.20 of this Agreement, (ii) Section 6 of this Agreement, (iii) Section 7 of this Agreement, or (iv) Section 7 of the Guaranty and Security Agreement;

(b)         (i) fails to perform or observe any covenant or other agreement contained in any of Sections 5.3 (solely if Parent or any Borrower fails to maintain its good standing in its jurisdiction of organization), 5.5,  5.8,  or 5.12 of this Agreement and such failure continues for a period of ten days after the earlier of (A) the date on which such failure shall first become known to any Responsible Officer of Parent, or (B) the date on which written notice thereof is given to Borrowers by Agent, or (ii) fails to perform or observe any covenant or other agreement contained in any of Sections 5.6,  5.14, or 5.16 of this Agreement and such failure continues for a period of fifteen days after the earlier of (A) the date on which such failure shall first become known to any Responsible Officer of Parent, or (B) the date on which written notice thereof is given to Borrowers by Agent; or

(c)         fails to perform or observe any covenant or other agreement contained in this Agreement, or in any of the other Loan Documents, in each case, other than any such covenant or agreement that is the subject of another provision of this Section 8 (in which event such other provision of this Section 8 shall govern), and such failure continues for a period of thirty days after the earlier of (i) the date on which such failure shall first become known to any Responsible Officer of Parent, or (ii) the date on which written notice thereof is given to Borrowers by Agent;

8.3        Judgments.  If a Loan Party or any Material Subsidiary or group of Subsidiaries that, taken together (as of the latest audited consolidated financial statements for Parent and its Subsidiaries), would constitute a Material Subsidiary fail to pay any final and non-appealable judgments aggregating in excess of $25,000,000 (net of any amounts that are covered by insurance issued by a reputable and creditworthy insurance company (as determined in the good faith by Parent) that has not contested coverage), and (a) which judgments remain unsatisfied or undischarged for any period of 60 consecutive days during which a stay of enforcement of such judgments shall not be in effect or (b) if enforcement proceedings are commenced upon any such final and non-appealable judgements;

8.4        Voluntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced by a Loan Party or any of its Subsidiaries;

8.5        Involuntary Bankruptcy, etc.  If an Insolvency Proceeding is commenced against a Loan Party or any of its Subsidiaries and any of the following events occur: (a) such Loan Party or such Subsidiary consents to the institution of such Insolvency Proceeding against it, (b) the petition

-107-

commencing the Insolvency Proceeding is not timely controverted, (c) the petition commencing the Insolvency Proceeding is not dismissed within sixty calendar days of the date of the filing thereof, (d) an interim trustee is appointed to take possession of all or any substantial portion of the properties or assets of, or to operate all or any substantial portion of the business of, such Loan Party or its Subsidiary, or (e) an order for relief shall have been issued or entered therein;

8.6        Default Under Other Agreements.  If there is (a) a default in one or more agreements to which a Loan Party or any of its Subsidiaries is a party with one or more third Persons relative to a Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate amount of $25,000,000 or more, and such default (i) occurs at the final maturity of the obligations thereunder, or (ii) results in a right by such third Person, irrespective of whether exercised, to accelerate the maturity of such Loan Party’s or its Subsidiary’s obligations thereunder, (b) a default in or an involuntary early termination of one or more Hedge Agreements to which a Loan Party or any of its Subsidiaries is a party, (c) an “Event of Default” or similar event under, and as such term is defined in, the Senior Secured Notes Indenture or the other Senior Secured Notes Documents, (d) an “Event of Default” or similar event under, and as such term is defined in, the Junior Lien Term Loan Credit Agreement or the other Junior Lien Term Loan Documents, or (e) an “Event of Default” or similar event under, and as such term is defined in, the Permitted Junior Conversion Debt Documents; provided that clause (a)(ii) of this Section 8.6 shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness, so long as (A) such sale or transfer is expressly permitted under the Loan Documents and under the documents providing for such Indebtedness and (B)  the obligations of each applicable Loan Party and its Subsidiaries with respect to such Indebtedness are extinguished in full upon such sale or transfer;

8.7        Representations, etc.  If any warranty, representation, certificate, statement, or Record made herein or in any other Loan Document or delivered in writing by or on behalf of any Loan Party to Agent or any Lender in connection with this Agreement or any other Loan Document proves to be untrue in any material respect (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of the date of issuance or making or deemed making thereof;

8.8        Guaranty.  If the obligation of any Guarantor under the guaranty contained in the Guaranty and Security Agreement is limited or terminated by operation of law or by such Guarantor (other than in accordance with the terms of this Agreement or the Guaranty and Security Agreement) or if any Guarantor repudiates or revokes or purports to repudiate or revoke any such guaranty;

8.9        Security Documents.  If the Guaranty and Security Agreement or any other Loan Document that purports to create a Lien, shall, for any reason, fail or cease to create a valid and perfected (except to the extent of Permitted Liens) first priority (with respect to ABL Priority Collateral) or second priority (with respect to assets that do not constitute ABL Priority Collateral) Lien on the Collateral covered thereby, except as a result of a disposition of the applicable Collateral in a transaction permitted under this Agreement;

8.10      Loan Documents.  The validity or enforceability of any Loan Document shall at any time for any reason (other than solely as the result of an action or failure to act on the part of Agent or pursuant to the terms of such Loan Document) be declared to be null and void, or a proceeding shall be commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries shall deny that such Loan Party or its Subsidiaries has any liability or obligation purported to be created under any Loan Document (or if any such Loan Party or its

-108-

Subsidiaries shall otherwise assert that such Loan Party or its Subsidiaries does not have any such liability or obligation purported to be created under any Loan Document);

8.11      Change of Control.  A Change of Control shall occur;

8.12      ERISA.  (a) Any Loan Party or ERISA Affiliate fails to make full payment when due of all amounts which any Loan Party or ERISA Affiliate is required to pay as contributions, installments, or otherwise to or with respect to a Pension Plan or Multiemployer Plan, and such failure could reasonably be expected to result in liability in excess of $50,000,000, (b) a Notification Event, which could reasonably be expected to result in liability in excess of $50,000,000, either individually or in the aggregate, or (c) any Loan Party or ERISA Affiliate completely or partially withdraws from one or more Multiemployer Plans and incurs Withdrawal Liability, or fails to make any Withdrawal Liability when due and such Withdrawal Liability or failure could reasonably be expected to result in liability in excess of $50,000,000; or

8.13      Invalidity of Intercreditor Agreements.  Any material provision of any Intercreditor Agreement shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or any Person shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder, or the Obligations, for any reason shall not have the priority contemplated by this Agreement or any such Intercreditor Agreement, in each case other than in accordance with the terms of such Intercreditor Agreement.

9.          RIGHTS AND REMEDIES.

9.1        Rights and Remedies.  Upon the occurrence and during the continuation of an Event of Default, Agent may, and, at the instruction of the Required Lenders, shall, in addition to any other rights or remedies provided for hereunder or under any other Loan Document or by applicable law, do any one or more of the following:

(a)         by written notice to Administrative Borrower, (i) declare the principal of, and any and all accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable and Borrowers shall be obligated to repay all of such Obligations in full, without presentment, demand, protest, or further notice or other requirements of any kind, all of which are hereby expressly waived by each Borrower, and (ii) direct Borrowers to provide (and Borrowers agree that upon receipt of such notice Borrowers will provide) Letter of Credit Collateralization to Agent to be held as security for Borrowers’ reimbursement obligations for drawings that may subsequently occur under issued and outstanding Letters of Credit;

(b)         by written notice to Administrative Borrower, declare the Commitments terminated, whereupon the Commitments shall immediately be terminated together with (i) any obligation of any Revolving Lender to make Revolving Loans, (ii) the obligation of the Swing Lender to make Swing Loans, and (iii) the obligation of Issuing Bank to issue Letters of Credit; and

(c)         exercise all other rights and remedies available to Agent or the Lenders under the Loan Documents, under applicable law, or in equity.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event of Default described in Section 8.4 or Section 8.5, in addition to the remedies set forth above, without any notice to Borrowers or any other Person or any act by the Lender Group, the Commitments shall automatically terminate and the Obligations (other than the Bank Product Obligations), inclusive of the principal of, and any and all

-109-

accrued and unpaid interest and fees in respect of, the Loans and all other Obligations (other than the Bank Product Obligations), whether evidenced by this Agreement or by any of the other Loan Documents, shall automatically become and be immediately due and payable and Borrowers shall automatically be obligated to repay all of such Obligations in full (including Borrowers being obligated to provide (and Borrowers agree that they will provide) (1) Letter of Credit Collateralization to Agent to be held as security for Borrowers’ reimbursement obligations in respect of drawings that may subsequently occur under issued and outstanding Letters of Credit and (2) Bank Product Collateralization to be held as security for Parent’s, Borrowers’ or their respective Subsidiaries’ obligations in respect of outstanding Bank Products), without presentment, demand, protest, or notice or other requirements of any kind, all of which are expressly waived by Parent and Borrowers.

9.2        Remedies Cumulative.  The rights and remedies of the Lender Group under this Agreement, the other Loan Documents, and all other agreements shall be cumulative.  The Lender Group shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by the Lender Group of one right or remedy shall be deemed an election, and no waiver by the Lender Group of any Default or Event of Default shall be deemed a continuing waiver.  No delay by the Lender Group shall constitute a waiver, election, or acquiescence by it.

10.        WAIVERS; INDEMNIFICATION.

10.1      Demand; Protest; etc.  Each of Parent and each Borrower waives,  demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, nonpayment at maturity, release, compromise, settlement, extension, or renewal of documents, instruments, chattel paper, and guarantees at any time held by the Lender Group on which Parent or any Borrower may in any way be liable.

10.2      The Lender Group’s Liability for Collateral.  Each of Parent and each Borrower hereby agrees that:  (a) so long as Agent complies with its obligations, if any, under the Code, the Lender Group shall not in any way or manner be liable or responsible for:  (i) the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or arising in any manner or fashion from any cause, (iii) any diminution in the value thereof, or (iv) any act or default of any carrier, warehouseman, bailee, processor, forwarding agency, or other Person, and (b) all risk of loss, damage, or destruction of the Collateral shall be borne by the Loan Parties, except to the extent any such loss, damage or destruction is directly caused by Agent’s gross negligence or willful misconduct, as determined in a final, non-appealable judgement by a court of competent jurisdiction.

10.3      Indemnification.  Each Borrower shall pay, indemnify, defend, and hold the Agent-Related Persons, the Lender-Related Persons, the Issuing Bank, and each Participant (each, an “Indemnified Person”) harmless (to the fullest extent permitted by law) from and against any and all claims, demands, suits, actions, investigations, proceedings, liabilities, fines, costs, penalties, and damages, and all reasonable and documented fees and disbursements of attorneys, experts, or consultants and all other reasonable and documented costs and expenses actually incurred in connection therewith or in connection with the enforcement of this indemnification (as and when they are incurred and irrespective of whether suit is brought), at any time asserted against, imposed upon, or incurred by any of them (a) in connection with or as a result of or related to the execution and delivery (provided, that Borrowers shall not be liable for costs and expenses (including attorneys’ fees) of any Lender (other than Wells Fargo) incurred in advising, structuring, drafting, reviewing, administering or syndicating the Loan Documents), enforcement, performance, or administration (including any restructuring or workout with respect hereto) of this Agreement, any of the other Loan Documents, or the transactions contemplated hereby or thereby or the monitoring of Parent’s  and its Subsidiaries’ compliance with the terms of the Loan Documents (provided, that the indemnification in this clause (a) shall not extend to (i) disputes

-110-

solely between or among the Lenders that do not involve any acts or omissions of any Loan Party, or (ii) disputes solely between or among the Lenders and their respective Affiliates that do not involve any acts or omissions of any Loan Party; it being understood and agreed that the indemnification in this clause (a) shall extend to Agent (but not the Lenders unless the dispute involves an act or omission of a Loan Party) relative to disputes between or among Agent on the one hand, and one or more Lenders, or one or more of their Affiliates, on the other hand, or (iii) any claims for Taxes, which shall be governed by Section 16, other than Taxes which relate to primarily non-Tax claims), (b) with respect to any actual or prospective investigation, litigation, or proceeding related to this Agreement, any other Loan Document, the making of any Loans or issuance of any Letters of Credit hereunder, or the use of the proceeds of the Loans or the Letters of Credit provided hereunder (irrespective of whether any Indemnified Person is a party thereto), or any act, omission, event, or circumstance in any manner related thereto, and (c) in connection with or arising out of any presence or release of Hazardous Materials at, on, under, to or from any assets or properties owned, leased or operated by any Loan Party or any of its Subsidiaries or any Environmental Actions, Environmental Liabilities or Remedial Actions related in any way to any such assets or properties of any Loan Party or any of its Subsidiaries (each and all of the foregoing, the “Indemnified Liabilities”).  The foregoing to the contrary notwithstanding, no Borrower shall have any obligation to any Indemnified Person under this Section 10.3 with respect to any Indemnified Liability that a court of competent jurisdiction finally determines to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnified Person or its officers, directors, employees, attorneys, or agents.  This provision shall survive the termination of this Agreement and the repayment in full of the Obligations.  If any Indemnified Person makes any payment to any other Indemnified Person with respect to an Indemnified Liability as to which Borrowers were required to indemnify the Indemnified Person receiving such payment, the Indemnified Person making such payment is entitled to be indemnified and reimbursed by Borrowers with respect thereto.  WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11.        NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to this Agreement or any other Loan Document shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as a party may designate in accordance herewith), or telefacsimile.  In the case of notices or demands to any Loan Party or Agent, as the case may be, they shall be sent to the respective address set forth below:

If to any Loan Party:	c/o Administrative Borrower
	2100 Q Street
	Sacramento, CA 95816
	Attn: Chief Financial Officer
	Fax No. 916-321-1869
with copies to:	WILSON SONSINI GOODRICH & ROSATI, P.C.
	650 Page Mill Road
	Palo Alto, CA  94304
	Attn:  Kathleen D. Rothman, Esq.
	Fax No.:  650-493-6811

-111-

If to Agent:	WELLS FARGO BANK, NATIONAL ASSOCIATION
	2450 Colorado Avenue, Suite 3000 West,
	Santa Monica, California 90404
	Attn: Loan Portfolio Manager
	Fax No.:  877-720-4156
with copies to:	MORGAN, LEWIS & BOCKIUS LLP
	300 S. Grand Avenue, Twenty-Second Floor
	Los Angeles, CA 90071-3132
	Attn:  Marshall Stoddard, Jr., Esq.
	Fax No.: 213-612-2501

Any party hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other party.  All notices or demands sent in accordance with this Section 11, shall be deemed received on the earlier of the date of actual receipt or three Business Days after the deposit thereof in the mail; provided, that (a) notices sent by overnight courier service shall be deemed to have been given when received, (b) notices by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient) and (c) notices by electronic mail shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available, return email or other written acknowledgment).

12.        CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER; JUDICIAL REFERENCE PROVISION.

(a)         THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

(b)         THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA; PROVIDED, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF

-112-

FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c)         TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS, IF ANY, TO A JURY TRIAL OF ANY CLAIM, CONTROVERSY, DISPUTE OR CAUSE OF ACTION DIRECTLY OR INDIRECTLY BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS (EACH A “CLAIM”).  EACH OF PARENT AND EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

(d)         EACH OF PARENT AND EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES AND THE STATE OF CALIFORNIA, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT.  EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(e)         NO CLAIM MAY BE MADE BY ANY LOAN PARTY AGAINST THE AGENT, THE SWING LENDER, ANY OTHER LENDER, ISSUING BANK, OR ANY AFFILIATE, DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OR LOSSES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH LOAN PARTY HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

(f)         IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH IN CLAUSE (C) ABOVE IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:

-113-

(i)       WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN SUBCLAUSE (ii) BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1.  THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE.  VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS ANGELES, CALIFORNIA.

(ii)      THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS).  THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.

(iii)     UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE.  IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN TEN DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B).  THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW.  PENDING APPOINTMENT OF THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.

(iv)     EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING.  ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT.  THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS OF THE COURT REPORTER;  PROVIDED, THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.

(v)      THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES.  THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER

-114-

AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA.

(vi)     THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW.  THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT.  THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW.  THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT.  THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.

(vii)    THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY.  AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

13.        ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

13.1      Assignments and Participations.

(a)         (i)  Subject to the conditions set forth in clause (a)(ii) below, any Lender may assign and delegate all or any portion of its rights and duties under the Loan Documents (including the Obligations owed to it and its Commitments) to one or more assignees so long as such prospective assignee is an Eligible Transferee (each, an “Assignee”), with the prior written consent (such consent not be unreasonably withheld or delayed) of:

(A)        Administrative Borrower;  provided, that no consent of Administrative Borrower shall be required (1) if a Default or Event of Default has occurred and is continuing, or (2) in connection with an assignment to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender; provided further, that Administrative Borrower shall be deemed to have consented to a proposed assignment unless they object thereto by written notice to Agent within five Business Days after having received notice thereof; and

(B)        Agent, Swing Lender, and Issuing Bank.

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

(A)        no assignment may be made (i) so long as no Specified Event of Default has occurred and is continuing, to a Disqualified Institution (without the prior written consent of the Administrative Borrower (such consent not be unreasonably withheld or delayed)), or (ii) to a natural person,

-115-

(B)        no assignment may be made to a Loan Party or an Affiliate of a Loan Party,

(C)        the amount of the Commitments and the other rights and obligations of the assigning Lender hereunder and under the other Loan Documents subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Agent) shall be in a minimum amount (unless waived by Agent) of $5,000,000 (except such minimum amount shall not apply to (I) an assignment or delegation by any Lender to any other Lender, an Affiliate of any Lender, or a Related Fund of such Lender, or (II) a group of new Lenders, each of which is an Affiliate of each other or a Related Fund of such new Lender to the extent that the aggregate amount to be assigned to all such new Lenders is at least $5,000,000),

(D)        each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement,

(E)        the parties to each assignment shall execute and deliver to Agent an Assignment and Acceptance; provided, that Borrowers and Agent may continue to deal solely and directly with the assigning Lender in connection with the interest so assigned to an Assignee until written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrowers and Agent by such Lender and the Assignee,

(F)         unless waived by Agent, the assigning Lender or Assignee has paid to Agent, for Agent’s separate account, a processing fee in the amount of $3,500, and

(G)        the assignee, if it is not a Lender, shall deliver to Agent an Administrative Questionnaire in a form approved by Agent (the “Administrative Questionnaire”).

(b)         From and after the date that Agent receives the executed Assignment and Acceptance and, if applicable, payment of the required processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall be a “Lender” and shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assigning Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except with respect to Section 10.3) and be released from any future obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto); provided, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of this Agreement, including such assigning Lender’s obligations under Section 15 and Section 17.9(a).

(c)         By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto, (iii) such Assignee confirms that it has received a copy of this Agreement, together with

-116-

such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such Assignee will, independently and without reliance upon Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such Assignee appoints and authorizes Agent to take such actions and to exercise such powers under this Agreement and the other Loan Documents as are delegated to Agent, by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and (vi) such Assignee agrees that it will perform all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender.

(d)         Immediately upon Agent’s receipt of the required processing fee, if applicable, and delivery of notice to the assigning Lender pursuant to Section 13.1(b) and any consents required under Section 13.1(a), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom.  The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

(e)         Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons (a “Participant”) participating interests in all or any portion of its Obligations, its Commitment, and the other rights and interests of that Lender (the “Originating Lender”) hereunder and under the other Loan Documents; provided, that (i) the Originating Lender shall remain a “Lender” for all purposes of this Agreement and the other Loan Documents and the Participant receiving the participating interest in the Obligations, the Commitments, and the other rights and interests of the Originating Lender hereunder shall not constitute a “Lender” hereunder or under the other Loan Documents and the Originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the Originating Lender shall remain solely responsible for the performance of such obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal solely and directly with the Originating Lender in connection with the Originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has the right to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment to, or consent or waiver with respect to this Agreement or of any other Loan Document would (A) extend the final maturity date of the Obligations hereunder in which such Participant is participating, (B) reduce the interest rate applicable to the Obligations hereunder in which such Participant is participating, (C) release all or substantially all of the Collateral or guaranties (except to the extent expressly provided herein or in any of the Loan Documents) supporting the Obligations hereunder in which such Participant is participating, (D) postpone the payment of, or reduce the amount of, the interest or fees payable to such Participant through such Lender (other than a waiver of default interest), or (E) decreases the amount or postpones the due dates of scheduled principal repayments or prepayments or premiums payable to such Participant through such Lender, (v) no participation shall be sold to a natural person, (vi) no participation shall be sold to a Loan Party or an Affiliate of a Loan Party, and (vii) all amounts payable by Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement.  The rights of any Participant only shall be derivative through the Originating Lender with whom such Participant participates and no Participant shall have any rights under this Agreement or the other Loan Documents or any direct rights as to the other Lenders, Agent, Borrowers, the Collateral, or otherwise in respect of the Obligations.  No Participant shall have the right to participate directly in the making of decisions by the Lenders among themselves.

-117-

(f)         In connection with any such assignment or participation or proposed assignment or participation or any grant of a security interest in, or pledge of, its rights under and interest in this Agreement, a Lender may, subject to the provisions of Section 17.9,  disclose all documents and information which it now or hereafter may have relating to any Loan Party and its Subsidiaries and their respective businesses.

(g)         Any other provision in this Agreement notwithstanding, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement to secure obligations of such Lender, including any pledge in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law;  provided, that no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(h)         Agent (as a non-fiduciary agent on behalf of Borrowers) shall maintain, or cause to be maintained, a register (the “Register”) on which it enters the name and address of each Lender as the registered owner of the Loans (and the principal amount thereof and stated interest thereon) held by such Lender (each, a “Registered Loan”).  A Registered Loan (and the registered note, if any, evidencing the same) may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register (and each registered note shall expressly so provide) and any assignment or sale of all or part of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by registration of such assignment or sale on the Register, together with the surrender of the registered note, if any, evidencing the same duly endorsed by (or accompanied by a written instrument of assignment or sale duly executed by) the holder of such registered note, whereupon, at the request of the designated assignee(s) or transferee(s), one or more new registered notes in the same aggregate principal amount shall be issued to the designated assignee(s) or transferee(s).  Prior to the registration of assignment or sale of any Registered Loan (and the registered note, if any evidencing the same), Borrowers shall treat the Person in whose name such Registered Loan (and the registered note, if any, evidencing the same) is registered as the owner thereof for the purpose of receiving all payments thereon and for all other purposes, notwithstanding notice to the contrary.  In the case of any assignment by a Lender of all or any portion of its Commitment to an Affiliate of such Lender or a Related Fund of such Lender, and which assignment is not recorded in the Register, the assigning Lender, on behalf of Borrowers, shall maintain a register comparable to the Register.

(i)          In the event that a Lender sells participations in the Registered Loan, such Lender, as a non-fiduciary agent on behalf of Borrowers, shall maintain (or cause to be maintained) a register on which it enters the name of all participants in the Registered Loans held by it (and the principal amount (and stated interest thereon) of the portion of such Registered Loans that is subject to such participations) (the “Participant Register”).  A Registered Loan (and the Registered Note, if any, evidencing the same) may be participated in whole or in part only by registration of such participation on the Participant Register (and each registered note shall expressly so provide).  Any participation of such Registered Loan (and the registered note, if any, evidencing the same) may be effected only by the registration of such participation on the Participant Register.  No Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement

-118-

notwithstanding any notice to the contrary.  For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participant Register.

(j)          Agent shall make a copy of the Register (and each Lender shall make a copy of its Participant Register to the extent it has one) available for review by Borrowers from time to time as Borrowers may reasonably request.

13.2      Successors.  This Agreement shall bind and inure to the benefit of the respective successors and assigns of each of the parties;  provided, that no Borrower may assign this Agreement or any rights or duties hereunder without the Lenders’ prior written consent and any prohibited assignment shall be absolutely void ab initio.  No consent to assignment by the Lenders shall release any Borrower from its Obligations.  A Lender may assign this Agreement and the other Loan Documents and its rights and duties hereunder and thereunder pursuant to Section 13.1 and, except as expressly required pursuant to Section 13.1, no consent or approval by any Borrower is required in connection with any such assignment.

14.        AMENDMENTS; WAIVERS.

14.1      Amendments and Waivers.

(a)         No amendment, waiver or other modification of any provision of this Agreement or any other Loan Document (other than the Fee Letter), and no consent with respect to any departure by Parent or any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by Agent at the written request of the Required Lenders) and the Loan Parties that are party thereto and then any such waiver or consent shall be effective, but only in the specific instance and for the specific purpose for which given; provided, that no such waiver, amendment, or consent shall, unless in writing and signed by all of the Lenders directly affected thereby and all of the Loan Parties that are party thereto, do any of the following:

(i)       increase the amount of or extend the expiration date of any Commitment of any Lender or amend, modify, or eliminate Section 2.4(c),

(ii)      postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees, or other amounts due hereunder or under any other Loan Document,

(iii)     reduce the principal of, or the rate of interest on, any loan or other extension of credit hereunder, or reduce any fees or other amounts payable hereunder or under any other Loan Document (except (y) in connection with the waiver of applicability of Section 2.6(c) (which waiver shall be effective with the written consent of the Required Lenders), and (z) that any amendment or modification of defined terms used in the financial covenants in this Agreement shall not constitute a reduction in the rate of interest or a reduction of fees for purposes of this clause (iii)),

(iv)     amend, modify, or eliminate this Section or any provision of this Agreement providing for consent or other action by all Lenders,

(v)      amend, modify, or eliminate Section 3.1 or 3.2,

(vi)     amend, modify, or eliminate Section 15.11,

(vii)    other than pursuant to the Intercreditor Agreements and as permitted by Section 15.11, release or contractually subordinated Agent’s Lien in and to any of the Collateral,

-119-

(viii)   amend, modify, or eliminate the definitions of “Required Lenders”,  Supermajority Lenders or “Pro Rata Share”,

(ix)     other than in connection with a merger, liquidation, dissolution or sale of such Person expressly permitted by the terms hereof or the other Loan Documents, release any Borrower or any Guarantor from any obligation for the payment of money under any of the Loan Documents or consent to the assignment or transfer by any Borrower or any Guarantor of any of its rights or duties under this Agreement or the other Loan Documents,

(x)      amend, modify, or eliminate any of the provisions of Section 2.4(b)(i),  (ii) or (iii) or Section 2.4(e) or (f), or

(xi)     amend, modify, or eliminate any of the provisions of Section 13.1 with respect to assignments to, or participations with, Persons who are Loan Parties or Affiliates of a Loan Party;

(b)         No amendment, waiver, modification, or consent shall amend, modify, waive, or eliminate,

(i)       the definition of, or any of the terms or provisions of, the Fee Letter, without the written consent of Agent and Borrowers (and shall not require the written consent of any of the Lenders),

(ii)      any provision of Section 15 pertaining to Agent, or any other rights or duties of Agent under this Agreement or the other Loan Documents, without the written consent of Agent, Borrowers, and the Required Lenders;

(c)         No amendment, waiver, modification, elimination, or consent shall amend, without written consent of Agent, Borrowers and the Supermajority Lenders, modify, or eliminate the definition of Borrowing Base or any of the defined terms (including the definitions of Eligible Accounts, Eligible Unbilled Accounts and Eligible Inventory) that are used in such definition to the extent that any such change results in more credit being made available to Borrowers based upon the Borrowing Base, but not otherwise, or the definition of Maximum Revolver Amount, or change Section 2.1(c).

(d)         No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Issuing Bank, or any other rights or duties of Issuing Bank under this Agreement or the other Loan Documents, without the written consent of Issuing Bank, Agent, Borrowers, and the Required Lenders.

(e)         No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Pledged Cash Letter of Credit Issuing Bank, or any other rights or duties of Pledged Cash Letter of Credit Issuing Bank under this Agreement or the other Loan Documents, without the written consent of Pledged Cash Letter of Credit Issuing Bank, Agent, Borrowers, and the Required Lenders.

(f)         No amendment, waiver, modification, elimination, or consent shall amend, modify, or waive any provision of this Agreement or the other Loan Documents pertaining to Swing Lender, or any other rights or duties of Swing Lender under this Agreement or the other Loan Documents, without the written consent of Swing Lender, Agent, Borrowers, and the Required Lenders.

(g)         Anything in this Section 14.1 to the contrary notwithstanding, (i) any amendment, modification, elimination, waiver, consent, termination, or release of, or with respect to, any

-120-

provision of this Agreement or any other Loan Document that relates only to the relationship of the Lender Group among themselves, and that does not affect the rights or obligations of any Loan Party, shall not require consent by or the agreement of any Loan Party, and (ii) any amendment, waiver, modification, elimination, or consent of or with respect to any provision of this Agreement or any other Loan Document may be entered into without the consent of, or over the objection of, any Defaulting Lender other than any of the matters governed by Section 14.1(a)(i) through (iii) that affect such Lender.

14.2      Replacement of Certain Lenders.

(a)         If (i) any action to be taken by the Lender Group or Agent hereunder requires the consent, authorization, or agreement of all Lenders or all Lenders affected thereby and if such action has received the consent, authorization, or agreement of the Required Lenders but not of all Lenders or all Lenders affected thereby, or (ii) any Lender makes a claim for compensation under Section 16, then Borrowers or Agent, upon at least five Business Days prior irrevocable notice, may permanently replace any Lender that failed to give its consent, authorization, or agreement (a “Non-Consenting Lender”) or any Lender that made a claim for compensation (a “Tax Lender”) with one or more Replacement Lenders, and the Non-Consenting Lender or Tax Lender, as applicable, shall have no right to refuse to be replaced hereunder.  Such notice to replace the Non-Consenting Lender or Tax Lender, as applicable, shall specify an effective date for such replacement, which date shall not be later than 15 Business Days after the date such notice is given.

(b)         Prior to the effective date of such replacement, the Non-Consenting Lender or Tax Lender, as applicable, and each Replacement Lender shall execute and deliver an Assignment and Acceptance, subject only to the Non-Consenting Lender or Tax Lender, as applicable, being repaid in full its share of the outstanding Obligations (without any premium or penalty of any kind whatsoever, but including (i) all interest, fees and other amounts that may be due in payable in respect thereof, (ii) an assumption of its Pro Rata Share of participations in the Letters of Credit, and (iii) Funding Losses).  If the Non-Consenting Lender or Tax Lender, as applicable, shall refuse or fail to execute and deliver any such Assignment and Acceptance prior to the effective date of such replacement, Agent may, but shall not be required to, execute and deliver such Assignment and Acceptance in the name or and on behalf of the Non-Consenting Lender or Tax Lender, as applicable, and irrespective of whether Agent executes and delivers such Assignment and Acceptance, the Non-Consenting Lender or Tax Lender, as applicable, shall be deemed to have executed and delivered such Assignment and Acceptance.  The replacement of any Non-Consenting Lender or Tax Lender, as applicable, shall be made in accordance with the terms of Section 13.1.  Until such time as one or more Replacement Lenders shall have acquired all of the Obligations, the Commitments, and the other rights and obligations of the Non-Consenting Lender or Tax Lender, as applicable, hereunder and under the other Loan Documents, the Non-Consenting Lender or Tax Lender, as applicable, shall remain obligated to make the Non-Consenting Lender’s or Tax Lender’s, as applicable, Pro Rata Share of Revolving Loans and to purchase a participation in each Letter of Credit, in an amount equal to its Pro Rata Share of participations in such Letters of Credit.

14.3      No Waivers; Cumulative Remedies.  No failure by Agent or any Lender to exercise any right, remedy, or option under this Agreement or any other Loan Document, or delay by Agent or any Lender in exercising the same, will operate as a waiver thereof.  No waiver by Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated.  No waiver by Agent or any Lender on any occasion shall affect or diminish Agent’s and each Lender’s rights thereafter to require strict performance by Parent and Borrowers of any provision of this Agreement.  Agent’s and each Lender’s rights under this Agreement and the other Loan Documents will be cumulative and not exclusive of any other right or remedy that Agent or any Lender may have.

-121-

15.        AGENT; THE LENDER GROUP.

15.1      Appointment and Authorization of Agent.  Each Lender hereby designates and appoints Wells Fargo as its agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to designate, appoint, and authorize) Agent to execute and deliver each of the other Loan Documents on its behalf and to take such other action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to Agent by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto.  Agent agrees to act as agent for and on behalf of the Lenders (and the Bank Product Providers) on the conditions contained in this Section 15.  Any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent shall not have any duties or responsibilities, except those expressly set forth herein or in the other Loan Documents, nor shall Agent have or be deemed to have any fiduciary relationship with any Lender (or Bank Product Provider), and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Agent.  Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement or the other Loan Documents with reference to Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only a representative relationship between independent contracting parties.  Each Lender hereby further authorizes (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent to act as the secured party under each of the Loan Documents that create a Lien on any item of Collateral.  Except as expressly otherwise provided in this Agreement, Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions that Agent expressly is entitled to take or assert under or pursuant to this Agreement and the other Loan Documents.  Without limiting the generality of the foregoing, or of any other provision of the Loan Documents that provides rights or powers to Agent, Lenders agree that Agent shall have the right to exercise the following powers as long as this Agreement remains in effect:  (a) maintain, in accordance with its customary business practices, ledgers and records reflecting the status of the Obligations, the Collateral, payments and proceeds of Collateral, and related matters, (b) execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents, or to take any other action with respect to any Collateral or Loan Documents which may be necessary to perfect, and maintain perfected, the security interests and Liens upon Collateral pursuant to the Loan Documents, (c) make Revolving Loans, for itself or on behalf of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (e) open and maintain such bank accounts and cash management arrangements as Agent deems necessary and appropriate in accordance with the Loan Documents for the foregoing purposes, (f) perform, exercise, and enforce any and all other rights and remedies of the Lender Group with respect to any Loan Party or its Subsidiaries, the Obligations, the Collateral, or otherwise related to any of same as provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents.

15.2      Delegation of Duties.  Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys in fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties.  Agent shall not be responsible for the negligence or misconduct of any agent or attorney in fact that it selects as long as such selection was made without gross negligence or willful misconduct.

-122-

15.3      Liability of Agent.  None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders (or Bank Product Providers) for any recital, statement, representation or warranty made by any Loan Party or any of its Subsidiaries or Affiliates, or any officer or director thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of any Loan Party or its Subsidiaries or any other party to any Loan Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any obligation to any Lenders (or Bank Product Providers) to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the books and records or properties of any Loan Party or its Subsidiaries.  No Agent-Related Person shall have any liability to any Lender, and Loan Party or any of their respective Affiliates if any request for a Loan, Letter of Credit or other extension of credit was not authorized by the applicable Borrower.  Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is contrary to any Loan Document or applicable law or regulation.

15.4      Reliance by Agent.  Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telefacsimile or other electronic method of transmission, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrowers or counsel to any Lender), independent accountants and other experts selected by Agent.  Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless Agent shall first receive such advice or concurrence of the Lenders as it deems appropriate and until such instructions are received, Agent shall act, or refrain from acting, as it deems advisable.  If Agent so requests, it shall first be indemnified to its reasonable satisfaction by the Lenders (and, if it so elects, the Bank Product Providers) against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Required Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders (and Bank Product Providers).

15.5      Notice of Default or Event of Default.  Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest, fees, and expenses required to be paid to Agent for the account of the Lenders and, except with respect to Events of Default of which Agent has actual knowledge, unless Agent shall have received written notice from a Lender or Borrowers referring to this Agreement, describing such Default or Event of Default, and stating that such notice is a “notice of default.”  Agent promptly will notify the Lenders of its receipt of any such notice or of any Event of Default of which Agent has actual knowledge.  If any Lender obtains actual knowledge of any Event of Default, such Lender promptly shall notify the other Lenders and Agent of such Event of Default.  Each Lender shall be solely responsible for giving any notices to its Participants, if any.  Subject to Section 15.4, Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Section 9;  provided, that unless and until Agent has received any such request, Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable.

-123-

15.6      Credit Decision.  Each Lender (and Bank Product Provider) acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by Agent hereinafter taken, including any review of the affairs of any Loan Party and its Subsidiaries or Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender (or Bank Product Provider).  Each Lender represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) to Agent that it has, independently and without reliance upon any Agent-Related Person and based on such due diligence, documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrowers.  Each Lender also represents (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to represent) that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of each Borrower or any other Person party to a Loan Document.  Except for notices, reports, and other documents expressly herein required to be furnished to the Lenders by Agent, Agent shall not have any duty or responsibility to provide any Lender (or Bank Product Provider) with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any Borrower or any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Persons.  Each Lender acknowledges (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that Agent does not have any duty or responsibility, either initially or on a continuing basis (except to the extent, if any, that is expressly specified herein) to provide such Lender (or Bank Product Provider) with any credit or other information with respect to any Borrower, its Affiliates or any of their respective business, legal, financial or other affairs, and irrespective of whether such information came into Agent’s or its Affiliates’ or representatives’ possession before or after the date on which such Lender became a party to this Agreement (or such Bank Product Provider entered into a Bank Product Agreement).

15.7      Costs and Expenses; Indemnification.  Agent may incur and pay Lender Group Expenses to the extent Agent reasonably deems necessary or appropriate for the performance and fulfillment of its functions, powers, and obligations pursuant to the Loan Documents, including court costs, attorneys’ fees and expenses, fees and expenses of financial accountants, advisors, consultants, and appraisers, costs of collection by outside collection agencies, auctioneer fees and expenses, and costs of security guards or insurance premiums paid to maintain the Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders for such expenses pursuant to this Agreement or otherwise.  Agent is authorized and directed to deduct and retain sufficient amounts from payments or proceeds of the Collateral received by Agent to reimburse Agent for such out-of-pocket costs and expenses prior to the distribution of any amounts to Lenders (or Bank Product Providers).  In the event Agent is not reimbursed for such costs and expenses by the Loan Parties and their Subsidiaries, each Lender hereby agrees that it is and shall be obligated to pay to Agent such Lender’s ratable thereof.  Whether or not the transactions contemplated hereby are consummated, each of the Lenders, on a ratable basis, shall indemnify and defend the Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers and without limiting the obligation of Borrowers to do so) from and against any and all Indemnified Liabilities; provided, that no Lender shall be liable for the payment to any Agent-Related Person of any portion of such Indemnified Liabilities resulting solely from such Person’s gross negligence or willful misconduct nor shall any Lender be liable for the obligations of any Defaulting Lender in failing to make a Revolving Loan or other extension of credit hereunder.  Without limitation of the foregoing, each Lender shall reimburse Agent upon demand for such Lender’s ratable share of any costs or out of pocket expenses

-124-

(including attorneys, accountants, advisors, and consultants fees and expenses) incurred by Agent in connection with the preparation, execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement or any other Loan Document to the extent that Agent is not reimbursed for such expenses by or on behalf of Borrowers.  The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Agent.

15.8      Agent in Individual Capacity.  Wells Fargo and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in, and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Loan Party and its Subsidiaries and Affiliates and any other Person party to any Loan Document as though Wells Fargo were not Agent hereunder, and, in each case, without notice to or consent of the other members of the Lender Group.  The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, Wells Fargo or its Affiliates may receive information regarding a Loan Party or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Loan Party or such other Person and that prohibit the disclosure of such information to the Lenders (or Bank Product Providers), and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver Agent will use its reasonable best efforts to obtain), Agent shall not be under any obligation to provide such information to them.  The terms “Lender” and “Lenders” include Wells Fargo in its individual capacity.

15.9      Successor Agent.  Agent may resign as Agent upon 30 days (ten days if an Event of Default has occurred and is continuing) prior written notice to the Lenders (unless such notice is waived by the Required Lenders) and Borrowers (unless such notice is waived by Borrowers or a Default or Event of Default has occurred and is continuing) and without any notice to the Bank Product Providers.  If Agent resigns under this Agreement, the Required Lenders shall be entitled, with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned), appoint a successor Agent for the Lenders (and the Bank Product Providers).  If, at the time that Agent’s resignation is effective, it is acting as Issuing Bank or the Swing Lender, such resignation shall also operate to effectuate its resignation as Issuing Bank or the Swing Lender, as applicable, and it shall automatically be relieved of any further obligation to issue Letters of Credit, or to make Swing Loans.  If no successor Agent is appointed prior to the effective date of the resignation of Agent, Agent may appoint, after consulting with the Lenders and Borrowers, a successor Agent.  If Agent has materially breached or failed to perform any material provision of this Agreement or of applicable law, the Required Lenders may agree in writing to remove and replace Agent with a successor Agent from among the Lenders with (so long as no Event of Default has occurred and is continuing) the consent of Borrowers (such consent not to be unreasonably withheld, delayed, or conditioned).  In any such event, upon the acceptance of its appointment as successor Agent hereunder, such successor Agent shall succeed to all the rights, powers, and duties of the retiring Agent and the term “Agent” shall mean such successor Agent and the retiring Agent’s appointment, powers, and duties as Agent shall be terminated.  After any retiring Agent’s resignation hereunder as Agent, the provisions of this Section 15 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.  If no successor Agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of Agent hereunder until such time, if any, as the Lenders appoint a successor Agent as provided for above.

-125-

15.10    Lender in Individual Capacity.  Any Lender and its respective Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, provide Bank Products to, acquire Equity Interests in and generally engage in any kind of banking, trust, financial advisory, underwriting, or other business with any Loan Party and its Subsidiaries and Affiliates and any other Person party to any Loan Documents as though such Lender were not a Lender hereunder without notice to or consent of the other members of the Lender Group (or the Bank Product Providers).  The other members of the Lender Group acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, pursuant to such activities, such Lender and its respective Affiliates may receive information regarding a Loan Party or its Affiliates or any other Person party to any Loan Documents that is subject to confidentiality obligations in favor of such Loan Party or such other Person and that prohibit the disclosure of such information to the Lenders, and the Lenders acknowledge (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to acknowledge) that, in such circumstances (and in the absence of a waiver of such confidentiality obligations, which waiver such Lender will use its reasonable best efforts to obtain), such Lender shall not be under any obligation to provide such information to them.

15.11    Collateral Matters.

(a)         The Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by the Loan Parties and their Subsidiaries of all of the Obligations, (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if Borrowers certify to Agent that the sale or disposition is permitted under Section 6.3 or Section 6.4 (and Agent may rely conclusively on any such certificate, without further inquiry), (iii) constituting property in which no Loan Party or any of its Subsidiaries owned any interest at the time Agent’s Lien was granted nor at any time thereafter, (iv) constituting property leased or licensed to a Loan Party or its Subsidiaries under a lease or license that has expired or is terminated in a transaction permitted under this Agreement, or (v) in connection with a credit bid or purchase authorized under this Section 15.11.  The Lenders hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to authorize) Agent, based upon the instruction of the Required Lenders, to (a) consent to the sale of, credit bid, or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code, including Section 363 of the Bankruptcy Code, (b) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any sale or other disposition thereof conducted under the provisions of the Code, including pursuant to Sections 9610 or 9620 of the Code, or (c) credit bid or purchase (either directly or indirectly through one or more entities) all or any portion of the Collateral at any other sale or foreclosure conducted or consented to by Agent in accordance with applicable law in any judicial action or proceeding or by the exercise of any legal or equitable remedy.  In connection with any such credit bid or purchase, (i) the Obligations owed to the Lenders and the Bank Product Providers shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not impair or unduly delay the ability of Agent to credit bid or purchase at such sale or other disposition of the Collateral and, if such contingent or unliquidated claims cannot be estimated without impairing or unduly delaying the ability of Agent to credit bid at such sale or other disposition, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the Collateral that is the subject of such credit bid or purchase) and the Lenders and the Bank Product Providers whose Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) in the Collateral that is the subject of such credit bid or purchase (or in the Equity Interests of the any entities that are used to consummate such credit bid or purchase), and (ii) Agent, based upon the instruction of the Required

-126-

Lenders, may accept non-cash consideration, including debt and equity securities issued by any entities used to consummate such credit bid or purchase and in connection therewith Agent may reduce the Obligations owed to the Lenders and the Bank Product Providers (ratably based upon the proportion of their Obligations credit bid in relation to the aggregate amount of Obligations so credit bid) based upon the value of such non-cash consideration; provided, that Bank Product Obligations not entitled to the application set forth in Section 2.4(b)(iii)(J) shall not be entitled to be, and shall not be, credit bid, or used in the calculation of the ratable interest of the Lenders and Bank Product Providers in the Obligations which are credit bid.  Except as provided above, Agent will not execute and deliver a release of any Lien on any Collateral without the prior written authorization of (y) if the release is of all or substantially all of the Collateral, all of the Lenders (without requiring the authorization of the Bank Product Providers), or (z) otherwise, the Required Lenders (without requiring the authorization of the Bank Product Providers).  Upon request by Agent or Borrowers at any time, the Lenders will (and if so requested, the Bank Product Providers will) confirm in writing Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 15.11;  provided, that (1) anything to the contrary contained in any of the Loan Documents notwithstanding, Agent shall not be required to execute any document or take any action necessary to evidence such release on terms that, in Agent’s opinion, could expose Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty, and (2) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly released) upon (or obligations of Borrowers in respect of) any and all interests retained by any Borrower, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.  Each Lender further hereby irrevocably authorize (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to irrevocably authorize) Agent, at its option and in its sole discretion, to subordinate (by contract or otherwise) any Lien granted to or held by Agent on any property under any Loan Document (a) to the holder of any Permitted Lien on such property if such Permitted Lien secures purchase money Indebtedness (including Capitalized Lease Obligations) which constitute Permitted Indebtedness and (b) to the extent Agent has the authority under this Section 15.11 to release its Lien on such property.

(b)         Agent shall have no obligation whatsoever to any of the Lenders (or the Bank Product Providers) (i) to verify or assure that the Collateral exists or is owned by a Loan Party or any of its Subsidiaries or is cared for, protected, or insured or has been encumbered, (ii) to verify or assure that Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, (iii) to verify or assure that any particular items of Collateral meet the eligibility criteria applicable in respect thereof, (iv) to impose, maintain, increase, reduce, implement, or eliminate any particular reserve hereunder or to determine whether the amount of any reserve is appropriate or not, or (v) to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event related thereto, subject to the terms and conditions contained herein, Agent may act in any manner it may deem appropriate, in its sole discretion given Agent’s own interest in the Collateral in its capacity as one of the Lenders and that Agent shall have no other duty or liability whatsoever to any Lender (or Bank Product Provider) as to any of the foregoing, except as otherwise expressly provided herein.

15.12    Restrictions on Actions by Lenders; Sharing of Payments.

(a)         Each of the Lenders agrees that it shall not, without the express written consent of Agent, and that it shall, to the extent it is lawfully entitled to do so, upon the written request of Agent, set off against the Obligations, any amounts owing by such Lender to any Loan Party or its Subsidiaries or any deposit accounts of any Loan Party or its Subsidiaries now or hereafter maintained with such Lender.  Each of the Lenders further agrees that it shall not, unless specifically requested to do so in

-127-

writing by Agent, take or cause to be taken any action, including, the commencement of any legal or equitable proceedings to enforce any Loan Document against any Borrower or any Guarantor or to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b)         If, at any time or times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations, except for any such proceeds or payments received by such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such distributions by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind, and with such endorsements as may be required to negotiate the same to Agent, or in immediately available funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance with their Pro Rata Shares; provided, that to the extent that such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment.

15.13    Agency for Perfection.  Agent hereby appoints each other Lender (and each Bank Product Provider) as its agent (and each Lender hereby accepts (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to accept) such appointment) for the purpose of perfecting Agent’s Liens in assets which, in accordance with Division 8 or Division 9, as applicable, of the Code can be perfected by possession or control.  Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor shall deliver possession or control of such Collateral to Agent or in accordance with Agent’s instructions.

15.14    Payments by Agent to the Lenders.  All payments to be made by Agent to the Lenders (or Bank Product Providers) shall be made by bank wire transfer of immediately available funds pursuant to such wire transfer instructions as each party may designate for itself by written notice to Agent.  Concurrently with each such payment, Agent shall identify whether such payment (or any portion thereof) represents principal, premium, fees, or interest of the Obligations.

15.15    Concerning the Collateral and Related Loan Documents.  Each member of the Lender Group authorizes and directs Agent to enter into this Agreement and the other Loan Documents.  Each member of the Lender Group agrees (and by entering into a Bank Product Agreement, each Bank Product Provider shall be deemed to agree) that any action taken by Agent in accordance with the terms of this Agreement or the other Loan Documents relating to the Collateral and the exercise by Agent of its powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders (and such Bank Product Provider).

15.16    Field Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports and Information.  By becoming a party to this Agreement, each Lender:

(a)         is deemed to have requested that Agent furnish such Lender, promptly after it becomes available, a copy of each field examination report respecting any Loan Party or its Subsidiaries (each, a “Report”) prepared by or at the request of Agent, and Agent shall so furnish each Lender with such Reports,

-128-

(b)         expressly agrees and acknowledges that Agent does not (i) make any representation or warranty as to the accuracy of any Report, and (ii) shall not be liable for any information contained in any Report,

(c)         expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that Agent or other party performing any field examination will inspect only specific information regarding the Loan Parties and their Subsidiaries and will rely significantly upon Parent’s  and its Subsidiaries’ books and records, as well as on representations of Parent’s and Borrowers’ personnel,

(d)         agrees to keep all Reports and other material, non-public information regarding the Loan Parties and their Subsidiaries and their operations, assets, and existing and contemplated business plans in a confidential manner in accordance with Section 17.9, and

(e)         without limiting the generality of any other indemnification provision contained in this Agreement, agrees:  (i) to hold Agent and any other Lender preparing a Report harmless from any action the indemnifying Lender may take or fail to take or any conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of Borrowers, and (ii) to pay and protect, and indemnify, defend and hold Agent, and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including, attorneys’ fees and costs) incurred by Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing,  (x) any Lender may from time to time request of Agent in writing that Agent provide to such Lender a copy of any report or document provided by any Loan Party or its Subsidiaries to Agent that has not been contemporaneously provided by such Loan Party or such Subsidiary to such Lender, and, upon receipt of such request, Agent promptly shall provide a copy of same to such Lender, (y) to the extent that Agent is entitled, under any provision of the Loan Documents, to request additional reports or information from any Loan Party or its Subsidiaries, any Lender may, from time to time, reasonably request Agent to exercise such right as specified in such Lender’s notice to Agent, whereupon Agent promptly shall request of Borrowers the additional reports or information reasonably specified by such Lender, and, upon receipt thereof from such Loan Party or such Subsidiary, Agent promptly shall provide a copy of same to such Lender, and (z) any time that Agent renders to Borrowers a statement regarding the Loan Account, Agent shall send a copy of such statement to each Lender.

15.17    Several Obligations; No Liability.  Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of Agent in its capacity as such, and not by or in favor of the Lenders, any and all obligations on the part of Agent (if any) to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments.  Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lender.  Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender.  Except as provided in Section 15.7, no member of the Lender Group shall have any liability for the acts of any other member of the Lender Group.  No Lender shall be responsible to any Borrower or any other Person for any failure by any other Lender (or Bank Product Provider) to fulfill its obligations to make credit available hereunder, nor to advance for such

-129-

Lender (or Bank Product Provider) or on its behalf, nor to take any other action on behalf of such Lender (or Bank Product Provider) hereunder or in connection with the financing contemplated herein.

16.        WITHHOLDING TAXES.

16.1      Payments.  All payments made by any Loan Party under any Loan Document will be made free and clear of, and without deduction or withholding for, any Taxes, except as otherwise required by applicable law, and in the event any deduction or withholding of Taxes is required, the applicable Loan Party shall make the requisite withholding, promptly pay over to the applicable Governmental Authority the withheld tax, and furnish to Agent as promptly as possible after the date the payment of any such Tax is due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the Loan Parties, or other evidence of such payment reasonably satisfactory to Agent.   Furthermore, if any such Tax is an Indemnified Taxes or an Indemnified Tax is so levied or imposed, the Loan Parties agree to pay the full amount of such Indemnified Taxes and such additional amounts as may be necessary so that every payment of all amounts due under this Agreement, any note, or Loan Document, including any amount paid pursuant to this Section 16.1 after withholding or deduction for or on account of any Indemnified Taxes, will not be less than the amount provided for herein.  The Loan Parties will promptly pay any Other Taxes or reimburse Agent for such Other Taxes upon Agent’s demand.  The Loan Parties shall jointly and severally indemnify each Indemnified Person (as defined in Section 10.3) (collectively a “Tax Indemnitee”) for the full amount of Indemnified Taxes arising in connection with this Agreement or any other Loan Document or breach thereof by any Loan Party (including any Indemnified Taxes imposed or asserted on, or attributable to, amounts payable under this Section 16) imposed on, or paid by, such Tax Indemnitee and all reasonable costs and expenses related thereto (including fees and disbursements of attorneys and other tax professionals), as and when they are incurred and irrespective of whether suit is brought, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (other than Indemnified Taxes and additional amounts that a court of competent jurisdiction finally determines to have resulted from the gross negligence or willful misconduct of such Tax Indemnitee).  The obligations of the Loan Parties under this Section 16 shall survive the termination of this Agreement, the resignation and replacement of the Agent, and the repayment of the Obligations.

16.2      Exemptions.

(a)         If a Lender or Participant is entitled to claim an exemption or reduction from United States withholding tax, such Lender or Participant agrees with and in favor of Agent, to deliver to Agent (or, in the case of a Participant, to the Lender granting the participation only) and the Administrative Borrower on behalf of all Borrowers one of the following before receiving its first payment under this Agreement:

(i)       if such Lender or Participant is entitled to claim an exemption from United States withholding tax pursuant to the portfolio interest exception, (A) a statement of the Lender or Participant, signed under penalty of perjury, that it is not a (I) a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of Administrative Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign corporation related to Borrowers within the meaning of Section 864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN, Form W-8BEN-E or Form W-8IMY (with proper attachments as applicable);

(ii)      if such Lender or Participant is entitled to claim an exemption from, or a reduction of, withholding tax under a United States tax treaty, a properly completed and executed copy of IRS Form W-8BEN or Form W-8BEN-E, as applicable;

-130-

(iii)     if such Lender or Participant is entitled to claim that interest paid under this Agreement is exempt from United States withholding tax because it is effectively connected with a United States trade or business of such Lender, a properly completed and executed copy of IRS Form W-8ECI;

(iv)     if such Lender or Participant is entitled to claim that interest paid under this Agreement is exempt from United States withholding tax because such Lender or Participant serves as an intermediary, a properly completed and executed copy of IRS Form W-8IMY (including a withholding statement and copies of the tax certification documentation for its beneficial owner(s) of the income paid to the intermediary, if required based on its status provided on the Form W-8IMY); or

(v)      a properly completed and executed copy of any other form or forms, including IRS Form W-9, as may be required under the IRC or other laws of the United States as a condition to exemption from, or reduction of, United States withholding or backup withholding tax.

(b)         Each Lender or Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and to promptly notify Agent and Administrative Borrower (or, in the case of a Participant, to the Lender granting the participation only) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(c)         If a Lender or Participant claims an exemption from withholding tax in a jurisdiction other than the United States, such Lender or such Participant agrees with and in favor of Agent and Borrowers, to deliver to Agent and Administrative Borrower (or, in the case of a Participant, to the Lender granting the participation only) any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, foreign withholding or backup withholding tax before receiving its first payment under this Agreement, but only if such Lender or such Participant is legally able to deliver such forms, or the providing of or delivery of such forms in the Lender’s reasonable judgment would not subject such Lender to any material unreimbursed cost or expense or materially prejudice the legal or commercial position of such Lender (or its Affiliates); provided,  further, that nothing in this Section 16.2(c) shall require a Lender or Participant to disclose any information that it deems to be confidential (including its tax returns).  Each Lender and each Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and to promptly notify Agent and Administrative Borrower (or, in the case of a Participant, to the Lender granting the participation only) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

(d)         If a Lender or Participant claims exemption from, or reduction of, withholding tax and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Borrowers to such Lender or Participant, such Lender or Participant agrees to notify Agent and Administrative Borrower (or, in the case of a sale of a participation interest, to the Lender granting the participation only) of the percentage amount in which it is no longer the beneficial owner of Obligations of Borrowers to such Lender or Participant.  To the extent of such percentage amount, Agent and Administrative Borrower will treat such Lender’s or such Participant’s documentation provided pursuant to Section 16.2(a) or 16.2(c) as no longer valid.  With respect to such percentage amount, such Participant or Assignee may provide new documentation, pursuant to Section 16.2(a) or 16.2(c), if applicable.  Borrowers agree that each Participant shall be entitled to the benefits of this Section 16 with respect to its participation in any portion of the Commitments and the Obligations so long as such Participant complies with the obligations set forth in this Section 16 with respect thereto and to be subject to Section 14.2, in each case as if it were a Lender and had acquired its interest by assignment; provided that such Participant (shall not be entitled to receive any greater payment under Section 16, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent

-131-

such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.

(e)         If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable due diligence and reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the IRC, as applicable), such Lender shall deliver to Agent (or, in the case of a Participant, to the Lender granting the participation only) at the time or times prescribed by law and at such time or times reasonably requested by Agent (or, in the case of a Participant, the Lender granting the participation) such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the IRC) and such additional documentation reasonably requested by Agent (or, in the case of a Participant, the Lender granting the participation) as may be necessary for Agent or Borrowers to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (e), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

16.3      Reductions.

(a)         If a Lender or a Participant is subject to an applicable withholding tax, Agent (or, in the case of a Participant, the Lender granting the participation) may withhold from any payment to such Lender or such Participant an amount equivalent to the applicable withholding tax.  If the forms or other documentation required by Section 16.2(a) or 16.2(c) are not delivered to Agent (or, in the case of a Participant, to the Lender granting the participation), then Agent (or, in the case of a Participant, to the Lender granting the participation) may withhold from any payment to such Lender or such Participant not providing such forms or other documentation an amount equivalent to the applicable withholding tax.

(b)         If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that Agent (or, in the case of a Participant, to the Lender granting the participation) did not properly withhold tax from amounts paid to or for the account of any Lender or any Participant due to a failure on the part of the Lender or any Participant (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify Agent (or such Participant failed to notify the Lender granting the participation) of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold Agent harmless (or, in the case of a Participant, such Participant shall indemnify and hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by Agent (or, in the case of a Participant, to the Lender granting the participation), as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to Agent (or, in the case of a Participant, to the Lender granting the participation only) under this Section 16, together with all costs and expenses (including attorneys’ fees and expenses).  The obligation of the Lenders and the Participants under this subsection shall survive the payment of all Obligations and the resignation or replacement of Agent.

16.4      Refunds.  If Agent or a Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes to which the Loan Parties have paid additional amounts pursuant to this Section 16, it shall pay over such refund to the Administrative Borrower on behalf of the Loan Parties (but only to the extent of payments made, or additional amounts paid, by the Loan Parties under this Section 16 with respect to Indemnified Taxes giving rise to such a refund), net of all out-of-pocket expenses of Agent or such Lender and without interest (other than any interest paid by the applicable Governmental Authority with respect to such a refund); provided, that the Loan Parties, upon the request of Agent or such Lender, agrees to repay the amount paid over to the Loan Parties (plus any penalties,

-132-

interest or other charges, imposed by the applicable Governmental Authority, other than such penalties, interest or other charges imposed as a result of the willful misconduct or gross negligence of Agent or Lender hereunder as finally determined by a court of competent jurisdiction) to Agent or such Lender in the event Agent or such Lender is required to repay such refund to such Governmental Authority.  Notwithstanding anything in this Agreement to the contrary, this Section 16 shall not be construed to require Agent or any Lender to make available its tax returns (or any other information which it deems confidential) to Loan Parties or any other Person or require Agent or any Lender to pay any amount to an indemnifying party pursuant to Section 16.4, the payment of which would place Agent or such Lender (or their Affiliates) in a less favorable net after-Tax position than such Person would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.

17.        GENERAL PROVISIONS.

17.1      Effectiveness.  This Agreement shall be binding and deemed effective when executed by Parent, each Borrower, Agent, and each Lender whose signature is provided for on the signature pages hereof.

17.2      Section Headings.  Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

17.3      Interpretation.  Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against the Lender Group or Parent or any Borrower, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

17.4      Severability of Provisions.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

17.5      Bank Product Providers.  Each Bank Product Provider in its capacity as such shall be deemed a third party beneficiary hereof and of the provisions of the other Loan Documents for purposes of any reference in a Loan Document to the parties for whom Agent is acting.  Agent hereby agrees to act as agent for such Bank Product Providers and, by virtue of entering into a Bank Product Agreement, the applicable Bank Product Provider shall be automatically deemed to have appointed Agent as its agent and to have accepted the benefits of the Loan Documents.  It is understood and agreed that the rights and benefits of each Bank Product Provider under the Loan Documents consist exclusively of such Bank Product Provider’s being a beneficiary of the Liens and security interests (and, if applicable, guarantees) granted to Agent and the right to share in payments and collections out of the Collateral as more fully set forth herein. In addition, each Bank Product Provider, by virtue of entering into a Bank Product Agreement, shall be automatically deemed to have agreed that Agent shall have the right, but shall have no obligation, to establish, maintain, relax, or release reserves in respect of the Bank Product Obligations and that if reserves are established there is no obligation on the part of Agent to determine or insure whether the amount of any such reserve is appropriate or not.  In connection with any such distribution of payments or proceeds of Collateral, Agent shall be entitled to assume no amounts are due or owing to any Bank Product Provider unless such Bank Product Provider has provided a written certification (setting forth a reasonably detailed calculation) to Agent as to the amounts that are due and owing to it and such written certification is received by Agent a reasonable period of time prior to the making of such distribution.  Agent shall have no obligation to calculate the amount due and payable with respect to any

-133-

Bank Products, but may rely upon the written certification of the amount due and payable from the applicable Bank Product Provider.  In the absence of an updated certification, Agent shall be entitled to assume that the amount due and payable to the applicable Bank Product Provider is the amount last certified to Agent by such Bank Product Provider as being due and payable (less any distributions made to such Bank Product Provider on account thereof).  Borrowers may obtain Bank Products from any Bank Product Provider, although Borrowers are not required to do so.  Each Borrower acknowledges and agrees that no Bank Product Provider has committed to provide any Bank Products and that the providing of Bank Products by any Bank Product Provider is in the sole and absolute discretion of such Bank Product Provider.  Notwithstanding anything to the contrary in this Agreement or any other Loan Document, no provider or holder of any Bank Product shall have any voting or approval rights hereunder (or be deemed a Lender) solely by virtue of its status as the provider or holder of such agreements or products or the Obligations owing thereunder, nor shall the consent of any such provider or holder be required (other than in their capacities as Lenders, to the extent applicable) for any matter hereunder or under any of the other Loan Documents, including as to any matter relating to the Collateral or the release of Collateral or Guarantors.

17.6      Debtor-Creditor Relationship.  The relationship between the Lenders and Agent, on the one hand, and the Loan Parties, on the other hand, is solely that of creditor and debtor.  No member of the Lender Group has (or shall be deemed to have) any fiduciary relationship or duty to any Loan Party arising out of or in connection with the Loan Documents or the transactions contemplated thereby, and there is no agency or joint venture relationship between the members of the Lender Group, on the one hand, and the Loan Parties, on the other hand, by virtue of any Loan Document or any transaction contemplated therein.

17.7      Counterparts; Electronic Execution.  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.  The foregoing shall apply to each other Loan Document mutatis mutandis.

17.8      Revival and Reinstatement of Obligations; Certain Waivers.

(a)         If any member of the Lender Group or any Bank Product Provider repays, refunds, restores, or returns in whole or in part, any payment or property (including any proceeds of Collateral) previously paid or transferred to such member of the Lender Group or such Bank Product Provider in full or partial satisfaction of any Obligation or on account of any other obligation of any Loan Party under any Loan Document or any Bank Product Agreement, because the payment, transfer, or the incurrence of the obligation so satisfied is asserted or declared to be void, voidable, or otherwise recoverable under any law relating to creditors’ rights, including provisions of the Bankruptcy Code relating to fraudulent transfers, preferences, or other voidable or recoverable obligations or transfers or to be subject to turn over pursuant to any of the Intercreditor Agreements (each, a “Voidable Transfer”), or because such member of the Lender Group or Bank Product Provider elects to do so on the reasonable advice of its counsel in connection with a claim that the payment, transfer, or incurrence is or may be a Voidable Transfer, then, as to any such Voidable Transfer, or the amount thereof that such member of the Lender Group or Bank Product Provider elects to repay, restore, or return (including pursuant to a settlement of any claim in respect thereof), and as to all reasonable costs, expenses, and attorneys’ fees

-134-

of such member of the Lender Group or Bank Product Provider related thereto, (i) the liability of the Loan Parties with respect to the amount or property paid, refunded, restored, or returned will automatically and immediately be revived, reinstated, and restored and will exist,  and (ii) Agent’s Liens securing such liability shall be effective, revived, and remain in full force and effect, in each case, as fully as if such Voidable Transfer had never been made.  If, prior to any of the foregoing, (A) Agent’s Liens shall have been released or terminated, or (B) any provision of this Agreement shall have been terminated or cancelled, Agent’s Liens, or such provision of this Agreement, shall be reinstated in full force and effect and such prior release, termination, cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligation of any Loan Party in respect of such liability or any Collateral securing such liability. This provision shall survive the termination of this Agreement and the repayment in full of the Obligations.

(b)         Anything to the contrary contained herein notwithstanding, if Agent or any Lender accepts a guaranty of only a portion of the Obligations pursuant to any guaranty, each Borrower hereby waives  its right under Section 2822(a) of the California Civil Code or any similar laws of any other applicable jurisdiction to designate the portion of the Obligations satisfied by the applicable guarantor’s partial payment.

17.9      Confidentiality.

(a)         Agent and Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding the Loan Parties and their Subsidiaries, their operations, assets, and existing and contemplated business plans (“Confidential Information”) shall be treated by Agent and the Lenders in a confidential manner, and shall not be disclosed by Agent and the Lenders to Persons who are not parties to this Agreement, except:  (i) to attorneys for and other advisors, accountants, auditors, and consultants to any member of the Lender Group  and to employees, directors and officers of any member of the Lender Group (the Persons in this clause (i), “Lender Group Representatives”) on a “need to know” basis in connection with this Agreement and the transactions contemplated hereby and on a confidential basis, (ii) to Subsidiaries and Affiliates of any member of the Lender Group (including the Bank Product Providers); provided, that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 17.9, (iii) as may be required by regulatory authorities so long as such authorities are informed of the confidential nature of such information, (iv) as may be required by statute, decision, or judicial or administrative order, rule, or regulation; provided,  that (x) prior to any disclosure under this clause (iv), the disclosing party agrees to provide Borrowers with prior notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior notice to Borrowers pursuant to the terms of the applicable statute, decision, or judicial or administrative order, rule, or regulation and (y) any disclosure under this clause (iv) shall be limited to the portion of the Confidential Information as may be required by such statute, decision, or judicial or administrative order, rule, or regulation, (v) as may be agreed to in advance in writing by Borrowers, (vi) as requested or required by any Governmental Authority pursuant to any subpoena or other legal process;  provided, that (x) prior to any disclosure under this clause (vi) the disclosing party agrees to provide Borrowers with prior written notice thereof, to the extent that it is practicable to do so and to the extent that the disclosing party is permitted to provide such prior written notice to Borrowers pursuant to the terms of the subpoena or other legal process and (y) any disclosure under this clause (vi) shall be limited to the portion of the Confidential Information as may be required by such Governmental Authority pursuant to such subpoena or other legal process, (vii) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by Agent or the Lenders or the Lender Group Representatives), (viii) in connection with any assignment, participation  or pledge of any Lender’s interest under this Agreement;  provided, that prior to receipt of Confidential Information any such assignee, participant, or pledgee shall have agreed in writing to receive such Confidential Information either subject to the terms of this Section 17.9 or pursuant to

-135-

confidentiality requirements substantially similar to those contained in this Section 17.9 (and such Person may disclose such Confidential Information to Persons employed or engaged by them as described in clause (i) above), (ix) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, that prior to any disclosure to any Person (other than any Loan Party, Agent, any Lender, any of their respective Affiliates, or their respective counsel) under this clause (ix) with respect to litigation involving any Person (other than any Borrower, Agent, any Lender, any of their respective Affiliates, or their respective counsel), the disclosing party agrees to provide Borrowers with prior written notice thereof, and (x) in connection with, and to the extent reasonably necessary for, the exercise of any secured creditor remedy under this Agreement or under any other Loan Document.

(b)         Anything in this Agreement to the contrary notwithstanding, Agent may disclose information concerning the terms and conditions of this Agreement and the other Loan Documents to loan syndication and pricing reporting services or in its marketing or promotional materials, with such information to consist of deal terms and other information customarily found in such publications or marketing or promotional materials and may otherwise use the name, logos, and other insignia of any Borrower or the other Loan Parties and the Commitments provided hereunder in any “tombstone” or other advertisements, on its website or in other marketing materials of the Agent.

(c)         Each Loan Party agrees that Agent may make materials or information provided by or on behalf of Borrowers hereunder (collectively, “Borrower Materials”) available to the Lenders by posting the Communications on IntraLinks, SyndTrak or a substantially similar secure electronic transmission system (the “Platform”).  The Platform is provided “as is” and “as available.”  Agent does not warrant the accuracy or completeness of the Borrower Materials, or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the communications.  No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by Agent in connection with the Borrower Materials or the Platform.  In no event shall Agent or any of the Agent-Related Persons have any liability to the Loan Parties, any Lender or any other person for damages of any kind, including direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or Agent’s transmission of communications through the Internet, except to the extent the liability of such person is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such person’s gross negligence or willful misconduct.  Each Loan Party further agrees that certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”).  The Loan Parties shall be deemed to have authorized Agent and its Affiliates and the Lenders to treat Borrower Materials marked “PUBLIC” or otherwise at any time filed with the SEC as not containing any material non-public information with respect to the Loan Parties or their securities for purposes of United States federal and state securities laws.  All Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor” (or another similar term).  Agent and its Affiliates and the Lenders shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” or that are not at any time filed with the SEC as being suitable only for posting on a portion of the Platform not marked as “Public Investor” (or such other similar term).

17.10    Survival.  All representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on

-136-

its behalf and notwithstanding that Agent, Issuing Bank, or any Lender may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of, or any accrued interest on, any Loan or any fee or any other amount payable under this Agreement is outstanding or unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or been terminated.

17.11    Patriot Act; Due Diligence.  Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender to identify each Loan Party in accordance with the Patriot Act.  In addition, Agent and each Lender shall have the right to periodically conduct due diligence on all Loan Parties, their senior management and key principals and legal and beneficial owners.  Each Loan Party agrees to cooperate in respect of the conduct of such due diligence and further agrees that the reasonable costs and charges for any such due diligence by Agent shall constitute Lender Group Expenses hereunder and be for the account of Borrowers.

17.12    Integration.  This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.  The foregoing to the contrary notwithstanding, all Bank Product Agreements, if any, are independent agreements governed by the written provisions of such Bank Product Agreements, which will remain in full force and effect, unaffected by any repayment, prepayments, acceleration, reduction, increase, or change in the terms of any credit extended hereunder, except as otherwise expressly provided in such Bank Product Agreement.

17.13    McClatchy Newspapers, Inc. as Agent for Borrowers.  Each Borrower hereby irrevocably appoints McClatchy Newspapers, Inc. as the borrowing agent and attorney-in-fact for all Borrowers (the “Administrative Borrower”) which appointment shall remain in full force and effect unless and until Agent shall have received prior written notice signed by each Borrower that such appointment has been revoked and that another Borrower has been appointed Administrative Borrower.  Each Borrower hereby irrevocably appoints and authorizes the Administrative Borrower (a) to provide Agent with all notices with respect to Revolving Loans and Letters of Credit obtained for the benefit of any Borrower and all other notices and instructions under this Agreement and the other Loan Documents (and any notice or instruction provided by Administrative Borrower shall be deemed to be given by Borrowers hereunder and shall bind each Borrower), (b) to receive notices and instructions from members of the Lender Group (and any notice or instruction provided by any member of the Lender Group to the Administrative Borrower in accordance with the terms hereof shall be deemed to have been given to each Borrower), (c) to enter into Bank Product Provider Agreements on behalf of Borrowers and their Subsidiaries, and (d) to take such action as the Administrative Borrower deems appropriate on its behalf to obtain Revolving Loans and Letters of Credit and to exercise such other powers as are reasonably incidental thereto to carry out the purposes of this Agreement.  It is understood that the handling of the Loan Account and Collateral in a combined fashion, as more fully set forth herein, is done solely as an accommodation to Borrowers in order to utilize the collective borrowing powers of Borrowers in the most efficient and economical manner and at their request, and that Lender Group shall not incur liability to any Borrower as a result hereof.  Each Borrower expects to derive benefit, directly or indirectly, from the handling of the Loan Account and the Collateral in a combined fashion since the successful operation of each Borrower is dependent on the continued successful performance of the integrated group.  To induce the Lender Group to do so, and in consideration thereof, each Borrower hereby jointly and severally agrees to indemnify each member of the Lender Group and hold each member of the Lender Group harmless against any and all liability, expense, loss or claim of damage or injury, made against the Lender Group by any Borrower or by any third party whosoever, arising from or incurred by reason of (i) the

-137-

handling of the Loan Account and Collateral of Borrowers as herein provided, or (ii) the Lender Group’s relying on any instructions of the Administrative Borrower,  except that Borrowers will have no liability to the relevant Agent-Related Person or Lender-Related Person under this Section 17.13 with respect to any liability that has been finally determined by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Agent-Related Person or Lender-Related Person, as the case may be.

17.14    Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a)         the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b)         the effects of any Bail-in Action on any such liability, including, if applicable:

(i)       a reduction in full or in part or cancellation of any such liability;

(ii)      a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii)     the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.

17.15    Intercreditor Agreements.  Each Lender hereunder authorizes and instructs Agent to enter into the Intercreditor Agreements and acknowledges (or is deemed to acknowledge) that a copy of each Intercreditor Agreement was delivered, or made available, to such Lender.  Each Lender hereby acknowledges that it has received and reviewed the Intercreditor Agreements.  Each of the Lenders agrees to be bound by the Intercreditor Agreements.  Any reference in this Agreement or any other Loan Document to “first priority lien” “or second priority” or words of similar effect in describing the Liens created hereunder or under any other Loan Document shall be understood to refer to such priority as set forth in the applicable Intercreditor Agreement.  Nothing in this Section 17.15 shall be construed to provide that any Loan Party is a third party beneficiary of the provisions of either Intercreditor Agreement or may assert any rights, defenses or claims on account of either Intercreditor Agreement or this Section 17.15 (other than as set forth in the last sentence hereof), and each Loan Party agrees that nothing in either Intercreditor Agreement is intended or shall impair the obligation of any Loan Party to pay the obligations under this Agreement, or any other Loan Document as and when the same become due and payable in accordance with their respective terms, or to affect the relative rights of the creditors with respect to any Loan Party or except as expressly otherwise provided in the applicable Intercreditor Agreement as to a Loan Party’s obligations, such Loan Party’s properties.  In furtherance of the foregoing, notwithstanding anything to the contrary set forth herein, prior to the payment in full of the Senior Secured Notes Obligations and the Junior Lien Term Loan Obligations to the extent that any Loan Party is required to (i) give physical possession over any Collateral (other than ABL Priority Collateral) to Agent under this Agreement or the other Loan Documents, such requirement to give possession shall be satisfied if such Collateral is delivered to and held by the Senior Secured Notes Agent pursuant to the

-138-

Notes Intercreditor Agreement and (ii) take any other action with respect to the Collateral (other than ABL Priority Collateral) or any proceeds thereof, including delivery of such Collateral or proceeds thereof to Agent, such action shall be deemed satisfied to the extent undertaken with respect to the Senior Secured Notes Agent.

[Signature pages to follow.]

-139-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered as of the date first above written.

PARENT:	The McClatchy Company,
	a Delaware corporation
	By:	/s/R. Elaine Lintecum
	Name:	R. Elaine Lintecum
	Title:	Chief Financial Officer
BORROWERS:	McClatchy Newspapers, Inc.,
	a Delaware corporation
	By:	/s/R. Elaine Lintecum
	Name:	R. Elaine Lintecum
	Title:	Vice President
	Miami Herald Media Company,
	a Delaware corporation
	By:	/s/R. Elaine Lintecum
	Name:	R. Elaine Lintecum
	Title:	Vice President
	The Charlotte Observer Publishing Company,
	a Delaware corporation
	By:	/s/R. Elaine Lintecum
	Name:	R. Elaine Lintecum
	Title:	Vice President
	Star-Telegram, Inc.,
	a Delaware corporation
	By:	/s/R. Elaine Lintecum
	Name:	R. Elaine Lintecum
	Title:	Vice President

[SIGNATURE PAGE TO CREDIT AGREEMENT]

Bellingham Herald Publishing, LLC,
a Delaware limited liability company
By: Pacific Northwest Publishing Company, Inc., its sole member
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Cypress Media, LLC,
a Delaware limited liability company
By: Cypress Media, Inc., its sole member
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Idaho Statesman Publishing, LLC,
a Delaware limited liability company
By: Pacific Northwest Publishing Company, Inc., its sole member
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
San Luis Obispo Tribune, LLC,
a Delaware limited liability
By: The McClatchy Company, its sole member
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Tacoma News, Inc.,
a Washington corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[SIGNATURE PAGE TO CREDIT AGREEMENT]

The Bradenton Herald, Inc.,
a Florida corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Macon Telegraph Publishing Company,
a Georgia corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Columbus Ledger-Enquirer, Inc.,
a Georgia corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Wichita Eagle and Beacon Publishing Company, Inc.,
a Kansas corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Lexington H-L Services, Inc.,
a Kentucky corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Gulf Publishing Company, Inc.,
a Mississippi corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[SIGNATURE PAGE TO CREDIT AGREEMENT]

The News and Observer Publishing Company,
a North Carolina corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
Nittany Printing and Publishing Company,
a Pennsylvania corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
East Coast Newspapers, Inc.,
a South Carolina corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
The State Media Company,
a South Carolina corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
The Sun Publishing Company, Inc.,
a South Carolina corporation
By:	/s/R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[SIGNATURE PAGE TO CREDIT AGREEMENT]

WELLS FARGO BANK, NATIONAL ASSOCIATION,
a national banking association, as Agent, a Lender and Issuing Bank
By:	/s/Sanat Amladi
Name:	Sanat Amladi
Title:	Managing Director

[SIGNATURE PAGE TO CREDIT AGREEMENT]

EXHIBIT A-1

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (“Assignment Agreement”) is entered into as of ___________________ between __________________ (“Assignor”) and ______________ (“Assignee”).  Reference is made to the Agreement described in Annex I hereto (the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Credit Agreement.

In accordance with the terms and conditions of Section 13 of the Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, that interest in and to the Assignor's rights and obligations under the Loan Documents as of the date hereof with respect to the Obligations owing to the Assignor, and Assignor’s portion of the Commitments, all to the extent specified on Annex I.

The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim and (ii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment Agreement and to consummate the transactions contemplated hereby; (b) makes no representation or warranty and assumes no responsibility with respect to (i) any statements, representations or warranties made in or in connection with the Loan Documents, or (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any other instrument or document furnished pursuant thereto; (c) makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or any Guarantor or the performance or observance by any Borrower or any Guarantor of any of their respective obligations under the Loan Documents or any other instrument or document furnished pursuant thereto, and (d) represents and warrants that the amount set forth as the Purchase Price on Annex I represents the amount owed by Borrowers to Assignor with respect to Assignor’s share of the Revolving Loans assigned hereunder, as reflected on Assignor’s books and records.

The Assignee (a) confirms that it has received copies of the Credit Agreement and the other Loan Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (b) agrees that it will, independently and without reliance upon Agent, Assignor, or any other Lender, based upon such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking any action under the Loan Documents; (c) confirms that it is an Eligible Transferee; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (e) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender; and (f) attaches the forms prescribed by the Internal Revenue Service of the United States certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Credit Agreement or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty.

Following the execution of this Assignment Agreement by the Assignor and Assignee, the Assignor will deliver this Assignment Agreement to the Agent for recording by the Agent.  The effective date of this Assignment Agreement (the “Settlement Date”) shall be the latest to occur of (a) the

date of the execution and delivery hereof by the Assignor and the Assignee, (b) the receipt by Agent for its sole and separate account a processing fee in the amount of $3,500 (if required by the Credit Agreement), (c) the receipt of any required consent of the Agent, and (d) the date specified in Annex I.

As of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement and, to the extent of the interest assigned pursuant to this Assignment Agreement, have the rights and obligations of a Lender thereunder and under the other Loan Documents, and (b) the Assignor shall, to the extent of the interest assigned pursuant to this Assignment Agreement, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents, provided,  however, that nothing contained herein shall release any assigning Lender from obligations that survive the termination of the Credit Agreement, including such assigning Lender’s obligations under Article 15 and Section 17.9(a) of the Credit Agreement.

Upon the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set forth in Annex I).  From and after the Settlement Date, Agent shall make all payments that are due and payable to the holder of the interest assigned hereunder (including payments of principal, interest, fees and other amounts) to Assignor for amounts which have accrued up to but excluding the Settlement Date and to Assignee for amounts which have accrued from and after the Settlement Date.  On the Settlement Date, Assignor shall pay to Assignee an amount equal to the portion of any interest, fee, or any other charge that was paid to Assignor prior to the Settlement Date on account of the interest assigned hereunder and that are due and payable to Assignee with respect thereto, to the extent that such interest, fee or other charge relates to the period of time from and after the Settlement Date.

This Assignment Agreement may be executed in counterparts and by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.  This Assignment Agreement may be executed and delivered by telecopier or other facsimile transmission all with the same force and effect as if the same were a fully executed and delivered original manual counterpart.

THIS ASSIGNMENT AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and Annex I hereto to be executed by their respective officers, as of the first date written above.

[NAME OF ASSIGNOR],
as Assignor
By
	Name:
	Title:
[NAME OF ASSIGNEE],
as Assignee
By
	Name:
	Title:

ACCEPTED THIS ____ DAY OF _______________ 

WELLS FARGO BANK, NATIONAL

ASSOCIATION, a national banking

association, as Agent, as Swing Lender and as Issuing Bank 

By

      Name:

      Title:

[[ADMINISTRATIVE BORROWER]

By

      Name:

      Title:]1

1   Include to the extent Borrowers’ consent is required by Section 13.1(a)(i)(A).

ANNEX FOR ASSIGNMENT AND ACCEPTANCE

ANNEX I

1.          Borrowers:  Those certain Subsidiaries of Parent from time to time party to the Credit Agreement, as “Borrowers”.
2.          Name and Date of Credit Agreement:
Credit Agreement dated as of July 16, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among The McClatchy Company, as parent (“Parent”), Borrowers, the lenders party thereto as “Lenders”, and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers.
3.Date of Assignment Agreement:	______________
4.Amounts:
Assigned Amount of Revolver Commitment	$_____________
Assigned Amount of Revolving Loans	$_____________
5.Settlement Date:
6.Purchase Price	$_____________
7.Notice and Payment Instructions, etc.
Assignee:	Assignor:
_______________________	_______________________
_______________________	_______________________
_______________________	_______________________

EXHIBIT B-1

[On file with the Company]

EXHIBIT C-1

FORM OF COMPLIANCE CERTIFICATE

[on Parent’s letterhead]

To:       Wells Fargo Bank, National Association

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attn:  Loan Portfolio Manager

Re:        Compliance Certificate dated ____________  __, 20__

Ladies and Gentlemen:

Reference is hereby made to that certain Credit Agreement, dated as of July 16, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among The McClatchy Company, a Delaware corporation (“Parent”), the Subsidiaries of Parent identified on the signature pages thereof as “Borrowers”, and those additional entities that become parties thereto as  Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1 (each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereof, and Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”). Capitalized terms used herein, but not specifically defined herein, shall have the meanings ascribed to them in the Credit Agreement.

Pursuant to Section 5.1 of the Credit Agreement, the undersigned officer of Parent hereby certifies as of the date hereof that:

1.          The financial information of Parent, Borrowers and their Subsidiaries furnished in Schedule 1 attached hereto has been prepared in accordance with GAAP (except, in the case of unaudited financial statements, for year-end audit adjustments and the lack of footnotes), and fairly presents in all material respects the consolidated financial condition of Parent, Borrowers and their Subsidiaries as of the date set forth therein.

2.          Such officer has reviewed the terms of the Credit Agreement and has made, or caused to be made under his/her supervision, a review in reasonable detail of the transactions and financial condition of Parent, Borrowers and their Subsidiaries during the accounting period covered by the financial statements delivered pursuant to Section 5.1 of the Credit Agreement.

3.          Such review has not disclosed the existence on and as of the date hereof, and the undersigned does not have knowledge of the existence as of the date hereof, of any event or condition that constitutes a Default or Event of Default, except for such conditions or events listed on Schedule 2 attached hereto, in each case specifying the nature and period of existence thereof and what action Parent, Borrowers and/or their Subsidiaries have taken, are taking, or propose to take with respect thereto.

4.          Except as set forth on Schedule 3 attached hereto, the representations and warranties of Parent, Borrowers and their Subsidiaries set forth in the Credit Agreement and the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date.

5.          As of the date hereof, Parent, each Borrower and their Subsidiaries are in compliance with the applicable covenants contained in Section 7 of the Credit Agreement as demonstrated on Schedule 4 hereof, and Schedule 4 includes a detailed calculation of the Fixed Charge Coverage Ratio (and each component thereof) for the period then ended (whether or not a Covenant Testing Period exists).

6.          Except as set forth on Schedule 5 attached hereto, Parent, each Borrower and their Subsidiaries are in compliance with the applicable ERISA and the IRC covenants contained in Sections 5.16 and 6.16 of the Credit Agreement.

7.          Schedule 6 attached hereto contains a true and complete list of all new Patents, Trademarks or Copyrights that are registered or the subject of pending applications for registration, and of all registered Copyright exclusively licensed to any Loan Party, in each case, which were acquired, registered, or for which applications for registration were filed by any Loan Party since the delivery of the previous Compliance Certificate.

8.          Schedule 7 attached hereto contains a true and complete list of the names of all Immaterial Subsidiaries (and such list indicates each Subsidiary that was designated as an Immaterial Subsidiary and each Subsidiary that ceased to be an Immaterial Subsidiary, in each case, since the later of (a) the delivery of the previous Compliance Certificate and (b) the Closing Date), and that each Subsidiary set forth on such list as an Immaterial Subsidiary qualifies as an Immaterial Subsidiary in accordance with the terms of the Credit Agreement.

9.          [Attached as Schedule 8 attached hereto is a detailed calculation of Excess Cash Flow (as defined in the Senior Secured Notes Indenture) for the fiscal year ended ________________, 20__.]1

[Signature page follows.]

1   To be included with each Compliance Certificate delivered at the end of each fiscal year.

IN WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this ____ day of _______________, 20___.

The McClatchy Company,

a Delaware corporation, as Parent

By:

Name:

Title:

SCHEDULE 1

Financial Information

SCHEDULE 2

Default or Event of Default

SCHEDULE 3

Representations and Warranties

SCHEDULE 4

Financial Covenants

Fixed Charge Coverage Ratio.

The Fixed Charge Coverage Ratio of Parent and its Subsidiaries, measured on a month-end basis, for the 12-month period ending [____________ ___, 20___], is [___]:1.0[, which ratio [is/is not] greater than or equal to the ratio set forth in Section 7 of the Credit Agreement for the corresponding period]2.

2   To be included upon the occurrence and during the continuance of a Covenant Testing Period.

SCHEDULE 5

ERISA Covenants

SCHEDULE 6

Intellectual Property

SCHEDULE 7

Immaterial Subsidiaries

[SCHEDULE 8

Excess Cash Flow]3

3   To be included with each Compliance Certificate delivered at the end of each fiscal year.

EXHIBIT J-1

FORM OF JOINDER AGREEMENT

This JOINDER AGREEMENT (this “Agreement”), is entered into as of ______ __, 20__, by and among ___________, a ________ (“New Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association (“Wells Fargo”), as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), and acknowledged and agreed to by Parent (as defined below) and the Existing Borrowers (as defined below).

WITNESSETH:

WHEREAS, pursuant to that certain Credit Agreement, dated as of July 16, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by and among  the lenders identified on the signature pages thereto (each of such lenders, together with its successors and permitted assigns, a “Lender”), Agent, The McClatchy Company, a Delaware corporation (“Parent”), and the Subsidiaries of Parent identified on the signature pages thereto as “Borrowers” (each an “Existing Borrower” and collectively, the “Existing Borrowers”; Existing Borrowers, New Borrower and those additional Persons that are joined as a party to the Credit Agreement by executing the form of Joinder attached thereto as Exhibit J-1, each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the Lender Group has agreed to make or issue Loans, Letters of Credit and other certain financial accommodations thereunder;

WHEREAS, initially capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Credit Agreement;

[WHEREAS, pursuant to that certain Intercompany Subordination Agreement, dated as of [_______] (as amended, restated, supplemented or otherwise modified from time to time, the “Intercompany Subordination Agreement”), by and among [Parent], ________, and each of ________’s Subsidiaries listed on the signature pages hereto as an obligor (such Subsidiaries, together with _______ [and Parent], are referred to hereinafter each individually as a “Obligor”, and individually and collectively, jointly and severally, as “Obligors”) and Agent, each Obligor has agreed to the subordination of indebtedness of each other Obligor owed to such Obligor on the terms set forth therein;]1

WHEREAS, pursuant to that certain Fee Letter, dated as of July 16, 2018 (as amended, restated, supplemented or otherwise modified from time to the, the “Fee Letter”), by and among Existing Borrowers and Agent, each Existing Borrower has agreed to pay certain fees to Agent on the terms set forth therein;

WHEREAS, New Borrower is required to become a party to the Credit Agreement by, among other things, executing and delivering this Agreement to Agent; and

WHEREAS, New Borrower has determined that the execution, delivery and performance of this Agreement directly benefit, and are within the corporate purposes and in the best interests of, New

1   Include only if there is an Intercompany Subordination Agreement in place.

Borrower, by virtue of the financial accommodations available to New Borrower from time to time pursuant to the terms and conditions of the Credit Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties hereto hereby agrees as follow:

1.           Joinder of New Borrower to the Credit Agreement.  By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement it shall be a party to the Credit Agreement as a “Borrower” and shall be bound by all of the terms, conditions, covenants, agreements and obligations set forth in the Credit Agreement, (b) accepts joint and several liability for the Obligations pursuant to the terms of the Loan Documents, and (c) confirms that, after giving effect to the supplement to the Schedules to the Credit Agreement provided for in Section 2 below, the representations and warranties contained in Section 4 of the Credit Agreement are true and correct in all material respects (except that such material qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) solely as they relate to New Borrower as of the date of this Agreement (except to the extent that such representations and warranties relate solely to an earlier date, in which case, such representations and warranties shall be deemed to relate to the date hereof and shall be true and correct as of the date hereof).  New Borrower hereby agrees that each reference to a “Borrower” or the “Borrowers” in the Credit Agreement and the other Loan Documents shall include New Borrower.  New Borrower acknowledges that it has received a copy of the Credit Agreement and the other Loan Documents and that it has read and understands the terms thereof.

2.           Updated Schedules.  Attached as Exhibit A hereto are updated copies of each of Schedule 4.1(b) and Schedule 4.1(c)2 to the Credit Agreement revised to include all information required to be provided therein including information with respect to New Borrower.  Each such Schedule shall be attached to the Credit Agreement, and on and after the date hereof all references in any Loan Document to any such Schedule to the Credit Agreement shall mean such Schedule as so amended; provided, that any use of the term “as of the date hereof” or any term of similar import, in any provision of the Credit Agreement relating to New Borrower or any of the information amended by such Schedule hereby, shall be deemed to refer to the date of this Agreement.

3.           [Joinder of New Borrower to the Intercompany Subordination Agreement.  By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement it shall be an Obligor under the Intercompany Subordination Agreement as if it were a signatory thereto and shall be bound by all of the provisions thereof, and (b) agrees that it shall comply with and be subject to all the terms, conditions, covenants, agreements and obligations set forth in the Intercompany Subordination Agreement.  New Borrower hereby agrees that each reference to an “Obligor” or the “Obligors” in the Intercompany Subordination Agreement shall include New Borrower.  New Borrower acknowledges that it has received a copy of the Intercompany Subordination Agreement and that it has read and understands the terms thereof.]

4.           Joinder of New Borrower to the Fee Letter.  By its execution of this Agreement, New Borrower hereby (a) agrees that from and after the date of this Agreement it shall be a “Borrower” party to the Fee Letter as if it were a signatory thereto and shall be bound by all of the provisions thereof, and

2   Include any additional Schedules to be updated as well.

2

(b) agrees that it shall comply with and be subject to all of the terms, conditions, covenants, agreements and obligations set forth in the Fee Letter applicable to Borrowers.  New Borrower hereby agrees that each reference to “Borrower” or “Borrowers” in the Fee Letter shall include New Borrower.  New Borrower acknowledges that it has received a copy of the Fee Letter and that it has read and understands the terms thereof.

5.           Representations and Warranties of New Borrower.  New Borrower hereby represents and warrants to Agent for the benefit of the Lender Group and the Bank Product Providers as follows:

(a)          It (i) is duly organized and existing and in good standing under the laws of the jurisdiction of its organization, (ii) is qualified to do business in any state where the failure to be so qualified could reasonably be expected to result in a Material Adverse Effect, and (iii) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into this Agreement and the other Loan Documents to which it is made a party and to carry out the transactions contemplated hereby and thereby and otherwise perform its obligations hereunder and thereunder.

(b)         The execution, delivery, and performance by it of this Agreement and any other Loan Document to which New Borrower is made a party (i) have been duly authorized by all necessary action on the part of New Borrower and (ii) do not and will not (A) violate any material provision of federal, state, or local law or regulation applicable to New Borrower or its Subsidiaries, the Governing Documents of New Borrower or its Subsidiaries, or any order, judgment, or decree of any court or other Governmental Authority binding on New Borrower or its Subsidiaries, (B) conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under any material agreement of New Borrower or its Subsidiaries where any such conflict, breach or default could individually or in the aggregate reasonably be expected to have a Material Adverse Effect, (C) result in or require the creation or imposition of any Lien of any nature whatsoever upon any assets of New Borrower, other than Permitted Liens, (D) require any approval of New Borrower’s interestholders or any approval or consent of any Person under any material agreement of New Borrower, other than consents or approvals that have been obtained and that are still in force and effect and except, in the case of material agreements, for consents or approvals, the failure to obtain could not individually or in the aggregate reasonably be expected to cause a Material Adverse Effect, or (E) require any registration with, consent, or approval of, or notice to or other action with or by, any Governmental Authority, other than registrations, consents, approvals, notices, or other actions that have been obtained and that are still in force and effect, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Agent for filing or recordation.

(c)          This Agreement and each Loan Document to which New Borrower is a party is the legally valid and binding obligation of New Borrower, enforceable against New Borrower in accordance with its respective terms, except as enforcement may be limited by equitable principles (regardless of whether enforcement is sought in equity or at law) or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

(d)         Each other representation and warranty applicable to New Borrower as a Borrower under the Loan Documents is true, correct and complete, in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date), in which case, such representations and warranties shall be deemed to relate to the date hereof and shall be true and correct in all material aspects (except that such materiality qualifier shall not be applicable to any

3

representations and warranties that are already qualified or modified by materiality in the text thereof) as of the date hereof.

6.           Additional Requirements.  Concurrent with the execution and delivery of this Agreement, Agent shall have received the following, each in form and substance reasonably satisfactory to Agent:

(a)          a Joinder No. __ to the Guaranty and Security Agreement, dated as of the date hereof, by and among New Borrower and Agent (“Joinder No. __”), together with the original Equity Interest certificates, if any, representing all of the Equity Interests of the Subsidiaries of New Borrower required to be pledged under the Guaranty and Security Agreement and any original promissory notes of New Borrower, accompanied by undated Equity Interest powers/transfer forms executed in blank, and the same shall be in full force and effect;

(b)         a Pledged Interests Addendum by __________, a _________, dated as of the date hereof, with respect to the pledge of Equity Interest of New Borrower, owned by _______, together with the original stock certificates, if any, representing all of the Equity Interests of New Borrower held by ________, accompanied by undated stock powers executed in blank and other proper instruments of transfer, and the same shall be in full force and effect;

(c)          appropriate financing statement to be filed in the office of the _______ Secretary of State against New Borrower to perfect the Agent’s Liens in and to the Collateral of New Borrower;

(d)         a certificate from the Secretary of New Borrower, dated as of the date hereof, (i) attesting to the resolutions of New Borrower’s [Board of Directors] [Managers] authorizing its execution, delivery, and performance of this Agreement and the other Loan Documents to which New Borrower is or will become a party, (ii) authorizing officers of New Borrower to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of New Borrower;

(e)          a certificate of status with respect to New Borrower, dated as of a recent date, such certificate to be issued by the appropriate officer of the jurisdiction of organization of New Borrower, which certificate shall indicate that New Borrower is in good standing in such jurisdiction;

(f)          certificates of status with respect to New Borrower, dated as of a recent date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of New Borrower) in which the failure to be duly qualified or licensed would constitute a Material Adverse Effect, which certificates shall indicate that New Borrower is in good standing in such jurisdictions;

(g)         copies of New Borrower’s Governing Documents, as amended, modified or supplemented to the date hereof, certified by the Secretary of New Borrower; and

(h)         evidence that New Borrower has been added to the Loan Parties’ existing insurance policies required by Section 5.6 of the Credit Agreement;

(i)          a customary opinion of counsel regarding such matters as to New Borrower as Agent or its counsel may reasonably request, and which is otherwise in form and substance reasonably satisfactory to Agent (it being understood that such opinion shall be limited to this Agreement, and the documents executed or delivered in connection herewith (including the financing statement filed against New Borrower)); and

4

(j)          subject to any applicable limitations and qualifications set forth in the Credit Agreement and the Guaranty and Security Agreement, such other agreements, instruments, approvals or other documents requested by Agent prior to the date hereof in order to create, perfect and establish the first priority of, or otherwise protect, any Lien on the Collateral of New Borrower purported to be covered by any Loan Document or otherwise to effect the intent that New Borrower shall become bound by all of the terms, covenants and agreements contained in the Loan Documents and that, to the extent set forth in the Credit Agreement and the Guaranty and Security Agreement, all property and assets of New Borrower shall become Collateral for the Obligations.

7.           Further Assurances.  Subject to any applicable limitations and qualifications set forth in the Credit Agreement and the Guaranty and Security Agreement, at any time upon the reasonable request of Agent, New Borrower shall promptly execute and deliver to Agent such Additional Documents as Agent shall reasonably request pursuant to the Credit Agreement and the other Loan Documents, in each case in form and substance reasonably satisfactory to Agent.

8.           Notices.  Notices to New Borrower shall be given in the manner set forth for Borrowers in Section 11 of the Credit Agreement.

9.           Choice of Law and Venue; Jury Trial Waiver; Judicial Reference.  THIS AGREEMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND JUDICIAL REFERENCE SET FORTH IN SECTION 12 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

10.         Binding Effect.  This Agreement shall be binding upon New Borrower, and the other Loan Parties and shall inure to the benefit of the Agent and the Lenders, together with their respective successors and permitted assigns.

11.         Effect on Loan Documents.

(a)          Except as contemplated to be supplemented hereby, the Credit Agreement, the Fee Letter, [the Intercompany Subordination Agreement] and each other Loan Document shall continue to be, and shall remain, in full force and effect.  Except as expressly contemplated hereby, this Agreement shall not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of any other term or condition of the Credit Agreement, the Fee Letter, [the Intercompany Subordination Agreement] or any of the instruments or agreements referred to therein, as the same may be amended or modified from time to time.

(b)         Each reference in the Credit Agreement and the other Loan Documents to “Borrower”, “Obligor” or words of like import referring to a Borrower or an Obligor shall include and refer to New Borrower and (b) each reference in the Credit Agreement, the Fee Letter, [Intercompany Subordination Agreement] or any other Loan Document to this “Agreement”, “hereunder”, “herein”, “hereof”, “thereunder”, “therein”, “thereof”, or words of like import referring to the Credit Agreement, the Fee Letter, [Intercompany Subordination Agreement] or any other Loan Document shall mean and refer to such agreement as supplemented by this Agreement.

12.         Miscellaneous

(a)          This Agreement is a Loan Document. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when

5

executed and delivered, shall be deemed to be an original, and all of which, taken together, shall constitute but one and the same Agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic image scan transmission (e.g., “PDF” or “tif” via email) shall be equally effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic image scan transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

(b)         Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

(c)          Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

(d)         Neither this Agreement nor any uncertainty or ambiguity herein shall be construed against any member of the Lender Group or New Borrower, whether under any rule of construction or otherwise.  This Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

(e)          The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

(f)          This Agreement shall be subject to the rules of construction set forth in Section 1.4 of the Credit Agreement, and such rules of construction are incorporated herein by this reference, mutatis mutandis.

[remainder of this page intentionally left blank].

6

IN WITNESS WHEREOF, New Borrower and Agent have caused this Agreement to be duly executed by its authorized officer as of the day and year first above written.

NEW BORROWER:	_____________,
	a _________________
	By:
	Name:
	Title:

AGENT:	WELLS FARGO BANK, NATIONAL ASSOCIATION,
	a national banking association
	By:
	Name:
	Title:

ACKNOWLEDGED AND AGREED TO BY:

PARENT:	The McClatchy Company,
	a Delaware corporation
	By:
	Name:
	Title:
EXISTING BORROWERS:	McClatchy Newspapers, Inc.,
	a Delaware corporation
	By:
	Name:
	Title:
	Miami Herald Media Company,
	a Delaware corporation
	By:
	Name:
	Title:
	The Charlotte Observer Publishing Company,
	a Delaware corporation
	By:
	Name:
	Title:
	Star-Telegram, Inc.,
	a Delaware corporation
	By:
	Name:
	Title:

Bellingham Herald Publishing, LLC,

a Delaware limited liability company

By: Pacific Northwest Publishing Company, Inc., its sole member

By:

Name:

Title:

Cypress Media, LLC,  

a Delaware limited liability company

By: Cypress Media, Inc., its sole member

By:

Name:

Title:

Idaho Statesman Publishing, LLC,

a Delaware limited liability company

By: Pacific Northwest Publishing Company, Inc., its sole member

By:

Name:

Title:

San Luis Obispo Tribune, LLC,

a Delaware limited liability

By: The McClatchy Company, its sole member

By:

Name:

Title:

Tacoma News, Inc.,

a Washington corporation

By:

Name:

Title:

The Bradenton Herald, Inc.,

a Florida corporation

By:

Name:

Title:

Macon Telegraph Publishing Company,

a Georgia corporation

By:

Name:

Title:

Columbus-Ledger Enquirer, Inc.,

a Georgia corporation

By:

Name:

Title:

Wichita Eagle and Beacon Publishing Company, Inc.,

a Kansas corporation

By:

Name:

Title:

Lexington H-L Services, Inc.,

a Kentucky corporation

By:

Name:

Title:

Gulf Publishing Company, Inc.,

a Mississippi corporation

By:

Name:

Title:

The News and Observer Publishing Company,

a North Carolina corporation

By:

Name:

Title:

Nittany Printing and Publishing Company,

a Pennsylvania corporation

By:

Name:

Title:

East Coast Newspapers, Inc.,

a South Carolina corporation

By:

Name:

Title:

The State Media Company,

a South Carolina corporation

By:

Name:

Title:

The Sun Publishing Company, Inc.,

a South Carolina corporation

By:

Name:

Title:

Exhibit A

SCHEDULE 4.1(b)

CAPITALIZATION OF EACH LOAN PARTY

SCHEDULE 4.1(c)

CAPITALIZATION OF EACH LOAN PARTY’S SUBSIDIARIES

EXHIBIT L-1

FORM OF LIBOR NOTICE

Wells Fargo Bank, National Association, as Agent 

under the below referenced Credit Agreement

2450 Colorado Avenue, Suite 3000 West

Santa Monica, California 90404

Attn:  Loan Portfolio Manager

Ladies and Gentlemen:

Reference is hereby made to that certain Credit Agreement, dated as of July 16, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), by and among The McClatchy Company, a Delaware corporation (“Parent”), the Subsidiaries of Parent identified on the signature pages thereof as “Borrowers”, and those additional entities that become parties thereto as  Borrowers in accordance with the terms thereof by executing the form of Joinder attached thereto as Exhibit J-1 (each, a “Borrower” and individually and collectively, jointly and severally, the “Borrowers”), the lenders identified on the signature pages thereof (each of such lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender” and, collectively, the “Lenders”), and Wells Fargo Bank, National Association, a national banking association, as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity “Agent”).  Capitalized terms used herein, but not specifically defined herein, shall have the meanings ascribed to them in the Credit Agreement.

This LIBOR Notice represents Borrowers’ request to elect the LIBOR Option with respect to outstanding Revolving Loans in the amount of $________ (the “LIBOR Rate Advance”).

The LIBOR Rate Advance will have an Interest Period of [1, 2, 3 or 6] month(s) commencing on __________.

This LIBOR Notice further confirms Borrowers’ acceptance, for purposes of determining the rate of interest based on the LIBOR Rate as determined pursuant to the Credit Agreement.

Administrative Borrower represents and warrants that (i) as of the date hereof, the representations and warranties of each Loan Party or its Subsidiaries contained in the Credit Agreement and in the other Loan Documents are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall be true and correct in all material respects (except that such materiality qualifier shall not be

Wells Fargo Bank, National Association, as Agent

Page 2

applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) as of such earlier date)), (ii) each of the covenants and agreements contained in any Loan Document have been performed (to the extent required to be performed on or before the date hereof or each such effective date), and (iii) no Default or Event of Default has occurred and is continuing on the date hereof, nor will any thereof occur after giving effect to the request above.

[signature page follows]

Dated:

MCCLATCHY NEWSPAPERS, INC., a

Delaware corporation, as Administrative

Borrower

By

Name:

Title:

Acknowledged by:

WELLS FARGO BANK, NATIONAL

ASSOCIATION, a national banking

association, as Agent

By:

Name:

Title:

[signature page to LIBOR Notice]

EXHIBIT P-1

FORM OF PERFECTION CERTIFICATE

_________ ____, [____]

Reference is hereby made to (a) that certain Credit Agreement dated as of July 16, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) by and among The McClatchy Company, a Delaware corporation, as parent (“Parent”), the parties set forth on Schedule A, as borrowers (the “Borrowers”), the lenders party thereto as “Lenders” (each of such Lenders, together with its successors and permitted assigns, is referred to hereinafter as a “Lender”), and Wells Fargo Bank, National Association, a national banking association (“Wells Fargo”), in its capacity as administrative agent for each member of the Lender Group and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, “Agent”), and (b) that certain Guaranty and Security Agreement dated as of July 16, 2018 (as amended, restated, supplemented, or otherwise modified from time to time, the “Guaranty and Security Agreement”) by and among Parent, Borrowers, the Subsidiaries of Parent parties thereto as “Grantors”, and Agent.

All initially capitalized terms used herein without definition shall have the meanings ascribed thereto in the Credit Agreement.  Any terms (whether capitalized or lower case) used in this Perfection Certificate that are defined in the Code shall be construed and defined as set forth in the Code unless otherwise defined herein or in the Credit Agreement; provided that to the extent that the Code is used to define any term used herein and if such term is defined differently in different Articles of the Code, the definition of such term contained in Article 9 of the Code shall govern.  As used herein, the term “Loan Parties” shall mean the “Loan Parties” as that term is defined in the Credit Agreement and “Code” shall mean the “Code” as that term is defined in the Guaranty and Security Agreement.

The undersigned, each in his or her capacity as an officer of each Loan Party, in their capacity as an officer and not in their individual capacity, hereby certifies to Agent and each of the other members of the Lender Group and the Bank Product Providers as follows as of the Closing Date:

1.          Names.

(a)         The exact legal name of each Loan Party, as such name appears in its certified certificate of incorporation, articles of incorporation, certificate of formation, or any other organizational document, is set forth in Schedule 1(a).  Each Loan Party is (i) the type of entity disclosed next to its name in Schedule 1(a) and (ii) a registered organization except to the extent disclosed in Schedule 1(a).  Also set forth in Schedule 1(a) is the organizational identification number, if any, of each Loan Party that is a registered organization, the Federal Taxpayer Identification Number of each Loan Party and the jurisdiction of formation of each Loan Party.  Each Loan Party has qualified to do business in the states listed on Schedule 1(a).

(b)         Set forth in Schedule 1(b) hereto is a list of any other legal names each Loan Party has had in the past five years, together with the date of the relevant name change.

(c)         Set forth in Schedule 1(c) is a list of all other names used by each Loan Party in connection with any business or organization to which such Loan Party became the successor by merger, consolidation, acquisition, change in form, nature or jurisdiction of organization or otherwise or on any filings with the Internal Revenue Service, in each case, at any time in the past five years.  Except as set forth in Schedule 1(c), no Loan Party has changed its jurisdiction of organization at any time during the past four months.

2.          Chief Executive Offices.  The chief executive office of each Loan Party is located at the address set forth in Schedule 2(a) hereto.  The location of any Collateral is set forth on Schedule 2(b) hereto.

3.          Real Property.

(a)         Attached hereto as Schedule 3(a) is a list of all (i) Real Property (as defined in the Guaranty and Security Agreement) of each Loan Party, (ii) filing offices for any mortgages encumbering the Real Property Collateral or to encumber, the Real Property Collateral as of the Closing Date, (iii) common names, addresses and uses of each parcel of Real Property (stating improvements located thereon) and (iv) other information relating thereto required by such Schedule.  Except as described on Schedule 3(a) attached hereto:  (A) no Loan Party has entered into any leases, subleases, tenancies, franchise agreements, licenses or other occupancy arrangements as owner, lessor, sublessor, licensor, franchisor or grantor with respect to any of the real property described on Schedule 3(a) and (B) no Loan Party has any leases which require the consent of the landlord, tenant or other party thereto to the transactions contemplated by the Loan Documents.

(b)        Schedule 3(b) sets forth all third parties (“Bailees”) with possession of any Collateral (including inventory and equipment) of the Loan Parties in an aggregate amount in excess of $100,000, including the name and address of such Bailee, a description of the inventory and equipment in such Bailee’s possession, and the location of such inventory and equipment to the extent not located at the address of such Bailee.

4.          Extraordinary Transactions.  Except for those purchases, mergers, acquisitions, consolidations, and other transactions described on Schedule 4 attached hereto, all of the Collateral has been originated by each Loan Party in the ordinary course of business or consists of goods which have been acquired by such Loan Party in the ordinary course of business from a person in the business of selling goods of that kind.

5.          [Reserved.]

6.          [Reserved.]

7.          Schedule of Filings.  Attached hereto as Schedule 7 is a schedule of (i) the appropriate filing offices for the UCC financing statements to be filed against each Loan Party, as debtor, and (ii) the appropriate filing offices for the filings described in Schedule 11(c).

8.          [Reserved.]

9.          Stock Ownership and Other Equity Interests.  Attached hereto as Schedule 9(a) is a true and correct list of each of all of the authorized, and the issued and outstanding, Equity Interests of each Loan Party (other than Parent) and the record and beneficial owners of such Equity Interests.  Also set forth on Schedule 9(a) is each equity investment of each Loan Party that represents 50% or less of the equity of the entity in which such investment was made.  Attached hereto as Schedule 9(b) is a true and correct organizational chart of Parent and its Subsidiaries.

10.        Instruments and Chattel Paper.  Attached hereto as Schedule 10 is a true and correct list of all promissory notes, instruments (other than checks to be deposited in the ordinary course of business), tangible chattel paper, electronic chattel paper and other evidence of Indebtedness held by each Loan Party as of the Closing Date, including all intercompany notes between or among any two or more Loan Parties or any of their Subsidiaries.

-  2  -

11.        Intellectual Property.

(a)        Schedule 11(a) provides a complete and correct list of all registered Copyrights (as defined in the Guaranty and Security Agreement) owned by any Loan Party, all applications for registration of Copyrights owned by any Loan Party, and all other Copyrights owned by any Loan Party and material to the conduct of the business of any Loan Party.  Schedule 11(a) provides a complete and correct list of all registered Patents (as defined in the Guaranty and Security Agreement) owned by any Loan Party and all applications for Patents owned by any Loan Party.  Schedule 11(a) provides a complete and correct list of all registered Trademarks (as defined in the Guaranty and Security Agreement) owned by any Loan Party, all applications for registration of Trademarks owned by any Loan Party, and all other Trademarks owned by any Loan Party and material to the conduct of the business of any Loan Party.

(b)        Schedule 11(b) provides a complete and correct list of all Intellectual Property Licenses (as defined in the Guaranty and Security Agreement) entered into by any Loan Party pursuant to which (i) any Loan Party has provided any license or other rights in Intellectual Property (as defined in the Guaranty and Security Agreement) owned or controlled by such Loan Party to any other Person (other than non-exclusive software licenses granted in the ordinary course of business) or (ii) any Person has granted to any Loan Party any license or other rights in Intellectual Property owned or controlled by such Person that is material to the business of such Loan Party, including any Intellectual Property that is incorporated in any Inventory, software, or other product marketed, sold, licensed, or distributed by such Loan Party.

12.        Commercial Tort Claims.  Attached hereto as Schedule 12 is a true and correct list of all commercial tort claims held by each Loan Party, including a brief description thereof.

13.        Deposit Accounts and Securities Accounts.  Attached hereto as Schedule 13 is a true and complete list of all Deposit Accounts and Securities Accounts (each as defined in the Guaranty and Security Agreement) maintained by each Loan Party, including the name of each institution where each such account is held, the name of each such account and the name of each entity that holds each account.

14.        Letter-of-Credit Rights.  Attached hereto as Schedule 14 is a true and correct list of all letters of credit issued in favor of any Loan Party, as beneficiary thereunder.

15.        Motor Vehicles.  Attached hereto as Schedule 15 is a true and correct list of all motor vehicles and other goods (covered by certificates of title or ownership).

16.        Other Assets.  A Loan Party owns the following kinds of assets:

Aircraft:	Yes ____  No __X__
Vessels, boats or ships:	Yes ____  No __X__
Railroad rolling stock:	Yes ____  No __X__

If the answer is yes to any of these other types of assets, please describe on Schedule 16.

17.        Insurance.  Attached hereto as Schedule 17 is a true and correct list of all of the insurance policies of each Loan Party.

[The Remainder of this Page has been intentionally left blank]

-  3  -

IN WITNESS WHEREOF, we have hereunto signed this Perfection Certificate as of the date first above written.

[PARENT]

By:

Name:

Title:

Schedule A

List of Borrowers

Name of Entity Jurisdiction of Formation

Schedule 1(a)

Legal Names, Etc.

Legal Name Type of Entity Registered
Organization
(Yes/No) Organizational
Number Federal Taxpayer
Identification
Number Jurisdiction
of
Formation Jurisdictions
Where Qualified to Do Business

Schedule 1(b)

Prior Names

Loan Party/Subsidiary Prior Name Date of Change

Schedule 1(c)

Changes in Corporate Identity; Other Names; Changes in Jurisdiction of Organization

Loan
Party/Subsidiary Name of Entity Action Date of
Action State of
Formation List of All Other
Names Used on Any
Filings with the
Internal Revenue
Service During Past
Five Years

[Add Information required by Section 1 to the extent required by Section 1(c) of the Perfection Certificate]

Schedule 2(a)

Chief Executive Offices

Loan Party Address County State

Schedule 2(b)

Collateral Locations

Loan Party Address County State Inventory

Schedule 3(a)

Real Property

Entity of Record Common Name
and Address Owned, Leased or
Other Interest Landlord / Owner if
Leased or Other
Interest Description of Lease or
Other Documents
Evidencing Interest Primary Purpose/
Use Encumbered or to be
Encumbered by Mortgage Filing Office for Mortgage

Schedule 3(a)

Real Property (cont.)

Required Consents; Loan Party Held Landlord/ Grantor Interests

I. Landlord’s / Tenant’s Consent Required

1.  [LIST EACH LEASE OR OTHER INSTRUMENT WHERE LANDLORD’S / TENANT’S CONSENT IS REQUIRED].

II. Leases, Subleases, Tenancies, Franchise Agreements, Licenses or Other Occupancy Agreements Pursuant to which any Loan Party holds Landlord’s / Grantor’s Interest

1.  [LIST EACH LEASE OR OTHER INSTRUMENT WHERE ANY LOAN PARTY HOLDS LANDLORD’S / GRANTOR’S INTEREST]

Schedule 3(b)

Bailees

Loan Party Address Description of Inventory and Equipment Subject to Bailment Approximate Value of Collateral

Schedule 4

Transactions Other Than in the Ordinary Course of Business

Loan Party/Subsidiary Description of Transaction Including Parties Thereto Date of Transaction

Schedule 7

Filings/Filing Offices

Type of Filing1 Entity Applicable Collateral
Document
[Mortgage, Security
Agreement or Other] Jurisdictions

1   UCC-1 financing statement, fixture filing, mortgage, intellectual property filing or other necessary filing.

Schedule 9(a)

(i) Equity Interests of Loan Parties and Subsidiaries (Other than Parent)

Legal Entities Record Owner Certificate
No. No. Shares/
Interest Percent
Pledged

(b) Other Equity Interests

Holder(s) of
Investment Name of
Investment Number of
Shares or
Units Class of Shares or
Units Certificate
Number

Schedule 9(b)

Organizational Chart

Schedule 10

Instruments and Chattel Paper

1.          Promissory Notes:

Lender Borrower Principal
Amount Date of
Issuance Interest
Rate Maturity Date

2.          Chattel Paper:

Schedule 11(a)

Copyrights, Patents and Trademarks

UNITED STATES COPYRIGHTS

Registrations:

GRANTOR OWNER REG. NO. REG. DATE DESCRIPTION

Applications:

Owner Application Number

OTHER COPYRIGHTS

Registrations:

Owner Country/State Title Registration Number

Applications:

Owner Country/State Application Number

Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

UNITED STATES PATENTS:

Registrations:

Owner Registration Number Description

Applications:

Owner Application Number Description

OTHER PATENTS:

Registrations:

Owner Registration Number Country/State Description

Applications:

Owner Application Number Country/State Description

Schedule 11(a)

Copyrights, Patents and Trademarks (cont.)

UNITED STATES TRADEMARKS:

Registrations:

MARK OWNER NAME REG/SERIAL # REG DATE

Applications:

Owner Application Number Trademark

OTHER TRADEMARKS:

Registrations:

Owner Registration Number Country/State Trademark

Schedule 11(b)

Intellectual Property Licenses

LICENSEE LICENSOR COUNTRY/STATE REGISTRATION/ APPLICATION NUMBER, IF ANY DESCRIPTION

Schedule 12

Commercial Tort Claims

Schedule 13

Deposit Accounts and Securities Accounts

Legal Entity Account Name Bank Bank Location Account
Descriptor Account #

Schedule 14

Letter of Credit Rights

Schedule 15

Motor Vehicles

Schedule 16

Other Assets

Schedule 17

Insurance

Schedule A-1

Agent’s Account

An account at a bank designated by Agent from time to time as the account into which Borrowers shall make all payments to Agent for the benefit of the Lender Group and into which the Lender Group shall make all payments to Agent under this Agreement and the other Loan Documents; unless and until Agent notifies Administrative Borrower and the Lender Group to the contrary, Agent’s Account shall be that certain deposit account bearing account number [***], reference PROJECT PRESS (THE MCCLATCHY COMPANY), and maintained by Agent with Wells Fargo Bank, N.A., 420 Montgomery Street, San Francisco, CA, ABA  #121-000-248.

Schedule C-1

Commitments

Lender	Revolver Commitment	Pledged Cash Letter of Credit Commitment	Total Commitment
Wells Fargo Bank, National Association	$ 65,000,000	$ 35,000,000	$ 100,000,000
All Lenders	$ 65,000,000	$ 35,000,000	$ 100,000,000

Schedule 3.1

The obligation of each Lender to make its initial extension of credit provided for in this Agreement is subject to the fulfillment, to the satisfaction of each Lender (the making of such initial extension of credit by any Lender being conclusively deemed to be its satisfaction or waiver of the following), of each of the following conditions precedent:

(a)         the Closing Date shall occur on or before July 16, 2018;

(b)         Agent shall have received evidence that appropriate financing statements have been prepared for filing by Agent or its counsel on the Closing Date in such office or offices as may be necessary or, in the opinion of Agent, desirable to perfect the Agent’s Liens in and to the Collateral;

(c)         Agent shall have received each of the following documents, in form and substance satisfactory to Agent, duly executed and delivered, and each such document shall be in full force and effect:

(i)       this Agreement,

(ii)      the Fee Letter,

(iii)     a completed Borrowing Base Certificate;

(iv)     a completed Perfection Certificate for each of the Loan Parties,

(v)      the Guaranty and Security Agreement,

(vi)     the Copyright Security Agreement,

(vii)    the Trademark Security Agreement,

(viii)   the Junior Lien Intercreditor Agreement,

(ix)     the Senior Secured Notes Intercreditor Agreement,

(x)      a promissory note evidencing the Revolving Loan, and

(xi)     a letter, in form and substance reasonably satisfactory to Agent, from Bank of America, N.A., in its capacity as administrative agent under the Existing Credit Facility (“Existing Agent”) to Parent respecting the amount necessary to repay in full all of the obligations of Parent and its Subsidiaries owing under the Existing Credit Facility and obtain a release of all of the Liens existing in favor of Existing Agent in and to the assets of Parent and its Subsidiaries, together with termination statements and other documentation evidencing the termination by Existing Agent of its Liens in and to the properties and assets of Parent and its Subsidiaries;

(d)         Agent shall have received a certificate from the Secretary of each Loan Party (i) attesting to the resolutions of such Loan Party’s board of directors authorizing its execution, delivery, and performance of the Loan Documents to which it is a party, (ii) authorizing specific officers of such Loan Party to execute the same, and (iii) attesting to the incumbency and signatures of such specific officers of such Loan Party;

(e)         Agent shall have received copies of each Loan Party’s Governing Documents, as amended, modified, or supplemented and in effect on the Closing Date, which Governing Documents shall be (i) certified by the Secretary of such Loan Party, and (ii) with respect to Governing Documents that are charter documents, certified as of a recent date (not more than 30 days prior to the Closing Date) by the appropriate governmental official;

(f)         Agent shall have received a certificate of status with respect to each Loan Party, dated within 30 days of the Closing Date, such certificate to be issued by the appropriate governmental authority or official of the jurisdiction of organization of such Loan Party, which certificate shall indicate that such Loan Party is in good standing in such jurisdiction;

(g)         Agent shall have received certificates of status with respect to each Loan Party, each dated within 30 days of the Closing Date, such certificates to be issued by the appropriate officer of the jurisdictions (other than the jurisdiction of organization of such Loan Party) in which its failure to be duly qualified or licensed would constitute a Material Adverse Effect, which certificates shall indicate that such Loan Party is in good standing in such jurisdictions;

(h)         Agent shall have received a certificate of insurance, as are required by Section 5.6 of this Agreement, the form and substance of which shall be satisfactory to Agent;

(i)          Agent shall have received Collateral Access Agreements with respect to the following locations: (i) 3900 Plano Pkwy, Plano TX and (ii) 2100 Q St, Sacramento, CA;

(j)          Agent shall have received a legal opinion of (i) Wilson Sonsini Goodrich & Rosati, special counsel to the Loan Parties, (ii) Holland & Knight LLP, special Florida counsel to the Loan Parties identified therein, (iii) Carlton Fields Jorden Burt, P.A., special Georgia counsel to the Loan Parties identified therein, (iv) Lewis, Rice & Fingersh, P.C., special Illinois counsel to the Loan Parties identified therein, (v) Fleeson, Gooing, Coulson & Kitch, L.L.C., special Kansas counsel to the Loan Parties identified therein, (vi) Stoll Keenon Ogden PLLC, special Kentucky counsel to the Loan Parties identified therein, (vii) Jones Walker LLP, special Mississippi counsel to the Loan Parties, identified therein (viii) Lewis, Rice & Fingersh, P.C., special Missouri counsel to the Loan Parties identified therein, (ix) McGuire Woods LLP, special North Carolina counsel to the Loan Parties identified therein, (x) Fox Rothschild LLP, special Pennsylvania counsel to the Loan Parties identified therein, and (xi) Carl F. Muller, Attorney at Law, special South Carolina counsel to the Loan Parties identified therein; each of which opinion shall be addressed to Agent and the Lenders and shall be in form and substance reasonably satisfactory to Agent;

(k)         Borrowers shall have minimum Excess Availability plus Qualified Cash of not less than $35,000,000, after giving effect to the payoff of obligations under the Existing Credit Facility, consummation of the Existing Debt Refinancing, and the initial extensions of credit under this Agreement and the payment of all fees and expenses required to be paid by Borrowers and any other applicable Loan Parties on the Closing Date under (A) this Agreement, (B) the other Loan Documents, and (C) the definitive documentation for any other transactions contemplated under this Agreement to occur on the Closing Date;

(l)          the use of proceeds of the Loans and any other extension of credit under this Agreement shall conform to the requirements of Section 6.11 of the Agreement;

(m)        Agent shall have completed its business, legal, and collateral due diligence, including (i) a collateral audit and review of Parent, Borrowers’ and their respective Subsidiaries’ books

-2-

and records and verification of Parent and Borrowers’ representations and warranties to Lender Group, and (ii) a review of Parent, Borrowers’ and their respective Subsidiaries’ Material Contracts, in each case, the results of which shall be satisfactory to Agent;

(n)         Agent shall have received, in form and substance satisfactory to Agent, and reviewed to its satisfaction, UCC, tax lien, litigation, bankruptcy and intellectual property searches from all offices that Agent deems appropriate in its sole discretion;

(o)         Agent shall have completed (i) Patriot Act searches, OFAC/PEP searches and customary individual background checks for each Loan Party, and (ii) Patriot Act searches, OFAC/PEP searches and customary individual background searches for each Loan Party’s senior management and key principals, in each case, the results of which shall be satisfactory to Agent;

(p)         Agent shall have received a set of Projections of Parent and its Subsidiaries for the 5-year period following the Closing Date (on a year by year basis, and for the 1-year period following the Closing Date, on a quarter by quarter basis with respect to the balance sheets), in form and substance (including as to scope and underlying assumptions) satisfactory to Agent;

(q)         Agent shall have received final credit committee approval with respect to the credit facilities contemplated under this Agreement;

(r)         Agent shall have received a description of the Margin Stock and a Form U-1 (with sufficient additional originals thereof for each Lender) duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board;

(s)         Agent shall have received a solvency certificate, in form and substance satisfactory to it, certifying that the Loan Parties, taken as a whole, are Solvent, in each case, after giving effect to (A) the payoff of the obligations under the Existing Credit Facility, (B) the consummation of the Existing Debt Refinancing, (C) the initial extensions of credit under this Agreement, (D) the incurrence of Indebtedness under any of the Senior Secured Notes Documents, the Junior Lien Term Loan Documents and the definitive documentation for any other transactions contemplated under this Agreement to occur on the Closing Date and (E) payment of all fees and expenses required to be paid by Borrowers and any other applicable Loan Parties on the Closing Date under (1) this Agreement, (2) the other Loan Documents, and (3) the definitive documentation for any other transactions contemplated under this Agreement to occur on the Closing Date;

(t)          Borrowers shall have reimbursed Agent for all Lender Group Expenses incurred in connection with the transactions evidenced by this Agreement and the other Loan Documents;

(u)         Substantially concurrently with the initial extensions of credit under this Agreement and the payment of all fees and expenses required to be paid by Borrowers on the Closing Date under this Agreement or the other Loan Documents, the Existing Debt Refinancing shall have been consummated;

(v)         Agent shall have received a certificate from the Secretary of Parent, dated as of the Closing Date, attaching true, correct and complete executed copies of (A) the primary Senior Secured Notes Documents and (B) the primary Junior Lien Term Loan Documents (collectively, the “Other Transaction Documents”).  Such certificate of a Secretary of Parent shall certify that (A) the attached

-3-

Other Transaction Documents are true, correct and complete copies of such documents, as of the Closing Date, (B) such Other Transaction Documents have been entered into by the Loan Parties and any of their applicable Subsidiaries in compliance with all applicable laws and all necessary approvals and are in full force and effect and have not been amended, supplemented or otherwise modified as of the Closing Date and (C) each condition precedent to the effectiveness of each such Other Transaction Document has been satisfied (other than any condition in relation to the execution, delivery and performance of this Agreement and the other Loan Documents required to be executed and delivered on the Closing Date), unless waived;

(w)        Prior to or simultaneously with any extension of credit by any Lender to any Borrower on the Closing Date, Agent shall have received evidence satisfactory to the Agent of receipt by Parent of proceeds of Indebtedness under (A) the Senior Secured Notes Documents in an aggregate principal amount of not more than $310,000,000 and (B) under the Junior Lien Term Loan Documents in an aggregate amount of not more than (i) $157,100,000 with respect to the Tranche A Term Loan Facility (as defined in the Junior Lien Term Loan Documents) and (ii) $193,500,000 with respect to the Tranche B Term Loan Facility (as defined in the Junior Lien Term Loan Documents);

(x)         Subject to the terms of the Senior Secured Notes Intercreditor Agreement, Agent (or the Notes Collateral Agent as bailee for possession) shall have received (A) to the extent required by the Guaranty and Security Agreement, any certificates representing the Pledged Interests (as defined in the Guaranty and Security Agreement), to the extent such Pledged Interests are represented by certificates, pledged pursuant to the Guaranty and Security Agreement, together with an undated stock power for each such certificates executed in blank by a duly Authorized Person of the pledgor thereof, and (B) each promissory note (if any) required to be pledged pursuant to the Guaranty and Security Agreement, together with undated endorsements for transfer executed in blank by the pledgor thereof;

(y)         Parent, Borrowers and each of their respective Subsidiaries shall have received all licenses, approvals or evidence of other actions required by any Governmental Authority and third party approvals (including shareholder approvals, landlords’ consents, and other consents) in connection with the execution and delivery by Parent, Borrowers or their respective Subsidiaries of the Loan Documents or with the consummation of the transactions contemplated thereby;

(z)         Agent shall have received the Fifth Supplemental Indenture to the Existing Unsecured 2027 Debentures and the Existing Unsecured 2029 Debentures, together with the Letter of Consent, which shall have become effective with respect to the Existing Unsecured 2027 Debentures and the Existing Unsecured 2029 Debentures, eliminating any restrictions with respect to the granting of liens; and

(aa)       all other documents and legal matters in connection with the transactions contemplated by this Agreement shall have been delivered, executed, or recorded and shall be in form and substance satisfactory to Agent.

-4-

Schedule 3.6

(a)         Within 10 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Agent shall have received any loss payable or additional insured endorsements as required by Section 5.6 of the Agreement, the form and substance of which shall be reasonably satisfactory to Agent.

(b)         Within 15 days after the Closing Date (or such later date as the Agent may agree in its sole discretion), the Loan Parties shall deliver to the Senior Secured Notes Agent (with copies delivered to the Agent) all intercompany notes constituting Negotiable Collateral (as defined in the Guaranty and Security Agreement) and corresponding allonges, together with lost note affidavits to the extent necessary, in each case, the form and substance of which shall be reasonably satisfactory to Agent.

(c)         Within (i) 5 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall deliver (or cause to be delivered) to Agent the Control Agreements in accordance with the requirements of the Agreement and the Controlled Account Agreements in accordance with the requirements of (and as defined in) the Guaranty and Security Agreement for all deposit accounts maintained at Bank of America, N.A., (ii) 10 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall deliver (or cause to be delivered) to Agent the Control Agreements in accordance with the requirements of the Agreement and the Controlled Account Agreements in accordance with the requirements of (and as defined in) the Guaranty and Security Agreement for all securities accounts maintained at Bank of America, N.A., and (iii) 45 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall deliver (or cause to be delivered) to Agent the Control Agreements in accordance with the requirements of the Agreement and the Controlled Account Agreements in accordance with the requirements of (and as defined in) the Guaranty and Security Agreement for all other accounts.

(d)         Within (i) 30 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall close Deposit Accounts No. X-2687 and X-0012 maintained with Bank of America, N.A. and (ii) 90 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall close collateral account No. X-5336 maintained with Bank of America, N.A.

(e)         On or before the date that is 30 days after the Closing Date (which date may be extended in writing by Agent in its sole discretion), the Loan Parties shall, in consultation with the Agent, make changes to their cash management systems in accordance with standard asset-based lending account practices in a manner reasonably acceptable to Agent

(f)         Within 90 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall use commercially reasonable efforts to deliver (or cause to be delivered) to Agent Collateral Access Agreements for each of the locations at which any Borrower stores inventory to the extent required by the terms of the Loan Documents.

(g)         Within 90 days after the Closing Date (or such longer period as agreed to by Agent in its sole discretion), Parent and Borrowers shall grant to Agent, for the benefit of the Lender Group and the Bank Product Providers, a Mortgage on each fee interest in the Real Property Collateral and shall deliver, including, without limitation:

i.           fully executed counterparts of the Mortgages evidencing the liens on the Real Property Collateral, together with evidence that counterparts of all the Mortgages have been

delivered to the title insurance company for recording in all places to the extent necessary to effectively create a valid and enforceable first priority (subject to the Senior Secured Notes Intercreditor Agreement) mortgage lien on each Real Property Collateral in favor of the Agent for its benefit and the benefit of the Lenders, subject only to Permitted Liens,

ii.          with respect to each Mortgage encumbering any Real Property Collateral, a loan policy of title insurance (or commitment to issue such a policy having the effect of a loan policy of title insurance) insuring (or committing to insure) the lien of such Mortgage as a valid and enforceable first priority (subject to the Senior Secured Notes Intercreditor Agreement) mortgage lien on such Real Property Collateral described therein, free and clear of all defects and encumbrances other than Permitted Liens, in an amount not less than the fair market value of such Real Property Collateral (each such policy, a “Mortgage Policy”),

iii.         with respect to each Real Property Collateral, a new ALTA survey or an 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 each Mortgage Policy,

iv.         opinions addressed to the Agent and the Lenders of (1) local counsel in each jurisdiction where the Real Property Collateral is located with respect to the enforceability of the Mortgages and other matters customarily included in such opinions and (2) counsel for the Loan Parties regarding due authorization, execution and delivery of the Mortgages,

v.          such affidavits, certificates, instruments of indemnification and other items (including a so-called “gap” indemnification) as shall be reasonably required to induce the title insurance company to issue each Mortgage Policy and endorsements referred to above,

vi.         evidence reasonably acceptable to the Agent and the Lenders of payment by the Loan Parties of all Mortgage Policy premiums, search and examination 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,

vii.        with respect to each Real Property Collateral, a completed “Life-of-Loan” Federal Emergency Management Agency standard flood hazard determination (together with a notice about special flood hazard area status and flood disaster assistance duly executed by the Borrowers and each Loan Party relating thereto), and

viii.       such other documentation, opinions, financing statements, fixture filings, insurance deliverables and phase 1 environmental audits, in form and substance reasonably satisfactory to Agent, in connection with the grant of such Mortgage as Agent shall request in its Permitted Discretion.

Schedule 5.1

Deliver to Agent (and if so requested by Agent, with copies for each Lender) each of the financial statements, reports, or other items set forth below at the following times in form reasonably satisfactory to Agent:

if an Increased Reporting Period (as defined below) is in effect, as soon as available, but in any event within 30 days (45 days in the case of a fiscal month that is the end of one of Parent’s fiscal quarters) after the end of each fiscal month during each of Parent’s fiscal years,	(a)           an unaudited consolidated balance sheet, income statement, and statement of cash flow, covering Parent’s and its Subsidiaries’ operations during such period and compared to the prior period (with each such period being the comparable period from such prior year), together with a corresponding discussion and analysis of results from management as is reasonably available;
as soon as available, but in any event within 30 days (45 days in the case of a  fiscal month that is the end of one of Parent’s fiscal quarters) after the end of each fiscal month during each of Parent’s fiscal years,	(b)          a Compliance Certificate along with the underlying calculations, including the calculations to arrive at Consolidated EBITDA and Fixed Charge Coverage Ratio (whether or not (x) a Covenant Trigger Period exists or (y) an Increased Reporting Period is then in effect).
as soon as available, but in any event within 45 days after the end of each fiscal month that is the last month of one of Parent’s fiscal quarters during each of Parent’s fiscal years,	(c)           an unaudited consolidated balance sheet, income statement, statement of cash flow, and statement of shareholder’s equity covering Parent’s and its Subsidiaries’ operations during such period and compared to the prior period (with each such period being the comparable period from such prior year), together with a corresponding discussion and analysis of results from management;

as soon as available, but in any event within 90 days after the end of each of Parent’s fiscal years (commencing with the fiscal year ending December 30, 2018),	(d)          consolidated financial statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent (it being understood that Deloitte & Touche LLP shall be acceptable to Agent) and certified, without any qualifications (including any (i) “going concern” or like qualification or exception, (ii) qualification or exception as to the scope of such audit, or (iii) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of Section 7 of the Agreement), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of cash flow, and statement of shareholder’s equity, and, if prepared, such accountants’ letter to management), and (e)           a Compliance Certificate along with the underlying calculations, including the calculations to arrive at Consolidated EBITDA and Fixed Charge Coverage Ratio (whether or not a Covenant Trigger Period exists).
as soon as available, but in any event within 45 days after the end of each of Parent’s fiscal years,	(f)           copies of Parent’s Projections, in form and substance (including as underlying assumptions) reasonably satisfactory to Agent, in its Permitted Discretion, for the forthcoming three years, year by year, and for the forthcoming fiscal year, fiscal quarter by fiscal quarter, certified by the chief financial officer of Parent as being such officer’s good faith estimate of the financial performance of Parent and its Subsidiaries during the period covered thereby, and (g)          a detailed calculation of Excess Cash Flow (as defined in the Senior Secured Notes Indenture).
if and when filed by Parent or any of its Subsidiaries with the SEC,	(h)          Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports, (i)           any other filings made by Parent or any of its Subsidiaries with the SEC, and (j)           any other information that is provided by Parent to its shareholders generally.
promptly, but in any event within 5 days after any Responsible Officer of Parent has knowledge of any event or condition that constitutes a Default or an Event of Default,	(k)          notice of such event or condition and a statement of the curative action that Borrowers propose to take with respect thereto.

-2-

promptly, but in any event within 10 days after any Responsible Officer of Parent has knowledge thereof, or after the service of process with respect thereto on any Loan Party,	(l)           notice of all actions, judgments, suits, or proceedings brought by or against Parent, any Borrower or any of their Subsidiaries before any Governmental Authority which reasonably could be expected to result in a Material Adverse Effect.
substantially concurrent with the execution and delivery of the same,	(m)         copies of each amendments, supplements, consent letters, waivers, forbearances, restatements or modifications to, and any material notices or reports pursuant to the terms of or in connection with any Senior Secured Notes Document or the Junior Term Loan Documents.
within five Business Days after any Responsible Officer of Parent has knowledge of any occurrence,	(n)          notices of any material past due or missed ERISA or Pension Plan payments, (o)          notices of any claims or Liens on any Collateral or other property of any Loan Party or ERISA Affiliate as a result of any material unpaid tax or ERISA or Pension Plan payments (and copies of any such notices and/or claims received by any Loan Party or ERISA Affiliate), and (p)          any notice (including, without limitation, in respect of any payment (including assessments or penalties), dispute, litigation, investigation, proceeding or imposition or taking of any Lien) given by the Pension Plan Guaranty Corporation to any Loan Party or any of its Subsidiaries.
upon the request of Agent,	(q)          any other information reasonably requested relating to the financial condition of Parent, any Borrower or their Subsidiaries.

For purposes of this Schedule 5.1, “Increased Reporting Period” means any period (a) commencing on any day that (i) an Event of Default occurs, or (ii) Excess Availability is less than the greater of (I) 15% of the Maximum Revolver Amount and (II) $9,750,000, and (b) continuing until, during the preceding thirty (30) calendar days at all times, (i) no Event of Default has existed and (ii) Excess Availability has equaled or exceeded the greater of (I) 15% of the Maximum Revolver Amount, and (II) $9,750,000.

-3-

Schedule 5.2

Provide Agent (and if so requested by Agent, with copies for each Lender) with each of the documents set forth below at the following times in form reasonably satisfactory to Agent; provided, that if any of the documents set forth below are provided through a system of electronic collateral reporting reasonably satisfactory to Agent, such documents will be deemed to have been delivered:

If (x) no Increased Reporting Period (as defined below) is in effect, monthly (no later than the 10th day of each fiscal month), or (y) an Increased Reporting Period is in effect, weekly (no later than Wednesday of each week, commencing with the first such day to occur during any Increased Reporting Period), (a)         an executed Borrowing Base Certificate, (b)         a detailed aging, by total, of each Borrower’s Accounts, together with a reconciliation and supporting documentation for any reconciling items noted, (c)         a monthly Account roll-forward, in a format reasonably acceptable to Agent in its discretion, tied to the beginning and ending account receivable balances of Borrowers’ general ledger, (d)         a detailed calculation of those Accounts that are not eligible for the Borrowing Base, (e)         notice of all claims, offsets, or disputes asserted by Account Debtors with respect to each Borrower’s Accounts, (f)         Inventory system/perpetual reports specifying the cost and the wholesale market value of each Borrower’s Inventory, by category, with additional detail showing additions to and deletions therefrom, together with a reconciliation to Borrowers’ general ledger, (g)         a detailed calculation of Inventory categories that are not eligible for the Borrowing Base, (h)         a summary aging, by vendor, of each Borrower’s accounts payable and any book overdraft and an aging, by vendor, of any held checks, (i)          a detailed report regarding each Loan Party’s cash and Cash Equivalents, including an indication of which amounts constitute Qualified Cash, (j)          a detailed calculation of those unbilled Accounts that are not eligible for the Borrowing Base, (k)         a report of unbilled Accounts, and (l)          a detailed calculation of Borrowers’ Accounts specifying underlying customer detail, including underlying customers of advertising or marketing agencies (such list of underlying customers in form and substance satisfactory to Agent in its Permitted Discretion) for each Account (delivered electronically in an acceptable format, if Borrowers have implemented electronic reporting), in form and substance satisfactory to Agent in its Permitted Discretion.

Monthly (no later than the 30th day after the end of each fiscal month),	(m)        a reconciliation of Accounts, accounts payable, and Inventory of Borrowers’ general ledger to its monthly financial statements, including any book reserves related to each category.
Quarterly (no later than the 45th day after the end of each fiscal quarter),	(n)         a report regarding each Loan Party’s and its Subsidiaries’ accrued, but unpaid, ad valorem taxes, and (o)         updates with respect to any applied for and registered Copyrights, Patents and Trademarks of any Loan Party pursuant to the Guaranty and Security Agreement.
Annually (no later than 90 days after the end of each fiscal year),	(p)         a detailed list of each Loan Party’s and its Subsidiaries’ customers (including any applicable underlying customers, including underlying customers of advertising or marketing agencies (such list of underlying customers in form and substance satisfactory to Agent in its Permitted Discretion)) and vendors, with address and contact information, (q)         if the Perfection Certificate delivered on the Closing Date is no longer accurate, a supplement to the Perfection Certificate, and (r)         a copy of any actuarial report received by the Pension Plan (which may be contained in Parent’s Annual Report on Form 10-K and will be deemed to have been delivered to Agent and the Lenders upon Parent’s filing of its Annual Report on Form 10-K for the applicable fiscal year, provided that, the Borrowers shall notify Agent of the posting of any such document).
promptly but in any event within 5 Business Days after any Loan Party acquires any Margin Stock,	(s)         notice of such acquisition, together with a description of the Margin Stock and a Form U-1 (with sufficient additional originals thereof for each Lender) duly executed and delivered by the Borrowers, together with such other documentation as Agent shall reasonably request, in order to enable Agent and the Lenders to comply with any of the requirements under Regulations T, U or X of the Federal Reserve Board.
Promptly upon receipt of any the following, or, as otherwise applicable, within 30 days after any Loan Party or any ERISA Affiliates knows or has reason to know,	(t)          that any Notification Event has occurred which could reasonably expect to result in any material liability of Parent or any of its Subsidiaries, and (u)         that there has been (i) a material increase in Unfunded Pension Liability since the date the representations hereunder are given or deemed given, or from any prior notice, as applicable, (ii) the existence of potential Withdrawal Liability, if any Loan Party or ERISA Affiliate were to withdraw completely from any and all Multiemployer Plans, (iii) the adoption of, or the commencement of contributions to, any Pension Plan by any Loan Party or any ERISA Affiliate, or (iv) the adoption of any amendment to a Pension Plan, which results in a material increase in contribution obligations of any Loan Party or any ERISA Affiliate.
Promptly upon any Loan Party obtaining knowledge of the	(v)         notice of (i) any Person or “group” (other than a Member of the McClatchy Family), or to any Loan Party’s knowledge, acquiring beneficial ownership of 25% (or, in the case of a non-U.S. Person or a group comprised of any non-U.S. Person,

2

occurrence or the planned occurrence, thereof,

10%) or more on a fully diluted basis of the voting or economic power in Parent or (ii) of any material changes to the Members of the McClatchy Family or any McClatchy Family Entity.

Upon request by Agent,

(w)        copies of purchase orders and invoices for Inventory acquired by any Loan Party, (x)         copies of invoices together with corresponding shipping and delivery documents, and credit memos together with corresponding supporting documentation, with respect to invoices and credit memos of any Loan Party in excess of an amount determined in the sole discretion of Agent, from time to time, (y)         a report detailing contributions to any Pension Plan of the Loan Parties, together with a report of expenses recognized on the income statement of such plan related to pension obligations, and a copy of any actuarial report received by any Pension Plan, (z)         copies of (i) any documents described in Section 101(k)(1) of ERISA that any Loan Party or ERISA Affiliate may request with respect to any Multiemployer Plan, (ii) any notices described in Section 101(l)(1) of ERISA that any Loan Party or ERISA Affiliate may request with respect to any Multiemployer Plan, and (iii) any other such information about any Multiemployer Plan, Pension Plan or Employee Benefit Plan that is a nonqualified deferred compensation plan or arrangement for which any Loan Party or ERISA Affiliate could reasonably be expected to incur any material liability, and (aa)       such other reports as to the Collateral of any Loan Party and its Subsidiaries, as Agent may reasonably request.

For purposes of this Schedule 5.2, “Increased Reporting Period” means any period (a) commencing on any day that (i) an Event of Default occurs, or (ii) Excess Availability is less than the greater of (I) 15% of the Maximum Revolver Amount and (II) $9,750,000, and (b) continuing until, during the preceding thirty (30) calendar days at all times, (i) no Event of Default has existed and (ii) Excess Availability has equaled or exceeded the greater of (I) 15% of the Maximum Revolver Amount, and (II) $9,750,000.

3

EX-10.3

Exhibit 10.3

FIFTH SUPPLEMENTAL INDENTURE

dated as of July 13, 2018

between

THE MCCLATCHY COMPANY,

and

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

as Trustee

7.15% Debentures due November 1, 2027
6.875% Debentures due March 15, 2029

[Signature Page to Fifth Supplemental Indenture]

THIS FIFTH SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), is entered into as of July 13, 2018, between THE MCCLATCHY COMPANY, a Delaware corporation (the “Company”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee (in such capacity, the “Trustee”).

RECITALS

WHEREAS, reference is hereby made to the Indenture, dated as of November 4, 1997  (as amended by the First Supplemental Indenture, dated as of June 1, 2001, the Second Supplemental Indenture, dated as of November 1, 2004, the Third Supplemental Indenture, dated as of August 16, 2005, and the Fourth Supplemental Indenture, dated as of June 27, 2006, the “Indenture”), relating to the Company’s 7.15% Debentures due November 1, 2027 (the “2027 Debentures”) and 6.875% Debentures due March 15, 2029  (the “2029 Debentures” and together with the 2027 Debentures, the “Debentures”);

WHEREAS, the Company plans to refinance its existing indebtedness through, among other things, the issuance of senior secured notes, the entry into and funding of a term loan, and the entry into and funding of an asset-based loan in order to extend the maturity of its existing indebtedness (the “Refinancing”);

WHEREAS, in order to facilitate the transactions contemplated by the Refinancing, the holders of the Debentures have agreed to remove certain restrictive covenants;

WHEREAS, pursuant to Section 104 and Section 902 of the Indenture, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of the applicable series, the Trustee and the Company may enter into a supplement to the Indenture for the purpose of, among other things, changing in any manner or eliminating any of the provisions of the Indenture, subject to clause (1) through (3) of Section 9.02;

WHEREAS, the Company has received the consent of the requisite Holders to the matters covered by this Supplemental Indenture and the Company has requested that the Trustee enter into this Supplemental Indenture;

WHEREAS, in connection with the foregoing, the Company has delivered to the Trustee an Officers’ Certificate, Board Resolutions and an Opinion of Counsel as required by the Indenture;

WHEREAS, in connection with the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Trustee desire to execute this Supplemental Indenture that complies with Section 902 of the Indenture.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties hereto hereby agree as follows:

ARTICLE 1
RELATION TO INDENTURE; DEFINITIONS

SECTION 1.1          Relation to Indenture.  This Supplemental Indenture constitutes an integral part of the Indenture.  In the event of inconsistencies between the Indenture and this Supplemental Indenture, the terms of this Supplemental Indenture shall govern.

SECTION 1.2          Certain Definitions.  Capitalized terms used herein and not otherwise defined herein are used as defined in the Indenture.

ARTICLE 2
TERMINATION AND RELEASE

SECTION 2.1          Amendments to Indenture.

Section 1007 of the Indenture is hereby amended and restated in its entirety as follows:

“Section 1007.  Reserved.”

Section 1008 of the Indenture is hereby amended and restated in its entirety as follows:

“Section 1008.  Reserved.”

ARTICLE 3
MISCELLANEOUS

SECTION 3.1          Notices.  All notices shall be made in accordance with Sections 105 and 106 of the Indenture.

SECTION 3.2          Separability Clause.  In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

SECTION 3.3          GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE, TOGETHER WITH THE INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 3.4          Waiver of Jury Trial.  The Company and the Trustee hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to the Indenture, as supplemented by this Supplemental Indenture.

SECTION 3.5          No Recourse Against Others.  An incorporator, director, officer, employee, stockholder or controlling person, as such, of the Company shall not have any liability for any obligations of the Company under the Debentures or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Debenture, each Holder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Debentures.

SECTION 3.6          Successors.  All agreements of the Company in the Indenture, as supplemented by this Supplemental Indenture, and the Debentures shall bind their respective successors.  All agreements of the Trustee in the Indenture, as supplemented by this Supplemental Indenture, shall bind its successors.

SECTION 3.7          Counterparts.  This Supplemental Indenture may be executed in any number of counterparts, each of which shall be original; but such counterparts shall together constitute but one and the same instrument.

SECTION 3.8          Ratification.  The Indenture, as supplemented and amended by this Supplemental Indenture, is in all respects hereby ratified and confirmed.

2

SECTION 3.9          Trustee Disclaimer.  The Trustee shall not be responsible for the validity or sufficiency of this Supplemental Indenture or for the recitals contained herein.

[Signature pages follow]

3

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the day and year first above written.

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., not in its individual capacity, but solely as Trustee
By:	/s/ R. Tarnas
	Name: R. Tarnas
	Title:   Vice President

[Signature Page to Fifth Supplemental Indenture]

The Company
THE MCCLATCHY COMPANY
By:	/s/ Elaine Lintecum
	Name: Elaine Lintecum
	Title:   Chief Financial Officer

[Signature Page to Fifth Supplemental Indenture]

EX-10.4

Exhibit 10.4

==================================

THE MCCLATCHY COMPANY,

as Issuer,

and

THE SUBSIDIARY GUARANTORS PARTIES

HERETO

9.000% Senior Secured Notes due 2026

==========

INDENTURE

Dated as of July 16, 2018

==========

THE BANK OF NEW YORK MELLON

TRUST COMPANY, N.A.,

as Trustee

and

as Collateral Agent

==================================

TABLE OF CONTENTS

		Page
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1.	Definitions	1
SECTION 1.2.	Other Definitions	34
SECTION 1.3.	Rules of Construction	34
ARTICLE II
The Notes
SECTION 2.1.	Form and Dating	35
SECTION 2.2.	Form of Execution and Authentication	37
SECTION 2.3.	Registrar and Paying Agent	38
SECTION 2.4.	Paying Agent to Hold Money in Trust	38
SECTION 2.5.	Lists of Holders of the Notes	38
SECTION 2.6.	Transfer and Exchange	38
SECTION 2.7.	Replacement Notes	44
SECTION 2.8.	Outstanding Notes	44
SECTION 2.9.	Treasury Notes	44
SECTION 2.10.	Temporary Notes	45
SECTION 2.11.	Cancellation	45
SECTION 2.12.	Payment of Interest; Defaulted Interest	45
SECTION 2.13.	CUSIP Numbers	46
SECTION 2.14.	[Reserved]	46
SECTION 2.15.	Record Date	46
ARTICLE III
Covenants
SECTION 3.1.	Payment of Notes	47
SECTION 3.2.	SEC Reports	47
SECTION 3.3.	Limitation on Indebtedness	47
SECTION 3.4.	Limitation on Restricted Payments	52
SECTION 3.5.	Limitation on Liens	57
SECTION 3.6.	Limitation on Restrictions on Distributions from Restricted Subsidiaries	57
SECTION 3.7.	Limitation on Sales of Assets and Subsidiary Stock	59
SECTION 3.8.	Limitation on Affiliate Transactions	60
SECTION 3.9.	Change of Control	61
SECTION 3.10.	Future Subsidiary Guarantors and After-Acquired Property	63
SECTION 3.11.	Limitation on Lines of Business	64
SECTION 3.12.	Effectiveness of Covenants	64
SECTION 3.13.	Compliance Certificate	65
SECTION 3.14.	Statement by Officers as to Default	65
SECTION 3.15.	Payment for Consents	65

-i-

SECTION 3.16.	Limitation on Voting Rights with Respect to Notes and Permitted Additional Pari Passu Obligations of Chatham Parties.	65
SECTION 3.17.	Maintenance of Properties	66
ARTICLE IV
Successor Company and Successor Guarantor
SECTION 4.1.	When Company May Merge or Otherwise Dispose of Assets	67
SECTION 4.2.	When a Subsidiary Guarantor May Merge or Otherwise Dispose of Assets	68
ARTICLE V
Redemption of Notes
SECTION 5.1.	Optional Redemption	69
SECTION 5.2.	Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions	70
SECTION 5.3.	Selection of Notes to Be Redeemed	70
SECTION 5.4.	Notice of Redemption	71
SECTION 5.5.	Deposit of Redemption Price	71
SECTION 5.6.	Notes Payable on Redemption Date	72
SECTION 5.7.	Notes Redeemed in Part	72
SECTION 5.8.	Mandatory Redemptions from Excess Cash Flow	72
SECTION 5.9.	Mandatory Redemptions from Net Available Cash from Asset Dispositions	72
ARTICLE VI
Defaults and Remedies
SECTION 6.1.	Events of Default	73
SECTION 6.2.	Acceleration	76
SECTION 6.3.	Other Remedies	76
SECTION 6.4.	Waiver of Past Defaults	76
SECTION 6.5.	Control by Majority	76
SECTION 6.6.	Limitation on Suits	77
SECTION 6.7.	Rights of Holders to Receive Payment	77
SECTION 6.8.	Collection Suit by Trustee	77
SECTION 6.9.	Trustee May File Proofs of Claim	77
SECTION 6.10.	Priorities	78
SECTION 6.11.	Undertaking for Costs	78
ARTICLE VII
Trustee and Collateral Agent
SECTION 7.1.	Duties of Trustee and Collateral Agent	78
SECTION 7.2.	Rights of Trustee and Collateral Agent	80
SECTION 7.3.	Individual Rights of Trustee and Collateral Agent	81

-ii-

SECTION 7.4.	Disclaimer	81
SECTION 7.5.	Notice of Defaults	82
SECTION 7.6.	Compensation and Indemnity	82
SECTION 7.7.	Replacement of Trustee	83
SECTION 7.8.	Successor Trustee by Merger	83
SECTION 7.9.	Eligibility; Disqualification	84
SECTION 7.10.	Limitation on Duty of Trustee and Collateral Agent in Respect of Collateral; Indemnification	84
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1.	Discharge of Liability on Notes; Defeasance	84
SECTION 8.2.	Conditions to Defeasance	86
SECTION 8.3.	Application of Trust Money	87
SECTION 8.4.	Repayment to Company	87
SECTION 8.5.	Indemnity for U.S. Government Obligations	87
SECTION 8.6.	Reinstatement	87
ARTICLE IX
Amendments
SECTION 9.1.	Without Consent of Holders	87
SECTION 9.2.	With Consent of Holders	89
SECTION 9.3.	Effect of Consents and Waivers	91
SECTION 9.4.	Notation on or Exchange of Notes	91
SECTION 9.5.	Trustee and Collateral Agent to Sign Amendments	91
ARTICLE X
Subsidiary Guarantee
SECTION 10.1.	Subsidiary Guarantee	92
SECTION 10.2.	Limitation on Liability; Termination, Release and Discharge	93
SECTION 10.3.	Right of Contribution	94
SECTION 10.4.	No Subrogation	94
ARTICLE XI
Collateral and Security
SECTION 11.1.	The Collateral	95
SECTION 11.2.	Further Assurances	96
SECTION 11.3.	Release of Liens on the Collateral	96
SECTION 11.4.	Authorization of Actions to Be Taken by the Trustee or the Collateral Agent Under the Collateral Documents	97

-iii-

ARTICLE XII
Miscellaneous
SECTION 12.1.	Notices	99
SECTION 12.2.	Certificate and Opinion as to Conditions Precedent	100
SECTION 12.3.	Statements Required in Certificate or Opinion	100
SECTION 12.4.	Submission of Jurisdiction	100
SECTION 12.5.	Rules by Trustee, Paying Agent and Registrar	100
SECTION 12.6.	Days Other than Business Days	100
SECTION 12.7.	Governing Law	101
SECTION 12.8.	Waiver of Jury Trial	101
SECTION 12.9.	No Recourse Against Others	101
SECTION 12.10.	Successors	101
SECTION 12.11.	Multiple Originals	101
SECTION 12.12.	Variable Provisions	101
SECTION 12.13.	Table of Contents; Headings	101
SECTION 12.14.	Direction by Holders to Enter into Collateral Documents and the Intercreditor Agreements	101
SECTION 12.15.	Force Majeure	101
SECTION 12.16.	USA Patriot Act	102
SECTION 12.17.	Foreign Account Tax Compliance Act (FATCA)	102

EXHIBITS
EXHIBIT A	Form of Note
EXHIBIT B	Form of Certificate of Transfer
EXHIBIT C	Form of Certificate of Exchange

SCHEDULES
SCHEDULE I	Mortgaged Real Property
SCHEDULE II	Post-Closing Matters

-iv-

INDENTURE, dated as of July 16, 2018 (this “Indenture”), among THE MCCLATCHY COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (the “Company”), certain subsidiaries of the Company from time to time parties hereto (the “Subsidiary Guarantors”) and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee (in such capacity, the “Trustee”) and as notes collateral agent (in such capacity, the “Collateral Agent”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Notes:

ARTICLE I

Definitions and Incorporation by Reference

SECTION 1.1.        Definitions.

“144A Global Note” means a global note substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

“ABL Agent” means Wells Fargo Bank, National Association and its successors and assigns or any other applicable administrative agent or collateral agent under the ABL Credit Facility.

“ABL Credit Documents” means the ABL Credit Facility, and each of the other agreements, documents, and instruments providing for or evidencing any ABL Obligation and any other document or instrument executed or delivered at any time in connection with any ABL Obligation (including any security, collateral or guarantee agreement or any intercreditor or joinder agreement among holders of ABL Obligations but excluding documents governing Hedging Obligations), to the extent such are effective at the relevant time, as each may be amended, modified, restated, supplemented, replaced or refinanced from time to time.

“ABL Credit Facility” means that credit agreement to be dated as of the Issue Date, by and among the Company, the other borrowers party thereto, the lenders party thereto in their capacities as lenders thereunder and Wells Fargo Bank, National Association, as administrative agent and collateral agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, in each case, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Sections 3.3 and 3.5 of this Indenture).

“ABL Intercreditor Agreement” means the ABL Intercreditor Agreement to be entered into among the Company, the Subsidiary Guarantors, the Trustee, the Collateral Agent, on behalf of itself and the Holders, and the ABL Agent, on behalf of itself and the ABL Secured Parties.

“ABL Lenders” means the “Lenders” from time to time party to, and as defined in the ABL Credit Facility, together with their respective successors and assigns; provided that the term “ABL Lender” shall in any event also include each letter of credit issuer and swingline lender under the ABL Credit Facility.

“ABL Obligations” means (i) all Obligations under the ABL Credit Facility and under any other agreement, document or instrument relating to the ABL Credit Facility, (ii) all Hedge Obligations (as defined in the ABL Credit Facility) secured pursuant to the ABL Credit Documents and owing by the Company or any of its Subsidiaries, and (iii) all Bank Product Obligations (as defined in the ABL Credit Facility) secured pursuant to the ABL Credit Documents and owing the Company or any of its Subsidiaries.  ABL Obligations shall in any event include:  all principal, premium, interest, fees, attorney fees, costs, charges, expenses, reimbursement obligations, indemnities, guarantees, and all other amounts payable under or secured by or pursuant to any ABL Credit Document (including, in each case, all amounts (including interest, fees and expenses) accruing on or after the commencement of any Insolvency or Liquidation Proceeding relating to the Company or any Subsidiary Guarantor and all amounts that would have accrued or become due under the terms of the ABL Credit Documents but for the effect of the Insolvency or Liquidation Proceeding and irrespective of whether a claim for all or any portion of such amounts is allowable or allowed in such Insolvency or Liquidation Proceeding).

“ABL Priority Collateral”  ” has the meaning assigned to it in the ABL Intercreditor Agreement.

“ABL Secured Parties” means the holders of any ABL Obligations.

“Acquired Indebtedness” means, with respect to any Person, Indebtedness (1) of a Person or any of its Subsidiaries existing at the time such Person is merged or consolidated with the Company or a Restricted Subsidiary or becomes a Restricted Subsidiary or (2) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, and Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.  Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (1) of the preceding sentence, on the date such Person is merged or consolidated with the Company or a Restricted Subsidiary or becomes a Restricted Subsidiary and, with respect to clause (2) of the preceding sentence, on the date of consummation of such acquisition of assets.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“After-Acquired Property” means any and all assets or property (other than Excluded Assets) acquired after the Issue Date, including any property or assets acquired by the Company or a Subsidiary Guarantor, which in each case constitutes Collateral or would have constituted Collateral had such assets or property been owned by the Company or such Subsidiary Guarantor on the Issue Date.

“Applicable ECF Percentage” means, with respect to Excess Cash Flow for any fiscal year (or portion thereof, in the case of the fiscal year ending on or about December 30, 2018), if the Priority Leverage Ratio as of the last day of such fiscal year is (i) equal to or greater than 1.75 to 1.00, 90%, (ii) less than 1.75 to 1.00 but greater than or equal to 1.50 to 1.00, 75%, (iii) less than 1.50 to 1.00 but greater than or equal to 1.25 to 1.00, 50% and (iv) less than 1.25 to 1.00, 0%.

“Agent” means any Registrar, Paying Agent or co-registrar.

-2-

“Applicable Premium” means, as determined by the Company with respect to a Note on any Redemption Date, the greater of:

(1)         1.0% of the principal amount of such Note; and

(2)         the excess, if any, of (a) the present value as of such Redemption Date of (i) the redemption price of such Note on July 15, 2022 as set forth in Section 5.1(a),  plus (ii) the remaining scheduled interest payments due on such Note through July 15, 2022 (excluding accrued but unpaid interest to, but excluding, the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points, over (b) the then-outstanding principal of such Note.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such transfer or exchange.

“Asset Acquisition” means (1) an Investment by the Company or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be consolidated or merged with the Company or any Restricted Subsidiary or (2) the acquisition by the Company or any Restricted Subsidiary of assets of any Person.

“Asset Disposition” means any sale, lease, transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Capital Stock of a Restricted Subsidiary (other than directors’ qualifying shares or local ownership shares) (it being understood that the Capital Stock of the Company is not an asset of the Company), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Company or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:

(1)         a disposition of assets by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary;

(2)         the disposition of Cash Equivalents in the ordinary course of business or the voluntary termination or unwinding of Hedging Obligations;

(3)         a disposition of inventory in the ordinary course of business;

(4)         a disposition of used, obsolete, worn out, damaged or surplus equipment or equipment or assets that are no longer used or useful in the conduct of the business of the Company and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business;

(5)         the disposition of all or substantially all of the assets of the Company in a manner permitted pursuant to Section 4.1 or any disposition that constitutes a Change of Control;

(6)         an issuance of Capital Stock by a Restricted Subsidiary to the Company or to a Restricted Subsidiary;

-3-

(7)         for purposes of Section 3.7 only, the making of a Permitted Investment or a disposition subject to Section 3.4;

(8)         dispositions of Capital Stock of a Restricted Subsidiary or property or other assets in a single transaction or a series of related transactions with an aggregate Fair Market Value of less than $1.0 million;

(9)         the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(10)       dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in Insolvency or Liquidation Proceedings and exclusive of factoring or similar arrangements;

(11)       the licensing or sublicensing of patents, trade secrets, know-how and other intellectual property, know-how or other general intangibles and licenses, leases or subleases of other property which do not materially interfere with the business of the Company and its Restricted Subsidiaries as operated immediately prior to the granting of such license, lease or sublease;

(12)       to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Related Business;

(13)       foreclosure on assets, Default Dispositions (as defined in the ABL Intercreditor Agreement) or transfers by reason of eminent domain;

(14)       any sale of Capital Stock, Indebtedness or other securities of an Unrestricted Subsidiary;

(15)       a Sale/Leaseback Transaction that is made for cash consideration in an amount not less than the cost of the underlying fixed or capital asset and is consummated within 180 days after the Company or any Restricted Subsidiary acquires or completes the acquisition of such fixed or capital asset;

(16)       the receipt by the Company or any Restricted Subsidiary of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets;

(17)       operating leases in the ordinary course of business;

(18)       the surrender or waiver of contract rights or litigation rights or the settlement, release or surrender of tort or other litigation claims of any kind; and

(19)       the transfer of improvements, additions or alterations in connection with the lease of any property.

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, (1) if such Sale/Leaseback Transaction does not constitute a Capitalized Lease Obligation, the present value (discounted at the interest rate implicit in the transaction) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended), determined in accordance with GAAP or (2)  if such Sale/Leaseback Transaction constitutes a Capitalized Lease

-4-

Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations.”

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Board of Directors” means:

(1)         with respect to a corporation, the Board of Directors of the corporation or (other than for purposes of determining Change of Control) any committee thereof duly authorized to act on behalf of the Board of Directors with respect to the relevant matter;

(2)         with respect to a partnership, the Board of Directors of the general partner of the partnership; and

(3)         with respect to any other Person, the board or committee of such Person serving a similar function.

“Borrowing Base” means, at any time the sum, without duplication, of (i) 90% of net accounts receivable plus (ii) 85% of unbilled accounts to the extent such accounts would upon invoicing be classified within accounts receivable of the Company in accordance with GAAP plus (ii) 55% of the book value of inventory, in each case, of the Company and the Subsidiary Guarantors, on a consolidated basis.

 “Business Day” means each day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or required by law to close.

“Capital Stock” of any Person means (1) with respect to any Person that is a corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Common Stock or Preferred Stock, and (2) with respect to any Person that is not a corporation, any and all partnership, limited liability company, membership or other equity interests of such Person, but in each case excluding any debt securities convertible into any of the foregoing or cash or a combination thereof.

“Capitalized Lease Obligation” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Cash Equivalents” means:

(1)         U.S. dollars, or in the case of any Foreign Subsidiary, such currencies held by it from time to time in the ordinary course of business;

(2)         securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full faith and

-5-

credit of the United States is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

(3)         marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either S&P or Moody’s;

(4)         certificates of deposit, demand deposits, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank (x) the long‑term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by S&P, or “A2” or the equivalent thereof by Moody’s  or (y) the short term commercial paper of such commercial bank or its parent company is rated at the time of acquisition thereof at least “A-1” or the equivalent thereof by S&P or “P-1” or the equivalent thereof by Moody’s and having combined capital and surplus in excess of $500 million;

(5)         repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2), (3) and (4) above, entered into with any bank meeting the qualifications specified in clause (4) above;

(6)         commercial paper rated at the time of acquisition thereof at least “A‑1” or the equivalent thereof by S&P or “P‑1” or the equivalent thereof by Moody’s or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof;

(7)         instruments equivalent to those referred to in clauses (1) through (6) above denominated in euros or any foreign currency comparable in credit quality and tenor to those referred to in such clauses and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Restricted Subsidiary organized in such jurisdiction;

(8)         interests in any investment company or money market fund that invests 95% or more of its assets in instruments of the type specified in clauses (1) through (7) above;

(9)         money market funds that (i) comply with the criteria set forth in Rule 2A-7 of the Investment Company Act of 1940, as amended, (ii) are rated at the time of acquisition thereof “AAA” or the equivalent by S&P or “Aaa” or the equivalent thereof by Moody’s and (iii) have portfolio assets of at least $5.0 billion; and

(10)       in the case of any Foreign Subsidiary, high quality short-term investments which are customarily used for cash management purposes in any country in which such Foreign Subsidiary operates.

“Cash Management Obligations” means obligations of the Company or any Subsidiary in relation to treasury, depository or cash management services agreements (including, without limitation, purchase cards).

-6-

“CFC” means a controlled foreign corporation (as that term is defined in the IRC) in which the Company or any Subsidiary Guarantor is a “United States shareholder” within the meaning of Section 951(b) of the Code.

“CFC Debt” means Indebtedness owed or treated as owed by one or more CFCs.

“Change of Control” means:

(1)         any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules 13d‑3 and 13d‑5 under the Exchange Act), directly or indirectly, of a majority of the total voting power of the Voting Stock of the Company (or its successors by merger, consolidation or purchase of all or substantially all of its assets);

(2)         the sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Restricted Subsidiary; or

(3)         the adoption by the stockholders of the Company of a plan or proposal for the liquidation or dissolution of the Company.

Notwithstanding the foregoing, neither the ownership nor acquisitions of shares of the Capital Stock of the Company by, nor the transfers of shares of the Capital Stock of the Company between, Members of the McClatchy Family or any McClatchy Family Entity shall constitute a Change of Control.  For purposes of this definition, “McClatchy Family Entity” shall mean a Person in which Members of the McClatchy Family beneficially own (within the meaning of Rule 13d-5 of the Securities Exchange Act of 1934, as in effect on the date hereof) more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of such Person.

“Chatham” means Chatham Asset Management LLC.

“Chatham Parties” means Chatham Asset Management LLC and its Affiliates.

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all property and assets, whether now owned or hereafter acquired, in which Liens are, from time to time, purported to be granted to secure the Notes and the Subsidiary Guarantees pursuant to the Collateral Documents.

“Collateral Agent” means The Bank of New York Mellon Trust Company, N.A., acting in its capacity as notes collateral agent under the Collateral Documents, or any successor thereto.

“Collateral Documents” means the Security Agreement, Mortgages and any other instruments and documents executed and delivered pursuant to this Indenture or any of the foregoing, as the same may be amended, restated, supplemented or otherwise modified from time to time and pursuant to which Collateral is pledged, assigned or granted to or on behalf of the Collateral Agent for the benefit of the Noteholder Secured Parties.

-7-

“Commodity Agreement” means any commodity futures contract, commodity option, commodity swap agreement, commodity collar agreement, commodity cap agreement or other similar agreement or arrangement entered into by the Company or any Restricted Subsidiary.

“Common Stock” means, with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Company” means The McClatchy Company until a successor replaces it pursuant to Section 4.1(c) and, thereafter, means such successor.

“Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:

(1)         increased (without duplication) by the following items to the extent deducted in calculating such Consolidated Net Income:

(a)         Consolidated Interest Expense; plus

(b)         Consolidated Income Taxes; plus

(c)         consolidated depreciation expense; plus

(d)         consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standards Board issued Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Other and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets”;  plus

(e)         other non‑cash charges, losses or expenses (including, without limitation, non-cash pension expense) reducing Consolidated Net Income, including any write-offs or write-downs (excluding any such non‑cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); plus

(f)         any non-cash compensation expense realized for grants of restricted stock, performance shares, stock options or other rights to officers, directors and employees of the Company or any Restricted Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Company (other than Disqualified Stock); plus

(g)         any fees, charges or other expenses made or Incurred in connection with any actual or proposed Investment, asset sale, acquisition, recapitalization or issuance of Capital Stock or Incurrence of Indebtedness or any amendment or modification of Indebtedness (including as a result of Statement of Financial Accounting Standards 141R);  plus

(h)         the amount of any restructuring charges (including lease termination, severance and relocation expenses), integration costs or other non-recurring charges or expenses deducted (and not added back) in such period in computing Consolidated Net Income;  plus

-8-

(i)          [reserved];  plus

(j)          all non-cash pension expense included in non-operating expenses;

(2)         decreased (without duplication) by non‑cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges that reduced EBITDA in any prior period); and

(3)         increased or decreased (without duplication) to eliminate the following items reflected in Consolidated Net Income:

(a)         any net gain or loss resulting in such period from Hedging Obligations and the application of ASC Topic 815, Derivatives and Hedging;

(b)         all unrealized gains and losses relating to financial instruments to which fair market value accounting is applied;

(c)         any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness (including any net loss or gain resulting from Hedging Obligations for currency exchange risk); and

(d)         effects of adjustments (including the effects of such adjustments pushed down to the Company and its Restricted Subsidiaries) in any line item in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any completed acquisition.

Notwithstanding the foregoing, clauses (1)(b) through (e) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary (other than a Subsidiary Guarantor) was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (1)(b) through (e) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be distributed to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority, which taxes or other payments are calculated by reference to the income or profits or capital of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), including, without limitation, state, franchise and similar taxes and foreign withholding taxes regardless of whether such taxes or payments are required to be remitted to any governmental authority.

“Consolidated Interest Expense” means, for any period, the interest expense of the Company and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including but not limited to the portion of any payments or accruals with respect to Capitalized Lease Obligations that are allocable to interest expense, excluding (x) any write-offs of capitalized fees under the ABL Credit Facility and all amendments thereto, (y) all non-cash charges for the

-9-

amortization of original issue discount with respect to the Notes and (z) any interest on tax reserves to the extent the Company has elected to treat such interest as an interest expense under FIN 48 since its adoption.

“Consolidated Leverage Ratio” means at any date of determination the ratio of:  (1) the sum of the aggregate outstanding amount of Indebtedness of the Company and the Restricted Subsidiaries as of the date of determination on a consolidated basis in accordance with GAAP to (2) the Company’s Consolidated EBITDA for the four most recently completed fiscal quarters (the “Four Quarter Period”) ending on or prior to the date of determination for which financial statements are publicly available.

For purposes of this definition, the Company’s “Consolidated EBITDA” shall be calculated on a pro forma basis after giving effect to any Asset Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Company or one of the Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) Incurring Indebtedness and the application of the proceeds from any Asset Disposition) at any time on or subsequent to the first day of the Four Quarter Period and on or prior to the date of determination, as if such Asset Disposition or Asset Acquisition occurred on the first day of the Four Quarter Period.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations shall be (x) made in good faith by a responsible financial or accounting officer of the Company (and may include, for the avoidance of doubt, cost savings and operating expense reductions resulting from such Asset Disposition or Asset Acquisition which is being given pro forma effect that have been or are expected to be realized within twelve (12) months after the date of such Asset Disposition or Asset Acquisition as the result of specified actions taken or to be taken within six (6) months after such date), except as otherwise provided herein or (y) determined in accordance with Regulation S-X.

“Consolidated Net Income” means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP (before preferred stock dividends); provided, however, that there will not be included in such Consolidated Net Income:

(1)         any net income (loss) of any Person if such Person is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except that:

(a)         subject to the limitations contained in clauses (3) through (6) below, the Company’s equity in the net income of any such Person for such period will be included (and, without duplication, and to the extent such amounts decreased the Company’s equity in the net income of any such Person for such period, shall be increased by the Company’s Proportionate Equity Share of the amounts described in clauses (1)(a), (1)(b), (1)(c) and 1(d) of the definition of Consolidated EBITDA that decreased the net income of such Person during such period) in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period or, without duplication, within three months following the last day of such period and prior to the date of determination or which the Company has determined as of such date of determination will be distributed imminently in respect of such period (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below); and

-10-

(b)         the Company’s equity in a net loss of any such Person for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Subsidiary during such period;

(2)         solely for the purpose of determining the amount available for Restricted Payments under Section 3.4(a)(iv)(3)(A), any net income (but not loss) of any Restricted Subsidiary (other than a Subsidiary Guarantor) if such Restricted Subsidiary is subject to prior government approval or other restrictions due to the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or government regulation (which have not been waived), directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Company, except that:

(a)         subject to the limitations contained in clauses (3) through (6) below, the Company’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and

(b)         the Company’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

(3)         any after-tax effect of gain or loss (less all fees and expenses relating thereto) realized upon sales or other dispositions of any assets of the Company or such Restricted Subsidiary (including pursuant to any Sale/Leaseback Transaction) other than in the ordinary course of business;

(4)         any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments;

(5)         the after-tax effect of extraordinary gain or loss;

(6)         the after-tax effect of the cumulative effect of a change in accounting principles;

(7)         any after-tax effect of non-cash impairment charges recorded in connection with the application of ASC Topic 350, Intangibles – Goodwill and Other and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets”; and

(8)         any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Company or any Restricted Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Capital Stock of the Company (other than Disqualified Stock).

“Corporate Trust Office”  shall be at the address of the Trustee specified in Section 12.1 or such other address as to which the Trustee may give notice to the Company or Holders pursuant to the procedures set forth in Section 12.1.

“Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

-11-

“Debt Facility” or “Debt Facilities” means, with respect to the Company or any Subsidiary Guarantor, one or more financing arrangements (including, without limitation, credit facilities, indentures and note purchase agreements and including the ABL Credit Facility) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness or issuances of debt securities evidenced by notes, debentures, bonds or similar instruments, in each case, as amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities) in whole or in part from time to time (and whether or not with the original trustee, administrative agent, holders and lenders or another trustee, administrative agent or agents), including, without limitation, any agreement extending the maturity thereof or increasing the amount of available borrowings thereunder pursuant to incremental facilities or adding Subsidiaries of the Company as additional guarantors thereunder, and whether or not increasing the amount of Indebtedness that may be issued thereunder.

“Default” means any event or condition that is, or after notice or passage of time or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.6 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Depositary” means The Depository Trust Company, its nominees and their respective successors and assigns, or such other depository institution hereinafter appointed by the Company.

“Designated Non-cash Consideration” means any consideration which is not cash or Cash Equivalents received by the Company or its Restricted Subsidiaries in connection with an Asset Disposition that is designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate executed by the Company at the time of such Asset Disposition.  Any particular item of Designated Non-cash Consideration will cease to be considered to be outstanding once it has been transferred, sold or otherwise exchanged for or converted into or for cash or Cash Equivalents.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:  (1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (2) is convertible into or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Company or a Restricted Subsidiary (it being understood that upon such conversion or exchange it shall be an Incurrence of such Indebtedness or Disqualified Stock)), or (3) is redeemable at the option of the holder of the Capital Stock, in whole or in part, in each case on or prior to the date 91 days after the earlier of the final maturity date of the Notes or the date the Notes are no longer outstanding; provided,  however, that only the portion of Capital Stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided,  further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a Change of Control or Asset Disposition (each defined in a substantially identical manner to the corresponding definitions in this Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Company may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Company with Section 3.9 and Section 3.7 and unless such repurchase or redemption would comply with Section 3.4.

-12-

“Equity Offering” means a public or private offering for cash by the Company of its Common Stock, perpetual Preferred Stock or options, warrants or rights with respect to its Common Stock, other than (x) public offerings with respect to the Company’s Common Stock, or options, warrants or rights, registered on Form S-4 or S-8, (y) an issuance to any Subsidiary or (z) any offering of Common Stock issued in connection with a transaction that constitutes a Change of Control.

“Exercise of Secured Creditor Remedies” has the meaning assigned to it in the ABL Intercreditor Agreement.

“Excess Cash Flow”  means, for any fiscal year of the Company the excess of (i) the consolidated cash flow from operations of the Company for such fiscal year as determined in accordance with GAAP over, without duplication (ii) the sum of (x) purchases of property, plant and equipment, (y) contributions to pension plans, and (z) additional Investments made pursuant to the terms of Investments as in effect on the Issue Date, in each case by the Company and its Restricted Subsidiaries during such fiscal year.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Property” has the meaning set forth in the Security Agreement.

“Excluded Subsidiary” means (a) any Immaterial Subsidiary, (b) any FSHCO, (c) any Foreign Subsidiary, (d) any domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary that is a CFC, (e) any not-for-profit subsidiary or captive insurance subsidiary and (f) any Subsidiary that is prohibited by any applicable requirement of law from becoming a Subsidiary Guarantor for so long as such legal prohibition exists.

“Existing Unsecured Notes” means the Company’s 7.15% Debentures due 2027 and 6.875% Debentures due 2029.

“Fair Market Value” means, with respect to any property, the price that would reasonably be expected to be paid in an arm’s length free-market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction.  Fair Market Value shall be determined, except as otherwise provided, by (x) if such decision involves a determination of Fair Market Value equal or less than $50.0 million, in good faith by any member of the Senior Management of the Company and (y) if such decision involves the determination of Fair Market Value in excess of $50.0 million, in good faith by the Board of Directors of the Company.

“Family Percentage Holding” means the aggregate percentage of the securities held by a Qualified Trust representing, directly or indirectly, an interest in voting shares or rights to voting shares of the Company that it is reasonable, under all the circumstances, to regard as being held beneficially for Qualified Persons (or any class consisting of two or more Qualified Persons); provided,  however, always that in calculating the Family Percentage Holding (A) in respect of any power of appointment or discretionary trust capable of being exercised in favor of any of the Qualified Persons such trust or power shall be deemed to have been exercised in favor of Qualified Persons until such trust or power has been otherwise exercised; (B) where any beneficiary of a Qualified Trust has assigned, transferred or conveyed, in any manner whatsoever, his or her beneficial interest to another Person, then, for the purpose of determining the Family Percentage Holding in respect of such Qualified Trust, the Person to whom such interest has been assigned, transferred or conveyed shall be regarded as the only Person beneficially interested in the Qualified Trust in respect of such interest but in the case where the interest so assigned, transferred or conveyed is an interest in a discretionary trust or is an interest which may arise as a result of the exercise

-13-

in favor of the assignor of a discretionary power of appointment and such discretionary trust or power of appointment is also capable of being exercised in favor of a Member of the McClatchy Family, such discretionary trust or power shall be deemed to have been so exercised in favor of Qualified Persons until it has in fact been otherwise exercised; and (C) the interest of any Permitted Residuary Beneficiary shall be ignored until its interest has indefeasibly vested.

“First Lien Obligations”  means ABL Obligations, the Notes Obligations and Permitted Additional Pari Passu Obligations; provided that any Indebtedness secured solely by Junior Liens may, at the option of the Company, be First Lien Obligations for purposes of any Junior Lien Intercreditor Agreement so long as such Junior Liens are subordinated to the Liens securing the Notes Obligations and the ABL Obligations pursuant to a separate Junior Lien Intercreditor Agreement.

“Foreign Subsidiary”  means (i) any Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and any Subsidiary of such Subsidiary and (ii) (1) any Subsidiary substantially all of the assets of which consist (directly or indirectly) of Capital Stock or indebtedness of one or more Subsidiaries that are a “controlled foreign corporation” for purposes of the Internal Revenue Code of 1986, as amended, and (2) any Subsidiary of a Subsidiary described in clause (ii)(1).

“FSHCO” means any direct or indirect domestic Subsidiary if substantially all of its assets consist, directly or indirectly, of (i) the equity of one or more direct or indirect Foreign Subsidiaries that are CFCs or other FSHCOs or (ii) CFC Debt.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession; provided that, except as otherwise provided in this Indenture, all calculations made for purposes of determining compliance with the terms of this Indenture shall use GAAP as in effect on the Issue Date; provided that “Capitalized Lease Obligation” (or whether a lease would constitute an operating lease) shall be determined without giving effect to any change in accounting for leases resulting from the implementation of Financial Accounting Standards Board ASU No. 2016-02, Leases (Topic 842), to the extent any lease (or similar arrangement conveying the right to use) would be required to be treated as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under generally accepted accounting principles in the United States of America as in effect on January 1, 2018.  All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP, except that in the event the Company is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Indenture.  For the avoidance of doubt, all financial statements of the Company and its subsidiaries, including those delivered pursuant to Section 3.2 of this Indenture shall be prepared in accordance with generally accepted accounting principles in the United States of America as in effect from time to time.

“Global Note Legend” means the legend set forth in Section 2.1(b) hereof, which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A hereto issued in accordance with Section 2.1 or 2.6 hereof.

-14-

“Good Faith by the Company” means the decision in good faith by a responsible financial or accounting officer of the Company.

“Guarantee” means any obligation, contingent or otherwise, of any Person, directly or indirectly, guaranteeing any Indebtedness or other financial obligations of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1)         to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(2)         entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other financial obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided,  however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Agreement.

“Holder” means a Person in whose name a Note is registered on the Registrar’s books.

“Immaterial Subsidiary” means, as of any date, any Wholly-Owned Subsidiary (other than a Foreign Subsidiary) whose total assets, as of that date, are less than $5.0 million and whose total revenues for the most recent 12-month period do not exceed $5.0 million; provided that a Wholly-Owned Subsidiary will not be considered to be an Immaterial Subsidiary if it, directly or indirectly, Incurs any Junior Lien Loans, Permitted Junior Debt, Permitted Additional Pari Passu Obligations or ABL Obligations.

“Incur” means to issue, create, assume, Guarantee, incur or otherwise become liable for; provided,  however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.  Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1)         the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

(2)         the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3)         the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations

-15-

with respect thereto; except to the extent such reimbursement obligation relates to a Trade Payable or similar obligation to a trade creditor in each case incurred in the ordinary course of business) other than obligations with respect to letters of credit, bankers’ acceptances or similar instruments securing obligations (other than obligations described in clauses (1) and (2) above and clause (5) below) entered into in the ordinary course of business of such Person to the extent such letters of credit, bankers’ acceptances or similar instruments are not drawn upon or, to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit, bankers’ acceptances or similar instruments;

(4)         the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except Trade Payables), which purchase price is due more than six (6) months after the date of placing such property in service or taking delivery and title thereto, except (i) any such balance that constitutes a Trade Payable, accrued liability or similar obligation to a trade creditor, in each case accrued in the ordinary course of business, and (ii) any earn-out obligation, purchase price adjustment or other deferred payment until the amount of such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP;

(5)         Capitalized Lease Obligations and all Attributable Indebtedness of such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor);

(6)         the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Subsidiary Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);

(7)         the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided,  however, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the principal amount of such Indebtedness of such other Persons;

(8)         the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor); and

(9)         to the extent not otherwise included in this definition, net Hedging Obligations of such Person (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time).

In no event shall the term “Indebtedness” include (i) any indebtedness under any overdraft or cash management facilities so long as any such indebtedness is repaid in full no later than five (5) Business Days following the date on which it was incurred or in the case of such indebtedness in respect of credit or purchase cards, within 60 days of its incurrence, (ii) obligations in respect of performance, appeal or other surety bonds or completion guarantees incurred in the ordinary course of business, (iii) except as provided in clause (5) above, any obligations in respect of a lease properly classified as an operating lease in accordance with GAAP, (iv) any liability for federal, state, local or other taxes not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP or (v) any customer deposits or advance payments received in the ordinary course of business.

-16-

The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided that contingent obligations arising in the ordinary course of business and not with respect to borrowed money of such Person or other Persons shall not be deemed to constitute Indebtedness.  Notwithstanding the foregoing, money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness shall not be deemed to be “Indebtedness,”  provided that such money is held to secure the payment of such interest.

“Independent Financial Advisor” means (1) an accounting, appraisal or investment banking firm or (2) a consultant to Persons engaged in a Related Business, in each case, of nationally recognized standing that is, in the good faith judgment of the Company, qualified to perform the task for which it has been engaged.

“Insolvency or Liquidation Proceeding” means (a) any voluntary or involuntary case or proceeding under the Bankruptcy Code or any other applicable Bankruptcy Law  with respect to the Company or any Subsidiary Guarantor, (b) any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to the Company or any Subsidiary Guarantor or with respect to a material portion of its respective assets, (c) any liquidation, dissolution, reorganization or winding-up of the Company or any Subsidiary Guarantor, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (d) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company or any Subsidiary Guarantor.

“Intercreditor Agreements” means the ABL Intercreditor Agreement and each Junior Lien Intercreditor Agreement.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Initial Notes” means the $310,000,000 in aggregate principal amount of 9.000% Senior Secured Notes due 2026 of the Company issued under this Indenture on the Issue Date.

“Initial Purchasers” means, with respect to the Initial Notes, J.P. Morgan Securities LLC and Credit Suisse Securities (USA), LLC.

“Interest Payment Date” means January 15 and July 15 of each year, commencing on January 15, 2019 and ending at the Stated Maturity of the Notes.

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“Investment” in any Person means any direct or indirect advance, loan (other than advances or extensions of credit in the ordinary course of business that are in conformity with GAAP recorded as accounts receivable on the balance sheet of the Company or its Restricted Subsidiaries) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar

-17-

instruments issued by such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:

(1)         Hedging Obligations entered into in the ordinary course of business and in compliance with this Indenture;

(2)         endorsements of negotiable instruments and documents in the ordinary course of business;

(3)         an acquisition of assets, Capital Stock or other securities by the Company or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Company;

(4)         a deposit of funds in connection with an acquisition; provided that either such acquisition is consummated by or through a Restricted Subsidiary or such deposit is returned to the Person who made it;

(5)         an account receivable arising, or prepaid expenses or deposits made, in the ordinary course of business; and

(6)         licensing or transfer of know-how or intellectual property or the providing of services in the ordinary course of business.

For purposes of Section 3.4, (1) “Investment” will include the portion (proportionate to the Company’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided,  however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company’s aggregate “Investment” in such Subsidiary as of the time of such redesignation less (b) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the Fair Market Value of the net assets (as conclusively determined in good faith by the Board of Directors of the Company) of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary; and (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Company.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, in each case, with a stable or better outlook; provided that a change in outlook shall not by itself cause the Company to lose its Investment Grade Rating.

“Issue Date” means July 16, 2018.

“Junior Indebtedness” means (i) the Existing Unsecured Notes, (ii) the Junior Lien Loans, (iii) any Permitted Junior Debt and (iv) any Refinancing Indebtedness in respect of the foregoing.

“Junior Lien Agent” means the collateral agent for the holders of Junior Lien Loans.

“Junior Lien Intercreditor Agreement” means (i) the intercreditor agreement entered into on the Issue Date among the Collateral Agent, the ABL Agent and one or more collateral agents for any other class of First Lien Obligations and the Junior Lien Agent and (ii) any other intercreditor agreement

-18-

on terms not less favorable to the Holders than the terms of the intercreditor agreement described in clause (i) above (as determined in good faith by the Company) pursuant to which the holders of any Indebtedness secured by Junior Liens subordinate the Liens securing such Indebtedness to the Notes Obligations and any other First Lien Obligations.

“Junior Lien Loans” means the loans secured by Liens on a junior basis to the Liens securing the Notes made pursuant to the Junior Lien Term Loan Credit Agreement by and among the Company and Chatham Parties named therein as lenders, dated as of the Issue Date.

“Junior Liens” means any obligations secured by Liens that are subordinated to the Liens securing the notes pursuant to a Junior Lien Intercreditor Agreement.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease (or any filing or agreement to give any financing statement in connection therewith) be deemed to constitute a Lien.

“Member of the McClatchy Family”  means:  (1) Trust for the Primary Benefit of James B. McClatchy, Trust for the Primary Benefit of Charles K. McClatchy, Trust for the Primary Benefit of Sue Stiles, Molly Maloney Evangelisti, Brown McClatchy Maloney, Kevin McClatchy, Adair McClatchy, Carlos McClatchy, Trust FBO William McClatchy, C.K. McClatchy Exempt T/U/W fbo Charles K. McClatchy, C.K. McClatchy Non-exempt T/U/W fbo Charles K. McClatchy, Britney Beth Maloney, Trust FBO Cortney Cate Maloney, Trust FBO Blaire Brinnen Maloney, Trust FBO Mallory McClatchy Maloney, and Carolan Kelly Stiles; (2) the spouse, for the time being and from time to time, of any Person listed in clause (1) above; (3) after the death of any Person listed in clause (1) above, the widow or widower, if any, of any Person listed in clause (1) above; (4) the issue of any Person listed in clause (1) above; (5) individuals adopted by any Person listed in clause (1) above or adopted by any of the issue of any Person listed in clause (1) above; provided,  however, that such individuals have not attained the age of majority at the date of such adoption, together with the issue of any such adopted individuals; provided that if any Person is born out of wedlock he shall not be deemed to be the issue of another Person for the purposes hereof unless and until he is proven or acknowledged to be the issue of such Person; or (6) a Qualified Trust, but only to the extent of its Family Percentage Holding of voting shares or rights to voting shares of the capital stock of the Company at such time.

“Moody’s” means Moody’s Investors Services, Inc., a subsidiary of Moody’s Corporation, and its successors.

“Mortgage” means any agreement, including a mortgage, deed of trust, trust deed, deed to secure debt or any other document creating and evidencing a Lien on and security interest in a Mortgaged Property in favor of or for the benefit of the Collateral Agent, which shall be in form and substance effective to grant a Lien in favor of or for the benefit of the Collateral Agent enforceable against the Company or the applicable Subsidiary Guarantor and creates rights in favor of or for the benefit of the Collateral Agent in respect of the applicable Mortgaged Real Property.

“Mortgaged Real Property” means (a) each real property listed on Schedule I and (b) each real property, if any, which shall be subject to a Mortgage delivered after the Issue Date pursuant to Section 3.10.

-19-

“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities or other assets received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case net of:

(1)         all brokerage, legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition;

(2)         all payments made on any Indebtedness (other than ABL Obligations, Permitted Additional Pari Passu Obligations and Indebtedness secured by Junior Liens) that is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or that must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition;

(3)         all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition;

(4)         the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed of in such Asset Disposition and retained by the Company or any Restricted Subsidiary after such Asset Disposition, including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters; and

(5)         any portion of the purchase price from an Asset Disposition placed in escrow (whether as a reserve for adjustment of the purchase price, or for satisfaction of indemnities in respect of such Asset Disposition);

provided,  however, that in the cases of clauses (4) and (5) above, upon reversal of any such reserve or the termination of any such escrow, Net Available Cash shall be increased by the amount of such reversal or any portion of funds released from escrow to the Company or any Restricted Subsidiary.

“Net Cash Proceeds” means, with respect to any issuance or sale of Capital Stock of the Company or any Restricted Subsidiary or Indebtedness, the cash proceeds of such issuance or sale, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

“Non-Guarantor Subsidiary” means any Restricted Subsidiary that is not a Subsidiary Guarantor.

“Non-Recourse Debt” means Indebtedness of a Person:

(1)         as to which neither the Company nor any Restricted Subsidiary (a) provides any Guarantee or credit support of any kind (including any undertaking, Guarantee, indemnity,

-20-

agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise);

(2)         no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Company or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and

(3)         the explicit terms of which provide there is no recourse against any of the assets of the Company or its Restricted Subsidiaries.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Noteholder Secured Parties” means the Trustee, Collateral Agent and Holders of any Notes Obligations.

“Notes” means the Initial Notes and any Additional Notes, treated as a single class of securities.

“Notes Custodian” means the custodian with respect to the Global Note (as appointed by the Depositary), or any successor Person thereto and shall initially be the Trustee.

“Notes Documents” means this Indenture, the Notes and the Collateral Documents.

“Notes Liens” means all Liens that secure the Notes Obligations.

“Notes Obligations”  means Obligations in respect of the Notes, the Subsidiary Guarantees, this Indenture and the Collateral Documents.

“Notes Priority Collateral” has the meaning assigned to it in the ABL Intercreditor Agreement.

“Notes Proceeds Account” means one or more deposit accounts, commodities accounts or securities accounts established or maintained by the Company or any Subsidiary Guarantor or the Collateral Agent or its agent for the sole purpose of holding the identifiable cash proceeds which arise from the disposition of any Notes Priority Collateral pursuant to an Exercise of Secured Creditor Remedies by the Collateral Agent or any other Noteholder Secured Party, or other sale of Notes Priority Collateral outside the ordinary course of business and which account has been identified in writing to the ABL Agent as a Notes Proceeds Account.

“Obligations” means any principal, interest, fees and expenses (including any interest, fees, expenses and other amounts accruing on or after the filing of any petition in bankruptcy or the commencement of any Insolvency or Liquidation Proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest, fees or expenses and other amounts are an allowed claim under applicable state, federal or foregoing law), penalties, indemnifications, reimbursements (including, without limitation, reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, fees,  expenses, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.

-21-

“Offering Memorandum” means the offering memorandum, dated as of June 29, 2018, relating to the offering of the Notes.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Company or, in the event that a Person is a partnership or a limited liability company that has no such officers, a person duly authorized under applicable law by the general partner, managers, members or a similar body to act on behalf of such Person.  “Officer” of the Company or any Subsidiary Guarantor has a correlative meaning.

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Company.

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee.  The counsel may be an employee of or counsel to the Company or a Subsidiary Guarantor.

“Permitted Additional Pari Passu Obligations” means any Indebtedness (other than the Notes) that is secured by a Lien permitted by clause (1) (or, to the extent relating to Refinancings of Indebtedness secured by Liens permitted by such clause, (19)) of the definition of “Permitted Liens” and the Obligations in respect of such Indebtedness.

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary.

“Permitted Investment” means an Investment by the Company or any Restricted Subsidiary in:

(1)         the Company or a Restricted Subsidiary, including through the purchase of Capital Stock of a Restricted Subsidiary;

(2)         any Investment by the Company or any of its Restricted Subsidiaries in a Person that is engaged in a Related Business if as a result of such Investment:

(a)         such Person becomes a Restricted Subsidiary; or

(b)         such Person, in one transaction or a series of related transactions, is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary;

and, in each case, any Investment held by such Person; provided that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation or transfer;

(3)         cash and Cash Equivalents or Investments that constituted Cash Equivalents at the time made;

(4)         receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided,  however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

-22-

(5)         commission, relocation, entertainment, payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(6)         loans or advances to, or guarantees of third party loans to, employees, officers or directors of the Company or any Restricted Subsidiary in the ordinary course of business in an aggregate amount outstanding at any time not in excess of $5.0 million with respect to all loans or advances or guarantees made since the Issue Date (without giving effect to the forgiveness of any such loan);

(7)         any Investment acquired by the Company or any of its Restricted Subsidiaries:

(a)         in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a judgment, bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable;

(b)         as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; or

(c)         in the form of notes payable, or stock or other securities issued by account debtors to the Company or any Restricted Subsidiary pursuant to negotiated agreements with respect to the settlement of such account debtor’s accounts, and other Investments arising in connection with the compromise, settlement or collection of accounts receivable, in each case in the ordinary course of business;

(8)         Investments made as a result of the receipt of non‑cash consideration (including Designated Non-cash Consideration) from an Asset Disposition that was made pursuant to and in compliance with Section 3.7 or any other disposition of assets not constituting an Asset Disposition;

(9)         Investments in existence on the Issue Date, and any extension, modification or renewal of any such Investments, or Investments purchased or received in exchange for such Investments, existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);

(10)       any Person to the extent such Investments consist of Currency Agreements, Interest Rate Agreements, Commodity Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 3.3 or that do not constitute Indebtedness;

(11)       Guarantees of Indebtedness issued in accordance with Section 3.3;

(12)       Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan including, without limitation, split-dollar insurance policies, in an amount not to exceed the amount of compensation expense recognized by the Company and its Restricted Subsidiaries in connection with such plans;

-23-

(13)       Investments received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(14)       any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility, unemployment insurance, workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company or any Restricted Subsidiary;

(15)       prepayments and other credits to suppliers made in the ordinary course of business;

(16)       endorsements of negotiable instruments and documents in the ordinary course of business;

(17)       loans or advances or similar transactions with customers, distributors, clients, developers, suppliers or purchasers of goods or services in the ordinary course of business;

(18)       Investments by the Company in connection with joint production arrangements in the form of dispositions of equipment to a joint venture entity in exchange for Capital Stock of or Indebtedness of the joint venture entity so long as within 30 days after such disposition but subject to the definition of Excluded Property, the Company’s or the applicable Restricted Subsidiary’s Capital Stock or Indebtedness in such entity are pledged to the Collateral Agent; and

(19)       Investments by the Company or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (19), in an aggregate amount at the time of such Investment not to exceed $25.0 million outstanding at any one time (with the Fair Market Value of such Investment being measured at the time made and without giving effect to subsequent changes in value).

“Permitted Junior Debt” means Indebtedness of the Company (which may be guaranteed by any Subsidiary Guarantor) (i) no portion of which has a scheduled maturity prior to the date that is six months after the final maturity of the Notes, (ii) which is not guaranteed by any Subsidiary of the Company that is not a Subsidiary Guarantor and (iii) which is not secured by any Liens on the assets of the Company or any Subsidiary of the Company except for Junior Liens on the Collateral.

“Permitted Liens” means, with respect to any Person:

(1)         Liens on the Collateral securing Indebtedness Incurred pursuant to Section 3.3(b)(i);

(2)         pledges or deposits by such Person under workers’ compensation laws, unemployment, general insurance and other insurance laws and old-age pensions and other social security or retirement benefits or similar legislation, or good-faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

-24-

(3)         Liens imposed by law and carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens, in each case Incurred in the ordinary course of business;

(4)         Liens for taxes, assessments or other governmental charges or levies not yet subject to penalties for non-payment or that are being contested in good faith by appropriate proceedings,  provided appropriate reserves required pursuant to GAAP have been made in respect thereof;

(5)         Liens in favor of issuers of surety, appeal or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(6)         minor survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(7)         Liens securing Hedging Obligations relating to Indebtedness so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligation;

(8)         leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

(9)         judgment Liens not giving rise to an Event of Default and Liens securing appeal or surety bonds related to such judgment so long as any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(10)       Liens for the purpose of securing (A) any Attributable Indebtedness in respect of a Sale/Leaseback Transaction Incurred pursuant to Section 3.3(b)(xvii) or (B) the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, mortgage financings, Purchase Money Indebtedness or other payments Incurred to finance assets or property (other than Capital Stock or other Investments) acquired, constructed, improved or leased in the ordinary course of business; provided that, in the case of this subclause (10)(B):

(a)         the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under this Indenture and does not exceed the cost of the assets or property so acquired, constructed or improved plus reasonable fees and expenses of such Person incurred in connection therewith; and

(b)         such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of the Company or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto and the proceeds thereof;

-25-

(11)       Liens that constitute banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a bank, depositary or other financial institution, whether arising by operation of law or pursuant to contract;

(12)       Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

(13)       Liens existing on the Issue Date (other than Liens permitted under clause (1) above or clause (35) below);

(14)       Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary;

(15)       Liens on property at the time the Company or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further,  however, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary;

(16)       Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Company or another Restricted Subsidiary;

(17)       Liens on Capital Stock of Unrestricted Subsidiaries to secure Indebtedness of Unrestricted Subsidiaries;

(18)       deposits as security for contested taxes or contested import to customs duties;

(19)       Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (1), (10), (13), (14), (15), (19)  or (36) of this definition; provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being Refinanced and if the Indebtedness being Refinanced was secured by Junior Liens then the Liens securing the Refinancing Indebtedness shall be Junior Liens;

(20)       any interest or title of a lessor under any operating lease;

(21)       Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(22)       Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;

-26-

(23)       Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business;

(24)       Liens on funds of the Company or any Subsidiary held in deposit accounts with third party providers of payment services securing credit card charge-back reimbursement and similar cash management obligations of the Company or the Subsidiaries;

(25)       Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction covering only the items being collected upon;

(26)       Liens arising by operation of law or contract on insurance policies and the proceeds thereof to secure premiums thereunder;

(27)       Liens on insurance policies and proceeds of insurance policies (including rebates of premiums) securing Indebtedness incurred pursuant to Section 3.3(b)(xii) to finance the payment of premiums on the insurance policies subject to such Liens;

(28)       statutory, common law or contractual Liens of landlords;

(29)       customary Liens granted in favor of a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to which Indebtedness permitted under Section 3.3 is Incurred;

(30)       Liens on any cash earnest money deposit made by the Company or any Restricted Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by this Indenture;

(31)       Liens in favor of credit card processors granted in the ordinary course of business;

(32)       Liens arising in connection with Cash Equivalents describe in clause (5) of the definition of “Cash Equivalents”;

(33)       Liens securing other obligations in an amount not to exceed $25.0 million at any time outstanding (it being understood that such Liens may not be Liens on the Collateral ranking pari passu or senior to the Notes Liens);

(34)       Liens securing cash management obligations incurred in the ordinary course of business; and

(35)       Liens on the Collateral securing Indebtedness Incurred pursuant to Section 3.3(b)(ii),  (B) Hedging Obligations and Bank Product Obligations that are secured ratably (other than with respect to cash collateral for letters of credit) with Indebtedness outstanding pursuant to Section 3.3(b)(ii) and (C) Liens on cash or deposits granted to the collateral agent with respect to Indebtedness Incurred pursuant to Section 3.3(b)(ii) in respect of letters of credit issued and outstanding thereunder; and

(36)       Junior Liens on the Collateral securing the Junior Lien Loans and Permitted Junior Debt.

-27-

“Permitted Residuary Beneficiary” means any Person who is a beneficiary of a Qualified Trust and, under the terms of the Qualified Trust, is entitled to distributions out of the capital of such Qualified Trust only after the death of all of the Qualified Persons who are beneficiaries of such Qualified Trust.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision hereof or any other entity.

“Preferred Stock” means, as applied to the Capital Stock of any corporation, Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

“Priority Leverage Ratio”  means, on any date, the Consolidated Leverage Ratio on such date adjusted to exclude all Indebtedness that is unsecured or secured solely by Junior Liens on the Collateral.

“Private Placement Legend” means the legend set forth in Section 2.1(c) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions hereof.

“Proportionate Equity Share” means, with respect to the Company’s equity in the net income of any Person included in the Company’s Consolidated Net Income pursuant to clause (1) of the definition thereof, the ratio of the Company’s equity in the net income of such Person during the applicable period to the total net income of such Person for such period.

“Purchase Money Indebtedness” means Indebtedness (including Capitalized Lease Obligations) Incurred (within 365 days of such purchase or lease) to finance or refinance the purchase, lease, construction, installation, or improvement of any assets used or useful in a Related Business (whether through the direct purchase of assets or through the purchase of Capital Stock of any Person owning such assets).

“Qualified Person” means a Person referred to in clauses (1) through (5) of the definition of Member of the McClatchy Family or the spouse, widow or widower for the time being and from time to time of any Person described in clause (4) or (5) of the definition of “Member of the McClatchy Family.”

“Qualified Trust” means a trust (whether testamentary or inter vivos) any beneficiary of which is a Qualified Person.

“QIB” means any “qualified institutional buyer” (as defined in Rule 144A).

“Rating Agencies” means S&P and Moody’s or if S&P or Moody’s or both shall not make a rating on the Notes publicly available, a nationally recognized statistical Rating Agency or agencies, as the case may be, selected by the Company (as certified by a resolution of the Board of Directors) which shall be substituted for S&P or Moody’s or both, as the case may be.

“Record Date” for the interest payable on any applicable Interest Payment Date means January 1 and July 1 (whether or not a Business Day) next preceding such Interest Payment Date.

-28-

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, replace, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for or to consolidate, such Indebtedness.  “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that is Incurred to Refinance any Indebtedness existing on the Issue Date or Incurred in compliance with this Indenture (including Indebtedness of the Company that Refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances Indebtedness of another Restricted Subsidiary (except that a Subsidiary Guarantor shall not Refinance Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor)), including Indebtedness that Refinances Refinancing Indebtedness;  provided, however, that:

(1)         if the Stated Maturity of the Indebtedness being Refinanced is later than the Stated Maturity of the Notes, the entire principal amount of the Refinancing Indebtedness has a Stated Maturity at least six (6) months later than the Stated Maturity of the Notes;

(2)         the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced at such time;

(3)         such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest, premiums required by the instruments governing such existing Indebtedness or premiums necessary to effectuate such Refinancing and costs, fees and expenses Incurred in connection therewith);

(4)         if the Indebtedness being Refinanced is subordinated in right of payment to the Notes or the Subsidiary Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Subsidiary Guarantee on terms at least as favorable to the Holders as those contained in the documentation governing the Indebtedness being Refinanced; and

(5)         Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor Subsidiary that refinances Indebtedness of the Company or a Subsidiary Guarantor.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Global Note bearing the Private Placement Legend and deposited with or on behalf of the Depositary and registered in the name of the Depositary or its nominee, issued in an initial denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.

“Related Business” means any business that is the same as or related, ancillary or complementary to any of the businesses of the Company and its Restricted Subsidiaries on the Issue Date and any reasonable extension or evolution of any of the foregoing, including without limitation, the online business of the Company and its Restricted Subsidiaries.

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

-29-

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Period” means, in relation to the Initial Notes, the 40 consecutive days beginning on and including the later of (A) the day on which the Initial Notes are offered to persons other than distributors (as defined in Regulation S under the Securities Act) and (B) the Issue Date; and, in relation to any Additional Notes that bear the Private Placement Legend, it means the comparable period of 40 consecutive days.

“Restricted Subsidiary” means any Subsidiary of the Company other than an Unrestricted Subsidiary.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“S&P” means S&P Global Ratings (a division of S&P Global Inc.) or any successor to the rating agency business thereof.

“Sale/Leaseback Transaction” means any direct or indirect arrangement relating to property now owned or hereafter acquired by the Company or a Restricted Subsidiary whereby the Company or such Restricted Subsidiary transfers such property to a Person (other than the Company or any of its Subsidiaries) and the Company or such Restricted Subsidiary leases it from such Person.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Agreement” means the security agreement dated July 16, 2018, among the Company, the Subsidiary Guarantors and the Collateral Agent, as the same may be amended, supplemented or otherwise modified from time to time.

“Senior Management” means the Chief Executive Officer, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the Company.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Specified Real Property” means the real property and improvements owned by the Company or any Restricted Subsidiary at (i) 1601 McGee Street and 1701 Locust Street, Kansas City, Missouri 64108, bearing assessor’s parcel numbers 29-240-19-11 and 29-240-36-08 and (ii) 100 Midland Avenue, Lexington, Kentucky 40508-1999 bearing assessor’s parcel number 11252975.

-30-

 “Stated Maturity” means, with respect to any security, the date specified in the agreement governing or certificate relating to such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the Issue Date or thereafter Incurred) that is subordinated or junior in right of payment to the Notes pursuant to a written agreement.  No Indebtedness of the Company shall be deemed to be subordinated or junior in right of payment to any other Indebtedness of the Company solely by virtue of Liens, guarantees, maturity or payments or structural subordination.

“Subsidiary” of any Person means (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof), or (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).  Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Company.

“Subsidiary Guarantee” means, individually, any Guarantee by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture thereto, and, collectively, all such Guarantees.  Each such Subsidiary Guarantee will be in the form prescribed by this Indenture.

“Subsidiary Guarantor” means each Restricted Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date (and any other Restricted Subsidiary that provides a Subsidiary Guarantee in accordance with this Indenture); provided that upon release or discharge of such Restricted Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Restricted Subsidiary ceases to be a Subsidiary Guarantor.

“substantially concurrent” means, with respect to two or more events, the occurrence of such events within 45 days of each other.

“Trade Payables” means, with respect to any Person, any accounts payable to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services.

“Treasury Rate”  means, as of any applicable Redemption Date, the weekly average rounded to the nearest 1/100th of a percentage point (for the most recently completed week for which such information is available as of the date that is two (2) Business Days prior to the applicable Redemption Date) of the yield to maturity of United States Treasury securities with a constant maturity (as compiled and published in the Federal Reserve Statistical Release H.15 with respect to each applicable day during such week or, if such Statistical Release is no longer published or available, any publicly available source of similar market data selected by the Company) most nearly equal to the period from the applicable Redemption Date to July 15, 2022; provided,  however, that if the period from the applicable Redemption Date to July 15, 2022 is not equal to the constant maturity of a United States Treasury security for which such a yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the applicable Redemption Date to July 15,

-31-

2022 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

“Trust Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.

“Uniform Commercial Code”  or “UCC”  means the New York Uniform Commercial Code or the Uniform Commercial Code of any other jurisdiction applicable to the Collateral, in each case, as in effect from time to time.

“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

“Unrestricted Global Note” means a permanent Global Note substantially in the form of Exhibit A attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that do not bear the Private Placement Legend.

“Unrestricted Subsidiary” means (1) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Company in the manner provided below and (2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Company may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

(1)         such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

(2)         all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter while they are Unrestricted Subsidiaries, consist of Non-Recourse Debt;

(3)         such designation and the Investment of the Company in such Subsidiary complies with Section 3.4;

(4)         such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Company and its Subsidiaries;

(5)         such Subsidiary is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation:

-32-

(a)         to subscribe for additional Capital Stock of such Person; or

(b)         to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(6)         on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary with terms substantially less favorable to the Company than those that might have been obtained from Persons who are not Affiliates of the Company.

Any such designation by the Board of Directors of the Company shall be evidenced to the Trustee by filing with the Trustee a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complies with the foregoing conditions.  If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.

The Board of Directors of the Company may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Company could Incur at least $1.00 of additional Indebtedness pursuant to Section 3.3(a) on a pro forma basis taking into account such designation.

“U.S. Government Obligations” means securities that are (1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation of the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such U.S. Government Obligations or a specific payment of principal of or interest on any such U.S. Government Obligations held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the Holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligations or the specific payment of principal of or interest on the U.S. Government Obligations evidenced by such depositary receipt.

“U.S. Person” means a U.S. Person as defined in Rule 902(k) of Regulation S under the Securities Act.

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable, of such Person.

“Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares or local ownership shares) is owned by the Company or another Wholly-Owned Subsidiary.

-33-

SECTION 1.2.        Other Definitions.

Term	Defined in   Section
“Additional Notes”	2.2
“Affiliate Transaction”	3.8(a)
“Applicable Law”	12.17
“Asset Disposition Purchase Date”	3.7(d)
“Bankruptcy Code”	6.1
“Bankruptcy Law”	6.1
“Change of Control Offer”	3.9(b)
“Change of Control Payment”	3.9(b)(i)
“Change of Control Payment Date”	3.9(b)(ii)
“Chatham Letter Agreement”	3.16(a)
“covenant defeasance option”	8.1(b)
“Custodian”	6.1
“Defaulted Interest”	2.12
“DTC”	2.1(b)
“Event of Default”	6.1
“Guarantor Obligations”	10.1
“legal defeasance option”	8.1(b)
“Notice of Default”	6.1
“Paying Agent”	2.3
“payment default”	6.1(a)(vi)(A)
“Redemption Date”	5.4
“Registrar”	2.3
“Reinstatement Date”	3.12(b)
“Restricted Payment”	3.4(a)
“Special Interest Payment Date”	2.12(a)
“Special Record Date”	2.12(a)
“Successor Company”	4.1(a)(i)
“Successor Guarantor”	4.2(a)(i)
“Suspended Covenants”	3.12(a)
“Suspension Period”	3.12(b)
“Voting Control Offer”	3.16(b)
“Voting Control Payment Date”	3.16(b)

SECTION 1.3.        Rules of Construction.  Unless the context otherwise requires:

(a)         a term has the meaning assigned to it;

(b)         an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(c)         “or” is not exclusive;

(d)         “including” means including without limitation;

(e)         words in the singular include the plural and words in the plural include the singular;

-34-

(f)         unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;

(g)         references to sections of, or rules under, the Securities Act or Exchange Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(h)         unless the context otherwise requires, any reference to an “Article,” “Section” or “clause” refers to an Article, Section or clause, as the case may be, of this Indenture;

(i)          the words “herein,” “hereof” and “hereunder” and any other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision; and

(j)          any requirement to pay interest on the Notes shall include all additional interest required pursuant to Section 6.1.

ARTICLE II

The Notes

SECTION 2.1.        Form and Dating.

(a)         The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto, the terms of which are incorporated in and made a part hereof.  The Notes may have notations, legends or endorsements approved as to form by the Company, and required by law, stock exchange rule, agreements to which the Company is subject or usage.  Each Note shall be dated the date of its authentication.  The Notes shall be issuable only in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

(b)         The Notes shall initially be issued in the form of one or more Global Notes and The Depository Trust Company (“DTC”), its nominees, and their respective successors, shall act as the Depositary with respect thereto.  Each Global Note (i) shall be registered in the name of the Depositary for such Global Note or the nominee of such Depositary, (ii) shall be delivered by the Trustee to such Depositary or held by the Trustee as custodian for the Depositary pursuant to such Depositary’s instructions, and (iii) shall bear a Global Note Legend in substantially the following form:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF

-35-

THE DEPOSITARY OR A SUCCESSOR DEPOSITARY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

(c)         Except as permitted by Section 2.6(g), any Note not registered under the Securities Act shall bear the following Private Placement Legend on the face thereof:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR] [IN THE CASE OF REGULATION S NOTES: 40 DAYS] AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO A “NON-U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF, AND IN COMPLIANCE WITH, REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS

-36-

LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

THE HOLDER OF THIS SECURITY WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

Members of, or participants in, the Depository (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depository, or the Trustee as its custodian and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the global Note for all purposes whatsoever, including but not limited to notices and payments.  Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.  Any notice to be delivered to DTC (including, but not limited to, a notice of redemption) may be delivered electronically by the Trustee in accordance with Applicable Procedures of DTC.

SECTION 2.2.        Form of Execution and Authentication.  An Officer shall sign the Notes for the Company by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note shall nevertheless be valid.

A Note shall not be valid until authenticated by the manual signature of the Trustee.  The signature of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Initial Notes for original issue on the Issue Date in an aggregate principal amount of $310,000,000,  and (ii) subject to compliance with Sections 3.3 and 3.5, one or more series of Notes (“Additional Notes”) for original issue after the Issue Date (such Notes to be substantially in the form of Exhibit A) in an unlimited amount,  in each case upon written order of the Company in the form of an Officers’ Certificate, which Officers’ Certificate shall, in the case of any issuance of Additional Notes, certify that such issuance is in compliance with Sections 3.3 and 3.5, together with an Opinion of Counsel stating that such Securities have been duly authorized, executed and delivered by the Company and, when duly authenticated and delivered by the Trustee, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms (subject to customary exceptions);  provided that if such Additional Notes are not fungible with the Initial Notes for U.S. federal income tax purpose or other securities law purposes, then such Additional Notes will have a separate CUSIP number.  In addition, each such Officers’ Certificate shall specify the amount of Notes to be authenticated, the date on which the Notes are to be authenticated, whether the securities are to be Initial Notes or Additional Notes and the aggregate principal amount of Notes outstanding on the date of authentication, and shall further specify the amount of such Notes to be issued as Global Notes or Definitive Notes.  Such Notes shall initially be in the form of one or more Global Notes, which (i) shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, the Notes to be issued, (ii) shall be registered in the name of the Depositary or its nominee and (iii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary’s instruction.  All Notes issued under this Indenture shall vote and consent together on all matters as one class and no series of Notes will have the right to vote or consent as a separate class on any matter.

-37-

The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes.  Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such agent.  An authenticating agent has the same rights as an Agent to deal with the Company or any Affiliate of the Company.

SECTION 2.3.        Registrar and Paying Agent.  The Company shall maintain (i) an office or agency where Notes may be presented for registration of transfer or for exchange (including any co-registrar, the “Registrar”) and (ii) an office or agency where Notes may be presented for payment (“Paying Agent”).  The Registrar shall keep a register of the Notes and of their transfer and exchange.  The Company may appoint one or more co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any additional paying agent.  The Company may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder of a Note.  The Company shall notify the Trustee in writing and the Trustee shall notify the Holders of the Notes of the name and address of any Agent not a party to this Indenture.  The Company may act as Paying Agent, Registrar or co-registrar.  The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture.  The agreement shall implement the provisions hereof that relate to such Agent.  The Company shall notify the Trustee in writing of the name and address of any such Agent.  If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 7.11.

The Company initially appoints the Trustee as Registrar, Paying Agent and agent for service of notices and demands in connection with the Notes.

SECTION 2.4.        Paying Agent to Hold Money in Trust.  The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders of the Notes or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee in writing of any Default by the Company in making any such payment.  While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee.  The Company at any time may require a Paying Agent to pay all money held by such Paying Agent to the Trustee.  Upon payment over to the Trustee, the Paying Agent (if other than the Company) shall have no further liability for the money delivered to the Trustee.  If the Company acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders of the Notes all money held by it as Paying Agent.

SECTION 2.5.        Lists of Holders of the Notes.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of the Notes.  If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least seven (7) Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders of the Notes, including the aggregate principal amount of the Notes held by each thereof.

SECTION 2.6.        Transfer and Exchange.

(a)         Transfer and Exchange of Global Notes.  A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.  Global Notes will be exchanged by the Company for Definitive Notes, subject to any applicable laws, only if (i) the Company delivers to the Trustee notice from the Depositary that (A) the Depositary is unwilling or unable to continue to act as

-38-

Depositary for the Global Notes or (B) the Depositary is no longer a clearing agency registered under the Exchange Act and, in either case, the Company fails to appoint a successor Depositary within 90 days after the date of such notice from the Depositary, (ii) upon request of the Trustee or Holders of a majority of the aggregate principal amount of outstanding Notes if there shall have occurred and be continuing an Event of Default with respect to the Notes or (iii) if the Company notifies the Trustee that it elects to cause the issuance of Definitive Notes.  In any such case, the Company will notify the Trustee in writing that, upon surrender by the Participants and Indirect Participants of their interests in such Global Note, certificated Notes will be issued to each Person that such Participants, Indirect Participants and DTC jointly identify as being the beneficial owner of the related Notes.  Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.7 and 2.10.  Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note.  A Global Note may not be exchanged for another Note other than as provided in this Section 2.6.  However, beneficial interests in a Global Note may be transferred and exchanged as provided in paragraph (b), (c) or (i) below.

(b)         Transfer and Exchange of Beneficial Interests in the Global Notes.  The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions hereof and the Applicable Procedures.  Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth in this Indenture to the extent required by the Securities Act.  Transfers of beneficial interests in the Global Notes also shall require compliance with the applicable subparagraphs below.

(i)         Transfer of Beneficial Interests in the Same Global Note.  Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however, that prior to the expiration of the Restricted Period, no transfer of beneficial interests in a Regulation S Global Note may be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser) unless permitted by applicable law and made in compliance with subparagraphs (ii) and (iii) below.  Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note.  No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this subparagraph (i) unless specifically stated above.

(ii)        All Other Transfers and Exchanges of Beneficial Interests in Global Notes.  In connection with all transfers and exchanges of beneficial interests that are not subject to subparagraph (i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase, or (B) (1) if Definitive Notes are at such time permitted to be issued pursuant to this Indenture, a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above.   Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in

-39-

Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to paragraph (m) below.

(iii)       Transfer of Beneficial Interests to Another Restricted Global Note.  A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of subparagraph (ii) above and the Registrar receives the following:

(A)        if the transferee will take delivery in the form of a beneficial interest in a 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and

(B)        if the transferee will take delivery in the form of a beneficial interest in a Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.

(iv)        [Reserved].

(c)         Transfer and Exchange of Beneficial Interests for Definitive Notes.

(i)  Transfer and Exchange of Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes.  Subject to Section 2.6(a) If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then upon receipt by the Registrar of the following documentation:

(A)        if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B)        if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C)        if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; and

(D)        if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to paragraph (m) below, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate a Restricted Definitive Note in the appropriate principal amount.  Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this paragraph (c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Restricted Definitive Notes to the Persons in whose names such Notes are so registered.

-40-

Any Restricted Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this subparagraph (i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii)   [Reserved].

(iii)  Transfer and Exchange of Beneficial Interests in Unrestricted Global Notes for Unrestricted Definitive Notes.  Subject to Section 2.6(a), if any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in subparagraph (b)(ii) above, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to paragraph (m) below, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the certificate a Definitive Note in the appropriate principal amount.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this subparagraph (c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant.  The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered.  Any Definitive Note issued in exchange for a beneficial interest pursuant to this subparagraph (c)(iii) shall not bear the Private Placement Legend.

(d)         Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i)  Transfer and Exchange of Restricted Definitive Notes for Beneficial Interests in Restricted Global Notes.  If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A)        if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B)        if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; or

(C)        if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof,

the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note.

(ii) [Reserved].

(iii) Transfer and Exchange of Unrestricted Definitive Notes for Beneficial Interests in Unrestricted Global Notes.  A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Unrestricted Definitive Notes to a

-41-

Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time.  Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from an Unrestricted Definitive Note or a Restricted Definitive Note, as the case may be, to a beneficial interest is effected pursuant to subparagraph (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.2, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Unrestricted Definitive Notes or Restricted Definitive Notes, as the case may be, so transferred.

(e)         Transfer and Exchange of Definitive Notes for Definitive Notes.  Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this paragraph (e), the Registrar shall register the transfer or exchange of Definitive Notes.  Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or its attorney, duly authorized in writing.  In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this paragraph (e).

(f)         Transfer of Restricted Definitive Notes to Restricted Definitive Notes.  Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A)        if the transfer will be made pursuant to Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B)        if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C)        if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including, if the Registrar so requests, a certification or Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act.

(g)         [Reserved].

(h)         Transfer of Unrestricted Definitive Notes to Unrestricted Definitive Notes.  A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note.  Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(i)          [Reserved].

(j)          [Reserved].

-42-

(k)         Private Placement Legend.

(A)        Except as permitted by subparagraph (B) below, each Global Note (other than an Unrestricted Global Note) and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the Private Placement Legend.

(B)        Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (c)(iii), (d)(iii), (e) or (f) of this Section 2.6 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.

(l)          Global Note Legend.  Each Global Note shall bear the Global Note Legend.

(m)        Cancellation and/or Adjustment of Global Notes.  At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(n)         General Provisions Relating to Transfers and Exchanges.

(i)   To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s order or at the Registrar’s request.

(ii)  No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.2,  2.10,  3.7,  3.9 and 5.7).

(iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except for the unredeemed portion of any Note being redeemed in part.

(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits hereof, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v)  The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business on a Business Day fifteen (15) days before the mailing of a notice of redemption of Notes and ending at the close of business on the day of such mailing or (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

-43-

(vi)   Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

(vii)  The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.2.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.6 to effect a registration of transfer or exchange may be submitted by facsimile.

(ix)   The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or Indirect Participants) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x)    Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

SECTION 2.7.        Replacement Notes.  If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon the written order of the Company signed by two Officers of the Company, shall authenticate a replacement Note if the Trustee’s requirements for replacements of Notes are met.  The Holder must supply indemnity or security sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced.  The Company and the Trustee may charge for their fees and expenses in replacing a Note including amounts to cover any tax, assessment, fee or other governmental charge that may be imposed in relation thereto.

Every replacement Note is an obligation of the Company.

SECTION 2.8.        Outstanding Notes.  The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.8 as not outstanding.

If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

If the principal amount of any Note is considered paid under Section 3.1 hereof, it shall cease to be outstanding and interest on it shall cease to accrue.

Subject to Section 2.9, a Note does not cease to be outstanding because the Company, a Subsidiary of the Company or an Affiliate of the Company holds the Note.

SECTION 2.9.        Treasury Notes.  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the

-44-

Company, any Subsidiary of the Company or any Affiliate of the Company shall be considered as though not outstanding, except that for purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer actually knows to be so owned shall be so considered.  Notwithstanding the foregoing, Notes that are to be acquired by the Company, any Subsidiary of the Company or an Affiliate of the Company pursuant to an exchange offer, tender offer or other agreement shall not be deemed to be owned by the Company, a Subsidiary of the Company or an Affiliate of the Company until legal title to such Notes passes to the Company, such Subsidiary or such Affiliate, as the case may be.

SECTION 2.10.      Temporary Notes.  Until Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes.  Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company and the Trustee consider appropriate for temporary Notes.  Without unreasonable delay, the Company shall prepare and the Trustee, upon receipt of the written order of the Company signed by two Officers of the Company, shall authenticate definitive Notes in exchange for temporary Notes.  Until such exchange, temporary Notes shall be entitled to the same rights, benefits and privileges as Definitive Notes.

SECTION 2.11.      Cancellation.  The Company at any time may deliver Notes to the Trustee for cancellation.  The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of all canceled Notes in its customary manner (subject to the record retention requirements of the Exchange Act), unless the Company directs copies of canceled Notes to be returned to it.  The Company may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation.

SECTION 2.12.      Payment of Interest; Defaulted Interest.  Interest on any Note which is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the Person in whose name such Note (or one or more predecessor Notes) is registered at the close of business on the regular Record Date for such interest at the office or agency of the Company maintained for such purpose pursuant to Section 2.3.

Any interest on any Note which is payable, but is not paid when the same becomes due and payable and such nonpayment continues for a period of 30 days shall forthwith cease to be payable to the Holder on the regular Record Date by virtue of having been such Holder, and such defaulted interest and (to the extent lawful) interest on such defaulted interest at the rate borne by the Notes (such defaulted interest and interest thereon herein collectively called “Defaulted Interest”) shall be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

(a)         The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on a Special Record Date (as defined below) for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date (not less than 30 days after such notice unless a shorter period shall be acceptable to the Trustee) of the proposed payment (the “Special Interest Payment Date”), and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.

-45-

Thereupon the Trustee shall fix a record date (the “Special Record Date”) for the payment of such Defaulted Interest, which shall be not more than 15 days and not less than 10 days prior to the Special Interest Payment Date and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date, and in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor to be given in the manner provided for in Section 12.1, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date and Special Interest Payment Date therefor having been so given, such Defaulted Interest shall be paid on the Special Interest Payment Date to the Persons in whose names the Notes (or their respective predecessor Notes) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

(b)         The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (b), such manner of payment shall be deemed practicable by the Trustee.

Notwithstanding the foregoing or anything to the contrary in this Indenture or the Notes, if any such Interest Payment Date (other than an Interest Payment Date at maturity) would otherwise be a day that is not a Business Day, then the Interest Payment Date shall be postponed to the next succeeding Business Day (except if that Business Day falls in the next succeeding calendar month, then interest shall be paid on the immediately preceding Business Day).  If the maturity date of the Notes is a day that is not a Business Day, all payments to be made on such day shall be made on the next succeeding Business Day, with the same force and effect as if made on the maturity date.  In either of such cases, no additional interest shall be payable as a result of such delay in payment.

Subject to the foregoing provisions of this Section, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13.      CUSIP Numbers.  The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use).  The Trustee shall not be responsible for the use of CUSIP numbers, and the Trustee makes no representation as to their correctness as printed on any Note or notice to Holders.  The Company shall promptly notify the Trustee in writing of any change in the CUSIP numbers.

SECTION 2.14.      [Reserved].

SECTION 2.15.      Record Date.  The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described in, or required or permitted to be taken pursuant to, this Indenture.  If a record date is fixed, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date.  No such consent shall be valid or effective for more than 120 days after such record date.

-46-

ARTICLE III

Covenants

SECTION 3.1.        Payment of Notes.  The Company shall promptly pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and in this Indenture.  Principal, premium, if any, and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium, if any, and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture.

The Company shall pay interest on overdue principal at the rate specified therefor in the Notes.

Notwithstanding anything to the contrary contained in this Indenture, the Company may, to the extent it is required to do so by law, deduct or withhold income or other similar taxes imposed by the United States of America from principal or interest payments hereunder.

SECTION 3.2.        SEC Reports.  Any documents or reports that the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (excluding any such information, documents or reports, or portions thereof, subject to confidential treatment and any correspondence with the SEC) must be filed by the Company with the Trustee within 15 days after the same are required to be filed with the SEC (giving effect to any grace period provided by Rule 12b-25 or any successor rule under the Exchange Act).  Documents filed by the Company with the SEC via the EDGAR system (or any successor thereto) will be deemed to be filed with the Trustee as of the time such documents are filed via EDGAR (or any successor thereto).  Delivery of reports, information and documents to the Trustee under this Indenture is for informational purposes only and the information and the Trustee’s receipt of the foregoing shall not constitute actual or constructive notice of any information contained therein, or determinable from information contained therein including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

The Company shall disclose in its annual and quarterly reports, a statement of the maximum amount of Permitted Additional Pari Passu Obligations (other than Refinancing Indebtedness) that it would have been permitted to incur as of the date of the most recent balance sheet included in such report.

In addition, the Company and the Subsidiary Guarantors shall make available to the Holders and to prospective investors, upon the request of such Holders, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to the extent such Notes constitute “restricted securities” within the meaning of the Securities Act.

In no event shall the Trustee be responsible for determining whether the Company has satisfied its delivery obligations set forth in the foregoing Section 3.2.

SECTION 3.3.        Limitation on Indebtedness.

(a)         The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided,  however, that the Company and the Subsidiary Guarantors may Incur Permitted Junior Debt if on the date thereof and, after giving effect

-47-

thereto and the application of the proceeds thereof on a pro forma basis the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would be no greater than 5.25 to 1.00.

(b)         The provisions of Section 3.3(a) shall not apply to the Incurrence of the following Indebtedness:

(i)    Indebtedness of the Company (1) evidenced by the Notes (other than Additional Notes) and Indebtedness of Subsidiary Guarantors evidenced by the Subsidiary Guarantees relating to the Notes (other than Additional Notes) and (2) Additional Notes and Permitted Additional Pari Passu Obligations so long as, in the case of this subclause (i), immediately after giving effect thereto, the aggregate principal amount of Notes and Permitted Additional Pari Passu Obligations then outstanding does not exceed the excess, if positive, of (x) 2.0x Consolidated EBITDA of the Company for the most recent four fiscal quarter period for which internal financial statements are available (with such pro forma adjustments to Consolidated EBITDA as are consistent with those set forth in the definition of “Consolidated Leverage Ratio”) minus (y) the aggregate principal amount of Notes mandatorily redeemed following the Issue Date pursuant Sections 5.8 and 5.9 hereof and, solely to the extent resulting in a reduction in the Company’s obligations to redeem Notes pursuant to Section 5.8, the principal amount of Notes retired by the Company pursuant to open market purchases or optional redemption of the Notes;

(ii)   Indebtedness Incurred pursuant to Debt Facilities in an aggregate principal amount not to exceed the sum of $40.0 million plus the Borrowing Base at any time outstanding;

(iii)  Guarantees by (x) the Company or a Subsidiary Guarantor (including any Restricted Subsidiary the Company elects to cause to become a Subsidiary Guarantor in connection therewith) of Indebtedness permitted to be Incurred by the Company or a Restricted Subsidiary in accordance with the provisions of this Indenture; and (y) Non-Guarantor Subsidiaries of Indebtedness Incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture;

(iv)  Indebtedness of the Company owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Company or any other Restricted Subsidiary; provided,  however,

(A)        if the Company is the obligor on Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;

(B)        if a Subsidiary Guarantor is the obligor on such Indebtedness and a Non-Guarantor Subsidiary is the obligee, such Indebtedness is subordinated in right of payment to the Subsidiary Guarantees of such Subsidiary Guarantor; and

(C)        (1) any subsequent issuance or transfer of Capital Stock or any other event that results in any such Indebtedness being beneficially held by a Person other than the Company or a Restricted Subsidiary of the Company; and (2) any subsequent sale or other transfer of any such Indebtedness to a Person other than the Company or a Restricted Subsidiary of the Company,

shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Company or such Subsidiary, as the case may be;

-48-

(v)   any Indebtedness (other than the Indebtedness described in clauses (i), (ii) and (xix)) outstanding on the Issue Date and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in clause (i), this clause (v), clause (vi) or clause (xix) or Incurred pursuant to Section 3.3(a);

(vi)  Indebtedness of Persons Incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged or consolidated with or into, the Company or any Restricted Subsidiary (other than Indebtedness Incurred in connection with, or in contemplation of, such acquisition, merger or consolidation); provided,  however, that at the time such Person is acquired by, or merged or consolidated with, the Company or any Restricted Subsidiary and after giving effect to the Incurrence of such Indebtedness pursuant to this clause (vi), either (x) the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would be no greater than 5.25 to 1.00; or (y) the aggregate principal amount of such Indebtedness at any time outstanding incurred pursuant to this clause (y) (together with all Refinancing Indebtedness in respect of Indebtedness previously Incurred pursuant to this clause (y)) shall not exceed $30.0 million;

(vii) Indebtedness under Hedging Obligations; provided,  however, that such Hedging Obligations are entered into to fix, manage or hedge interest rate, currency or commodity exposure of the Company or any Restricted Subsidiary and not for speculative purposes;

(viii) Purchase Money Indebtedness in an aggregate principal amount not to exceed $30.0 million at any one time outstanding pursuant to this clause (viii);

(ix)  Indebtedness Incurred by the Company or its Restricted Subsidiaries in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self‑insurance obligations, performance, bid, surety, appeal and similar bonds and completion Guarantees (not for borrowed money) or security deposits, letters of credit, banker’s guarantees or banker’s acceptances, in each case in the ordinary course of business;

(x)   Indebtedness arising from agreements of the Company or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case, Incurred or assumed in connection with the acquisition or disposition of any business or assets of the Company or any business, assets or Capital Stock of a Subsidiary, other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing such acquisition; provided that:

(A)        the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to subsequent changes in value), actually received by the Company and its Restricted Subsidiaries in connection with such disposition; and

(B)        such Indebtedness is not reflected on the balance sheet of the Company or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (x));

(xi)  Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument, including, but not limited to, electronic transfers, wire transfers and commercial card payments drawn against insufficient funds in the ordinary course of

-49-

business (except in the form of committed or uncommitted lines of credit); provided,  however, that such Indebtedness is extinguished within ten (10) Business Days of Incurrence;

(xii) Indebtedness Incurred by the Company or any Restricted Subsidiary in connection with (x) insurance premium financing arrangements not to exceed $10.0 million at any one time outstanding or (y) take-or-pay obligations in supply agreements incurred in the ordinary course of business;

(xiii) Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions Incurred in the ordinary course of business of the Company and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to provide treasury services or to manage cash balances of the Company and its Restricted Subsidiaries (for the avoidance of doubt, including Cash Management Obligations);

(xiv) guarantees to suppliers or licensors (other than guarantees of Indebtedness) in the ordinary course of business;

(xv) Indebtedness of the Company or any Restricted Subsidiary to the extent that the net proceeds thereof are promptly deposited to effect the Company’s legal defeasance option or covenant defeasance option in accordance with Article VIII;

(xvi) Indebtedness of the Company or any Restricted Subsidiary consisting of Guarantees in respect of obligations of joint ventures; provided that the aggregate principal amount of the Indebtedness incurred pursuant to this clause (xvi) shall not exceed $20.0 million at any time outstanding;

(xvii) Indebtedness of the Company or any Restricted Subsidiary Incurred in connection with any Sale/Leaseback Transaction, in an aggregate principal amount not to exceed $75.0 million at any time outstanding;

(xviii) in addition to the items referred to in clauses (i) through (xvii) above and (xix) below, Indebtedness of the Company and its Restricted Subsidiaries in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (xviii) and then outstanding, shall not exceed $30.0 million at any time outstanding;  and

(xix) Indebtedness of the Company or any Subsidiary Guarantor in respect of the Junior Lien Loans incurred on the Issue Date in an aggregate principal amount not to exceed $350.55 million.

(c)         For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 3.3:

(i)    in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in Section 3.3(b) or could be Incurred pursuant to Section 3.3(a), the Company, in its sole discretion, may divide and classify such item of Indebtedness (or any portion thereof) on the date of Incurrence and may later reclassify such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 3.3 and only be required to include the amount and type of such Indebtedness once; provided that all Indebtedness under the ABL Credit Facility shall be deemed Incurred on the Issue Date under Section 3.3(b)(ii) and may not

-50-

later be reclassified and all Indebtedness in respect of the Junior Lien Loans shall be deemed to be Incurred on the Issue Date under Section 3.3(b)(xix) and may not later be reclassified;

(ii)   Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(iii)  if obligations in respect of letters of credit are Incurred pursuant to a Debt Facility and are being treated as Incurred pursuant to Section 3.3(b)(ii) and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

(iv)  the principal amount of any Disqualified Stock of the Company or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Subsidiary Guarantor, shall be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(v)    Indebtedness permitted by this Section 3.3 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 3.3 permitting such Indebtedness; and

(vi)  the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value or the amortization of debt discount, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock shall not be deemed to be an Incurrence of Indebtedness for purposes of this Section 3.3.  The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount or the aggregate principal amount outstanding in the case of Indebtedness issued with interest payable-in-kind, (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness, (iii) in the case of the Guarantee by a specified Person of Indebtedness of another Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation and (iv) in the case of Indebtedness of others Guaranteed solely by means of a Lien on any asset or property of the Company or any Restricted Subsidiary (and not to their other assets or properties generally), the lesser of (x) the Fair Market Value of such asset or property on the date on which such Indebtedness is Incurred and (y) the amount of the Indebtedness so secured.

(d)         In addition, the Company shall not permit (i) any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt; if at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 3.3, the Company shall be in Default of this Section 3.3) or (ii) any Indebtedness issued or borrowed by the Company to be refinanced with Indebtedness issued or borrowed by any Subsidiary of the Company.

(e)         For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in

-51-

effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to Refinance other Indebtedness denominated in a foreign currency, and such Refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of such new Indebtedness.  Notwithstanding any other provision of this Section 3.3, the maximum amount of Indebtedness that the Company may Incur pursuant to this Section 3.3 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies.  The principal amount of any Indebtedness Incurred to Refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being Refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such Refinancing.

SECTION 3.4.        Limitation on Restricted Payments.

(a)         The Company shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to:

(i)    declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) other than:

(A)        dividends or distributions payable solely in Capital Stock of the Company (other than Disqualified Stock) or in options, warrants or other rights to purchase such Capital Stock of the Company; and

(B)        dividends or distributions by a Restricted Subsidiary payable to the Company or another Restricted Subsidiary (and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its other holders of common Capital Stock on a pro rata basis or on a basis that results in the receipt by the Company or a Restricted Subsidiary of dividends or distributions of a greater value than it would receive on a pro rata basis);

(ii)   purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Company held by Persons other than the Company or a Restricted Subsidiary (other than in exchange for Capital Stock of the Company (other than Disqualified Stock));

(iii)  make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Junior Indebtedness other than the purchase, repurchase, redemption, defeasance or other acquisition of such Junior Indebtedness, in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within six (6) months of the date of purchase, repurchase, redemption, defeasance or acquisition; or

(iv)  make any Restricted Investment (all such payments and other actions referred to in clauses (i) through (iv) (other than any exception thereto) shall be referred to as a “Restricted Payment”), unless, at the time of and after giving effect to such Restricted Payment:

-52-

(1)         no Default shall have occurred and be continuing (or would result therefrom);

(2)         immediately after giving effect to such transaction on a pro forma basis, the Company is able to Incur $1.00 of additional Permitted Additional Pari Passu Obligations under Section 3.3(b)(i)(2) hereof; and

(3)         the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date (excluding Restricted Payments made pursuant to clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), (xiv), (xv) and (xvi) of Section 3.4(b)) would not exceed the sum of, without duplication:

(A)         the excess of (x) the Company’s cumulative Consolidated EBITDA (whether positive or negative) determined at the time of such Restricted Payment minus (y) 140% of the Company’s Consolidated Interest Expense, each determined for the period (taken as one accounting period) from April 2, 2018 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment;

(B)         100% of the aggregate Net Cash Proceeds and the Fair Market Value of marketable securities or other property received by the Company or a Restricted Subsidiary from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Issue Date, other than:

(x)         Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of the Company or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination; and

(y)         Net Cash Proceeds received by the Company from the issue and sale of its Capital Stock to the extent applied to redeem Notes pursuant to Section 5.1(b);

(C)        the amount by which Indebtedness of the Company and its Restricted Subsidiaries is reduced on the Company’s consolidated balance sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness (other than Junior Indebtedness) of the Company or its Restricted Subsidiaries for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the Fair Market Value of any other property, distributed by the Company or any Restricted Subsidiary upon such conversion or exchange);

(D)        100% of the Net Cash Proceeds and the Fair Market Value of property other than cash and marketable securities from the sale or other disposition (other than to the Company or a Restricted Subsidiary) of Restricted Investments made after the Issue Date and redemptions and repurchases of such Restricted Investments from the Company or its Restricted Subsidiaries and

-53-

repayment of Restricted Investments in the form of loans or advances from the Company and its Restricted Subsidiaries and releases of Guarantees that constitute Restricted Investments by the Company and its Restricted Subsidiaries (other than in each case to the extent the Restricted Investment was made pursuant to Section 3.4(b)(xii));

(E)        100% of the Net Cash Proceeds and the Fair Market Value of property other than cash and marketable securities received by the Company or its Restricted Subsidiaries from the sale (other than to the Company or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Company or a Restricted Subsidiary pursuant to Section 3.4(b)(xii) or to the extent such Investment constituted a Permitted Investment); and

(F)         to the extent that any Unrestricted Subsidiary of the Company designated as such after the Issue Date is redesignated as a Restricted Subsidiary or any Unrestricted Subsidiary of the Company merges into or consolidates with the Company or any of its Restricted Subsidiaries or any Unrestricted Subsidiary transfers, dividends or distributes assets to the Company or a Restricted Subsidiary, in each case after the Issue Date, the Fair Market Value of such Subsidiary as of the date of such redesignation or such merger or consolidation, or in the case of the transfer, dividend or distribution of assets of an Unrestricted Subsidiary to the Company or a Restricted Subsidiary, the Fair Market Value of such assets of the Unrestricted Subsidiary as determined at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, consolidation or transfer, dividend or distribution of assets (other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary was made by a Restricted Subsidiary pursuant to Section 3.4(b)(xii) or to the extent such Investment constituted a Permitted Investment).

(b)         The provisions of Section 3.4(a) hereof shall not prohibit

(i)    any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock, Junior Indebtedness or any Restricted Investment made in exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company (other than (x) Disqualified Stock and (y) Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Company or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);  provided, however, that the Net Cash Proceeds from such sale of Capital Stock shall be excluded from Section 3.4(a)(iv)(3)(B);

(ii)   any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Junior Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent Incurrence of Refinancing Indebtedness;

(iii)  any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Company or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Company or such Restricted Subsidiary, as the case may be, that, so long as such refinancing Disqualified Stock is permitted to be Incurred pursuant to Section 3.3;

-54-

(iv)  dividends paid within 90 days after the date of declaration if at such date of declaration such dividend would have complied with this provision;

(v)    the purchase, repurchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock, of the Company held by any existing or former employees, management or directors of or consultants to the Company or any Subsidiary of the Company or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other compensatory agreements approved by the Board of Directors of the Company; provided that such purchases, repurchases, redemptions, acquisitions, cancellations or retirements pursuant to this clause (v) shall not exceed $5.0 million in the aggregate during any calendar year, although such amount in any calendar year (with any unused amounts in any year being available in succeeding years) may be increased by an amount not to exceed:

(A)        the Net Cash Proceeds from the sale of Capital Stock (other than Disqualified Stock) of the Company to existing or former employees or members of management of the Company or any of its Subsidiaries that occurs after the Issue Date, to the extent the cash proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments (provided that the Net Cash Proceeds from such sales or contributions shall be excluded from Section 3.4(a)(iv)(3)(B)); plus

(B)        the cash proceeds of key man life insurance policies received by the Company or its Restricted Subsidiaries after the Issue Date; less

(C)        the amount of any Restricted Payments previously made with the cash proceeds described in clauses (A) and (B) of this clause (v);

(vi)  the accrual declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Company issued in accordance with the terms of this Indenture;

(vii) repurchases or other acquisitions of Capital Stock deemed to occur (i) upon the exercise of stock options, warrants, restricted stock units or other rights to purchase Capital Stock or other convertible securities if such Capital Stock represents a portion of the exercise price thereof or conversion price thereof or (ii) in connection with withholdings or similar taxes payable by any future, present or former employee, director or officer;

(viii) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Junior Indebtedness at a purchase price not greater than 101% of the principal amount of (plus accrued and unpaid interest on) such Junior Indebtedness in the event of a Change of Control in accordance with provisions similar to Section 3.9;  provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Company has made a Change of Control Offer under this Indenture and has completed the repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control Offer under this Indenture;

(ix)  cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Capital Stock of the Company or other exchanges of securities of the Company or a Restricted Subsidiary in exchange for Capital Stock of the Company;

-55-

(x)      Restricted Payments from the proceeds of Permitted Junior Debt if on the date thereof and, after giving effect thereto on a pro forma basis, the Consolidated Leverage Ratio for the Company and its Restricted Subsidiaries would be no greater than 5.25 to 1.00;

(xi)     [reserved];

(xii)    other Restricted Payments in an aggregate amount, which, when taken together with all other Restricted Payments made pursuant to this clause (xii) (as reduced by the amount of capital returned from any such Restricted Payments that constituted Restricted Investments in the form of cash and Cash Equivalents (exclusive of amounts included in Section 3.4(a)(iv)(3)(A))) not to exceed $25.0 million;

(xiii)   the purchase of fractional shares of Capital Stock of the Company arising out of stock dividends, splits or combinations or mergers, consolidations or other acquisitions;

(xiv)   in connection with any acquisition by the Company or any of its Subsidiaries, the receipt or acceptance of the return to the Company or any of its Restricted Subsidiaries of Capital Stock of the Company constituting a portion of the purchase price consideration in settlement of indemnification claims or as a result of a purchase price adjustment (including earn-outs or similar obligations);

(xv)    the distribution of rights pursuant to any shareholder rights plan or the redemption of such for nominal consideration in accordance with the terms of any shareholder rights plan; or

(xvi)   payments or distributions to stockholders pursuant to appraisal rights required under applicable law in connection with any merger, consolidation or other acquisition by the Company or any Restricted Subsidiary;

provided,  however, that at the time of and after giving effect to any Restricted Payment permitted under clauses (vi), (x), (xii) and (xvi), no Default shall have occurred and be continuing or would occur as a consequence thereof.

(c)         The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the assets or securities proposed to be paid, transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.  The Fair Market Value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively in Good Faith by the Company.

For purposes of determining compliance with this Section 3.4, in the event that a proposed Restricted Payment (or portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in clauses (i) through (xvi) of this Section 3.4(b), or is entitled to be made pursuant to Section 3.4(a), the Company shall be entitled to divide and classify such Restricted Payment (or portion thereof) on the date of its payment in any manner that complies with this Section 3.4.

If the Company or any Restricted Subsidiary makes a Restricted Investment or a Permitted Investment and the Person in which such Investment was made subsequently becomes a Restricted Subsidiary, to the extent such Investment resulted in a reduction of the amounts calculated under the first paragraph of this covenant or any other provision of this covenant or the definition of Permitted Investment (which was not subsequently reversed), then such amount shall be increased by the amount of such

-56-

reduction to the extent of the lesser of (x) the amount of such Investment and (y) the Fair Market Value of such Investment at the time such Person becomes a Restricted Subsidiary.

(d)         As of the Issue Date, all of the Company’s Subsidiaries shall be Restricted Subsidiaries.  The Company shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of the definition of “Unrestricted Subsidiary.”  For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Company and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the definition of “Investment.”  Such designation shall be permitted only if a Restricted Payment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an “Unrestricted Subsidiary.”  “=Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Indenture.

SECTION 3.5.        Limitation on Liens.  The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur or assume any Lien (other than Permitted Liens) that secures any Indebtedness on any asset or property of the Company or such Restricted Subsidiary or any income or profits therefrom.

SECTION 3.6.        Limitation on Restrictions on Distributions from Restricted Subsidiaries.

(a)         The Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(i)          (A) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or

(B)        pay any Indebtedness or other obligations owed to the Company or any Restricted Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock);

(ii)         make any loans or advances to the Company or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Company or any Restricted Subsidiary to other Indebtedness Incurred by the Company or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or

(iii)        sell, lease or transfer any of its property or assets to the Company or any Restricted Subsidiary (it being understood that such transfers shall not include any type of transfer described in clause (i) or (ii) of this Section 3.6(a)).

(b)         The restrictions in Section 3.6(a) shall not prohibit encumbrances or restrictions existing under or by reason of:

(i)          any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date, (including, without limitation, this Indenture, the Notes, the Notes Guarantees, the Collateral Documents, the ABL Intercreditor Agreement, the Junior Lien Loans (and related documentation) and the ABL Credit Facility in effect on such date);

-57-

(ii)   any encumbrance or restriction with respect to a Person or assets pursuant to an agreement in effect on or before the date on which such Person became a Restricted Subsidiary or was acquired by, merged into or consolidated with the Company or a Restricted Subsidiary (other than Capital Stock or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by, merged into or consolidated with the Company or in contemplation of the transaction) or such assets were acquired by the Company or any Restricted Subsidiary; provided that any such encumbrance or restriction shall not extend to any Person or the assets or property of the Company or any other Restricted Subsidiary other than the Person and its Subsidiaries or the assets and property so acquired and that, in the case of Indebtedness, was permitted to be Incurred pursuant to this Indenture;

(iii)  any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this Section 3.6(b) or this clause (iii) or contained in any amendment, restatement, modification, renewal, supplement, refunding, replacement or Refinancing of an agreement referred to in clause (i) or (ii) of this Section 3.6(b) or this clause (iii); provided,  however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable (as determined in Good Faith by the Company) in any material respect, taken as a whole, to the Holders than the encumbrances and restrictions contained in such agreements referred to in clause (i) or (ii) of this Section 3.6(b) on the Issue Date or the date such Restricted Subsidiary became a Restricted Subsidiary or was merged into or consolidated with a Restricted Subsidiary, whichever is applicable;

(iv)  in the case of Section 3.6(a)(iii), encumbrances or restrictions arising in connection with Liens permitted to be Incurred under the provisions of Section 3.5 that apply only to the assets subject to such Liens;

(v)    Purchase Money Indebtedness and Capitalized Lease Obligations permitted under this Indenture, in each case, that impose encumbrances or restrictions of the nature described in Section 3.6(a)(iii) on the property so acquired;

(vi)  contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Company pursuant to an agreement that has been entered into for the sale of all or a portion of the Capital Stock or assets of such Subsidiary;

(vii) restrictions on cash or other deposits or net worth imposed by customers or lessors or required by insurance, surety or bonding companies under contracts entered into in the ordinary course of business;

(viii) any customary provisions in joint venture agreements relating to joint ventures and other similar agreements entered into in the ordinary course of business, provided that if such joint venture is a Restricted Subsidiary, such provisions shall not materially affect the Company’s ability to make anticipated principal or interest payments on the Notes (as determined in Good Faith by the Company);

(ix)  any customary provisions in leases, subleases or licenses and other agreements entered into by the Company or any Restricted Subsidiary in the ordinary course of business;

-58-

(x)    encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation, order, permit or grant;

(xi)  encumbrances or restrictions contained in or arising under indentures or debt instruments or other debt arrangements Incurred or Preferred Stock issued by Subsidiary Guarantors in accordance with Section 3.3 that are not more restrictive, taken as a whole (as determined in Good Faith by the Company), than those applicable to the Company in this Indenture and the ABL Credit Facility (which results in encumbrances or restrictions comparable to those applicable to the Company at a Restricted Subsidiary level);

(xii) encumbrances or restrictions contained in or arising under indentures or other debt instruments or debt arrangements Incurred or Preferred Stock issued by Restricted Subsidiaries that are not Subsidiary Guarantors subsequent to the Issue Date pursuant to clauses (ii), (v), (vi), (vii) and (xiv) of Section 3.3(b),  provided that such encumbrances and restrictions contained in any agreement or instrument shall not materially affect the Company’s ability to make anticipated principal or interest payments on the Notes (as determined in Good Faith by the Company); and

(xiii) under any contract, instrument or agreement relating to Indebtedness of any Foreign Subsidiary which imposes restrictions solely on such Foreign Subsidiary and its Subsidiaries.

SECTION 3.7.        Limitation on Sales of Assets and Subsidiary Stock.

(a)         The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any Asset Disposition following the Issue Date unless:

(i)    the Company or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined as of the date of contractually agreeing to such Asset Disposition) of the assets subject to such Asset Disposition; and

(ii)   at least 75% of the consideration from such Asset Disposition received by the Company or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents.

The Company shall determine the Fair Market Value of any consideration from such Asset Disposition that is not cash or Cash Equivalents.

(b)         For the purposes of this Section 3.7, the following are deemed to be cash:  (x) the assumption of Indebtedness or other liabilities of the Company (other than Disqualified Stock or Junior Indebtedness) or Indebtedness or other liabilities of any Restricted Subsidiary (other than Disqualified Stock or Junior Indebtedness) and the release of the Company or such Restricted Subsidiary from all liability on such Indebtedness or liabilities in connection with such Asset Disposition, (y) securities, notes or similar obligations received by the Company or any Restricted Subsidiary from the transferee that are converted within 180 days by the Company or such Restricted Subsidiary into cash and (z) any Designated Non-cash Consideration received by the Company or any of its Restricted Subsidiaries in such Asset Disposition having an aggregate Fair Market Value (determined in Good Faith by the Company), taken together with all other Designated Non-cash Consideration received pursuant to this clause (z) that is at that time outstanding, not to exceed $50.0 million at the time of the receipt of such Designated Non-cash

-59-

Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

SECTION 3.8.        Limitation on Affiliate Transactions.

(a)         The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”) unless:

(i)    the terms of such Affiliate Transaction, when viewed together with any related Affiliate Transactions, are not materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable transaction at the time of such transaction in arm’s-length dealings with a Person who is not an Affiliate;

(ii)   in the event such Affiliate Transaction involves an aggregate consideration in excess of $10.0 million, the terms of such transaction have been approved by a majority of the disinterested members of the Board of Directors of the Company (and such majority determines that such Affiliate Transaction satisfies the criteria in clause (i) above); and

(iii)  in the event such Affiliate Transaction involves an aggregate consideration in excess of $20.0 million, the Company has received a written opinion from an Independent Financial Advisor that such Affiliate Transaction is fair, from a financial point of view, to the Company and the Restricted Subsidiaries, as applicable, or not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate.

(b)         The provisions of Section 3.8(a) shall not apply to:

(i)    any (x) Restricted Payment permitted to be made pursuant to Section 3.4 and (y) Permitted Investment in any Person that is an Affiliate of the Company solely as a result of ownership of Investments in such Person by the Company or any Restricted Subsidiary;

(ii)   any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of the Company pursuant to restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans, pension plans or similar plans or agreements or arrangements approved by the Board of Directors of the Company;

(iii)  loans or advances to employees, officers or directors of the Company or any Restricted Subsidiary of the Company in the ordinary course of business, in an aggregate amount outstanding at any time not in excess of $5.0 million (without giving effect to the forgiveness of any such loan);

(iv)  any transaction between or among the Company and any Restricted Subsidiary or between or among Restricted Subsidiaries, and any Guarantees issued by the Company or a Restricted Subsidiary for the benefit of the Company or a Restricted Subsidiary;

(v)    the payment of reasonable and customary compensation (including fees, benefits, severance, change of control payments and incentive arrangements) to, and employee benefit arrangements, including, without limitation, split-dollar insurance policies, and indemnity or similar

-60-

arrangements provided on behalf of, directors, officers, employees and agents of the Company or any Restricted Subsidiary, whether by charter, bylaw, statutory or contractual provisions;

(vi)  the existence of, and the performance of obligations of the Company or any of its Restricted Subsidiaries under the terms of any agreement to which the Company or any of its Restricted Subsidiaries is a party as of or on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided,  however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date shall be permitted to the extent that its terms, taken as a whole, are not more disadvantageous to the Holders in any material respect, as determined in Good Faith by the Company, than the terms of the agreements in effect on the Issue Date;

(vii) any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged with or into or consolidated with the Company or a Restricted Subsidiary; provided that such agreement was not entered into in contemplation of such acquisition, merger or consolidation, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Holders, as determined in Good Faith by the Company, when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition or merger);

(viii) transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of the business of the Company and its Restricted Subsidiaries; provided that as determined in Good Faith by the Company, such transactions are on terms that are not materially less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person;

(ix)  any purchases by the Company’s Affiliates of Indebtedness of the Company or any of its Restricted Subsidiaries the majority of which Indebtedness is placed with Persons who are not Affiliates; and

(x)   any issuance or sale of Capital Stock (other than Disqualified Stock) to Affiliates of the Company and the granting of registration and other customary rights in connection therewith or any contribution to the Capital Stock of the Company or any Restricted Subsidiary.

SECTION 3.9.        Change of Control.

(a)         If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes as described under Section 5.1, each Holder shall have the right to require the Company to repurchase all or any part (in integral multiples of $1,000 except that no Note may be tendered in part if the remaining principal amount would be less than $2,000) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to, but excluding, the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

(b)         Within 30 days following any Change of Control, the Company shall send a notice to each Holder at the address appearing in the Note Register, with a copy to the Trustee, stating (the “Change of Control Offer”):

(i)    that a Change of Control Offer is being made and that such Holder has the right to require the Company to purchase such Holder’s Notes at a purchase price in cash equal to

-61-

101% of the principal amount of such Notes plus accrued and unpaid interest, if any,  to, but excluding, the date of purchase (subject to the right of Holders of record on a Record Date to receive interest on the relevant Interest Payment Date) (the “Change of Control Payment”);

(ii)   the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is sent) (the “Change of Control Payment Date”);

(iii)  the procedures determined by the Company, consistent with this Indenture, that a Holder must follow in order to have its Notes repurchased;

(iv)  that any Notes not tendered will continue to accrue interest in accordance with the terms of this Indenture;

(v)   that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(vi)  that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes delivered for purchase and a statement that such Holder is unconditionally withdrawing its election to have such Notes purchased; and

(vii) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.

(c)         On the Change of Control Payment Date, the Company shall, to the extent lawful:

(i)    accept for payment all Notes or portions of Notes properly tendered pursuant to the Change of Control Offer;

(ii)   deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes so tendered; and

(iii)  deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

(d)         The Paying Agent shall promptly send to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and deliver to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $2,000 or larger integral multiples of $1,000.

(e)         If the Change of Control Payment Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, will be paid on the relevant Interest Payment Date to the Person in whose name a Note is registered at the close of business on

-62-

such Record Date, and no additional interest shall be payable to Holders who tender pursuant to the Change of Control Offer.

(f)         The Change of Control provisions described above shall be applicable whether or not any other provisions of this Indenture are applicable.

(g)         The Company shall not be required to make a Change of Control Offer upon a Change of Control if (i) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (ii) a notice of redemption for all of the outstanding Notes has been given pursuant to this Indenture unless and until there is a default in payment of the applicable redemption price, plus accrued and unpaid interest to, but excluding, the proposed Redemption Date.  Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

(h)         The Company shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations thereunder in connection with the repurchase of Notes pursuant to a Change of Control Offer.  To the extent that the provisions of any securities laws or regulations conflict with provisions of this Indenture, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in this Indenture by virtue of such conflict.

SECTION 3.10.      Future Subsidiary Guarantors and After-Acquired Property.

(a)         The Company shall cause each Wholly-Owned Subsidiary (other than an Excluded Subsidiary) that is formed or acquired following the Issue Date to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary shall unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest in respect of the Notes, including all obligations under this Indenture,  on the terms set forth in Article X pursuant to a supplemental indenture hereto in form reasonably satisfactory to the Trustee.

(b)         Each Restricted Subsidiary that becomes a Subsidiary Guarantor on or after the Issue Date shall also become a party to the Security Agreement and the other applicable Collateral Documents and the Intercreditor Agreements and, to the extent required by this Indenture, the Security Agreement and any other Collateral Document, shall as promptly as practicable execute and deliver and file, if applicable, such security instruments, financing statements and certificates as may be necessary to vest in the Collateral Agent, subject to Permitted Liens, a perfected first-priority security interest on a pari passu basis with the Liens securing any Permitted Additional Pari Passu Obligations (subject to Permitted Liens) in properties and assets that constitute Collateral as security for the Notes Obligations and as may be necessary to have such property or asset added to the applicable Collateral as required under this Indenture and the Collateral Documents, and thereupon all provisions of this Indenture relating to the Collateral shall be deemed to relate to such properties and assets to the same extent and with the same force and effect.

(c)         Subject to Section 11.1(e), at any time that the Company or any Subsidiary Guarantor shall acquire or own any real property with a fair market value in excess of $2,000,000 which does not constitute Excluded Property and which is not subject to a Mortgage in favor of the Collateral Agent for the benefit of the Noteholder Secured Parties, the Company or such Subsidiary Guarantor shall within ninety (90) days after the acquisition of such real property (or such later date as the ABL Agent may

-63-

agree with respect to the corresponding requirement under the ABL Credit Documents), duly execute and deliver to the Collateral Agent counterparts of a Mortgage together with other items set forth in Schedule 2, with respect to any such real property.

SECTION 3.11.      Limitation on Lines of Business.  The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business.

SECTION 3.12.      Effectiveness of Covenants.

(a)         After the Issue Date, following the first day: (i) the Notes have an Investment Grade Rating from both of the Ratings Agencies and (ii) no Default has occurred and is continuing under this Indenture, the Company and its Restricted Subsidiaries shall not be subject to Sections 3.3,  3.4,  3.6,  3.7,  3.8,  3.10 and 4.1(a)(iv) (collectively, the “Suspended Covenants”).

(b)         If at any time the Notes’ credit rating is downgraded from an Investment Grade Rating by any Rating Agency, then the Suspended Covenants shall thereafter be reinstated as if such covenants had never been suspended (the “Reinstatement Date”) and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes subsequently attain an Investment Grade Rating and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Notes maintain an Investment Grade Rating); provided,  however, that no Default, Event of Default or breach of any kind shall be deemed to exist or have occurred under this Indenture, the Notes or the Subsidiary Guarantees with respect to the Suspended Covenants based on, and none of the Company or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below), or any actions taken at any time pursuant to any contractual obligation arising prior to the Reinstatement Date, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period.  The period of time between the date of suspension of the covenants and the Reinstatement Date is referred to as the “Suspension Period.”

(c)         On the Reinstatement Date, all Indebtedness Incurred during the Suspension Period shall be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under Section 3.3(b)(v).  Calculations made after the Reinstatement Date of the amount available to be made as Restricted Payments under Section 3.4 shall be made as though Section 3.4 had been in effect since the Issue Date and throughout the Suspension Period.  Accordingly, Restricted Payments made during the Suspension Period shall reduce the amount available to be made as Restricted Payments under Section 3.4(a) to the extent such Restricted Payments were not otherwise permitted to be made pursuant to Section 3.4(b)(i) through (xvii);  provided that the amount available to be made as Restricted Payments on the Reinstatement Date pursuant to the first paragraph shall not be reduced below zero solely as a result of such Restricted Payments under Section 3.4.

(d)         During any period when the Suspended Covenants are suspended, the Board of Directors of the Company may not designate any of the Company’s Subsidiaries as Unrestricted Subsidiaries pursuant to this Indenture.

(e)         The Company shall deliver to the Trustee an Officers’ Certificate notifying the Trustee of any Reinstatement Date or the commencement of any Suspension Period, and in no event shall the Trustee be charged with the knowledge of such Suspension Period or Reinstatement Date, except to the extent that a Trust Officer has received such Officers’ Certificate.

-64-

SECTION 3.13.      Compliance Certificate.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (commencing with the fiscal year ending December 30, 2018) an Officers’ Certificate stating whether or not the signers know of any Default or Event of Default that occurred during such period.  If they do, the certificate shall describe the Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

SECTION 3.14.      Statement by Officers as to Default.  The Company shall deliver to the Trustee, within 30 days after the knowledge thereof if such event is still continuing, written notice in the form of an Officers’ Certificate of any Event of Default or any event which, with notice or the lapse of time or both, would constitute an Event of Default under Section 6.1(a)(i),  (ii),  (iii),  (iv),  (v),  (vi),  (ix),  (x) or (xi), which shall include their status and what action the Company is taking or proposing to take in respect thereof.

SECTION 3.15.      Payment for Consents.  The Company shall not, and shall not permit any of its Subsidiaries to pay or cause to be paid any consideration to or for the benefit of any Holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or amendment;  provided that if such consent, waiver or amendment is in connection with an exchange offer for the Notes, such exchange offer may be limited to only those Holders that are “Qualified Institutional Buyers” within the meaning of Rule 144A under the Securities Act.

SECTION 3.16.      Limitation on Voting Rights with Respect to Notes and Permitted Additional Pari Passu Obligations of Chatham Parties.

(a)         The Company shall at all times maintain in full force and effect that certain letter agreement with Chatham Asset Management, LLC, dated as of July 16, 2018 (the “Chatham Letter Agreement”), and cause the Chatham Party to comply therewith.

(b)         Notwithstanding the foregoing, the foregoing provisions will be permanently eliminated in the event that any Chatham Party makes a Voting Control Offer in accordance with the requirements set forth below.

The applicable Chatham Party will mail a notice to each Holder at the address appearing in the security register, with a copy to the Trustee, stating (the “Voting Control Offer”):

(1)         that a Voting Control Offer is being made and that such Holder has the right to require Chatham to purchase all of such Holder’s Notes at a purchase price in cash equal to the then applicable redemption price of such Holder’s Notes (as set forth in Section 5.1) of the principal amount of such Notes plus accrued and unpaid interest, if any, and additional interest, if any, to, but excluding, the date of purchase (subject to the right of Holders of record on a record date to receive interest on the relevant Interest Payment Date) (the “Voting Control Payment”);

(2)         the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Voting Control Payment Date”);

(3)         the procedures determined by Chatham, consistent with this Indenture, that a Holder must follow in order to have its Notes purchased;

-65-

(4)         that any Notes not tendered will continue to accrue interest in accordance with the terms of this Indenture;

(5)         that following the Voting Control Payment subject to the applicable Chatham Party’s compliance with the provisions of the next paragraph, the provisions of this Indenture described in the first paragraph above shall cease to apply; and

(6)         that Holders will be entitled to withdraw their election if the paying agent receives, not later than the close of business on the second Business Day preceding the Voting Control Payment Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes delivered for purchase and a statement that such Holder is unconditionally withdrawing its election to have such Notes purchased.

On the Voting Control Payment Date, to the extent lawful:

(1)         the applicable Chatham Party shall accept for payment all Notes properly tendered pursuant to the Voting Control Offer and make the Voting Control Payment in respect of such Notes to the Holders of such Notes; and

(2)         the applicable Chatham Party shall deliver to the Trustee the Notes so accepted, together with an executed certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by such Chatham Party and the Company shall deliver a certificate to the Trusteed instructing the Trustee to reissue such Notes or portions of Notes to such Chatham Party in accordance with the transfer procedures set forth in Section 2.6.

(c)         If the Voting Control Payment Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, and additional interest, if any, will be paid on the relevant Interest Payment Date to the Person in whose name a Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders who tender pursuant to the Voting Control Offer.

(d)         In no event, shall the Trustee be obligated to monitor or be charged with knowledge of the Notes held by the Chatham Parties, nor shall the Trustee have any obligation to enforce the compliance by the Chatham Parties of the Chatham Letter Agreement.  The Trustee shall be under no obligation to request any certification relating to the Chatham Parties, unless the Trustee is requested in writing to do so by Holders of not less than 10% in aggregate principal amount of the then-outstanding Notes.  The Trustee may at all times conclusively rely on the accuracy of an Officers’ Certificate of the Company or a certificate of Chatham delivered in connection therewith.

SECTION 3.17.      Maintenance of Properties.  The Company will, and will cause each of the Subsidiary Guarantors to, (i) at all times maintain, preserve and protect all property used in the conduct of its business and keep such property in good repair, working order and condition (other than wear and tear occurring in the ordinary course of business), in each case, except as could not reasonably be expected to result in a Material Adverse Effect, (ii) from time to time make, or cause to be made, all necessary and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all times, except as could not reasonably be expected to result in a Material Adverse Effect and (iii) keep its insurable property insured at all times by financially sound and reputable insurance companies in amounts and with respect to such properties as are customarily insured against by other Persons engaged in the same or similar businesses and similarly situated and located, as determined in Good Faith by the Company.

-66-

ARTICLE IV

Successor Company and Successor Guarantor

SECTION 4.1.        When Company May Merge or Otherwise Dispose of Assets.

(a)         The Company shall not consolidate with or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, convey, transfer, lease, or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries, taken as a whole, in one or more related transactions, to any Person unless:

(i)    if other than the Company, the resulting, surviving or transferee Person (the “Successor Company”) shall be a corporation, partnership or limited liability company organized and existing under the laws of the United States of America, any State of the United States, the District of Columbia or any territory thereof;

(ii)   the Successor Company (if other than the Company) and, in the case of a Successor Company that is not a corporation, a corporate co-issuer, assume pursuant to a supplemental indenture or other documentation instruments, executed and delivered to the Trustee, in forms reasonably satisfactory to the Trustee, all of the obligations of the Company under the Notes, this Indenture, the Collateral Documents (as applicable) and the Intercreditor Agreements and, to the extent required by and subject to the limitations set forth in the Security Agreement, will cause such amendments, supplements or other instruments to be executed, filed and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by or transferred to the Successor Company, together with such financing statements or comparable documents to the extent required by and subject to the limitations set forth in the Security Agreement, as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions;

(iii)  immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Company, the Successor Company or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Company, the Successor Company or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(iv)  immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period;

(A)        the Company or the Successor Company, as applicable, would be able to Incur at least $1.00 of additional Indebtedness pursuant to Section 3.3(a); or

(B)        the Consolidated Leverage Ratio for the Successor Company and its Restricted Subsidiaries would be less than or equal to such Consolidated Leverage Ratio prior to such transaction;

(v)    if the Successor Company is not the Company, each Subsidiary Guarantor (unless it is the other party to the transactions above, in which case clause (i) shall apply) shall have by supplemental indenture confirmed that its Subsidiary Guarantee shall apply to such Person’s obligations in respect of this Indenture and the Notes and its obligations under the Collateral

-67-

Documents and the Intercreditor Agreements shall continue to be in effect and, to the extent required by and subject to the limitations set forth in the Security Agreement, shall cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by such Subsidiary Guarantor, together with such financing statements or comparable documents to the extent required by and subject to the limitations set forth in the Security Agreement, as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions; and

(vi)  the Successor Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Section 4.1 and, if any supplement to any Collateral Document is required in connection with such transaction, such supplement shall comply with the applicable provisions of this Indenture.

(b)         Without compliance with Sections 4.1(a)(iii) and (iv):

(i)    any Restricted Subsidiary may consolidate with, merge with or into or to the Company or a Subsidiary Guarantor so long as no Capital Stock of the Restricted Subsidiary is distributed to any Person other than the Company or a Subsidiary Guarantor;  provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company will not be required to comply with Section 4.1(a)(vi), and

(ii)   the Company may merge with an Affiliate of the Company solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other benefits, so long as the amount of Indebtedness of the Company and its Restricted Subsidiaries is not increased thereby; provided that, in the case of a Restricted Subsidiary that merges into the Company, the Company shall not be required to comply with the preceding clause (vi).

(c)         Upon satisfaction of the conditions set forth in Section 4.1(a) or 4.1(b), as applicable, the Company shall be released from its obligations under this Indenture and the other Notes Documents and the Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, the other Notes Documents (as applicable) and the ABL Intercreditor Agreement, but, in the case of a lease of all or substantially all its assets, the predecessor Company shall not be released from the obligation to pay the principal of and interest on the Notes.

(d)         Solely for the purpose of computing amounts under Sections 3.4(a)(iv)(3)(A),  (a)(iv)(3)(B),  (a)(iv)(3)(C) and (a)(iv)(3)(D), the Successor Company shall only be deemed to have succeeded and be substituted for the Company with respect to periods subsequent to the effective time of such merger, consolidation, combination or transfer of assets.

SECTION 4.2.        When a Subsidiary Guarantor May Merge or Otherwise Dispose of Assets.

(a)         The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into (whether or not the Subsidiary Guarantor is the surviving corporation), or sell, assign, convey, transfer, lease, convey or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to any Person (other than to the Company or another Subsidiary Guarantor), unless:

-68-

(i)    if such entity remains a Subsidiary Guarantor, (A) the resulting, surviving or transferee Person (the “Successor Guarantor”) shall be a corporation, partnership, trust or limited liability company organized and existing under the laws of the United States of America, any State of the United States, the District of Columbia or any other territory thereof; (B) the Successor Guarantor, if other than such Subsidiary Guarantor, expressly assumes in writing by supplemental indenture (and other applicable documents), executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee, this Indenture, the Collateral Documents (as applicable) and the Intercreditor Agreements and, to the extent required by and subject to the limitations set forth in the Security Agreement, shall cause such amendments, supplements or other instruments to be executed, filed and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by or transferred to the Successor Guarantor, together with such financing statements or comparable documents to the extent required by and subject to the limitations set forth in the Security Agreement, as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions; (C) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor or any Restricted Subsidiary as a result of such transaction as having been Incurred by the Successor Guarantor or such Restricted Subsidiary at the time of such transaction), no Default of Event of Default shall have occurred and be continuing; and (D) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and

(ii)   if such transaction constitutes an Asset Disposition, the transaction is made in compliance with Section 3.7, to the extent applicable.

(b)         Upon satisfaction of the conditions set forth in Section 4.2(a), the applicable  Subsidiary Guarantor shall be released from its obligations under this Indenture and the other Note Documents and the Successor Guarantor shall succeed to, and be substituted for, and may exercise every right and power of, a Subsidiary Guarantor under this Indenture, the other Note Documents (as applicable) and the Intercreditor Agreements, but, in the case of a lease of all or substantially all its assets, a Subsidiary Guarantor shall not be released from its obligations under its Subsidiary Guarantee.

(c)         Notwithstanding the foregoing, any Subsidiary Guarantor may (i) merge with or into or transfer all or part of its properties and assets to another Subsidiary Guarantor or the Company or (ii) merge with a Restricted Subsidiary of the Company solely for the purpose of reincorporating the Subsidiary Guarantor in a State of the United States or the District of Columbia, as long as the amount of Indebtedness of such Subsidiary Guarantor and its Restricted Subsidiaries is not increased thereby.

ARTICLE V

Redemption of Notes

SECTION 5.1.        Optional Redemption.

(a)         Except as set forth in Section 5.1(b) and (c), the Notes are not redeemable until July 15, 2022.  On and after July 15, 2022, the Company may redeem all or, from time to time, a part of the Notes upon not less than 15 nor more than 60 days’ notice to the Holders at the following redemption prices (expressed as a percentage of principal amount of the Notes to be redeemed) plus accrued and unpaid interest on the Notes, if any, to, but excluding, the applicable redemption date (subject to the right of

-69-

Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Year	Percentage
2022	104.500%
2023	102.250%
2024 and thereafter	100.000%

(b)         The Company may on any one or more occasions prior to July 15, 2021, redeem up to 40% of the original principal amount of the Notes with the Net Cash Proceeds of one or more Equity Offerings at a redemption price of 109.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date); provided that:

(i)    at least 60% of the original principal amount of the Notes remains outstanding after each such redemption; and

(ii)   the redemption occurs within 90 days after the closing of such Equity Offering.

Notice of any redemption pursuant to this Section 5.1(b) may be given prior to the completion of such Equity Offering, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

(c)         In addition, at any time prior to July 15, 2022, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium, plus accrued and unpaid interest, if any,  to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

SECTION 5.2.        Election to Redeem; Notice to Trustee of Optional and Mandatory Redemptions.  If the Company elects to redeem Notes pursuant to Section 5.1, the Company shall furnish to the Trustee, at least five (5) Business Days (or such shorter time as may be acceptable to the Trustee) before notice of redemption is required to be sent or caused to be sent  to Holders pursuant to Section 5.4, an Officers’ Certificate setting forth (a) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (b) the Redemption Date, (c) the principal amount of the Notes to be redeemed and (d) the redemption price.

SECTION 5.3.        Selection of Notes to Be Redeemed.  In the case of any partial redemption, selection of the Notes for redemption will be made (subject to rounding such that Notes are redeemed in whole increments of $1,000 and no Note of $2,000 in principal amount or less shall be redeemed in part) in accordance with applicable procedures of DTC.  If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note in accordance with Section 5.7.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

-70-

SECTION 5.4.        Notice of Redemption.  The Company shall provide, a notice of redemption not less than 15 nor more than 60 days prior to a date fixed for redemption (a “Redemption Date”), to each Holder of Notes to be redeemed, sent to each Holder’s registered address, or if the Notes to be redeemed are represented by one or more Global Notes, delivered in accordance with the applicable procedures of DTC.  The Trustee shall give notice of redemption in the Company’s name and at the Company’s expense; provided,  however, that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII.

All notices of redemption shall state:

(a)         the Redemption Date,

(b)         the redemption price and the amount of accrued interest, if any, to, but excluding, the Redemption Date payable as provided in Section 5.6, if any,

(c)         if less than all outstanding Notes are to be redeemed, the identification of the particular Notes (or portion thereof) to be redeemed, as well as the aggregate principal amount of Notes to be redeemed and the aggregate principal amount of Notes to be outstanding after such partial redemption,

(d)         in case any Note is to be redeemed in part only, the notice which relates to such Note shall state that on and after the Redemption Date, upon surrender of such Note, the Holder shall receive, without charge, a new Note or Notes of authorized denominations for the principal amount thereof remaining unredeemed,

(e)         that on the Redemption Date the redemption price (and accrued interest, if any, to, but excluding, the Redemption Date payable as provided in Section 5.6) shall become due and payable upon each such Note, or the portion thereof, to be redeemed, and, unless the Company defaults in making the redemption payment, that interest on Notes called for redemption (or the portion thereof) shall cease to accrue on and after said date,

(f)         the place or places where such Notes are to be surrendered for payment of the redemption price and accrued interest, if any,

(g)         the name and address of the Paying Agent,

(h)         that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price,

(i)          the CUSIP number, and that no representation is made as to the accuracy or correctness of the CUSIP number, if any, listed in such notice or printed on the Notes, and

(j)          the Section of this Indenture pursuant to which the Notes are to be redeemed.

Any notice of redemption may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of a related Equity Offering.

SECTION 5.5.        Deposit of Redemption Price.  Prior to 11:00 a.m. New York City time, on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 2.4) an

-71-

amount of money sufficient to pay the redemption price of, and accrued interest on, all the Notes which are to be redeemed on that date.

SECTION 5.6.        Notes Payable on Redemption Date.  Notice of redemption having been given as aforesaid, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the redemption price therein specified (together with accrued interest, if any, to, but excluding, the Redemption Date) (except as provided for in the last paragraph of Section 5.1(b)), and from and after such date (unless the Company shall default in the payment of the redemption price and accrued interest) such Notes shall cease to bear interest.  Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the redemption price, together with accrued interest, if any, to, but excluding, the Redemption Date (subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

If any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate borne by the Notes.

If a Redemption Date is on or after a  Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, shall be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest shall be payable to Holders whose Notes shall be subject to redemption by the Company.

SECTION 5.7.        Notes Redeemed in Part.  Any Note which is to be redeemed only in part (pursuant to the provisions of this Article) shall be surrendered at the office or agency of the Company maintained for such purpose pursuant to Section 2.3 (with, if the Company so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and make available for delivery to the Holder of such Note at the expense of the Company, a new Note or Notes, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Note so surrendered, provided that each such new Note shall be in a principal amount of $2,000 and integral multiples of $1,000 in excess thereof.

SECTION 5.8.        Mandatory Redemptions from Excess Cash Flow.  In the event that in any fiscal year, commencing with the fiscal year ending on or about December 30, 2018, Excess Cash Flow for such fiscal year (or, in the case of the fiscal year ending on or about December 30, 2018, Excess Cash Flow for the two full fiscal quarter period ending on the last day of such year) is positive, the Company shall, not later than 115 days after the last day of each fiscal year redeem an aggregate principal amount of Notes equal to the excess of (a) the greater of (i) $2,000 and (ii) the Applicable ECF Percentage of Excess Cash Flow for such period (rounded upwards to the nearest increment of $1,000) over (b) the aggregate principal amount of Notes retired by the Company during such period (whether pursuant to open market purchases, tender offers or optional redemptions) except to the extent funded through an Incurrence of long-term Indebtedness at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

SECTION 5.9.        Mandatory Redemptions from Net Available Cash from Asset Dispositions.  In the event that the Company or any of its Restricted Subsidiaries receive any Net Available Cash from any Asset Disposition (other than an Asset Disposition of ABL Priority Collateral), then within 60 days of receipt thereof, the Company shall redeem an aggregate principal amount of Notes equal to

-72-

the greater of (i) $2,000 and (ii) the amount of such Net Available Cash (rounded upwards to the nearest increment of $1,000) at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

ARTICLE VI

Defaults and Remedies

SECTION 6.1.        Events of Default.

(a)         Each of the following is an event of default (an “Event of Default”):

(i)    default in any payment of interest on any Note when the same becomes due, and such default continues for a period of 30 days;

(ii)   default in the payment of the principal of or premium, if any, on any Note when the same becomes due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration of acceleration or otherwise;

(iii)  the Company fails to comply with its obligations under Section 3.9 or Article IV;

(iv)  the Company fails to comply for 45 days after notice as provided below with any of its obligations under Sections 3.2,  3.3,  3.4,  3.5,  3.6,  3.7,  3.8,  3.10,  3.11 and 3.15 (in each case, other than matters that would constitute an Event of Default under Section 6.1(a)(iii));

(v)    the Company or any Subsidiary Guarantor fails to comply for 60 days after notice as provided below with its other agreements (except as provided in clauses (a)(i) through (a)(iv) of this Section 6.1) contained in this Indenture or under the Notes or the Collateral Documents;

(vi)  the Company or any of its Restricted Subsidiaries defaults under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries), other than Indebtedness owed to the Company or a Restricted Subsidiary, whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, which default:

(A)        is caused by a failure to pay principal on such Indebtedness at its final stated maturity within the grace period provided in the agreements or instruments governing such Indebtedness (“payment default”); or

(B)        results in the acceleration by the holders of such Indebtedness prior to its stated final, maturity;

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $25.0 million or more;

-73-

(vii) the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(A)        commences a voluntary Insolvency or Liquidation Proceeding with respect to itself;

(B)        consents to the entry of an order for relief against it in an involuntary Insolvency or Liquidation Proceeding;

(C)        consents to the appointment of a Custodian (as defined below) of it or for substantially all of its property; or

(D)        makes a general assignment for the benefit of its creditors;

or takes any comparable action under any foreign Bankruptcy Laws relating to insolvency or the nights of creditors generally;

(viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)        is for relief against the Company or any Significant Subsidiary or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary, in an involuntary case;

(B)        appoints a Custodian of the Company, any Significant Subsidiary or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary, for any substantial part of its property; or

(C)        orders the winding up or liquidation of the Company, any Significant Subsidiary or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary;

(ix)  failure by the Company or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final and non-appealable judgments aggregating in excess of $25.0 million (net of any amounts that are covered by insurance issued by a reputable and creditworthy insurance company (as determined in the Good Faith by the Company) that has not contested coverage), which judgments remain unsatisfied or undischarged for any period of 60 consecutive days during which a stay of enforcement of such judgments shall not be in effect;

(x)   any Subsidiary Guarantee of a Significant Subsidiary or group of Restricted Subsidiaries that taken together as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture and the Subsidiary Guarantees) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that

-74-

is a Significant Subsidiary or group of Subsidiary Guarantors that taken together as of the latest audited consolidated financial statements of the Company and its Restricted Subsidiaries would constitute a Significant Subsidiary denies or disaffirms its obligations under this Indenture, its Subsidiary Guarantee, any Collateral Document or the ABL Intercreditor Agreement and the Company fails to cause such Restricted Subsidiary or Restricted Subsidiaries, as the case may be, to rescind such denials or disaffirmations within 30 days; and

(xi)  with respect to any Collateral having a fair market value in excess of $10.0 million, individually or in the aggregate, (A) the failure of the security interest with respect to such Collateral under the Collateral Documents, at any time, to be in full force and effect for any reason other than in accordance with the terms of the Collateral Documents and the terms of this Indenture or the Intercreditor Agreements, as applicable, and other than the satisfaction in full of all obligations under this Indenture and discharge of this Indenture if such failure continues for 60 days or (B) the assertion by the Company or any Subsidiary Guarantor, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable, except in each case for the failure or loss of perfection resulting from the failure of the Collateral Agent to make filings, renewals and continuations (or other equivalent filings) which are required to be made or the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents if such assertion is not rescinded within 30 days.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

Notwithstanding the foregoing, if the Company so elects, the sole remedy of the Holders for the Company’s failure to comply with Section 3.2 hereof, will for the first 180 days after the occurrence of such failure consist exclusively of the right to receive additional interest on the Notes at a rate per annum:  (i) equal to 0.25% for the first 90 days after the occurrence of such failure and (ii) equal to 0.50% from the 91st day to, and including, the 180th day after the occurrence of such failure.  The additional interest will accrue on all outstanding Notes from and including the date on which such failure first occurs until such violation is cured or waived and shall be payable on each relevant Interest Payment Date to Holders of record on the regular Record Date immediately preceding the Interest Payment Date.  On the 181st day after such failure (if such violation is not cured or waived prior to such 181st day), such failure will then constitute an Event of Default without any further notice or lapse of time and the Notes shall be subject to acceleration as provided below.

Notwithstanding the foregoing, a default under clauses (iv), (v) or (xi)(A) or (xi)(B) of this Section 6.1(a) shall not constitute an Event of Default until the Trustee or the Holders of 25% in principal amount of the outstanding Notes notify the Company of the default and the Company does not cure such default within the time specified in clause (iv), (v) or (xi)(A) or (xi)(B) of this paragraph after receipt of such notice.  Such notice must specify the Default, demand that it be remedied and state that such notice is a “Notice of Default.”

The term “Bankruptcy Code” means Title 11, United States Code, as now or hereafter in effect or any successor statute.  The term “Bankruptcy Law” means the Bankruptcy Code or any other Federal, state or foreign law for the relief of debtors.  The term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

-75-

SECTION 6.2.        Acceleration.  If an Event of Default (other than an Event of Default specified in Section 6.1(a)(vii) or (viii) with respect to the Company) occurs and is continuing, the Trustee by notice in writing specifying the Event of Default that it is a “notice” to the Company, or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Company and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable.  Upon such a declaration, such principal, premium and accrued and unpaid interest shall, subject to Section 6.4, be immediately due and payable.  In the event of a declaration of acceleration of the Notes because an Event of Default set forth in Section 6.1(a)(vi) above has occurred and is continuing, such declaration of acceleration of the Notes shall be automatically rescinded and annulled if the default triggering such Event of Default pursuant to Section 6.1(a)(vi) shall be remedied or cured by the Company or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 30 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived.  If an Event of Default specified in Section 6.1(a)(vii) or (viii) with respect to the Company occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest on all the Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

SECTION 6.3.        Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture (including sums owed to the Trustee and Collateral Agent and their agents and counsel), the Subsidiary Guarantees, Collateral Documents,  the Intercreditor Agreements or any Permitted Junior Lien Intercreditor Agreement.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

SECTION 6.4.        Waiver of Past Defaults.  The Holders of a majority in principal amount outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes) Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences (except a Default or Event of Default in the payment of the principal of, premium or interest on a Note) and rescind any such acceleration with respect to the Notes and its consequences if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.

SECTION 6.5.        Control by Majority.  Subject to the provisions of the Collateral Documents, the Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or the Collateral Agent or of exercising any trust or power conferred on the Trustee or the Collateral Agent.  However, the Trustee or the Collateral Agent, as the case may be, may refuse to follow any direction that conflicts with law or this Indenture, the Notes, the Subsidiary Guarantees,  the Collateral Documents or the Intercreditor Agreements, or, subject to Sections 7.1 and 7.2, that the Trustee determines is unduly prejudicial to the rights of other Holders or would involve the Trustee or the Collateral Agent in personal

-76-

liability; provided,  however, that the Trustee or the Collateral Agent may take any other action deemed proper by the Trustee or the Collateral Agent that is not inconsistent with such direction.  Prior to taking any action under this Indenture, the Trustee or the Collateral Agent shall be entitled to indemnity, security or prefunding satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

SECTION 6.6.        Limitation on Suits.  Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(i)    the Holder has previously given to the Trustee written notice stating that an Event of Default is continuing;

(ii)   the Holders of at least 25% in outstanding principal amount of the Notes have made a written request to the Trustee to pursue the remedy;

(iii)  such Holder or Holders have offered to the Trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense;

(iv)  the Trustee has not complied with the request within 60 days after receipt of the request and the offer of security or indemnity; and

(v)    the Holders of a majority in principal amount of the outstanding Notes do not give the Trustee a direction that, in the opinion of the Trustee, is inconsistent with the request during such 60-day period.

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder (it being understood that the Trustee has no affirmative duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders). Notwithstanding the forgoing, in no event may any Holder enforce any Lien of the Collateral Agent pursuant to the Collateral Documents.

SECTION 6.7.        Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium (if any) or interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.8.        Collection Suit by Trustee.  If an Event of Default specified in Section 6.1(a)(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.6.

SECTION 6.9.        Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company, its Subsidiaries or their respective creditors or properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in any Insolvency or Liquidation Proceeding or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event

-77-

that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.6.  Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan or reorganization, arrangement, adjustment or composition or similar dispositive restructuring plan affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in such Insolvency or Liquidation Proceeding.

SECTION 6.10.      Priorities.  Subject to the terms of the Intercreditor Agreements, the Collateral Documents and Section 11.4(f)  the Trustee shall pay out any money or property received by it, whether pursuant to the foreclosure or other remedial provisions contained in the Collateral Documents or otherwise, in the following order:

First:         to the Trustee and Collateral Agent for amounts due to each of them under Section 7.6 and under the Collateral Documents;

Second:     to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

Third:        to the Company or, to the extent the Trustee receives any amount for any Subsidiary Guarantor, to such Subsidiary Guarantor.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section.  At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

SECTION 6.11.      Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.

ARTICLE VII

Trustee and Collateral Agent

SECTION 7.1.        Duties of Trustee and Collateral Agent.

(a)         If an Event of Default has occurred and is continuing, the Trustee or the Collateral Agent shall exercise the rights and powers vested in it by this Indenture,  the Collateral Documents and the Intercreditor Agreements, as the case may be, and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs; provided that if an Event of Default occurs and is continuing, the Trustee and the Collateral Agent shall be under no obligation to exercise any of the rights or powers under this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreements  at the request or direction of any of the Holders unless such Holders have offered the Trustee or the Collateral

-78-

Agent indemnity, security or prefunding satisfactory to the Trustee or the Collateral Agent in its sole discretion, as applicable, against loss, liability or expense.

(b)         Except during the continuance of an Event of Default:

(i)    the Trustee or the Collateral Agent undertake to perform such duties and only such duties as are specifically set forth in this Indenture, the Collateral Documents and the Intercreditor Agreements  and no implied covenants or obligations shall be read into this Indenture, any Collateral Document or the Intercreditor Agreements  against the Trustee or the Collateral Agent; and

(ii)   in the absence of gross negligence or bad faith on its part, the Trustee or Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee or Collateral Agent under this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements, as applicable.  However, in the case of any such certificates or opinions which by any provisions hereof are specifically required to be furnished to the Trustee or the Collateral Agent, the Trustee or the Collateral Agent shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreements, as the case may be (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c)         The Trustee and the Collateral Agent may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i)    this paragraph does not limit the effect of paragraph (b) of this Section;

(ii)   neither the Trustee nor the Collateral Agent shall be liable for any error of judgment made in good faith by a Trust Officer or Trust Officers unless it is proved that the Trustee or the Collateral Agent was negligent in ascertaining the pertinent facts; and

(iii)  neither the Trustee nor the Collateral Agent shall be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.

(iv)  The Collateral Agent shall not have any fiduciary or other implied duties of any kind or nature to any person, regardless of whether an Event of Default has occurred and is continuing.

(d)         The Trustee and the Collateral Agent shall not be liable for interest on any money received by it except as the Trustee and the Collateral Agent may agree in writing with the Company.

(e)         Money held in trust by the Trustee or the Collateral Agent need not be segregated from other funds except to the extent required by law.

(f)         No provision of this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements shall require the Trustee or the Collateral Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or thereunder or in the exercise of any of its rights or powers, if it shall have reasonable

-79-

grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(g)         Every provision of this Indenture, the Collateral Documents or the Intercreditor Agreements relating to the conduct or affecting the liability of or affording protection to the Trustee and the Collateral Agent shall be subject to the provisions of this Section.

(h)         The Trustee and the Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee or the Collateral Agent, as applicable, security, prefunding or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction.

SECTION 7.2.        Rights of Trustee and Collateral Agent.

(a)         Each of the Trustee and the Collateral Agent may conclusively rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or any other paper or document believed by it to be genuine and to have been signed or presented by the proper Person or Persons.  The Trustee and the Collateral Agent need not investigate any fact or matter stated in the document.

(b)         Before the Trustee or the Collateral Agent acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel.  Neither the Trustee nor the Collateral Agent shall be liable for any action it takes or omits to take in good faith in reliance on an Officers’ Certificate or Opinion of Counsel.

(c)         Each of the Trustee and the Collateral Agent may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

(d)         Each of the Trustee and the Collateral Agent shall not be liable for any action it takes or omits to take in good faith (in the case of the Trustee) which it believes to be authorized or within its rights or powers; provided,  however, that the Trustee’s or the Collateral Agent’s conduct, respectively, does not constitute willful misconduct or negligence.

(e)         Each of the Trustee and the Collateral Agent may consult with counsel of its selection, and the advice or opinion of counsel with respect to legal matters relating to this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder or under the Notes, the Subsidiary Guarantees, the Collateral Documents, the Intercreditor Agreement or any Permitted Junior Lien Intercreditor Agreement in good faith and in accordance with the advice or opinion of such counsel.

(f)         The Trustee and the Collateral Agent shall not be bound to make any investigation into any statement, warranty or representation, or the facts or matters stated in any resolution, certificate, statement, instrument, opinion, notice, request, direction, consent, order, bond or other paper or document made or in connection with this Indenture, any other Collateral Document or the Intercreditor Agreements; moreover, the Trustee and the Collateral Agent shall not be bound to make any investigation into (i) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein, in any other Collateral Document or the Intercreditor Agreements  (ii) the occurrence of

-80-

any default, or the validity, enforceability, effectiveness or genuineness of this Indenture, any other Collateral Document or the Intercreditor Agreements or any other agreement, instrument or document, (iii) the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (iv) the value or the sufficiency of any Collateral, (v) the satisfaction of any condition set forth in any Collateral Document, other than to confirm receipt of items expressly required to be delivered to the Collateral Agent or (vi) the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note other evidence of indebtedness or other paper or document, but each of the Trustee and the Collateral Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee or the Collateral Agent shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.  The Trustee and the Collateral Agent shall have no liability with respect to any action or inaction taken by or with respect to any Sub-Collateral Agent (as defined in the Security Agreement).

(g)         The Trustee shall not be deemed to have knowledge of any Default or Event of Default except any Default or Event of Default of which a Trust Officer shall have received written notification at the Corporate Trust Office of the Trustee and such notice references the Notes and this Indenture.

(h)         In no event shall the Trustee or the Collateral Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee or the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(i)          The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, the Collateral Agent, and each agent, custodian and other Person employed to act hereunder and under the Collateral Documents and the Intercreditor Agreements.

(j)          The Trustee and the Collateral Agent may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

SECTION 7.3.        Individual Rights of Trustee and Collateral Agent.  Each of the Trustee and the Collateral Agent in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company, the Subsidiary Guarantors or their Affiliates with the same rights it would have if it were not Trustee or Collateral Agent, respectively.  Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights.  However, the Trustee must comply with Section 7.9.  In addition, the Trustee shall be permitted to engage in transactions with the Company; provided,  however, that if the Trustee acquires any conflicting interest (within the meaning of Section 310(b) of the Trust Indenture Act of 1939, as amended), the Trustee must (i) eliminate such conflict within 90 days of acquiring such conflicting interest or (ii) resign.

SECTION 7.4.        Disclaimer.  Each of the Trustee and the Collateral Agent shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements, it shall not be accountable for the Company’s use of the Notes or the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication or for the use or application of any funds received by any Paying Agent other than the Trustee.

-81-

SECTION 7.5.        Notice of Defaults.  If a Default occurs and is continuing and is known to the Trustee, the Trustee shall mail to each Holder, with a copy to the Collateral Agent, notice of the Default within 90 days after the Trustee obtains such knowledge.  Except in the case of a Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of Trust Officers of the Trustee in good faith determines that withholding the notice is in the interests of Holders.

SECTION 7.6.        Compensation and Indemnity.  The Company shall pay to each of the Trustee and the Collateral Agent from time to time such compensation for its services as the parties shall agree in writing from time to time.  The Trustee’s compensation and the Collateral Agent’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse each of the Trustee and the Collateral Agent upon request for all reasonable out-of-pocket expenses incurred or made by it, including, but not limited to, costs of collection, costs of preparing and reviewing reports, certificates and other documents, costs of preparation and sending of notices to Holders and reasonable costs of counsel, in addition to the compensation for its services.  Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Collateral Agent, any predecessor Collateral Agent, the Trustee or any predecessor Trustee in each of its capacities hereunder (including Paying Agent, and Registrar), and each of their officers, directors, employees, counsel and agents, against any and all loss, liability or expense (including, but not limited to, reasonable attorneys’ fees and expenses) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements, including the costs and expenses of enforcing this Indenture (including this Section 7.6), the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements  and of defending itself against any claims (whether asserted by any Holder, the Company or otherwise).  The Collateral Agent and the Trustee shall notify the Company promptly of any claim for which it may seek indemnity.  Failure by the Collateral Agent and the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder.  The Company shall defend the claim and the Collateral Agent and the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.  The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Collateral Agent and the Trustee through their own willful misconduct or negligence or bad faith.

To secure the Company’s payment obligations in this Section, the Collateral Agent and the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Notes.  The right of the Collateral Agent and the Trustee to receive payment of any amounts due under this Section 7.6 shall not be subordinate to any other liability or indebtedness of the Company.

The Company’s payment obligations pursuant to this Section and any lien arising hereunder shall survive the discharge of this Indenture and the resignation or removal of the Trustee or Collateral Agent.  When the Trustee or Collateral Agent incurs fees or expenses after the occurrence of a Default specified in Section 6.1(a)(vii) or (viii) with respect to the Company, the fees or expenses are intended to constitute expenses of administration in any Insolvency or Liquidation Proceeding under any Bankruptcy Law.

Pursuant to Section 10.1, the obligations of the Company hereunder are jointly and severally guaranteed by the Subsidiary Guarantors.

-82-

SECTION 7.7.        Replacement of Trustee.  The Trustee may resign at any time by so notifying the Company in writing at least 30 days before the effective date of such resignation.  The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Company and the Trustee in writing at least 30 days before the effective date of such removal and may appoint a successor Trustee.  The Company shall remove the Trustee if:

(i)    the Trustee fails to comply with Section 7.9;

(ii)   the Trustee is adjudged bankrupt or insolvent;

(iii)  a receiver or other public officer takes charge of the Trustee or its property; or

(iv)  the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Holders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.6.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in principal amount of the Notes may petition, at the Company’s expense, any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.9, unless the Trustee’s duty to resign is stayed, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.7, the Company’s obligations under Section 7.6 shall continue for the benefit of the retiring Trustee.

SECTION 7.8.        Successor Trustee by Merger.  If the Trustee or the Collateral Agent consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee or the Collateral Agent, as applicable.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Trustee shall have.

-83-

SECTION 7.9.        Eligibility; Disqualification.  The Trustee shall have a combined capital and surplus of at least $50 million as set forth in its most recent filed annual report of condition.

SECTION 7.10.      Limitation on Duty of Trustee and Collateral Agent in Respect of Collateral; Indemnification.  Beyond the exercise of reasonable care in the custody thereof, neither the Trustee nor the Collateral Agent shall have any duty as to any Collateral in their possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and neither the Trustee nor the Collateral Agent shall be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any security interest in the Collateral.  The Trustee and the Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in their possession if the Collateral is accorded treatment substantially equal to that which they accord their own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Trustee or the Collateral Agent in good faith.

Neither the Trustee nor the Collateral Agent shall have any duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements  by the Company, the Subsidiary Guarantors or any other Person.

ARTICLE VIII

Discharge of Indenture; Defeasance

SECTION 8.1.        Discharge of Liability on Notes; Defeasance.

(a)         When (i) (x) the Company delivers to the Trustee all outstanding Notes (other than Notes replaced pursuant to Section 2.7 or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company) for cancellation or (y) all outstanding Notes not theretofore delivered for cancellation have become due and payable by reason of making a notice of redemption pursuant to Article V hereof or otherwise, or will become due and payable within one year or may be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of a notice of redemption pursuant to Article V by the Trustee in the name, and at the expense, of the Company pursuant to Article V  and the Company or any Subsidiary Guarantor irrevocably deposits or causes to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as shall be sufficient without consideration of any reinvestment of interest to pay and discharge the entire Indebtedness on such Notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to, but excluding, the date of maturity or redemption; (ii) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit (other than a Default resulting from borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing) and such deposit shall not result in a breach or violation of, or constitute a default under, any material instrument (other than this Indenture) to which the Company or any Subsidiary Guarantor is a party or by which the Company or any Subsidiary Guarantor is bound; (iii) the Company or any Subsidiary Guarantor has paid or caused to be paid all sums payable on the date of deposit to the Trustee under this Indenture; and (iv) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of such Notes at maturity or the

-84-

Redemption Date, as the case may be, then this Indenture shall, subject to Section 8.1(c), cease to be of further effect.

Upon the satisfaction of the foregoing conditions and upon the request of the Company, the Trustee subject to its receipt of an Opinion of Counsel and an Officers’  Certificate shall acknowledge in writing that this Indenture, subject to Section 8.1(c), ceases to be of further force and effect.

(b)         Subject to Sections 8.1(c) and 8.2, the Company at its option and at any time may terminate (i) all the obligations of the Company and any Subsidiary Guarantor under the Notes, this Indenture and the Collateral Documents (“legal defeasance option”) or (ii) the obligations of the Company and any Subsidiary Guarantor under Sections 3.2,  3.3,  3.4,  3.5,  3.6,  3.7,  3.8,  3.9,  3.10,  3.11,  3.12,  3.15 and 4.1(a)(iv) and the Collateral Documents and the Company and the Subsidiary Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant or provision, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or provision or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply with such covenants or provisions shall no longer constitute a Default or an Event of Default under Section 6.1(a)(iii) (only with respect to Section 3.9),  6.1(a)(iv) (only with respect to such covenants), 6.1(a)(v) (only with respect to such covenants), 6.1(a)(vi),  6.1(a)(vii) (only with respect to Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements of the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary), Section 6.1(a)(viii) (only with respect to Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements of the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary) and 6.1(a)(ix) (clause (ii) being referred to as the “covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes shall be unaffected thereby.  The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.

If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default.  If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.1(a)(iii) (only with respect to Section 3.9),  6.1(a)(iv) (only with respect to the covenants subject to such covenant defeasance), 6.1(a)(v) (only with respect to the covenants subject to such covenant defeasance), 6.1(a)(vi),  6.1(a)(vii) (only with respect to Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements of the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary), 6.1(a)(viii) (only with respect to Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together (as of the latest audited financial statements of the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary) or 6.1(a)(ix),  6.1(a)(x) or 6.1(a)(xi) or because of the failure of the Company to comply with Section 4.1(a)(iv).

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

(c)         Notwithstanding the provisions of Sections 8.1(a) and (b), the Company’s obligations in Sections 2.2,  2.3,  2.4,  2.5,  2.6,  2.9,  2.10,  2.12,  3.1,  6.7,  6.8,  7.1,  7.2,  7.6,  7.7,  8.1(b) (with respect to legal defeasance), 8.3,  8.4,  8.5 and 8.6 shall survive until the Notes have been paid in full.  Thereafter, the Company’s obligations in Sections 6.7,  7.6,  8.4 and 8.5 shall survive.

-85-

SECTION 8.2.        Conditions to Defeasance.  The Company may exercise its legal defeasance option or its covenant defeasance option only if:

(i)    the Company shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, U.S. dollars or U.S. Government Obligations, or a combination of U.S. dollars and U.S. Government Obligations, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium, if any, on the outstanding Notes issued hereunder on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular Redemption Date;

(ii)   in the case of legal defeasance, the Company has delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Issue Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the beneficial owners shall not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred;

(iii)  in the case of covenant defeasance, the Company has delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the beneficial owners of the respective outstanding Notes shall not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and shall be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(iv)  such legal defeasance or covenant defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Company or any of its Restricted Subsidiaries is a party or by which the Company or any of its Restricted Subsidiaries is bound;

(v)    no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowings);

(vi)  the Company shall deliver to the Trustee an Opinion of Counsel to the effect that, assuming, among other things, no intervening Insolvency or Liquidation Proceeding of the Company between the date of deposit and the 91st day following the deposit and assuming that no Holder is an “insider” of the Company under applicable Bankruptcy Law, after the 91st day following the deposit, the trust funds shall not be subject to the effect of Section 547 of the Bankruptcy Code or any similar provision of any other Bankruptcy Law;

(vii) the Company shall deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and

(viii) the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions),

-86-

each stating that all conditions precedent relating to the legal defeasance or the covenant defeasance have been complied with.

SECTION 8.3.        Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII.  It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.

SECTION 8.4.        Repayment to Company.  Anything herein to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon company order any money or U.S. Government Obligations held by it as provided in this Article VIII which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect legal defeasance or covenant defeasance, as applicable, provided that the Trustee shall not be required to liquidate any U.S. Government Obligations in order to comply with the provisions of this paragraph.

Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal of or interest on the Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.

SECTION 8.5.        Indemnity for U.S. Government Obligations.  The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

SECTION 8.6.        Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company and each Subsidiary Guarantor under this Indenture, the Notes, the Subsidiary Guarantees and the Collateral Documents shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII;  provided,  however, that, if the Company or the Subsidiary Guarantors have made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company or the Subsidiary Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE IX

Amendments

SECTION 9.1.        Without Consent of Holders.  This Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreements  may be amended or supplemented without notice to or consent of any Holder:

(i)    to cure any ambiguity, omission, defect or inconsistency;

-87-

(ii)   to comply with (a) Article IV in respect of the assumption by a Successor Company of an obligation of the Company under this Indenture, the Notes and the Collateral Documents and (b) Article IV and Article X in respect of the assumption by a Person of the obligations of a Subsidiary Guarantor under its Subsidiary Guarantee, this Indenture,  the Collateral Documents and the Intercreditor Agreements;

(iii)  to provide for uncertificated Notes in addition to or in place of certificated Notes; provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code;

(iv)  to add Guarantees with respect to the Notes or to release a Subsidiary Guarantor from its obligations under its Subsidiary Guarantee or this Indenture in accordance with the applicable provisions of this Indenture;

(v)   to add additional property or assets as Collateral to secure the Notes and the Subsidiary Guarantees or to appoint a Sub-Collateral Agent (as defined in the Security Agreement) for the purposes set forth in the Security Agreement;

(vi)  to release Liens in favor of the Collateral Agent in the Collateral as provided in Section 11.3 or otherwise in accordance with this Indenture, Collateral Documents or Intercreditor Agreements;

(vii) to add to the covenants of the Company for the benefit of the Holders, add Events of Default or to surrender any right or power herein conferred upon the Company or any Subsidiary Guarantor;

(viii) to make any change that does not adversely affect the rights of any Holder in any material respect;

(ix)  [reserved];

(x)   to provide for the appointment of a successor trustee; provided that the successor trustee is otherwise qualified and eligible to act as such under the terms of this Indenture; or provide for the appointment of a successor Collateral Agent;

(xi)  to enter into a Junior Lien Intercreditor Agreement or the ABL Intercreditor Agreement;

(xii) to conform the text of this Indenture, the Notes or the Subsidiary Guarantees to any provision of the “Description of notes” section of the Offering Memorandum, to the extent that such provision in the “Description of notes” is intended to be a verbatim recitation of a provision of this Indenture, the Notes or the Subsidiary Guarantees;

(xiii) so long as no Event of Default has occurred and is continuing, in the event the ABL Agent enters into any amendment, waiver or consent in respect of any of the ABL Credit Documents for the purpose of adding to or deleting from, or waiving or consenting to any departures from any provision of any ABL Credit Document, in each case solely with respect to (x) any notice, delivery, maintenance, use or replacement obligation in respect of, (y) any obligation to provide control over and/or (z) the location of or general administration of, any ABL Priority Collateral, then such amendment, waiver or consent shall apply automatically (subject to any existing

-88-

cushion or setback in such comparable Collateral Document provision and subject to the terms of the ABL Intercreditor Agreement) to any comparable provision (if any) of any of the Collateral Documents without the consent of or action by any Noteholder Secured Party (with all such amendments, waivers and modifications subject to the terms of the ABL Intercreditor Agreement); provided that (i) no such amendment, waiver or consent shall have the effect of (A) removing assets subject to the Lien of any Collateral Document, except to the extent that a release of such Lien is permitted by the ABL Intercreditor Agreement, and provided that there is a corresponding release of the Lien securing the ABL Obligations, (B) imposing duties on the Trustee or the Collateral Agent without its consent or the Noteholder Secured Parties without their consent, or (C) permitting other Liens on the Collateral not permitted under the terms of the Collateral Documents, (ii) any such amendment, waiver or consent that materially and adversely affects the rights of the Noteholder Secured Parties and does not affect the ABL Secured Parties in a like or similar manner shall not apply to the Collateral Documents without the consent of the Collateral Agent acting at the written direction of the Holders of a majority in aggregate principal amount of the Notes, (iii) notice of such amendment, waiver or consent shall be given to the Collateral Agent no later than ten (10) days after its effectiveness, provided that the failure to give such notice shall not affect the effectiveness and validity thereof and (iv) such amendment, waiver or modification to the applicable Collateral Document shall be approved by the Company in writing; or

(xiv) to provide for or confirm the issuance of Additional Notes in accordance with the terms of this Indenture.

In addition, no consent of the Holders will be required under the Collateral Documents, the ABL Intercreditor Agreement and the Junior Lien Intercreditor Agreement to any amendments and other modifications to the Collateral Documents, the ABL Intercreditor Agreement and the Junior Lien Intercreditor Agreement to add other parties (or any authorized agent thereof or trustee therefor) holding ABL Obligations, Permitted Additional Pari Passu Obligations or Junior Lien Loans that are Incurred in compliance with this Indenture and the Collateral Documents (it being understood that any Indebtedness secured by Junior Liens may be added to any Junior Lien Intercreditor Agreement as First Lien Obligations for purposes thereof so long as such Junior Liens are subordinated to the liens securing Notes Obligations and the ABL Obligations pursuant to a separate Junior Lien Intercreditor Agreement).

After an amendment under this Section 9.1 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.  A consent to any amendment, supplement or waiver under this Indenture by any Holder given in connection with a tender of such Holder’s Note shall not be rendered invalid by such tender.

SECTION 9.2.        With Consent of Holders.  This Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents and the Intercreditor Agreements  may be amended or supplemented with the consent of the Holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).  Any past default or compliance with the provisions of this Indenture, the Notes, the Subsidiary Guarantees, the Collateral Documents or the Intercreditor Agreements  may be waived with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents or waivers obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).  However, without the consent of each Holder of an outstanding Note affected, no amendment, supplement or waiver may:

-89-

(i)    reduce the principal amount of Notes whose Holders must consent to an amendment;

(ii)   reduce the rate of or extend the time for payment of interest on any Note;

(iii)  reduce the principal of or extend the Stated Maturity of any Note;

(iv)  waive a Default or Event of Default in the payment of principal of, or interest or premium, if any, on the Notes issued hereunder (except a rescission of acceleration of the Notes issued hereunder by the Holders of at least a majority in aggregate principal amount of the Notes issued hereunder with respect to a nonpayment default and a waiver of the payment default that resulted from such acceleration);

(v)    reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may or shall be redeemed or repurchased in accordance with Section 3.9 or Article V, whether through an amendment or waiver of provisions in the covenants or otherwise;

(vi)  make any Note payable in a currency other than that stated in the Note;

(vii) amend any contractual right expressly set forth in this Indenture or any Note of any Holder to receive payment of principal, premium, if any, and interest on such Holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(viii) make any change in the amendment provisions in this Section 9.2;

(ix)  modify the Subsidiary Guarantees of any Significant Subsidiary or group of Subsidiary Guarantors that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries) would constitute a Significant Subsidiary in any manner, taken as a whole, materially adverse to the Holders; or

(x)   release any Subsidiary Guarantor that is a Significant Subsidiary or group of Subsidiary Guarantors that, taken together (as of the latest audited consolidated financial statements for the Company and its Restricted Subsidiaries), would constitute a Significant Subsidiary from any of its obligations under its Subsidiary Guarantee or this Indenture, except in compliance with the terms thereof.

In addition, without the consent of the Holders of at least 66% in principal amount of Notes then outstanding, no amendment, supplement or waiver may (1) modify any Collateral Document or the provisions in this Indenture dealing with Collateral Documents or application of trust moneys in any manner, taken as a whole, materially adverse to the Holders or otherwise release any Collateral from the Liens of the Collateral Documents other than in accordance with this Indenture, the Collateral Documents and the Intercreditor Agreements or (2) modify the Intercreditor Agreements in any manner adverse to the Holders in any material respect other than in accordance with the terms of this Indenture, the Collateral Documents and the Intercreditor Agreements.

It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or supplement, but it shall be sufficient if such consent approves the substance thereof.  A consent to any amendment, supplement or waiver under this Indenture by

-90-

any Holder given in connection with a tender of such Holder’s Note shall not be rendered invalid by such tender.

After an amendment or supplement under this Indenture, the Collateral Documents or the Intercreditor Agreements become effective, the Company shall mail to the Holders a notice briefly describing such amendment or supplement.  The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment or supplement under this Section.

SECTION 9.3.        Effect of Consents and Waivers.  A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note.  After an amendment or waiver becomes effective, it shall bind every Holder unless it makes a change described in clauses (i) through (x) of Section 9.2, in which case the amendment, supplement or waiver or other action shall bind each Holder who has consented to it and every subsequent Holder that evidences the same debt as the consenting Holder’s Notes.  An amendment or waiver made pursuant to Section 9.2 shall become effective upon receipt by the Trustee of the requisite number of written consents.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to take any such action, whether or not such Persons continue to be Holders after such record date.

SECTION 9.4.        Notation on or Exchange of Notes.  If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms.  Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

SECTION 9.5.        Trustee and Collateral Agent to Sign Amendments.  The Trustee and Collateral Agent shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not, in the sole determination of the Trustee or Collateral Agent, adversely affect the rights, duties, liabilities or immunities of the Trustee or Collateral Agent.  If it does, the Trustee or Collateral Agent may but need not sign it.  In signing any amendment, supplement or waiver pursuant to this Article IX, the Trustee or Collateral Agent shall be entitled to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by or complies with this Indenture, the Collateral Documents and the Intercreditor Agreements  and that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to customary exceptions.  Notwithstanding the foregoing, no Opinion of Counsel will be required for the Trustee or Collateral Agent to execute any amendment or supplement adding a new Subsidiary Guarantor under this Indenture.

-91-

ARTICLE X

Subsidiary Guarantee

SECTION 10.1.      Subsidiary Guarantee.  Subject to the provisions of this Article X, each Subsidiary Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with each other Subsidiary Guarantor, to each Holder of the Notes, to the extent lawful, and the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other obligations of the Company under this Indenture and the Notes (including, without limitation, interest, fees and expenses accruing on or after the filing of any petition in bankruptcy or the commencement of any Insolvency or Liquidation Proceeding relating to the Company or any Subsidiary Guarantor whether or not a claim for post-filing or post-petition interest, fees and expenses is allowed in such proceeding and the obligations under Section 7.6) and the Collateral Documents (all the foregoing being hereinafter collectively called the “Guarantor Obligations”).  Each Subsidiary Guarantor agrees (to the extent lawful) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Article X notwithstanding any extension or renewal of any Guarantor Obligation.

Each Subsidiary Guarantor waives (to the extent lawful) presentation to, demand of, payment from and protest to the Company of any of the Guarantor Obligations and also waives (to the extent lawful) notice of protest for nonpayment.  Each Subsidiary Guarantor waives (to the extent lawful) notice of any default under the Notes or the Guarantor Obligations.

Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein constitutes a Guarantee of payment when due (and not a Guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Guarantor Obligations.

Except as set forth in Section 4.2,  Section 10.2 and Article VIII, the obligations of each Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Guarantor Obligations in full), including any claim of waiver, release, surrender, alteration or compromise, and shall not (to the extent lawful) be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guarantor Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of each Subsidiary Guarantor herein shall not (to the extent lawful) be discharged or impaired or otherwise affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under this Indenture, the Notes, the Collateral Documents, the Intercreditor Agreements  or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes, the Collateral Documents, the Intercreditor Agreements or any other agreement; (d) the release of any security held by any Holder or the Collateral Agent for the Guarantor Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Subsidiary Guarantor; (f) any change in the ownership of the Company; (g) any default, failure or delay, willful or otherwise, in the performance of the Guarantor Obligations; or (h) any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Subsidiary Guarantor or would otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law or equity.

Each Subsidiary Guarantor agrees that its Subsidiary Guarantee herein shall remain in full force and effect until payment in full of all the Guarantor Obligations or such Subsidiary Guarantor is

-92-

released from its Subsidiary Guarantee in compliance with Section 4.2,  Section 10.2 and Article VIII.  Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of, premium, if any, or interest on any of the Guarantor Obligations is rescinded, avoided or must otherwise be restored by any Holder upon or in connection with an Insolvency or Liquidation Proceeding of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against any Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay any of the Guarantor Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, each Subsidiary Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Trustee or the Trustee on behalf of the Holders an amount equal to the sum of (i) the unpaid amount of such Guarantor Obligations then due and owing and (ii) accrued and unpaid interest on such Guarantor Obligations then due and owing (but only to the extent not prohibited by law) (including interest, fees and expenses accruing on or after the filing of any petition in bankruptcy or the commencement of any Insolvency or Liquidation Proceeding relating to the Company or any Subsidiary Guarantor whether or not a claim for post-filing or post-petition interest, fees and expenses is allowed in such proceeding).

Each Subsidiary Guarantor further agrees that, as between such Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Guarantor Obligations guaranteed hereby may be accelerated as provided in this Indenture for the purposes of its Subsidiary Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guarantor Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Guarantor Obligations, such Guarantor Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purposes of this Subsidiary Guarantee.

Each Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

Neither the Company nor the Subsidiary Guarantors shall be required to make a notation on the Notes to reflect any Subsidiary Guarantee or any release, termination or discharge thereof and any such notation shall not be a condition to the validity of any Subsidiary Guarantee.

SECTION 10.2.      Limitation on Liability; Termination, Release and Discharge.

(a)         Any term or provision of this Indenture to the contrary notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall automatically (and without any further action by any Subsidiary Guarantor or any other Person) be reduced and limited to the maximum amount as shall, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution obligations under this Indenture, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under any Bankruptcy Law or other applicable federal or state law and not otherwise being void, voidable or avoidable under any similar laws affecting the rights of creditors generally.

(b)         A Subsidiary Guarantee by a Subsidiary Guarantor shall be automatically and unconditionally released and discharged, and each Subsidiary Guarantor and its obligations under the Subsidiary Guarantee and this Indenture shall be released and discharged:

-93-

(i)    upon any sale, exchange or transfer (by merger or otherwise) of the Capital Stock of such Subsidiary Guarantor (including any sale, exchange or transfer) following which such Subsidiary Guarantor ceases to be a direct or indirect Subsidiary of the Company if such sale, exchange or transfer does not constitute an Asset Disposition or is made in compliance with this Indenture, including Section 3.7 and Article IV;

(ii)   the dissolution or liquidation of such Subsidiary Guarantor in accordance with the provisions of this Indenture;

(iii)  upon exercise of the Company’s legal defeasance option or covenant defeasance option or upon satisfaction and discharge of this Indenture, in each case, pursuant to the provisions of Article VIII hereof; and

(iv)  if the Company designates such Subsidiary Guarantor as an Unrestricted Subsidiary and such designation complies with the other applicable provisions of this Indenture.

(c)         In the event the Trustee is asked to acknowledge such a release, the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.

(d)         The release of a Subsidiary Guarantor from its Subsidiary Guarantee and its obligations under this Indenture in accordance with the provisions of this Section 10.2 shall not preclude the future applications of Section 3.10 to such Person.

SECTION 10.3.      Right of Contribution.  Each Subsidiary Guarantor hereby agrees that to the extent that any Subsidiary Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against the Company or any other Subsidiary Guarantor who has not paid its proportionate share of such payment.  The provisions of this Section 10.3 shall in no respect limit the obligations and liabilities of each Subsidiary Guarantor to the Trustee and the Holders and each Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by such Subsidiary Guarantor hereunder.

SECTION 10.4.      No Subrogation.  Notwithstanding any payment or payments made by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor shall be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Guarantor Obligations, nor shall any Subsidiary Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Guarantor Obligations are paid in full.  If any amount shall be paid to any Subsidiary Guarantor on account of such subrogation rights at any time when all of the Guarantor Obligations shall not have been paid in full, such amount shall be held by such Subsidiary Guarantor in trust for the Trustee and the Holders, segregated from other funds of such Subsidiary Guarantor, and shall, forthwith upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the exact form received by such Subsidiary Guarantor (duly indorsed by such Subsidiary Guarantor to the Trustee, if required), to be applied against the Guarantor Obligations.

-94-

ARTICLE XI

Collateral and Security

SECTION 11.1.      The Collateral.

(a)         The due and punctual payment of the principal of, premium, if any, and interest on the Notes and the Subsidiary Guarantees thereof when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, interest on the overdue principal of and interest (to the extent lawful), if any, on the Notes and the Subsidiary Guarantees thereof and performance of all other obligations under this Indenture, including, without limitation, the obligations of the Company set forth in Section 7.6 and Section 8.6 herein, and the Notes and the Subsidiary Guarantees thereof and the Collateral Documents, shall be secured by Liens as provided in the Collateral Documents which the Company and the Subsidiary Guarantors, as the case may be, have entered into simultaneously with the execution of this Indenture and shall be secured by all Collateral Documents hereafter delivered as required or permitted by this Indenture.

(b)         The Company and the Subsidiary Guarantors hereby agree that the Collateral Agent shall hold the Collateral in trust for the benefit of all of the Holders, the Collateral Agent and the Trustee, in each case pursuant to the terms of the Collateral Documents, and the Collateral Agent is hereby authorized to execute and deliver the Collateral Documents.

(c)         Each Holder, by its acceptance of any Notes and the Subsidiary Guarantees thereof, consents and agrees to the terms of the Collateral Documents (including, without limitation, the provisions providing for foreclosure) and the Intercreditor Agreements, as the same may be in effect or as may be amended from time to time in accordance with their terms, and authorizes and directs the Collateral Agent to perform its obligations and exercise its rights under the Collateral Documents and the Intercreditor Agreements in accordance therewith.

(d)         The Trustee and each Holder, by accepting the Notes and the Subsidiary Guarantees thereof, acknowledges that, as more fully set forth in the Collateral Documents, the Collateral as now or hereafter constituted shall be held for the benefit of all the Holders and the Trustee, and that the Lien of this Indenture and the Collateral Documents in respect of the Trustee and the Holders is subject to and qualified and limited in all respects by the Collateral Documents and the Intercreditor Agreements and actions that may be taken thereunder.

(e)         To the extent not completed prior to the Issue Date, the Company or the applicable Subsidiary Guarantor will take the actions and satisfy the requirements set forth on Schedule 2 on or prior to the date set forth on Schedule 2 with respect to each Mortgaged Real Property listed on Schedule 1. Upon satisfaction of such requirements, the Company shall promptly deliver to the Trustee and the Collateral Agent an Officers’ Certificate notifying them that such actions have been taken and certifying that such requirements have been satisfied.

-95-

SECTION 11.2.      Further Assurances.  The Company shall, and shall cause each Subsidiary Guarantor to, at their sole expense, do or cause to be done all acts which may be reasonably necessary, or as requested by the Collateral Agent, to confirm that the Collateral Agent holds, for the benefit of the Holders and the Trustee, duly created, enforceable and perfected first-priority Liens and security interests, as applicable, in the Collateral (subject to Permitted Liens) to the extent such liens are required to be so perfected by this Indenture and the Collateral Documents, including the filing of UCC continuation statements and UCC amendments.

SECTION 11.3.      Release of Liens on the Collateral.

(a)         The Liens on the Collateral shall automatically and without any need for any further action by any Person be released:

(i)    in whole or in part, as applicable, as to all or any portion of property subject to such Liens which has been taken by eminent domain, condemnation or other similar circumstances;

(ii)   in whole upon:

(1)         satisfaction and discharge of this Indenture as set forth in Section 8.1(a);  or

(2)         a legal defeasance or covenant defeasance of this Indenture as set forth in Section 8.1(b);

(iii)  in part, as to any property that (x) is sold, transferred or otherwise disposed of by the Company or any Subsidiary Guarantor (other than to the Company or a Subsidiary Guarantor) in a transaction not prohibited by this Indenture at the time of such sale, transfer or disposition or (y) is owned or at any time acquired by a Subsidiary Guarantor that has been released from its Subsidiary Guarantee in accordance with this Indenture, concurrently with the release of such Subsidiary Guarantee (including in connection with the designation of a Subsidiary Guarantor as an Unrestricted Subsidiary);

(iv)  pursuant to an amendment in accordance with Article IX;

(v)    in whole as to all Collateral that is owned by a Subsidiary Guarantor that is released from its Subsidiary Guarantee in accordance with Section 10.2;  and

(vi)  in part, in accordance with the applicable provisions of the Collateral Documents and the ABL Intercreditor Agreement.

(b)         In connection with any termination or release of any Liens in all or any portion of the Collateral pursuant to this Indenture or any of the Collateral Documents, the Trustee shall, or shall cause the Collateral Agent to, promptly execute, deliver or acknowledge all documents, instruments and releases that have been requested to release, reconvey to the Company and/or the Subsidiary Guarantors, as the case may be, such Collateral or otherwise give effect to, evidence or confirm such termination or release in accordance with the directions of the Company and/or the Subsidiary Guarantor, as the case may be.

(c)         The release of any Collateral from the terms of the Collateral Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and

-96-

to the extent such Collateral is released pursuant to this Indenture or upon termination of this Indenture.  The Trustee and each of the Holders each acknowledge and direct the Trustee and the Collateral Agent that a release of Collateral or a Lien in accordance with the terms of any Collateral Document and this Article XI will not be deemed for any purpose to be an impairment of the Lien on the Collateral in contravention of the terms of this Indenture.

(d)         Notwithstanding any provision to the contrary herein, as and when requested by the Company or any Subsidiary Guarantor, the Trustee shall instruct the Collateral Agent to authorize the filing of Uniform Commercial Code financing statement amendments or releases (which shall be prepared by the Company or such Subsidiary Guarantor) solely to the extent necessary to delete or release Liens on property or assets not required to be subject to a Lien under the Collateral Documents from the description of assets in any previously filed financing statements.  If requested in writing by the Company or any Subsidiary Guarantor, the Trustee shall instruct the Collateral Agent to execute such documents, instruments or statements reasonably requested of it (which shall be prepared by the Company or such Subsidiary Guarantor) and to take such other action as the Company may request to evidence or confirm that such property or assets not required to be subject to a Lien under the Collateral Documents described in the immediately preceding sentence has been released from the Liens of each of the Collateral Documents.  The Collateral Agent shall execute and deliver such documents, instruments and statements and shall take all such actions promptly upon receipt of such instructions from the Company, any Subsidiary Guarantor or the Trustee.

(e)         In no event shall the Trustee or Collateral Agent be obligated to execute or deliver any document evidencing any release or reconveyance without receipt of an Opinion of Counsel and Officers’ Certificate, each stating that such release complies with this Indenture, the Intercreditor Agreements and the Collateral Documents.

SECTION 11.4.      Authorization of Actions to Be Taken by the Trustee or the Collateral Agent Under the Collateral Documents.

(a)         Subject to the provisions of the Collateral Documents, the Intercreditor Agreements  and the other provisions of this Indenture, each of the Trustee or the Collateral Agent may take all actions it deems necessary or appropriate in order to (i) enforce any of its rights or any of the rights of the Holders under the Collateral Documents and (ii) upon the occurrence and during the continuance of an Event of Default, collect and receive any and all amounts payable in respect of the Collateral in respect of the obligations of the Company and the Subsidiary Guarantors hereunder and thereunder.  Subject to the provisions of the Collateral Documents and the Intercreditor Agreements, the Trustee or the Collateral Agent shall have the power (but not the obligation) to institute and to maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Collateral by any acts that may be unlawful or in violation of the Collateral Documents, the Intercreditor Agreements or this Indenture, and such suits and proceedings as the Trustee or the Collateral Agent may deem expedient to preserve or protect its interest and the interests of the Holders in the Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders or the Trustee).

(b)         The Trustee or the Collateral Agent shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes negligence,

-97-

bad faith or willful misconduct on the part of the Trustee or the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of the Company to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.  The Trustee or the Collateral Agent shall have no responsibility for recording, filing, re-recording or refiling any financing statement, continuation statement, document, instrument or other notice in any public office at any time or times or to otherwise take any action to perfect or maintain the perfection of any security interest granted to it under the Collateral Documents or otherwise.

(c)         Where any provision of the Collateral Documents requires that additional property or assets be added to the Collateral, the Company shall, or shall cause the applicable Subsidiary Guarantors to, take any and all actions reasonably required to cause such additional property or assets to be added to the Collateral and to create and maintain a valid and enforceable perfected first-priority security interest on a pari passu basis with the Liens securing any Permitted Additional Pari Passu Obligations in such property or assets (subject to Permitted Liens) in favor of the Collateral Agent for the benefit of the Holders, in each case in accordance with and to the extent required under the Collateral Documents.

(d)         The Trustee or the Collateral Agent, in taking any action under the Collateral Documents, shall be entitled to receive, if requested, as a condition to take any action, an Officers’ Certificate and Opinion of Counsel to the effect that such action does not violate this Indenture, the Collateral Documents or the Intercreditor Agreements, and the Trustee or the Collateral Agent shall be fully protected relying thereon.

(e)         In acting under the Collateral Documents and the Intercreditor Agreements, the Trustee and Collateral Agent shall have all the protections, rights and immunities given to them under this Indenture.

(f)         For the avoidance of doubt, upon receipt of any payment by the Collateral Agent or the Trustee pursuant to the Intercreditor Agreements, the Company, Guarantors and Holders agree that, as among them, such payments shall be made and such funds applied in accordance with Section 6.10 of this Indenture, and in every case whatsoever, the Trustee and Collateral Agent will each be paid amounts owed them under this Indenture, the Intercreditor Agreements  and the Collateral Documents prior to payments (pursuant to Article VI of this Indenture) being made to the Holders.

(g)         In the event that the Trustee or Collateral Agent is required to acquire title to any property or asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the sole discretion of the Trustee or the Collateral Agent, as the case may be, may cause it to be considered an “owner or operator” under the provisions of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601, et seq., or otherwise cause it to incur liability under  CERCLA or any other federal, state or local law, each of the Trustee and the Collateral Agent reserves the right, instead of taking such action, to either resign or arrange for the transfer of the title or control of the asset to a court-appointed receiver.  Neither the Trustee nor the Collateral Agent shall be liable to any person for any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Trustee’s or the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or under the Collateral Documents or relating to the discharge, release or threatened release of hazardous materials into the environment.  If at any time it is necessary or advisable for the Collateral to be possessed, owned, operated or managed by any person other than the Company or a Guarantor, the Holders of a majority of the aggregate principal amount of the Notes shall direct the Trustee or the

-98-

Collateral Agent, as the case may be, to appoint an appropriately qualified person who they shall designate to possess, own, operate or manage, as the case may be, the Collateral.

ARTICLE XII

Miscellaneous

SECTION 12.1.      Notices.  Notices given by publication shall be deemed given on the first date on which publication is made, and notices given by first-class mail, postage prepaid, shall be deemed given five calendar days after mailing.  Notices delivered in accordance with the applicable procedures of DTC will be deemed given when delivered to DTC.  Any notice or communication shall be in writing and delivered in person, by facsimile or mailed by first-class mail addressed as follows:

if to the Company or to any Subsidiary Guarantor:

c/o The McClatchy Company

2100 “Q” Street
Sacramento, California 95816
Attention: Vice President, General Counsel
Facsimile No.: (916) 321-1869

if to the Trustee or Collateral Agent:

The Bank of New York Mellon Trust Company, N.A.

400 South Hope Street, Suite 500
Los Angeles, California 90071
Attention: Corporate Unit
Facsimile: (213) 630-6298

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

Each of the Trustee and Collateral Agent agrees to accept and act upon instructions or directions pursuant to this Indenture or the Collateral Documents or any Intercreditor Agreement sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods.  If the party elects to give the Trustee or Collateral Agent e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee or Collateral Agent in its discretion elects to act upon such instructions, the Trustee’s or Collateral Agent's understanding of such instructions shall be deemed controlling.  Neither the Trustee nor the Collateral Agent shall be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s or Collateral Agent's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction.  The party providing electronic instructions agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee or Collateral Agent, including without

-99-

limitation the risk of the Trustee or Collateral Agent acting on unauthorized instructions, and the risk or interception and misuse by third parties.

SECTION 12.2.      Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture (except in connection with the original issuance of Notes on the date hereof), the Company shall furnish to the Trustee:

(i)    an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii)   an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

SECTION 12.3.      Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(i)    a statement that the individual making such certificate or opinion has read such covenant or condition;

(ii)   a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii)  a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv)  a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

In giving such Opinion of Counsel, counsel may rely as to factual matters on an Officers’ Certificate or on certificates of public officials.

SECTION 12.4.      Submission of Jurisdiction.  To the extent permitted by applicable law, the Company and each Guarantor hereby irrevocably submits to the jurisdiction of any New York State court sitting in the Borough of Manhattan in the City of New York or any federal court sitting in the Borough of Manhattan in the City of New York in respect of any suit, action or proceeding arising out of or relating to this Indenture, the Guarantees and the Notes, and, to the extent permitted by applicable law, irrevocably accepts for itself and in respect of its property, generally and unconditionally, jurisdiction of the aforesaid courts.

SECTION 12.5.      Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for action by, or a meeting of, Holders.  The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 12.6.      Days Other than Business Days.  If a payment date is not a Business Day, payment shall be made on the next succeeding day that is not a Business Day, and no interest shall

-100-

accrue for the intervening period.  If a regular Record Date is not a Business Day, the Record Date shall not be affected.

SECTION 12.7.      Governing Law.  This Indenture, the Notes and the Subsidiary Guarantees shall be governed by, and construed in accordance with, the laws of the State of New York.

SECTION 12.8.      Waiver of Jury Trial.  EACH OF THE COMPANY, THE SUBSIDIARY GUARANTORS, EACH HOLDER BY ITS ACCEPTANCE OF A NOTE AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 12.9.      No Recourse Against Others.  An incorporator, director, officer, employee, stockholder or controlling person, as such, of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, the Subsidiary Guarantees, the Collateral Documents, the Intercreditor Agreements  or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Note, each Holder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Notes.

SECTION 12.10.    Successors.  All agreements of the Company and each Subsidiary Guarantor in this Indenture and the Notes shall bind their respective successors.  All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 12.11.    Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.

SECTION 12.12.    Variable Provisions.  The Company initially appoints the Trustee as Paying Agent and Registrar and custodian with respect to any Global Notes.

SECTION 12.13.    Table of Contents; Headings.  The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

SECTION 12.14.    Direction by Holders to Enter into Collateral Documents and the Intercreditor Agreements.  By accepting a Note, each Holder is deemed to have authorized and directed the Trustee and the Collateral Agent, as applicable, to enter into the Collateral Documents and the Intercreditor Agreements.

SECTION 12.15.    Force Majeure.  In no event shall the Trustee or the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee and the Collateral Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

-101-

SECTION 12.16.    USA Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA Patriot Act the Trustee and the Trust Officers, like all financial institutions and in order to help fight the funding of terrorism and money laundering, are required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account.  The parties to this agreement agree that they will provide the Trustee and the Trust Officers with such information as they may request in order to satisfy the requirements of the USA Patriot Act.

SECTION 12.17.    Foreign Account Tax Compliance Act (FATCA).The Company agrees (i) to provide the Trustee with such reasonable information as it has in its possession to enable the Trustee to determine whether any payments pursuant to the Indenture are subject to the withholding requirements described in Section 1471(b) of the Code or otherwise imposed pursuant to Sections 1471 through 1474 of the Code and any regulations, or agreements thereunder or official interpretations thereof (“Applicable Law”), and (ii) that the Trustee shall be entitled to make any withholding or deduction from payments under the Indenture to the extent necessary to comply with Applicable Law, for which the Trustee shall not have any liability, except in cases of willful misconduct or negligence or bad faith).

-102-

IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

THE MCCLATCHY COMPANY
By:	/s/ Elaine Lintecum
	Name:   Elaine Lintecum
	Title:     Vice President and Chief Financial Officer

[Signature Page to Indenture]

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 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.
All By:	/s/ Elaine Lintecum
	Name:   Elaine Lintecum
	Title:     Vice President
MCCLATCHY MANAGEMENT SERVICES, INC.
MCCLATCHY INTERACTIVE LLC

[Signature Page to Indenture]

All By:	/s/ Elaine Lintecum
	Name:   Elaine Lintecum
	Title:     President
BELLINGHAM HERALD PUBLISHING, LLC
IDAHO STATESMAN PUBLISHING, LLC
OLYMPIAN PUBLISHING, LLC
All By:	Pacific Northwest Publishing Company, Inc.,
	its Sole Member
By:	/s/ Elaine Lintecum
	Name:   Elaine Lintecum
	Title:     Vice President
CYPRESS MEDIA, LLC
By:	Cypress Media, Inc.,
	its Sole Member
By:	/s/ Elaine Lintecum
	Name:  Elaine Lintecum
	Title:    Vice President
SAN LUIS OBISPO TRIBUNE, LLC
By:	The McClatchy Company,
	its Sole Member
By:	/s/ Elaine Lintecum
	Name:   Elaine Lintecum
	Title:    Vice President, Finance, Chief Financial
	Officer and Treasurer

[Signature Page to Indenture]

THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Trustee
By:	/s/ Karen Yu
	Name:   Karen Yu
	Title:     Vice President
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Collateral Agent
By:	/s/ Karen Yu
	Name:  Karen Yu
	Title:    Vice President

[Signature Page to Indenture]

EXHIBIT A

[FORM OF FACE OF NOTE]

Global Note Legend, if applicable

Private Placement Legend, if applicable

A-1

No. [___]	Principal Amount $[______________],
	as revised by the Schedule of Increases
	or Decreases in the Global Note attached hereto
	CUSIP NO. ____________

THE MCCLATCHY COMPANY

9.000% Senior Secured Note due 2026

The McClatchy Company, a Delaware corporation, promises to pay to [___________], or registered assigns, the initial principal amount set forth on the Schedule of Increases or Decreases in the Global Note attached hereto, as revised by the Schedule of Increases or Decreases in the Global Note attached hereto, on July 15, 2026.

Interest Payment Dates:  January 15 and July 15.

Record Dates:  January 1 and July 1.

Additional provisions of this Note are set forth on the other side of this Note.

A-2

THE MCCLATCHY COMPANY
By:
	Name:
	Title:
By:
	Name:
	Title:

A-3

TRUSTEE’S CERTIFICATE OF AUTHENTICATION
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.
as Trustee, certifies that this is one of the
Notes referred to in the Indenture.
By:		Date:
	Authorized Signatory

A-4

[FORM OF REVERSE SIDE OF NOTE]

9.000% Senior Secured Note due 2026

1.          Interest.

The McClatchy Company, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum shown above.

The Company shall pay interest semiannually on January 15 and July 15 of each year, with the first interest payment to be made on January 15, 2019.  Interest on the Notes shall accrue from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from July 16, 2018.  The Company shall pay interest on overdue principal or premium, if any (plus interest on such interest to the extent lawful), at the rate borne by the Notes to the extent lawful.  Interest shall be computed on the basis of a 360-day year of twelve 30-day months.  Interest shall accrue (in addition to the interest rate borne by the Notes) from and including the date on which an Event of Default under Section 6.1(a)(ii),  6.1(a)(vii) or 6.1(a)(viii) shall occur to but excluding the date on which such Event of Default shall have been cured, at a rate per annum equal to 2.0% of the principal amount of the Notes.

Notwithstanding the foregoing, if any such Interest Payment Date would otherwise be a day that is not a Business Day, then the interest payment will be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date. If the maturity date of the Notes is a day that is not a Business Day, all payments to be made on such day will be made on the next succeeding Business Day, with the same force and effect as if made on the maturity date. In either of such cases, no additional interest will be payable as a result of such delay in payment.

2.          Method of Payment.

By no later than 11:00 a.m. (New York City time) on the date on which any principal of, premium, if any, or interest on any Note is due and payable, the Company shall irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay such principal, premium, if any, and/or interest.  The Company shall pay interest (except Defaulted Interest) to the Persons who are registered Holders of Notes at the close of business on the January 1 and July 1 next preceding the Interest Payment Date unless Notes are cancelled, repurchased or redeemed after the record date and before the Interest Payment Date.  Holders must surrender Notes to a Paying Agent to collect principal payments.  The Company shall pay principal, premium, if any, and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  Payments in respect of Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by the transfer of immediately available funds to the accounts specified by the Depositary.  The Company shall make all payments in respect of a Definitive Note (including principal, premium, if any, and interest) by mailing a check to the registered address of each Holder thereof.

3.          Paying Agent and Registrar.

Initially, The Bank of New York Mellon Trust Company, N.A., duly organized and existing under the laws of the United States of America and having a corporate trust office at The Bank of New York Mellon Trust Company, N.A., 400 South Hope Street, Suite 500, Los Angeles, California 90071, (“Trustee”), shall act as Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice to any Holder.  The Company or any of its domestically incorporated Wholly-Owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

A-5

4.          Indenture.

The Company issued the Notes under an Indenture dated as of July 16, 2018 (as it may be amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), among the Company, the Subsidiary Guarantors and the Trustee.  The terms of the Notes include those stated in the Indenture.  Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all such terms, and Holders are referred to the Indenture and the Securities Act for a statement of those terms.  To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

The Notes are senior secured obligations of the Company. This Note is one of the 9.000% Senior Secured Notes due 2026 referred to in the Indenture.  The Notes include (i) $310,000,000 aggregate principal amount of the Company’s 9.000 % Senior Secured Notes due 2026 issued under the Indenture on July 16, 2018 (herein called “Initial Notes”),  and (ii) if and when issued in accordance with the provisions of the Indenture, additional 9.000% Senior Secured Notes due 2026 of the Company that may be issued from time to time under the Indenture subsequent to July 16, 2018 (herein called “Additional Notes”).  The Indenture, among other things, imposes certain covenants with respect to  the following matters: the Incurrence of Indebtedness by the Company and its Restricted Subsidiaries, the payment of dividends and other distributions on the Capital Stock of the Company, the purchase or redemption of Capital Stock of the Company, certain purchases or redemptions of Junior Indebtedness, the sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or sale of Capital Stock of Restricted Subsidiaries, the incurrence of certain Liens, future Subsidiary Guarantors, the business activities and investments of the Company and its Restricted Subsidiaries and transactions with Affiliates, provided,  however, certain of such limitations shall be suspended if the Notes receive a rating of “BBB-” (or the equivalent) or higher from S&P (or its successors) and “Baa3” (or the equivalent) or higher from Moody’s (or its successors), in each case, with a stable or better outlook.  In addition, the Indenture limits the ability of the Company and its Restricted Subsidiaries to enter into agreements that restrict distributions and dividends from Subsidiaries.  The Indenture also imposes requirements with respect to the provision of financial information.  The Indenture also contains certain exceptions to the foregoing, and this description is qualified in its entirety by reference to the Indenture.

5.          Guarantee.

To guarantee the due and punctual payment of the principal, premium, if any, and interest, fees and expenses (including post-filing or post-petition interest, fees and expenses) on the Notes and all other amounts payable by the Company under the Indenture, the Notes, the Collateral Documents and the Intercreditor Agreements when and as the same shall be due and payable, whether at maturity, by acceleration or otherwise, according to the terms of the Notes and the Indenture, the Subsidiary Guarantors have unconditionally guaranteed (and future guarantors, together with the Subsidiary Guarantors, shall unconditionally Guarantee), jointly and severally, such obligations on a senior, secured basis on a pari passu basis with the Liens securing any Permitted Additional Pari Passu Obligations pursuant to the terms of the Indenture.

6.          Security.

The Initial Notes and Additional Notes, if any, are treated as a single class of securities under the Indenture and shall be secured by first-priority Liens and security interests, subject to Permitted Liens, in the Collateral on the terms and conditions set forth in the Indenture and the Collateral Documents.  The Collateral Agent holds the Collateral in trust for the benefit of the Trustee and the Holders, in each case pursuant to the Collateral Documents.  Each Holder, by accepting this Note, consents and

A-6

agrees to the terms of the Collateral Documents (including the provisions providing for the foreclosure and release of Collateral) as the same may be in effect or may be amended from time to time in accordance with their terms, the Indenture and the Intercreditor Agreements and authorizes and directs the Collateral Agent to enter into the Collateral Documents and the Intercreditor Agreements, and to perform its obligations and exercise its rights thereunder in accordance therewith.

7.          Redemption.

(a)         Except as described in clauses (b) and (c) below, the Notes are not redeemable until July 15, 2022.  On and after July 15, 2022, the Company may redeem all or, from time to time, a part of the Notes, upon not less than 15 nor more than 60 days’ notice at the following redemption prices (expressed as a percentage of principal amount of the Notes to be redeemed) plus accrued and unpaid interest on the Notes, if any, to the applicable redemption date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on July 15 of the years indicated below:

Year	Percentage
2022	104.500%
2023	102.250%
2024 and thereafter	100.000%

(b)         At any time prior to July 15, 2022, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium plus accrued and unpaid interest, if any, to, but excluding, the date of redemption (subject to the rights of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

“Applicable Premium” means, as determined by the Company with respect to a Note on any Redemption Date, the greater of:

(1)         1.0% of the principal amount of such Note; and

(2)         the excess, if any, of (a) the present value as of such Redemption Date of (i) the principal amount of such Note on July 15, 2022,  plus (ii) the remaining scheduled interest payments due on such Note through July 15, 2022 (excluding accrued but unpaid interest to the date of redemption), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points, over (b) the then outstanding principal of such Note.

“Treasury Rate”  means, as of any applicable Redemption Date, the weekly average rounded to the nearest 1/100th of a percentage point (for the most recently completed week for which such information is available as of the date that is two Business Days prior to the applicable Redemption Date) of the yield to maturity of United States Treasury securities with a constant maturity (as compiled and published in the Federal Reserve Statistical Release H.15 with respect to each applicable day during such week or, if such Statistical Release is no longer published or available, any publicly available source of similar market data selected by the Company) most nearly equal to the period from the applicable Redemption Date to July 15, 2022; provided, however, that if the period from the applicable Redemption Date to July 15, 2022 is not equal to the constant maturity of a United States Treasury security for which such a yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the applicable Redemption Date to July 15, 2022 is less

A-7

than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

(c)         On or prior to July 15, 2021, the Company may on any one or more occasions redeem up to 40% of the original principal amount of the Notes with the Net Cash Proceeds of one or more Equity Offerings at a redemption price of 109.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of Notes on the relevant Record Date to receive interest due on the relevant Interest Payment Date); provided that

(i)          at least 60% of the original principal amount of the Notes remains outstanding after each such redemption; and

(ii)         the redemption occurs within 90 days after the closing of such Equity Offering.

Notice of any redemption pursuant to clause (c) may be given prior to the completion of such Equity Offering, and any such redemption or notice may, at the Company’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of the related Equity Offering.

(d)         In the event that in any fiscal year, commencing with the fiscal year ending on or about December 30, 2018, Excess Cash Flow for such fiscal year (or, in the case of the fiscal year ending on or about December 30, 2018, Excess Cash Flow for the two full fiscal quarter period ending on the last day of such year) is positive, the Company shall, not later than 115 days after the last day of each fiscal year redeem an aggregate principal amount of Notes equal to the excess of (a) the greater of (i) $2,000 and (ii) the Applicable ECF Percentage of Excess Cash Flow for such period (rounded upwards to the nearest increment of $1,000) over (b) the aggregate principal amount of Notes retired by the Company during such period (whether pursuant to open market purchases, tender offers or optional redemptions) except to the extent funded through an Incurrence of long-term Indebtedness at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

(e)         In the event that the Company or any of its Restricted Subsidiaries receive any Net Available Cash from any Asset Disposition (other than an Asset Disposition of ABL Priority Collateral), then within 60 days of receipt thereof, the Company shall redeem an aggregate principal amount of Notes equal to the greater of (i) $2,000 and (ii) the amount of such Net Available Cash (rounded upwards to the nearest increment of $1,000) at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

(f)         Any redemption pursuant to this paragraph 7 shall be made pursuant to the provisions of Article V of the Indenture.

8.          [Reserved].

9.          Change of Control.

(a)         If a Change of Control occurs, unless the Company has exercised its right to redeem all of the Notes under Section 5.1 of the Indenture, each Holder shall have the right to require the Company to repurchase all or any part (in integral multiples of $1,000 except that no Note may be

A-8

tendered in part if the remaining principal amount would be less than $2,000) of such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount of the Notes plus accrued and unpaid interest, if any, to, but excluding, the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date) as provided in, and subject to the terms of, the Indenture.

10.        Denominations; Transfer; Exchange.

The Notes are in registered form without coupons in denominations of principal amount of $2,000 and whole multiples of $1,000 in excess thereof.  A Holder may transfer or exchange Notes in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not register the transfer of or exchange any Notes for a period beginning fifteen (15) Business Days before an Interest Payment Date and ending on such Interest Payment Date.

11.        Persons Deemed Owners.

The registered Holder of this Note may be treated as the owner of it for all purposes.

12.        Unclaimed Money.

If money for the payment of the principal of or premium, if any, or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another person.  After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

13.        Discharge and Defeasance.

Subject to certain conditions set forth in the Indenture, the Company at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Notes to redemption or maturity, as the case may be.

14.        Amendment, Waiver.

Subject to certain exceptions set forth in the Indenture, (i) the Indenture, the Notes and the Collateral Documents may be amended with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for Notes) and (ii) any default (other than (x) with respect to nonpayment or (y) in respect of a provision that cannot be amended without the written consent of each Holder affected) or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount of the Notes then outstanding (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).  Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture, the Notes or the Collateral Documents to cure any ambiguity, omission, defect or inconsistency, or to comply with Article IV or Article X of the Indenture in respect of the assumption by a Successor Company of an obligation of the Company under the Indenture or by a Successor Guarantor of obligations under a Subsidiary Guarantee, or to provide for uncertificated Notes in addition to or in place of certificated Notes, or to add Guarantees with respect to the Notes or to secure the Notes, or to release a Subsidiary Guarantor upon its designation

A-9

as an Unrestricted Subsidiary or otherwise in accordance with the Indenture, to add additional property or assets as Collateral to secure the Notes and the Subsidiary Guarantees, to release Liens in favor of the Collateral Agent in the Collateral as provided under the collateral release provisions, or to add additional covenants or surrender rights and powers conferred on the Company, to amend the Collateral Documents in the same manner as any amendments made to the ABL Credit Documents or to make any change that does not adversely affect the rights of any Holder in any material respect or to conform the text of the Indenture, the Notes or the Subsidiary Guarantees to the “Description of notes” section of the Offering Memorandum.

15.        Defaults and Remedies.

Under the Indenture, and subject to the terms and provisions of the Indenture Events of Default include, without limitation:  (i) default for 30 days in payment of interest when due on the Notes; (ii) default in payment of the principal of or premium, if any, on the Notes at Stated Maturity, upon optional redemption, upon required repurchase, upon declaration of acceleration or otherwise; (iii) failure by the Company to comply with its obligations under Section 3.9 or Article IV of the Indenture; (iv) failure by the Company or any Subsidiary Guarantor to comply with certain other provisions or agreements in the Indenture, the Notes and the Collateral Documents, in certain cases subject to notice and lapse of time; (v) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company or any Restricted Subsidiary if the amount accelerated (or so unpaid) exceeds $25.0 million; (vi) certain events of bankruptcy or insolvency with respect to the Company or any Significant Subsidiary; (vii) certain final and non-appealable judgments or decrees for the payment of money in excess of $25.0 million; (viii) any Subsidiary Guarantee of a Significant Subsidiary is declared null and void in a judicial proceeding or is denied or disaffirmed by such Significant Subsidiary; and (ix) with respect to Collateral with a fair market value in excess of $10.0 million, a declaration or assertion of invalidity or unenforceability or the failure to be in full force and effect (except as contemplated hereby), subject to any applicable grace periods as set forth in the Indenture.

If an Event of Default occurs and is continuing, the Trustee or Holders of at least 25% in aggregate principal amount of the outstanding Notes then outstanding may declare all the Notes to be due and payable immediately.  Certain events of bankruptcy or insolvency with respect to the Company are Events of Default which shall result in the Notes being due and payable immediately upon the occurrence of such Events of Default.

Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee and the Collateral Agent may refuse to enforce the Indenture or the Notes unless each receives indemnity or security reasonably satisfactory to each of the Trustee and the Collateral Agent.  Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Holders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest.

16.        Collateral.

These Notes and any Guarantee by a Subsidiary Guarantor are secured by a security interest in the Collateral pursuant to certain Collateral Documents.

17.        Trustee Dealings with the Company.

Subject to certain limitations set forth in the Indenture, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal

A-10

with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

18.        No Recourse Against Others.

A director, officer, employee, incorporator or stockholder of the Company or any Subsidiary Guarantor shall not have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, the Indenture, the Subsidiary Guarantees, the Collateral Documents, the Intercreditor Agreements or for any claim based on, in respect of, or by reason of, such obligations or their creation.  By accepting a Note, each Holder waives and releases all such liability.  The waiver and release shall be part of the consideration for the issue of the Notes.

19.        Authentication.

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent acting on its behalf) manually signs the certificate of authentication on the other side of this Note.

20.        Abbreviations.

Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

21.        CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures the Company has caused CUSIP numbers to be printed on the Notes.  No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers placed thereon.

22.        Successor Entity.

When a successor entity assumes, in accordance with the Indenture, all the obligations of its predecessor under the Notes and the Indenture, and immediately before and thereafter no Default or Event of Default exists and all other conditions of the Indenture are satisfied, the predecessor entity will be released from those obligations.

23.        Governing Law.

This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

A-11

The Company shall furnish to any Holder upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Note in larger type.  Requests may be made to:

The McClatchy Company

2100 “Q” Street

Sacramento, California 95816

Attention: Vice President, General Counsel

Facsimile No.: (916) 322-1869

A-12

ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint ___________ agent to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

Date:  ____________________	Your Signature:  ___________________
Signature Guarantee:  ______________________________
(Signature must be guaranteed)

Sign exactly as your name appears on the other side of this Note.

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

A-13

[TO BE ATTACHED TO GLOBAL NOTES]

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of the Note shall be $ [______________].  The following increases or decreases in this Global Note have been made:

Date of
Exchange Amount of decrease
in Principal Amount
of this Global Note Amount of increase
in Principal Amount
of this Global Note Principal Amount of
this Global Note
following such
decrease or increase Signature of
authorized signatory
of Trustee or Notes
Custodian

A-14

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 3.9 of the Indenture, check the box:

☐

3.9

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 3.9 of the Indenture, state the amount in principal amount (must be in denominations of integral multiples of $1,000):  $

Date:  _______________		Your Signature:
			(Sign exactly as your name appears on the
			other side of the Note)
Signature Guarantee:
	(Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to SEC Rule 17Ad-15.

A-15

SUBSIDIARY GUARANTEE

Pursuant to the Indenture (the “Indenture”) dated as of July 16, 2018 among The McClatchy Company, the Subsidiary Guarantors party thereto (each a “Subsidiary Guarantor” and collectively the “Subsidiary Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and as collateral agent, each Subsidiary Guarantor, subject to the provisions of Article X of the Indenture, hereby fully, unconditionally and irrevocably guarantees on a pari passu basis with the Liens securing any Permitted Additional Pari Passu Obligations, as primary obligor and not merely as surety, jointly and severally with each other Subsidiary Guarantor, to each Holder of the Notes, to the extent lawful, and the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Notes and all other obligations of the Company under the Indenture and the Notes (including without limitation interest, fees and expenses accruing on or after the filing of any petition in bankruptcy, or the commencement of any Insolvency or Liquidation Proceeding relating to the Company or any Subsidiary Guarantor whether or not a claim for post-filing or post-petition interest, fees and expenses is allowed in such proceeding and the obligations under Section 7.6 of the Indenture) and the Collateral Documents (all the foregoing being hereinafter collectively called the “Guarantor Obligations”).  Each Subsidiary Guarantor agrees (to the extent lawful) that the Guarantor Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it shall remain bound under this Subsidiary Guarantee notwithstanding any extension or renewal of any Guarantor Obligation.

The Guarantor Obligations of the Subsidiary Guarantors to the Holders of the Notes pursuant to the Subsidiary Guarantee and the Indenture are expressly set forth in Article X of the Indenture and reference is hereby made to the Indenture for the precise terms of the Subsidiary Guarantee.

Each Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Subsidiary Guarantee.

A-16

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 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.
All By:
	Name:  Elaine Lintecum
	Title:    Vice President
MCCLATCHY MANAGEMENT SERVICES, INC.
MCCLATCHY INTERACTIVE LLC

A-17

All By:
	Name:   Elaine Lintecum
	Title:     President
BELLINGHAM HERALD PUBLISHING, LLC
IDAHO STATESMAN PUBLISHING, LLC
OLYMPIAN PUBLISHING, LLC
All By:	Pacific Northwest Publishing Company, Inc.,
	its Sole Member
By:
	Name:   Elaine Lintecum
	Title:     Vice President
CYPRESS MEDIA, LLC
By:	Cypress Media, Inc.,
	its Sole Member
By:
	Name:  Elaine Lintecum
	Title:    Vice President
SAN LUIS OBISPO TRIBUNE, LLC
By:	The McClatchy Company,
	its Sole Member
By:
	Name:   Elaine Lintecum
	Title:    Vice President, Finance, Chief Financial
	Officer and Treasurer

A-18

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

The McClatchy Company
2100 “Q” Street
Sacramento, California 95816
Attention: Vice President, General Counsel
Facsimile No.: (916) 321-1869

The Bank of New York Mellon Trust Company, N.A.
400 South Hope Street, Suite 500

Los Angeles, California 90071
Attention: Corporate Unit
Facsimile: (213) 630-6298

Re:  9.000%  Senior Secured Notes due 2026

Reference is hereby made to the Indenture, dated as of July 16, 2018 (the “Indenture”), among The McClatchy Company, as Issuer (the “Company”), the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

________________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $____ in such Note[s] or interests (the “Transfer”), to __________ (the “Transferee”), as further specified in Annex A hereto.  In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.          ☐Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note pursuant to Rule 144A.  The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

2.           ☐Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or a Definitive Note pursuant to Regulation S.  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act

B-1

and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the  facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).  Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

3.           ☐Check and complete if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S.  The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a)         ☐         such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

or

(b)         ☐         or such Transfer is being effected to the Company or a subsidiary thereof;

or

(c)         ☐         such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

4.           ☐Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

(a)         ☐Check if Transfer is pursuant to Rule 144.  (i)  The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the

B-2

transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b)         ☐Check if Transfer is pursuant to Regulation S.  (i)  The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c)         ☐Check if Transfer is pursuant to other exemption.  (i)  The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act.  Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

	[Insert Name of Transferor]
	By:
		Name:
		Title:
Dated: _____________________________

B-3

ANNEX A TO CERTIFICATE OF TRANSFER

1.          The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a)         ☐          a beneficial interest in the:

(i)          ☐         144A Global Note (CUSIP [               ]), or

(ii)         ☐         Regulation S Global Note (CUSIP [               ]),  or

(b)         ☐         a Restricted Definitive Note.

2.          After the Transfer the Transferee will hold:

[CHECK ONE]

(a)         ☐          a beneficial interest in the:

(i)          ☐         144A Global Note  (CUSIP [               ]),  or

(ii)         ☐         Regulation S Global Note (CUSIP [               ]), or

(iii)        ☐         Unrestricted Global Note  CUSIP [               ],  or

(b)         ☐         a Restricted Definitive Note; or

(c)         ☐          an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

B-4

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

The McClatchy Company
2100 “Q” Street
Sacramento, California 95816
Attention: Vice President, General Counsel
Facsimile No.: (916) 321-1869

The Bank of New York Mellon Trust Company, N.A.
400 South Hope Street, Suite 500
Los Angeles, California 90071
Attention: Corporate Unit
Facsimile: (213) 630-6298

Re:  9.000% Senior Secured Notes due 2026

(CUSIP [             ])

Reference is hereby made to the Indenture, dated as of July 16, 2018 (the “Indenture”), among The McClatchy Company, as Issuer (the “Company”), the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee.  Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

_______________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $________ in such Note[s] or interests (the “Exchange”).  In connection with the Exchange, the Owner hereby certifies that:

1.          Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note.

(a)         ☐Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b)         ☐Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and

C-1

the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c)         ☐Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note.  In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d)         ☐Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note.  In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2.          Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a)         ☐Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note.  In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b)         ☐Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note.  In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] _ 144A Global Note, _ Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States.  Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-2

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

	[Insert Name of Transferor]
	By:
		Name:
		Title:
Dated: _____________________________

C-3

SCHEDULE 1

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

SCHEDULE 2

POST-CLOSING MATTERS

Within 90 days after the Issue Date, or as soon as practical thereafter using commercially reasonable efforts, the Company shall deliver to the Initial Purchasers, Trustee and the Collateral Agent each of the following documents, which shall be reasonably satisfactory in form and substance to the Initial Purchasers, Trustee and the Collateral Agent and each of their respective counsel:

(i)          Mortgages.  Fully executed counterparts of the Mortgages evidencing the liens on the Mortgaged Real Property listed on Schedule I, together with evidence that counterparts of all the Mortgages have been delivered to the title insurance company for recording in all places to the extent necessary to effectively create a valid and enforceable first priority mortgage lien on each Mortgaged Real Property in favor of the Collateral Agent for its benefit and the benefit of the Trustee and the holders of the Notes, subject only to Permitted Liens.

(ii)         Title Insurance.  With respect to each Mortgage encumbering any Mortgaged Real Property, a loan policy of title insurance (or commitment to issue such a policy having the effect of a loan policy of title insurance) insuring (or committing to insure) the lien of such Mortgage as a valid and enforceable first priority mortgage lien on such Mortgaged Real Property described therein, free and clear of all defects and encumbrances other than Permitted Liens, in an amount not less than the fair market value of such Mortgaged Real Property (each such policy, a “Mortgage Policy”).

(iii)       Surveys.  With respect to each Mortgaged Real Property, a new ALTA survey or an 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 each Mortgage Policy.

(iv)        Counsel Opinions.  Opinions addressed to the Initial Purchasers and the Collateral Agent for its benefit and for the benefit of the Trustee and the holders of the Notes of (i) local counsel in each jurisdiction where the Mortgaged Real Property is located with respect to the enforceability of the Mortgages and other matters customarily included in such opinions and (ii) counsel for the Company regarding due authorization, execution and delivery of the Mortgages.

(v)         Mortgaged Real Property Indemnification.  Such affidavits, certificates, instruments of indemnification and other items (including a so-called “gap” indemnification) as shall be reasonably required to induce the title insurance company to issue each Mortgage Policy and endorsements referred to above.

(vi)        Collateral Fees and Expenses.  Evidence reasonably acceptable to the Initial Purchasers and the Collateral Agent of payment by the Company of all Mortgage Policy premiums, search and examination 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.

EX-10.6

Exhibit 10.6

EXECUTION VERSION

JUNIOR LIEN TERM LOAN CREDIT AGREEMENT

dated as of July 16, 2018

among

The McClatchy Company,
 as Borrower,

The Lenders Party Hereto,

The Guarantors Party Hereto,

The Bank of New York Mellon,

 as Administrative Agent, Tranche A Collateral Agent and Tranche B Collateral Agent

TABLE OF CONTENTS

Section	Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	1
SECTION 1.01 Certain Defined Terms	1
SECTION 1.02 Computation of Time Periods; Other Definitional Provisions	40
SECTION 1.03 Accounting Terms	41
SECTION 1.04 Times of Day	42
SECTION 1.05 Classes of Loans	42
ARTICLE II AMOUNTS AND TERMS OF THE LOANS	42
SECTION 2.01 The Loans	42
SECTION 2.02 Making the Loans	42
SECTION 2.03 Repayment of Loans	43
SECTION 2.04 Termination of the Commitments	43
SECTION 2.05 Prepayments	43
SECTION 2.06 Interest	44
SECTION 2.07 Agent’s Fees	44
SECTION 2.08 Payments and Computations	44
SECTION 2.09 Taxes	46
SECTION 2.10 Sharing of Payments, Etc	49
SECTION 2.11 Use of Proceeds	50
SECTION 2.12 Evidence of Debt	50
ARTICLE III CONDITIONS TO EFFECTIVENESS OF LENDING	52
SECTION 3.01 Closing Conditions of the Initial Lenders	52
SECTION 3.02 Closing Conditions of the Loan Parties	54
ARTICLE IV REPRESENTATIONS AND WARRANTIES	55
SECTION 4.01 Existence, Qualification and Power	55
SECTION 4.02 Authorization; No Contravention	55
SECTION 4.03 Governmental Authorization, Other Consents	56
SECTION 4.04 Binding Effect	56
SECTION 4.05 Financial Statements; No Material Adverse Effect	56
SECTION 4.06 Investment Company Act	57
SECTION 4.07 Disclosure	57
SECTION 4.08 Subsidiaries	57
SECTION 4.09 Ownership of Property; Liens	57
SECTION 4.10 Taxes	57
SECTION 4.11 Solvency	57
SECTION 4.12 Compliance with Laws	57
SECTION 4.13 Collateral Documents	58
SECTION 4.14 Use of Proceeds	58
SECTION 4.15 OFAC Rules and Regulations, Patriot Act and FCPA	58
SECTION 4.16 No Litigation	59

-1-

ARTICLE V AFFIRMATIVE COVENANTS	59
SECTION 5.01 Corporate Existence	59
SECTION 5.02 Maintenance of Properties	59
SECTION 5.03 Payment of Taxes and Other Claims	59
SECTION 5.04 Statement by Officers as to Default	60
SECTION 5.05 Financial Statements	60
SECTION 5.06 Compliance with Laws	61
SECTION 5.07 Books and Records	61
SECTION 5.08 Additional Guarantors; Additional Collateral; Further Assurances	61
SECTION 5.09 Exchange Rights	62
ARTICLE VI NEGATIVE COVENANTS	63
SECTION 6.01 Limitation on Indebtedness	63
SECTION 6.02 Limitation on Restricted Payments	68
SECTION 6.03 Limitation on Liens	73
SECTION 6.04 Limitation on Restrictions on Distributions from Restricted Subsidiaries	73
SECTION 6.05 Limitation on Sales of Assets and Subsidiary Stock	76
SECTION 6.06 Limitation on Affiliate Transactions	76
SECTION 6.07 Limitation on Lines of Business	78
SECTION 6.08 Fundamental Changes	78
ARTICLE VII EVENTS OF DEFAULT	79
SECTION 7.01 Events of Default	79
ARTICLE VIII THE AGENTS	82
SECTION 8.01 Authorization and Action	82
SECTION 8.02 Agents Individually	83
SECTION 8.03 Duties of Agents; Exculpatory Provisions	83
SECTION 8.04 Reliance by Agents	85
SECTION 8.05 Delegation of Duties	86
SECTION 8.06 Resignation of Agents	86
SECTION 8.07 Non-Reliance on Agents and Other Lenders	87
SECTION 8.08 Agents May File Proofs of Claim	87
SECTION 8.09 Collateral and Guaranty Matters	88
SECTION 8.10 Indemnification	90
SECTION 8.11 Tax Indemnification by the Lenders	90
SECTION 8.12 Lien Priority Confirmation	91
ARTICLE IX GUARANTY	91
SECTION 9.01 Guaranty; Limitation of Liability	91
SECTION 9.02 Guaranty Absolute	92
SECTION 9.03 Waivers and Acknowledgments	93
SECTION 9.04 Subrogation	94
SECTION 9.05 Guaranty Supplements	95
SECTION 9.06 Continuing Guaranty; Assignments	95

-2-

ARTICLE X SUBORDINATION OF GUARANTEE	96
SECTION 10.01 Agreement to Subordinate	96
SECTION 10.02 Liquidation, Dissolution, Bankruptcy	96
SECTION 10.03 Default on Priority Indebtedness	97
SECTION 10.04 Acceleration of Payment of Guaranteed Obligations	98
SECTION 10.05 When Distribution Must Be Paid Over	98
SECTION 10.06 Subrogation	98
SECTION 10.07 Relative Rights	98
SECTION 10.08 Subordination May Not Be Impaired by Guarantor	99
SECTION 10.09 Rights of Administrative Agent	99
SECTION 10.10 Distribution or Notice to Representative	99
SECTION 10.11 Article X Not to Prevent Events of Default or Limit Right To Accelerate	99
SECTION 10.12 Administrative Agent and the Lenders Entitled To Rely	99
SECTION 10.13 Administrative Agent to Effectuate Subordination	100
SECTION 10.14 Administrative Agent Not Fiduciary for Lenders of Priority Indebtedness	100
SECTION 10.15 Reliance by Lenders of Priority Indebtedness on Subordination Provisions	100
ARTICLE XI MISCELLANEOUS	101
SECTION 11.01 Amendments, Etc	101
SECTION 11.02 Notices, Etc	102
SECTION 11.03 No Waiver; Remedies	104
SECTION 11.04 Costs and Expenses	104
SECTION 11.05 Right of Set-off	105
SECTION 11.06 Binding Effect	106
SECTION 11.07 Successors and Assigns	106
SECTION 11.08 Execution in Counterparts	109
SECTION 11.09 Release of Collateral	109
SECTION 11.10 Survival of Agreement	109
SECTION 11.11 Patriot Act Notice	109
SECTION 11.12 Jurisdiction, Etc	110
SECTION 11.13 Governing Law	111
SECTION 11.14 Waiver of Jury Trial	111
SECTION 11.15 No Advisory or Fiduciary Responsibility	111
SECTION 11.16 No Manipulation	112
SECTION 11.17 Derivatives Trading Activities	112
SECTION 11.18 Pari Passu Ranking	112

-3-

SCHEDULES

Schedule I	-	Commitments
Schedule II	-	Guarantors
Schedule 11.02	-	Addresses for Notices
EXHIBITS
Exhibit A	-	Form of Note
Exhibit B	-	Form of Assignment and Assumption
Exhibit C	-	Form of Security Agreement
Exhibit D	-	Form of Guaranty Supplement
Exhibit E-1	-	Form of U.S. Tax Compliance Certificate (Foreign Lenders that are not Partnerships)
Exhibit E-2	-	Form of U.S. Tax Compliance Certificate (Foreign Lenders that are Partnerships)
Exhibit F	-	Form of Supplemental Indenture

-4-

JUNIOR LIEN TERM LOAN CREDIT AGREEMENT

JUNIOR LIEN TERM LOAN CREDIT AGREEMENT, dated as of July 16, 2018 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Agreement”), among The McClatchy Company, a Delaware corporation (the “Borrower”), the Guarantors (as hereinafter defined), the Initial Lenders (as hereinafter defined), The Bank of New York Mellon, as collateral agent (Tranche A) for the holders of Tranche A Loans (together with any successor collateral agent appointed pursuant to Article VIII, the “Tranche A Collateral Agent”), as collateral agent (Tranche B) for the holders of Tranche B Loans (together with any successor collateral agent appointed pursuant to Article VIII, the “Tranche B Collateral Agent” and together with the Tranche A Collateral Agent, the “Collateral Agent”) and as administrative agent (together with any successor administrative agent appointed pursuant to Article VIII, the “Administrative Agent” and, together with the Collateral Agent, the “Agents”) for the Lenders (as hereinafter defined).

PRELIMINARY STATEMENTS:

WHEREAS, the Borrower is the issuer of the 2027 Debentures and the 2029 Debentures (as such terms are defined below);

WHEREAS, the Borrower has requested (i) a term loan (the “Tranche A Loan”) consisting of (A) amounts incurred by the Borrower to repurchase for cash or exchange certain of the 2027 Debentures (as further defined below, the “2027 Debentures Amount”) and (ii) a term loan (the “Initial Tranche B Loan”) consisting of amounts incurred by the Borrower to repurchase for cash or exchange certain of the 2029 Debentures (as further defined below, the “2029 Debentures Amount”);

WHEREAS, the Initial Tranche B Loan may be increased by the Additional Tranche B Loan as set forth in Section 2.01(c) (the sum of the Initial Tranche B Loan and the Additional Tranche B Loan, the “Tranche B Loan”, and together with the Tranche A Loan, the “Facility”); and

WHEREAS, the Lenders are willing to make available to the Borrower the Facility upon the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:

-1-

AGREEMENT:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01  Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“2027 Debentures” means the 7.15% Debentures due November 1, 2027, issued by the Borrower.

“2027 Debentures Amount” means the sum of (i) $98,901,464.69, which is the sum of (A) the prevailing market price at 5:00 p.m. on July 13, 2018 as reported on TRACE of $82,083,000 aggregate principal amount of 2027 Debentures, plus (B) accrued and unpaid interest thereon up to, but excluding, the Closing Date and (ii) $60.0 million in cash, repayable at maturity in accordance with Section 2.03 in the amount of approximately $75.0 million.

“2029 Debentures” means the 6.875% Debentures due March 15, 2029, issued by the Borrower.

“2029 Debentures Amount” means $250,172,362.47, which is the sum of (A) the prevailing market price at 5:00 p.m. on July 13, 2018 as reported on TRACE of $193,466,000 aggregate principal amount of 2029 Debentures, plus (B) accrued and unpaid interest thereon up to, but excluding, the Closing Date.

“2022 Debt Refinancing” means the issuance by the Borrower of senior secured notes in an aggregate principal amount of $310.0 million, the proceeds of which, together with the proceeds from this Facility, and cash on hand, are applied to redeem, refinance, discharge or otherwise acquire 100% of the issued and outstanding 2022 Notes, with any remainder to be used by the Borrower to pay fees, expenses and taxes in connection with the Refinancing and for working capital and general corporate purposes.

“2022 Notes” means the 9.0% Senior Secured Notes due 2022, issued by the Borrower.

“ABL Agent” means Wells Fargo Bank, National Association and its successors and assigns or any other applicable administrative agent or collateral agent under the ABL Credit Facility.

“ABL Credit Facility” means that credit agreement dated as of the Closing Date, by and among the Borrower, the subsidiaries of Borrower party thereto as borrowers, the lenders party thereto in their capacities as lenders thereunder and Wells Fargo Bank, National Association, as administrative agent and collateral agent, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof and any indentures or credit facilities or commercial paper facilities that

-1-

replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Sections 6.01 and 6.03).

“ABL Intercreditor Agreement” means the ABL/Notes Intercreditor Agreement to be entered into among the Borrower, the Guarantors, the collateral agent of the New First Lien Debt, on behalf of itself and the holders of the New First Lien Debt, and the ABL Agent, on behalf of itself and the ABL Secured Parties.

“ABL Obligations” means the “Obligations” as defined in the credit agreement governing the ABL Credit Facility.

“ABL Priority Collateral” means the following assets of the Borrower and the Guarantors (other than Notes Priority Collateral and Excluded Property):

(a)        all accounts, payment intangibles, accounts receivable, and other receivables (including credit card receivables, and other receivables, whether consisting of accounts receivables or general intangibles) and all other rights to payment (in each case including any such rights to payment for property sold, leased, licensed or otherwise disposed of or for services rendered or to be rendered (including rights to payment arising from services rendered or from the sale, lease, license, use or other disposition of inventory)), in each case, whether such rights to payment constitute accounts, payment intangibles, general intangibles, letter-of-credit rights or any other classification of property, or are evidenced in whole or in part by instruments, chattel paper or documents, except, in each case, pledged debt instruments, which are not otherwise included as “ABL Priority Collateral” pursuant to clauses (g) and (i) below;

(b)        all inventory;

(c)        all (x) deposit accounts and money and all cash, checks, other negotiable instruments, funds and other evidences of payments held therein, (y) securities accounts and security entitlements and securities credited thereto, and (z) commodity accounts and commodity contracts credited thereto, and, in each case, all cash, checks and other property held therein or credited thereto;

(d)        all money, cash, cash equivalents, and tax refunds, other than tax refunds solely relating to real property, equipment and intellectual property;

(e)        all claims under policies of casualty insurance and all proceeds of casualty insurance, in each case, payable by reason of loss or damage to any ABL Priority Collateral and all proceeds of business interruption insurance;

(f)        commercial tort claims to the extent any such claims relate to the ABL Priority Collateral;

-2-

(g)        all general intangibles, instruments, documents, chattel paper, letter-of-credit rights and supporting obligations related to the foregoing;

(h)        all books and records relating to the items referred to in the preceding clauses (a) through (g) above (including all books, databases, customer lists, and records, whether tangible or electronic, which contain any information relating to any of the items referred to in the preceding clauses (a) through (g)); and

(i)         all proceeds (including insurance proceeds) of any of the foregoing.

“ABL Secured Parties” means the holders of any ABL Obligations.

“Acquired Indebtedness” means, with respect to any Person, Indebtedness (1) of a Person or any of its Subsidiaries existing at the time such Person is merged or consolidated with the Borrower or a Restricted Subsidiary or becomes a Restricted Subsidiary or (2) assumed in connection with the acquisition of assets from such Person, in each case whether or not Incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, and Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.  Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (1) of the preceding sentence, on the date such Person is merged or consolidated with the Borrower or a Restricted Subsidiary or becomes a Restricted Subsidiary and, with respect to clause (2) of the preceding sentence, on the date of consummation of such acquisition of assets.

“Additional Guarantor” has the meaning specified in Section 9.05.

“Additional Tranche B Loan” has the meaning specified in Section 2.01(c).

“Administrative Agent” has the meaning specified in the recital of parties to this Agreement.

“Administrative Agent’s Account” means the account of the Administrative Agent specified by the Administrative Agent in writing to the Loan Parties from time to time.

“Affiliate”  of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent Parties” has the meaning specified in Section 11.02(c).

“Agents” has the meaning specified in the recital of parties to this Agreement.

“Agreement” has the meaning specified in the recital of parties to this Agreement.

-3-

“Applicable Rate” means (i) with respect to the Tranche A Loan, a rate per annum equal to 7.795%, and (ii) with respect to the Tranche B Loan, a rate per annum equal to 6.875%.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Asset Acquisition” means (1) an Investment by the Borrower or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be consolidated or merged with the Borrower or any Restricted Subsidiary or (2) the acquisition by the Borrower or any Restricted Subsidiary of assets of any Person.

“Asset Disposition” means any sale, lease, transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, of shares of Equity Interests of a Restricted Subsidiary (other than directors’ qualifying shares or local ownership shares) (it being understood that the Equity Interests of the Borrower is not an asset of the Borrower), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Borrower or any of its Restricted Subsidiaries, including any disposition by means of a merger, consolidation or similar transaction.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:

(a)        a disposition of assets by a Restricted Subsidiary to the Borrower or by the Borrower or a Restricted Subsidiary to a Restricted Subsidiary;

(b)        the disposition of Cash Equivalents in the ordinary course of business or the voluntary termination or unwinding of Hedging Obligations;

(c)        a disposition of inventory in the ordinary course of business;

(d)        a disposition of used, obsolete, worn out, damaged or surplus equipment or equipment or assets that are no longer used or useful in the conduct of the business of the Borrower and its Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business;

(e)        any disposition of all or substantially all of the assets of the Borrower in a manner permitted pursuant to Section 6.08 or any disposition that constitutes a Change of Control;

(f)        an issuance of Equity Interests by a Restricted Subsidiary to the Borrower or to a Restricted Subsidiary;

(g)        for purposes of Section 6.05 only, the making of a Permitted Investment or a disposition subject to Section 6.02;

-4-

(h)        dispositions of Equity Interests of a Restricted Subsidiary or property or other assets in a single transaction or a series of related transactions with an aggregate Fair Market Value of less than $1.12 million;

(i)         the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(j)         dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

(k)        the licensing or sublicensing of patents, trade secrets, know-how and other intellectual property, know-how or other general intangibles and licenses, leases or subleases of other property which do not materially interfere with the business of the Borrower and its Restricted Subsidiaries as operated immediately prior to the granting of such license, lease or sublease;

(l)         to the extent allowable under Section 1031 of the Code, any exchange of like property (excluding any boot thereon) for use in a Related Business;

(m)       foreclosure on assets, Default Dispositions or transfers by reason of eminent domain;

(n)        any sale of Equity Interests, Indebtedness or other securities of an Unrestricted Subsidiary;

(o)        a Sale/Leaseback Transaction that is made for cash consideration in an amount not less than the cost of the underlying fixed or capital asset and is consummated within 180 days after the Borrower or any Restricted Subsidiary acquires or completes the acquisition of such fixed or capital asset;

(p)        the receipt by the Borrower or any Restricted Subsidiary of any cash insurance proceeds or condemnation award payable by reason of theft, loss, physical destruction or damage, taking or similar event with respect to any of their respective property or assets;

(q)        operating leases in the ordinary course of business;

(r)        the surrender or waiver of contract rights or litigation rights or the settlement, release or surrender of tort or other litigation claims of any kind; and

(s)        the transfer of improvements, additions or alterations in connection with the lease of any property.

“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.07 or by the definition of “Eligible Assignee”), and acknowledged by the

-5-

Administrative Agent, in accordance with Section 11.07 and in substantially the form of Exhibit B hereto or any other form approved by the Administrative Agent.

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, (a) if such Sale/Leaseback Transaction does not constitute a Capitalized Lease Obligation, the present value (discounted at the interest rate implicit in the transaction) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended), determined in accordance with GAAP or (2) if such Sale/Leaseback Transaction constitutes a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations.”

“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2017, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Bankruptcy Law” means Title 11, U.S. Code, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or any similar foreign, federal or state law for the relief of debtors.

“Blockage Notice” has the meaning specified in Section 10.03.

“Board of Directors” means, with respect to any Person:

(a)        with respect to a corporation, the Board of Directors of the corporation or (other than for purposes of determining Change of Control) any committee thereof duly authorized to act on behalf of the Board of Directors with respect to the relevant matter;

(b)        with respect to a partnership, the Board of Directors of the general partner of the partnership; and

(c)        with respect to any other Person, the board or committee of such Person service a similar function.

“Borrower” has the meaning specified in the recital of parties to this Agreement.

“Borrowing Base” means, at any time the sum, without duplication, of (i) 90% of net accounts receivable plus (ii) 85% of unbilled accounts to the extent such accounts would upon invoicing be classified within accounts receivable of the Borrower in accordance with GAAP

-6-

plus (ii) 55% of the book value of inventory, in each case, of the Borrower and the Guarantors, on a consolidated basis.

“Business Day”  means each day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or required by law to close.

“Capitalized Lease Obligation” means an obligation that is required to be classified and accounted for as a capitalized lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Cash Amount” means $60,000,000 of cash to be provided to Borrower at the Closing.

“Cash Equivalents” means:

(a)        U.S. dollars, or in the case of any Foreign Subsidiary, such currencies held by it from time to time in the ordinary course of business;

(b)        securities issued or directly and fully guaranteed or insured by the United States Government or any agency or instrumentality of the United States (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

(c)        marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc.;

(d)        certificates of deposit, demand deposits, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank (x) the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc., or “A2” or the equivalent thereof by Moody’s Investors Service, Inc. or (y) the short term commercial paper of such commercial bank or its parent company is rated at the time of acquisition thereof at least “A-1” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P-1” or the equivalent thereof by Moody’s Investors Service, Inc., and having combined capital and surplus in excess of $500 million;

(e)        repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b), (c) and (d) above, entered into with any bank meeting the qualifications specified in clause (d) above;

-7-

(f)        commercial paper rated at the time of acquisition thereof at least “A-1” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P-1” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof;

(g)        instruments equivalent to those referred to in clauses (a) through (f) above denominated in euros or any foreign currency comparable in credit quality and tenor to those referred to in such clauses and customarily used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Restricted Subsidiary organized in such jurisdiction;

(h)        interests in any investment company or money market fund that invests 95% or more of its assets in instruments of the type specified in clauses (a) through (g) above;

(i)         money market funds that (i) comply with the criteria set forth in Rule 2A-7 of the Investment Company Act of 1940, as amended, (ii) are rated at the time of acquisition thereof “AAA” or the equivalent by Standard & Poor’s Ratings Group, Inc. or “Aaa” or the equivalent thereof by Moody’s Investors Service, Inc. and (iii) have portfolio assets of at least $5.0 billion; and

(j)         in the case of any Foreign Subsidiary, high quality short-term investments which are customarily used for cash management purposes in any country in which such Foreign Subsidiary operates.

“Cash Management Obligations” means obligations of the Borrower or any Subsidiary in relation to treasury, depository or cash management services agreements (including, without limitation, purchase cards).

“CFC” means a controlled foreign corporation (as that term is defined in the Code) in which the Borrower or any Guarantor is a “United States shareholder” within the meaning of Section 951(b) of the Code.

“CFC Debt” means Indebtedness owed or treated as owed by one or more CFCs.

“Change of Control” means:

(a)        any “person” or “group” of related persons (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of a majority of the total voting power of the Voting Stock of the Borrower (or its successors by merger, consolidation or purchase of all or substantially all of its assets);

(b)        the sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Borrower and its Subsidiaries taken as a whole to any

-8-

“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than a Restricted Subsidiary; or

(c)        the adoption by the stockholders of the Borrower of a plan or proposal for the liquidation or dissolution of the Borrower.

Notwithstanding the foregoing, neither the ownership nor acquisitions of shares of the Equity Interests of the Borrower by, nor the transfers of shares of the Equity Interests of the Borrower between, Members of the McClatchy Family or any McClatchy Family Entity shall constitute a Change of Control.  For purposes of this definition, “McClatchy Family Entity” shall mean a Person in which Members of the McClatchy Family beneficially own (within the meaning of Rule 13d-5 of the Exchange Act, as in effect on the date hereof) more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of such Person.

“Chatham” means Chatham Asset Management, LLC and its Affiliates holding 2027 Debentures and 2029 Debentures.

“Closing” means the time that all of the conditions set forth in Sections 3.01 and 3.02 are satisfied or waived pursuant to the terms thereof.

“Closing Date” means the date of the Closing.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Collateral” means all “Collateral” as defined in the Collateral Documents.

“Collateral Agent” has the meaning specified in the recital of parties to this Agreement.

“Collateral Documents” means the Security Agreement, the Intellectual Property Security Agreement, each of the collateral documents, instruments and agreements delivered pursuant to Section 5.08, and each other agreement that creates a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

“Collateral and Guarantee Requirement” has the meaning specified in the Security Agreement.

“Commitment” means the Tranche A Commitment and the Initial Tranche B Commitment.

“Commodity Agreement” means any commodity futures contract, commodity option, commodity swap agreement, commodity collar agreement, commodity cap agreement or other similar agreement or arrangement entered into by the Borrower or any Restricted Subsidiary.

“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of

-9-

such Person’s common stock whether or not outstanding on the Closing Date, and includes, without limitation, all series and classes of such common stock.

“Communications” has the meaning specified in Section 11.02(b).

“Consolidated” or “consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Consolidated EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period:

(a)        increased (without duplication) by the following items to the extent deducted in calculating such Consolidated Net Income:

(i)        Consolidated Interest Expense; plus

(ii)       Consolidated Income Taxes; plus

(iii)      consolidated depreciation expense; plus

(iv)       consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standards Board issued Accounting Standards Codification (“ASC”) Topic 350, Intangibles—Goodwill and Other Intangibles and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets;  plus

(v)        other non-cash charges, losses or expenses (including, without limitation, non-cash pension expense) reducing Consolidated Net Income, including any write-offs or write-downs (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); plus

(vi)       any non-cash compensation expense realized for grants of restricted stock, performance shares, stock options or other rights to officers, directors and employees of the Borrower or any Restricted Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Equity Interests of the Borrower (other than Disqualified Stock); plus

(vii)     any fees, charges or other expenses made or Incurred in connection with any actual or proposed Investment, asset sale, acquisition, recapitalization or issuance of Equity Interests or Incurrence of Indebtedness or any amendment or modification of Indebtedness (including as a result of Statement of Financial Accounting Standards 141R); plus

(viii)    the amount of any restructuring charges (including lease termination, severance and relocation expenses), integration costs or other non-recurring charges or expenses deducted (and not added back) in such period in computing Consolidated Net Income; plus

-10-

(ix)       all non-cash pension expense included in non-operating expenses;

(b)        decreased (without duplication) by non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges that reduced EBITDA in any prior period); and

(c)        increased or decreased (without duplication) to eliminate the following items reflected in Consolidated Net Income:

(i)         any net gain or loss resulting in such period from Hedging Obligations and the application of ASC Topic 815, Derivatives and Hedging;

(ii)       all unrealized gains and losses relating to financial instruments to which fair market value accounting is applied;

(iii)      any net gain or loss resulting in such period from currency translation gains or losses related to currency remeasurements of Indebtedness (including any net loss or gain resulting from Hedging Obligations for currency exchange risk); and

(iv)       effects of adjustments (including the effects of such adjustments pushed down to the Borrower and its Restricted Subsidiaries) in any line item in such Person’s consolidated financial statements pursuant to GAAP resulting from the application of purchase accounting in relation to any completed acquisition.

Notwithstanding the foregoing, clauses (a)(ii) through (v) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary (other than a Guarantor) was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (a)(ii) through (v) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be distributed to the Borrower by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders.

“Consolidated Income Taxes” means, with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits or capital of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), including, without limitation, state, franchise and similar taxes and foreign withholding taxes regardless of whether such taxes or payments are required to be remitted to any governmental authority.

-11-

“Consolidated Interest Expense” means, for any period, the interest expense of the Borrower and its Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including but not limited to the portion of any payments or accruals with respect to Capitalized Lease Obligations that are allocable to interest expense, excluding (w) any write-offs of capitalized fees under the ABL Credit Facility and all amendments thereto, (x) all non-cash charges for the amortization of original issue discount with respect to the New First Lien Debt,  the Loans and any Exchange Notes, (y) all non-cash charges for the amortization of purchase price adjustments related to 2027 Debentures and 2029 Debentures in connection with the acquisition of Knight-Ridder, Inc., and (z) any interest on tax reserves to the extent the Borrower has elected to treat such interest as an interest expense under FIN 48 since its adoption.

“Consolidated Leverage Ratio” means at any date of determination the ratio of:  (1) the sum of the aggregate outstanding amount of Indebtedness of the Borrower and the Restricted Subsidiaries as of the date of determination on a consolidated basis in accordance with GAAP to (2) the Borrower’s Consolidated EBITDA for the four most recently completed fiscal quarters (the “Four Quarter Period”) ending on or prior to the date of determination for which financial statements are publicly available.

For purposes of this definition, the Borrower’s “Consolidated EBITDA” shall be calculated on a pro forma basis after giving effect to any Asset Dispositions or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of the Borrower or one of the Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of such Asset Acquisition) Incurring Indebtedness and the application of the proceeds from any Asset Disposition) at any time on or subsequent to the first day of the Four Quarter Period and on or prior to the date of determination, as if such Asset Disposition or Asset Acquisition occurred on the first day of the Four Quarter Period.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations shall be (x) made in good faith by a responsible financial or accounting officer of the Borrower (and may include, for the avoidance of doubt, cost savings and operating expense reductions resulting from such Asset Disposition or Asset Acquisition which is being given pro forma effect that have been or are expected to be realized within twelve (12) months after the date of such Asset Disposition or Asset Acquisition as the result of specified actions taken or to be taken within six (6) months after such date) and, except as otherwise provided herein or (y) determined in accordance with Regulation S-X.

“Consolidated Net Income” means, for any period, the net income (loss) of the Borrower and its consolidated Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP (before preferred stock dividends); provided, however, that there will not be included in such Consolidated Net Income:

(a)        any net income (loss) of any Person if such Person is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except that:

-12-

(i)       subject to the limitations contained in clauses (c) through (f) below, the Borrower’s equity in the net income of any such Person for such period will be included (and, without duplication, and to the extent such amounts decreased the Borrower’s equity in the net income of any such Person for such period, shall be increased by the Borrower’s Proportionate Equity Share of the amounts described in clauses (a)(i), (a)(ii), (a)(iii) and (a)(iv) of the definition of Consolidated EBITDA that decreased the net income of such Person during such period) in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period or, without duplication, within three months following the last day of such period and prior to the date of determination or which the Borrower has determined as of such date of determination will be distributed imminently in respect of such period (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (b) below); and

(ii)      the Borrower’s equity in a net loss of any such Person for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Borrower or a Restricted Subsidiary during such period;

(b)        solely for the purpose of determining the amount available for Restricted Payments under Section 6.02(a), any net income (but not loss) of any Restricted Subsidiary (other than a Guarantor) if such Restricted Subsidiary is subject to prior government approval or other restrictions due to the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or government regulation (which have not been waived), directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Borrower, except that:

(i)       subject to the limitations contained in clauses (c) through (f) below, the Borrower’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Borrower or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause); and

(ii)      the Borrower’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

(c)        any after-tax effect of gain or loss (less all fees and expenses relating thereto) realized upon sales or other dispositions of any assets of the Borrower or such Restricted Subsidiary (including pursuant to any Sale/Leaseback Transaction) other than in the ordinary course of business;

(d)        any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments;

(e)        the after-tax effect of extraordinary gain or loss;

(f)        the after-tax effect of the cumulative effect of a change in accounting principles;

-13-

(g)        any after-tax effect of non-cash impairment charges recorded in connection with the application of ASC Topic 350, Intangibles—Goodwill and Other Intangibles and ASC Topic 360-10, Impairment and Disposal of Long-Lived Assets; and

(h)        any non-cash compensation expense realized for grants of performance shares, stock options or other rights to officers, directors and employees of the Borrower or any Restricted Subsidiary; provided that such shares, options or other rights can be redeemed at the option of the holder only for Equity Interests of the Borrower (other than Disqualified Stock).

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

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled” have meanings correlative thereto.

“Conversion Date” has the meaning set forth in Section 2.01(c).

“Conversion Request” has the meaning set forth in Section 2.01(c).

“Credit Derivatives Definitions” means the 2014 ISDA Credit Derivatives Definitions, as published by ISDA.

“Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

“Debt Facility” or “Debt Facilities” means, with respect to the Borrower or any Guarantor, one or more financing arrangements (including, without limitation, credit facilities, indentures and note purchase agreements and including the ABL Credit Facility) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness or issuances of debt securities evidenced by notes, debentures, bonds or similar instruments, in each case, as amended, restated, supplemented, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities) in whole or in part from time to time (and whether or not with the original trustee, administrative agent, holders and lenders or another trustee, administrative agent or agents), including, without limitation, any agreement extending the maturity thereof or increasing the amount of available borrowings thereunder pursuant to incremental facilities or adding Subsidiaries of the Borrower as additional guarantors thereunder, and whether or not increasing the amount of Indebtedness that may be issued thereunder.

“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

“Default Dispositions” has the meaning set forth in the Intercreditor Agreement.

-14-

“Default Interest” has the meaning set forth in Section 2.06(b).

“Derivative” has the meaning specified in Section 11.16.

“Designated Non-cash Consideration” means any consideration which is not cash or Cash Equivalents received by the Borrower or its Restricted Subsidiaries in connection with an Asset Disposition that is designated as Designated Non-cash Consideration pursuant to an officer’s certificate executed by the Borrower at the time of such Asset Disposition.  Any particular item of Designated Non-cash Consideration will cease to be considered to be outstanding once it has been transferred, sold or otherwise exchanged for or converted into or for cash or Cash Equivalents.

“Disclosure Letter” means the disclosure letter, dated as of the date hereof, delivered by Borrower to the Administrative Agent for the benefit of the Lenders.

“Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:  (1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (2) is convertible into or exchangeable for Indebtedness or Disqualified Stock (excluding Equity Interests which is convertible or exchangeable solely at the option of the Borrower or a Restricted Subsidiary (it being understood that upon such conversion or exchange it shall be an Incurrence of such Indebtedness or Disqualified Stock)), or (3) is redeemable at the option of the holder of the Equity Interests, in whole or in part, in each case on or prior to the date 91 days after the earlier of the (i) Termination Date or (ii) termination of all Commitments and payment in full of all Obligations (other than contingent indemnification obligations not then payable for which a claim has been asserted); provided, however, that only the portion of Equity Interests that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Equity Interests that would constitute Disqualified Stock solely because the holders thereof have the right to require the Borrower to repurchase such Equity Interests upon the occurrence of a Change of Control or Asset Disposition (each defined in a substantially identical manner to the corresponding definitions in this Agreement) shall not constitute Disqualified Stock if the terms of such Equity Interests (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the Borrower may not repurchase or redeem any such Equity Interests (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Borrower with Section 6.05 and unless such repurchase or redemption would comply with Section 6.02.

“Eligible Assignee” means (i) a Lender; (ii) an Affiliate of a Lender; (iii) an Approved Fund; and (iv) any other Person (other than an individual) approved by the Borrower (such approval not to be unreasonably withheld or delayed), provided that no Borrower approval will be required for any assignment if a Default pursuant to Section 7.01(a), (d) or (e) with respect to the Borrower has occurred and is continuing or an ISDA Credit Event with respect to the Borrower has occurred.

-15-

“Equity Interests” means (1) with respect to any Person that is a corporation, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Common Stock or Preferred Stock, and (2) with respect to any Person that is not a corporation, any and all partnership, limited liability company, membership or other equity interests of such Person, but in each case, excluding any debt securities convertible into any of the foregoing or cash or combination thereof.

“Events of Default” has the meaning specified in Section 7.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exchange Notes” has the meaning specified in Section 5.09.

“Excluded Subsidiary” means (a) any Immaterial Subsidiary, (b) any FSHCO, (c) any Foreign Subsidiary, (d) any domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary that is a CFC, (e) any not-for-profit subsidiary or captive insurance subsidiary and (f) any Subsidiary that is prohibited by any applicable requirement of law from becoming a Guarantor for so long as such legal prohibition exists.

“Excluded Property” has the meaning set forth in the Security Agreement.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment  or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.09, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.09(e) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” means that certain Third Amended and Restated Credit Agreement, dated as of December 12, 2012 (as amended, restated, modified or otherwise supplemented from time to time), among the Borrower, the lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

“Facility” means, at any time, Facility defined in the preliminary statements to this Agreement, in the aggregate amount of the Lenders’ Commitments at such time.

-16-

“Facility Maturity Date” means (a) with respect to Tranche A Loans, July 15, 2030, and (b) with respect to Tranche B Loans, July 15, 2031; provided,  however, that, in each case, if such date is not a Business Day, the Facility Maturity Date shall be the next preceding Business Day.

“Fair Market Value” means, with respect to any property, the price that would reasonably be expected to be paid in an arm’s length free-market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction.  Fair Market Value shall be determined, except as otherwise provided, by (x) if such decision involves a determination of Fair Market Value equal or less than $50.0 million, in good faith by any member of the Senior Management of the Borrower and (y) if such decision involves the determination of Fair Market Value in excess of $50.0 million, in good faith by the Board of Directors of the Borrower.

“Family Percentage Holding” means the aggregate percentage of the securities held by a Qualified Trust representing, directly or indirectly, an interest in voting shares or rights to voting shares of the Borrower that it is reasonable, under all the circumstances, to regard as being held beneficially for Qualified Persons (or any class consisting of two or more Qualified Persons); provided, however, always that in calculating the Family Percentage Holding (a) in respect of any power of appointment or discretionary trust capable of being exercised in favor of any of the Qualified Persons such trust or power shall be deemed to have been exercised in favor of Qualified Persons until such trust or power has been otherwise exercised; (b) where any beneficiary of a Qualified Trust has assigned, transferred or conveyed, in any manner whatsoever, his or her beneficial interest to another Person, then, for the purpose of determining the Family Percentage Holding in respect of such Qualified Trust, the Person to whom such interest has been assigned, transferred or conveyed shall be regarded as the only Person beneficially interested in the Qualified Trust in respect of such interest but in the case where the interest so assigned, transferred or conveyed is an interest in a discretionary trust or is an interest which may arise as a result of the exercise in favor of the assignor of a discretionary power of appointment and such discretionary trust or power of appointment is also capable of being exercised in favor of a Member of the McClatchy Family, such discretionary trust or power shall be deemed to have been so exercised in favor of Qualified Persons until it has in fact been otherwise exercised; and (c) the interest of any Permitted Residuary Beneficiary shall be ignored until its interest has indefeasibly vested.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any intergovernmental agreements entered into pursuant to any of the foregoing, and any agreement entered into pursuant to Section 1471(b)(1) of the Code.

“FCPA” has the meaning set forth in Section 4.15(d).

“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business

-17-

Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“Foreign Lender” means any Lender that is not a U.S. Person.

“Foreign Subsidiary” means any Subsidiary that is not a U.S. Person and any Subsidiary of such Subsidiary.

“FSHCO” means any direct or indirect domestic Subsidiary if substantially all of its assets consist, directly or indirectly, of (i) the equity of one or more direct or indirect Foreign Subsidiaries that are CFCs or other FSHCOs or (ii) CFC Debt.

“Fund” means any Person (other than an individual) that is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“GAAP”  means generally accepted accounting principles in the United States of America as in effect as of the date hereof, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession; provided that, except as otherwise provided in this Agreement, all calculations made for purposes of determining compliance with the terms of this Agreement shall use GAAP as in effect on the date hereof; provided that “Capitalized Lease Obligation” (or whether a lease would constitute an operating lease) shall be determined without giving effect to any change in accounting for leases resulting from the implementation of Financial Accounting Standards Board ASU No. 2016-02, Leases (Topic 842), to the extent any lease (or similar arrangement conveying the right to use) would be required to be treated as a capital lease where such lease (or similar arrangement) would not have been required to be so treated under generally accepted accounting principles in the United States of America as in effect on January 1, 2018.  All ratios and computations based on GAAP contained in this Agreement will be computed in conformity with GAAP, except that in the event the Borrower is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Agreement. For the avoidance of doubt, all financial statements of the Borrower and its subsidiaries, including those delivered pursuant to Section 5.05 shall be prepared in accordance with generally accepted accounting principles in the United States of America as in effect from time to time.

“Good Faith by the Borrower” means the decision in good faith by a responsible financial or accounting officer of the Borrower.

“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or

-18-

pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means any obligation, contingent or otherwise, of any Person, directly or indirectly, guaranteeing any Indebtedness or other financial obligations of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(a)        to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(b)        entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other financial obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

“Guaranteed Obligations” has the meaning specified in Section 9.01(a).

“Guarantors” means the Subsidiaries of the Borrower listed on Schedule II hereto and each other Subsidiary of the Borrower that shall be required to execute and deliver a guaranty pursuant to Section 5.08 or shall otherwise execute and deliver such a guaranty.

“Guaranty” or “Guaranties” means the guaranty of the Guarantors set forth in Article IX, together with each other guaranty and Guaranty Supplement delivered pursuant to Section 5.08 or otherwise delivered by a Guarantor.

“Guaranty Supplement” has the meaning specified in Section 9.05.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Agreement.

“Immaterial Subsidiary” means, as of any date, any wholly-owned Subsidiary (other than a Foreign Subsidiary) whose total assets, as of that date, are less than $5.0 million and whose total revenues for the most recent 12-month period do not exceed $5.0 million; provided that a wholly-owned Subsidiary will not be considered to be an Immaterial Subsidiary if it, directly or indirectly, incurs any New First Lien Debt, ABL Obligations, Junior Indebtedness or Permitted Additional Secured Obligations.

“Incur” means to issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Equity Interests of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the

-19-

foregoing.  Any Indebtedness issued at a discount (including Indebtedness on which interest is payable through the issuance of additional Indebtedness) shall be deemed incurred at the time of original issuance of the Indebtedness at the initial accreted amount thereof.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(a)        the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

(b)        the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(c)        the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto; except to the extent such reimbursement obligation relates to a Trade Payable or similar obligation to a trade creditor in each case incurred in the ordinary course of business) other than obligations with respect to letters of credit, bankers’ acceptances or similar instruments securing obligations (other than obligations described in clauses (a) and (b) above and clause (e) below) entered into in the ordinary course of business of such Person to the extent such letters of credit, bankers’ acceptances or similar instruments are not drawn upon or, to the extent drawn upon, such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit, bankers’ acceptances or similar instruments;

(d)        the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (except Trade Payables), which purchase price is due more than six (6) months after the date of placing such property in service or taking delivery and title thereto, except (i) any such balance that constitutes a Trade Payable, accrued liability or similar obligation to a trade creditor, in each case accrued in the ordinary course of business, and (ii) any earn-out obligation, purchase price adjustment or other deferred payment until the amount of such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP;

(e)        Capitalized Lease Obligations and all Attributable Indebtedness of such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor);

(f)        the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Guarantor, any Preferred Stock (but excluding, in each case, any accrued dividends);

(g)        the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (i) the Fair Market

-20-

Value of such asset at such date of determination and (ii) the principal amount of such Indebtedness of such other Persons;

(h)        the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor); and

(i)         to the extent not otherwise included in this definition, net Hedging Obligations of such Person (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time).

In no event shall the term “Indebtedness” include (i) any indebtedness under any overdraft or cash management facilities so long as any such indebtedness is repaid in full no later than five (5) Business Days following the date on which it was incurred or in the case of such indebtedness in respect of credit or purchase cards, within 60 days of its incurrence, (ii) obligations in respect of performance, appeal or other surety bonds or completion guarantees incurred in the ordinary course of business, (iii) except as provided in clause (e) above, any obligations in respect of a lease properly classified as an operating lease in accordance with GAAP, (iv) any liability for federal, state, local or other taxes not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP or (v) any customer deposits or advance payments received in the ordinary course of business.

The amount of Indebtedness of any Person at any date will be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided that contingent obligations arising in the ordinary course of business and not with respect to borrowed money of such Person or other Persons shall not be deemed to constitute Indebtedness.  Notwithstanding the foregoing, money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness shall not be deemed to be “Indebtedness,” provided that such money is held to secure the payment of such interest.

“Indemnified Costs” has the meaning specified in Section 8.10(a).

“Indemnified Party” has the meaning specified in Section 11.04(b).

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b)  to the extent not otherwise described in (a), Other Taxes.

“Independent Financial Advisor” means (a) an accounting, appraisal or investment banking firm or (b) a consultant to Persons engaged in a Related Business, in each case, of nationally recognized standing that is, in the good faith judgment of the Borrower, qualified to perform the task for which it has been engaged.

-21-

“Initial Lenders” means each lender listed on the signature pages hereof as an Initial Lender.

“Initial Tranche B Commitment” means the amount set forth opposite each Initial Lender’s name on Schedule I hereto under the caption “Initial Tranche B Commitment.”

“Initial Tranche B Loan” has the meaning specified in Section 2.01(b).

“Intellectual Property Security Agreement” has the meaning specified in the Security Agreement.

“Intercreditor Agreement” means the intercreditor agreement entered into on the Closing Date among the collateral agent for the New First Lien Debt, the ABL Agent and one or more collateral agents for any other class of Permitted Additional Secured Obligations and the Collateral Agent.

“Interest Payment Date” means January 15 and July 15 of each year, commencing January 15, 2019.

“Interest Rate Agreement” means with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“Investment” in any Person means any direct or indirect advance, loan (other than advances or extensions of credit in the ordinary course of business that are in conformity with GAAP recorded as accounts receivable on the balance sheet of the Borrower or its Restricted Subsidiaries) or other extensions of credit (including by way of Guaranties or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Equity Interests, Indebtedness or other similar instruments issued by such Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:

(a)        Hedging Obligations entered into in the ordinary course of business and in compliance with this Agreement;

(b)        endorsements of negotiable instruments and documents in the ordinary course of business;

(c)        an acquisition of assets, Equity Interests or other securities by the Borrower or a Subsidiary for consideration to the extent such consideration consists of Common Stock of the Borrower;

-22-

(d)        a deposit of funds in connection with an acquisition; provided that either such acquisition is consummated by or through a Restricted Subsidiary or such deposit is returned to the Person who made it;

(e)        an account receivable arising, or prepaid expenses or deposits made, in the ordinary course of business; and

(f)        licensing or transfer of know-how or intellectual property or the providing of services in the ordinary course of business.

For purposes of Section 6.02, (1) “Investment” will include the portion (proportionate to the Borrower’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Borrower shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Borrower’s aggregate “Investment” in such Subsidiary as of the time of such redesignation less (b) the portion (proportionate to the Borrower’s equity interest in such Subsidiary) of the Fair Market Value of the net assets (as conclusively determined in good faith by the Board of Directors of the Borrower) of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary; and (2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Borrower.

“ISDA” means the International Swaps and Derivatives Association, Inc. and any successor thereto.

“ISDA Credit Event” means an event that constitutes a “Failure to Pay" Credit Event or a “Bankruptcy” Credit Event (as such terms are defined in the Credit Derivatives Definitions and taking into account Section 4.1 of the Credit Derivatives Definitions).

“Junior Indebtedness” means Loans and/or commitments that are subordinated to the payment of the Obligations or that are secured by Junior Liens.

“Junior Lien Intercreditor Agreement” means (a) the Junior Lien Intercreditor Agreement, dated as of the Closing Date, between the Tranche A Collateral Agent and the Tranche B Collateral Agent, and (b) any other intercreditor agreement, including an intercreditor agreement related to the Exchange Notes, on terms not less favorable to the Tranche A Collateral Agent and the holders of Tranche A Loans than the terms of the intercreditor agreement described in clause (a) above, pursuant to which the holders (or a trustee or agent on behalf of the holders) of any Exchange Notes subordinate the Liens securing such Exchange Notes to the obligations with respect to the Tranche A Loans.

“Junior Liens” means any obligations secured by Liens that are subordinated to the Liens securing the Obligations.

-23-

“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lender Appointment Period” has the meaning specified in Section 8.06.

“Lenders” means the Initial Lenders and each Person that shall become a Lender hereunder pursuant to Section 11.07 for so long as such Initial Lenders or Person, as the case may be, shall be a party to this Agreement.

“Lien”  means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease (or any filing or agreement to give any financing statement in connection therewith) be deemed to constitute a Lien.

“Loan” means a Tranche A Loan or Tranche B Loan.

“Loan Documents” means (a) this Agreement, (b) the Notes, and (c) the Collateral Documents.

“Loan Parties” means, collectively, the Borrower and each Guarantor.

“Make-Whole Amount” means, with respect to any Tranche A Loans or Tranche B Loans that are subject to any voluntary prepayment under Section 2.05(a) the excess of (A) the present value at the date of such prepayment of (1) the principal amount of such Loans plus (2) all interest that would have accrued on such principal amount from the date of such prepayment to, but not including, the applicable Facility Maturity Date (such present value to be computed by the Borrower using a discount rate equal to the yield to maturity of United States Treasury securities with a comparable maturity period plus 50 basis points and discounted in accordance with customary financial practice to the date of such prepayment) over (B) the principal amount of such Loans.

“Material Adverse Effect” means any event, change, circumstance, effect or other matter that has, or could reasonably be expected to have, either individually or in the aggregate with all other events, changes, circumstances, effects or other matters, with or without notice, lapse of time or both, (a) a material adverse change in, or a material adverse effect upon, the business, assets, operations or financial condition of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of the Borrower and the Loan Parties, taken as a whole, to perform their obligations under the Loan Documents; or (c) a material adverse effect upon the

-24-

legality, validity, binding effect or enforceability against the Borrower or any Loan Party (excluding any Excluded Subsidiary) of any Loan Document to which it is a party.

“Member of the McClatchy Family” means:  (a)  Trust for the Primary Benefit of James B. McClatchy, Trust for the Primary Benefit of Charles K. McClatchy, Trust for the Primary Benefit of Sue Stiles, Molly Maloney Evangelisti, Brown McClatchy Maloney, Kevin McClatchy, Adair McClatchy, Carlos McClatchy, Trust FBO William McClatchy, C.K. McClatchy Exempt T/U/W fbo Charles K. McClatchy, C.K. McClatchy Non-exempt T/U/W fbo Charles K. McClatchy, Britney Beth Maloney, Trust FBO Cortney Cate Maloney, Trust FBO Blaire Brinnen Maloney, Trust FBO Mallory McClatchy Maloney, and Carolan Kelly Stiles; (b) the spouse, for the time being and from time to time, of any Person listed in clause (a) above; (c) after the death of any Person listed in clause (a) above, the widow or widower, if any, of any Person listed in clause (a) above; (d) the issue of any Person listed in clause (a) above; (e) individuals adopted by any Person listed in clause (a) above or adopted by any of the issue of any Person listed in clause (a) above; provided, however, that such individuals have not attained the age of majority at the date of such adoption, together with the issue of any such adopted individuals; provided that if any Person is born out of wedlock he shall not be deemed to be the issue of another Person for the purposes hereof unless and until he is proven or acknowledged to be the issue of such Person; or (f) a Qualified Trust, but only to the extent of its Family Percentage Holding of voting shares or rights to voting shares of the capital stock of the Borrower at such time.

“Mortgaged Real Property” means all real property and improvements owned in fee simple by the Borrower or a Guarantor having a Fair Market Value in excess of $2,000,000 but excluding Specified Real Property.

“Net Cash Proceeds” means, with respect to any issuance or sale of Equity Interests of the Borrower or any Restricted Subsidiary or Indebtedness, the cash proceeds of such issuance or sale, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

“New First Lien Debt” means the 9.000% Senior Secured Notes due 2026 issued by the Borrower and any amendments, supplements, modifications, extensions, renewals, restatements, refundings or refinancings thereof.

“Non-Guarantor Subsidiary” means any Restricted Subsidiary that is not a Guarantor.

“Non-Priority Payment Default” has the meaning specified in Section 10.03.

“Non-Recourse Debt” means Indebtedness of a Person:

(a)        as to which neither the Borrower nor any Restricted Subsidiary (a) provides any Guaranties or credit support of any kind (including any undertaking, Guaranties,

-25-

indemnity, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable (as a guarantor or otherwise);

(b)        no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Borrower or any Restricted Subsidiary to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and

(c)        the explicit terms of which provide there is no recourse against any of the assets of the Borrower or its Restricted Subsidiaries.

“Note” means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A hereto, evidencing the indebtedness of the Borrower to such Lender resulting from the Loan made by such Lender.

“Notes Priority Collateral” means the following assets (other than the (i) ABL Priority Collateral and (ii) Excluded Property) that constitutes:

(a)        all equipment;

(b)        all intellectual property;

(c)        all debt instruments not specified to be ABL Priority Collateral;

(d)        all Equity Interests of Restricted Subsidiaries;

(e)        all commercial tort claims to the extent any such claims relate to the Notes Priority Collateral;

(f)        Mortgaged Real Property;

(g)        all general intangibles, instruments, documents, chattel paper, letter-of-credit rights, books and records and supporting obligations related to the foregoing and proceeds (including insurance proceeds) of the foregoing (except to the extent constituting ABL Priority Collateral);

(h)        all other goods (including but not limited to fixtures) and assets not constituting ABL Priority Collateral, whether tangible or intangible and wherever located;

(i)         all books and records relating to the items referred to in the preceding clauses (a) through (h) above (including all books, databases, customer lists, and records, whether tangible or electronic, which contain any information relating to any of the items referred to in the preceding clauses (a) through (h)); and

(j)         subject to the Intercreditor Agreement, all proceeds of any of the foregoing (except to the extent constituting ABL Priority Collateral).

-26-

“Obligations” means all Loans to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Bankruptcy Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

“OFAC” shall mean the Office of Foreign Assets Control of the United States Department of the Treasury.

“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

“pay the Guaranteed Obligations” has the meaning specified in Section 10.03.

“Payment Blockage Period” has the meaning specified in Section 10.03.

“PCAOB” means the Public Company Accounting Oversight Board.

“Permitted Additional Secured Obligations” means any Indebtedness (other than the New First Lien Debt) that is secured by a Lien permitted by clause (a) (or, to the extent relating

-27-

to Refinancings of Indebtedness secured by Liens permitted by such clause (s) of the definition of “Permitted Liens.”

“Permitted Debt” means Indebtedness of the Borrower (which may be guaranteed by any Guarantor) (i) no portion of which has a scheduled maturity prior to the date that is six months after the final maturity of the New First Lien Debt, and (ii) which is not guaranteed by any Subsidiary of the Borrower that is not a Guarantor.

“Permitted Investment” means an Investment by the Borrower or any Restricted Subsidiary in:

(a)        the Borrower or a Restricted Subsidiary, including through the purchase of Equity Interests of a Restricted Subsidiary;

(b)        any Investment by the Borrower or any of its Restricted Subsidiaries in a Person that is engaged in a Related Business if as a result of such Investment:

(i)       such Person becomes a Restricted Subsidiary; or

(ii)      such Person, in one transaction or a series of related transactions, is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary;

and, in each case, any Investment held by such Person; provided that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation or transfer;

(c)        cash and Cash Equivalents or Investments that constituted Cash Equivalents at the time made;

(d)        receivables owing to the Borrower or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Borrower or any such Restricted Subsidiary deems reasonable under the circumstances;

(e)        commission, relocation, entertainment, payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(f)        loans or advances to, or guarantees of third party loans to, employees, officers or directors of the Borrower or any Restricted Subsidiary in the ordinary course of business in an aggregate amount outstanding at any time not in excess of $5.75 million with respect to all loans or advances or guarantees made since the date hereof (without giving effect to the forgiveness of any such loan);

-28-

(g)        any Investment acquired by the Borrower or any of its Restricted Subsidiaries:

(i)       in exchange for any other Investment or accounts receivable held by the Borrower or any such Restricted Subsidiary in connection with or as a result of a judgment, bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable;

(ii)      as a result of a foreclosure by the Borrower or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; or

(iii)     in the form of notes payable, or stock or other securities issued by account debtors to the Borrower or any Restricted Subsidiary pursuant to negotiated agreements with respect to the settlement of such account debtor’s accounts, and other Investments arising in connection with the compromise, settlement or collection of accounts receivable, in each case in the ordinary course of business;

(h)        Investments made as a result of the receipt of non-cash consideration (including Designated Non-cash Consideration) from an Asset Disposition that was made pursuant to and in compliance with Section 6.05 or any other disposition of assets not constituting an Asset Disposition;

(i)         Investments in existence on the date hereof, and any extension, modification or renewal of any such Investments, or Investments purchased or received in exchange for such Investments, existing on the date hereof, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the date hereof);

(j)         any Person to the extent such Investments consist of Currency Agreements, Interest Rate Agreements, Commodity Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 6.01 or that do not constitute Indebtedness;

(k)        Guarantees of Indebtedness issued in accordance with Section 6.01;

(l)         Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan including, without limitation, split-dollar insurance policies, in an amount not to exceed the amount of compensation expense recognized by the Borrower and its Restricted Subsidiaries in connection with such plans;

(m)       Investments received in settlement of debts created in the ordinary course of business and owing to the Borrower or any Restricted Subsidiary or in satisfaction of

-29-

judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor;

(n)        any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility, unemployment insurance, workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Borrower or any Restricted Subsidiary;

(o)        prepayments and other credits to suppliers made in the ordinary course of business;

(p)        endorsements of negotiable instruments and documents in the ordinary course of business;

(q)        loans or advances or similar transactions with customers, distributors, clients, developers, suppliers or purchasers of goods or services in the ordinary course of business;

(r)        Investments by the Borrower in connection with joint production arrangements in the form of dispositions of equipment to a joint venture entity in exchange for Equity Interests of or Indebtedness of the joint venture entity so long as within 30 days after such disposition but subject to the definition of Excluded Property, the Borrower’s or the applicable Restricted Subsidiary’s Equity Interests or Indebtedness in such entity are pledged to the Collateral Agent; and

(s)        Investments by the Borrower or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (s), in an aggregate amount at the time of such Investment not to exceed $28.0 million outstanding at any one time (with the Fair Market Value of such Investment being measured at the time made and without giving effect to subsequent changes in value).

“Permitted Liens” means, with respect to any Person:

(a)        Liens on the Collateral securing Indebtedness Incurred pursuant to Section 6.01(b)(i);

(b)        pledges or deposits by such Person under workers’ compensation laws, unemployment, general insurance and other insurance laws and old-age pensions and other social security or retirement benefits or similar legislation, or good-faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

-30-

(c)        Liens imposed by law and carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens, in each case Incurred in the ordinary course of business;

(d)        Liens for taxes, assessments or other governmental charges or levies not yet subject to penalties for non-payment or that are being contested in good faith by appropriate proceedings, provided appropriate reserves required pursuant to GAAP have been made in respect thereof;

(e)        Liens in favor of issuers of surety, appeal or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(f)        minor survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(g)        Liens securing Hedging Obligations relating to Indebtedness so long as the related Indebtedness is, and is permitted to be under this Agreement, secured by a Lien on the same property securing such Hedging Obligation;

(h)        leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of the Borrower or any of its Restricted Subsidiaries;

(i)         judgment Liens not giving rise to an Event of Default and Liens securing appeal or surety bonds related to such judgment so long as any appropriate legal proceedings that may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired;

(j)         Liens for the purpose of securing (A) any Attributable Indebtedness in respect of a Sale/Leaseback Transaction Incurred pursuant to Section 6.01(b)(xvii) or (B) the payment of all or a part of the purchase price of, or Capitalized Lease Obligations, mortgage financings, Purchase Money Indebtedness or other payments Incurred to finance assets or property (other than Equity Interests or other Investments) acquired, constructed, improved or leased in the ordinary course of business; provided that, in the case of this subclause (j):

(i)       the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be incurred under this Agreement and does not exceed the cost of the assets or property so acquired, constructed or improved plus reasonable fees and expenses of such Person incurred in connection therewith; and

-31-

(ii)      such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of the Borrower or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto and the proceeds thereof;

(k)        Liens that constitute banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a bank, depositary or other financial institution, whether arising by operation of law or pursuant to contract;

(l)         Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Borrower and its Restricted Subsidiaries in the ordinary course of business;

(m)       Liens existing on the date hereof (other than Liens permitted under clause (a) above or clause (jj) below);

(n)        Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided further,  however, that any such Lien may not extend to any other property owned by the Borrower or any Restricted Subsidiary;

(o)        Liens on property at the time the Borrower or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Borrower or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; provided further,  however, that such Liens may not extend to any other property owned by the Borrower or any Restricted Subsidiary;

(p)        Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the Borrower or another Restricted Subsidiary;

(q)        Liens on Equity Interests of Unrestricted Subsidiaries to secure Indebtedness of Unrestricted Subsidiaries;

(r)        deposits as security for contested taxes or contested import to customs duties;

(s)        Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (a), (j), (m), (n), (o), (s) or (jj) of this definition;

provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being Refinanced and if the Indebtedness being Refinanced was secured by Junior Liens then the Liens securing the Refinancing Indebtedness shall be Junior Liens;

-32-

(t)         any interest or title of a lessor under any operating lease;

(u)        Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(v)        Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with importation of goods;

(w)       Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of business;

(x)        Liens on funds of the Borrower or any Subsidiary held in deposit accounts with third party providers of payment services securing credit card charge-back reimbursement and similar cash management obligations of the Borrower or the Subsidiaries;

(y)        Liens of a collecting bank arising in the ordinary course of business under Section 4-208 of the Uniform Commercial Code in effect in the relevant jurisdiction covering only the items being collected upon;

(z)        Liens arising by operation of law or contract on insurance policies and the proceeds thereof to secure premiums thereunder;

(aa)      Liens on insurance policies and proceeds of insurance policies (including rebates of premiums) securing Indebtedness incurred pursuant to Section 6.01(b)(xii) to finance the payment of premiums on the insurance policies subject to such Liens;

(bb)      statutory, common law or contractual Liens of landlords;

(cc)      customary Liens granted in favor of a trustee to secure fees and other amounts owing to such trustee under an indenture or other agreement pursuant to which Indebtedness permitted under Section 6.01 is Incurred;

(dd)      Liens on any cash earnest money deposit made by the Borrower or any Restricted Subsidiary in connection with any letter of intent or acquisition agreement that is not prohibited by this Agreement;

(ee)      Liens in favor of credit card processors granted in the ordinary course of business;

(ff)       Liens arising in connection with Cash Equivalents describe in clause (e) of the definition of Cash Equivalents;

-33-

(gg)      Liens securing other obligations in an amount not to exceed $28.0 million at any time outstanding (it being understood that such Liens may not be Liens on the Collateral ranking pari passu or senior to the Liens securing New First Lien Debt);

(hh)      Liens securing cash management obligations incurred in the ordinary course of business;

(ii)       Liens on the Collateral securing Indebtedness Incurred pursuant to Section 6.01(b)(ii), (B) Hedging Obligations and Cash Management Obligations that are secured ratably (other than with respect to cash collateral for letters of credit) with Indebtedness outstanding pursuant to Section 6.01(b)(ii) and (C) Liens on cash or deposits granted to the collateral agent with respect to Indebtedness Incurred pursuant to Section 6.01(b)(ii) in respect of letters of credit issued and outstanding thereunder; and

(jj)       Junior Liens on the Collateral securing Junior Indebtedness.

“Permitted Residuary Beneficiary” means any Person who is a beneficiary of a Qualified Trust and, under the terms of the Qualified Trust, is entitled to distributions out of the capital of such Qualified Trust only after the death of all of the Qualified Persons who are beneficiaries of such Qualified Trust.

“Person”  means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision hereof or any other entity.

“Platform” has the meaning specified in Section 11.02(b).

“Preferred Stock” means, as applied to the Equity Interests of any corporation, Equity Interests of any class or classes (however designated) that is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Equity Interests of any other class of such Person.

“Priority Indebtedness”  means “First Lien Obligations” as defined in the Intercreditor Agreement.

“Priority Payment Default” has the meaning specified in Section 10.03.

“Proportionate Equity Share” means, with respect to the Borrower’s equity in the net income of any Person included in the Borrower’s Consolidated Net Income pursuant to clause (a) of the definition thereof, the ratio of the Borrower’s equity in the net income of such Person during the applicable period to the total net income of such Person for such period.

“Purchase Money Indebtedness” means Indebtedness (including Capitalized Lease Obligations) Incurred (within 365 days of such purchase or lease) to finance or refinance the purchase, lease, construction, installation, or improvement of any assets used or useful in a Related Business (whether through the direct purchase of assets or through the purchase of Equity Interests of any Person owning such assets).

-34-

“Qualified Person” means a Person referred to in clauses (a) through (e) of the definition of Member of the McClatchy Family or the spouse, widow or widower for the time being and from time to time of any Person described in clause (d) or (e) of the definition of “Member of the McClatchy Family.”

“Qualified Trust” means a trust (whether testamentary or inter vivos) any beneficiary of which is a Qualified Person.

“Recipient” means (a) the Administrative Agent or (b) any Lender, as applicable.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, replace, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for or to consolidate, such Indebtedness.  “Refinanced” and “Refinancing” shall have correlative meanings.

“Refinancing Indebtedness” means Indebtedness that is Incurred to Refinance any Indebtedness existing on the date hereof or Incurred in compliance with this Agreement (including Indebtedness of the Borrower that Refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that Refinances Indebtedness of another Restricted Subsidiary (except that a Guarantor shall not Refinance Indebtedness of a Restricted Subsidiary that is not a Guarantor)), including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:

(a)        if the Stated Maturity of the Indebtedness being Refinanced is later than the Termination Date, the entire principal amount of the Refinancing Indebtedness has a Stated Maturity at least 6 months later than the Termination Date;

(b)        the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced at such time;

(c)        such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest, premiums required by the instruments governing such existing Indebtedness or premiums necessary to effectuate such Refinancing and costs, fees and expenses Incurred in connection therewith);

(d)        if the Indebtedness being Refinanced is subordinated in right of payment to the Loans or the Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Loans or the Guaranties on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being Refinanced; and

(e)        Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor Subsidiary that refinances Indebtedness of the Borrower or a Guarantor.

-35-

“Register” has the meaning specified in Section 11.07(d).

“Registered Public Accounting Firm” has the meaning specified in the Securities Laws and shall be independent of the Borrower as prescribed in the Securities Laws.

“Regulations” means the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code.  All references herein to sections of the Regulations shall include any corresponding provisions of succeeding, similar, substitute proposed or final Regulations.

“Related Business” means any business that is the same as or related, ancillary or complementary to any of the businesses of the Borrower and its Restricted Subsidiaries on the date hereof and any reasonable extension or evolution of any of the foregoing, including without limitation, the online business of the Borrower and its Restricted Subsidiaries.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and such Person’s and such Person’s Affiliates’ respective partners, directors, officers, employees, agents and advisors.

“Representative” has the meaning set forth in the Intercreditor Agreement.

“Required Lenders” means, at any time, Lenders owed or holding at least a majority in interest of the aggregate principal amount of all Tranche A Loans or Tranche B Loans (taken as a whole) outstanding at such time.

“Responsible Officer” means, when used with respect to the Agents, any officer within the department of the Agents administering this matter, including any vice president, assistant vice president, senior associate, assistant secretary, assistant treasurer, trust officer or any other officer of the Agents who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any such matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Agreement.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” means a Subsidiary of the Borrower other than an Unrestricted Subsidiary.

“Sale/Leaseback Transaction” means any direct or indirect arrangement relating to property now owned or hereafter acquired by the Borrower or a Restricted Subsidiary whereby the Borrower or such Restricted Subsidiary transfers such property to a Person (other than the Borrower or any of its Subsidiaries) and the Borrower or any Restricted Subsidiary leases it from such Person.

“Sanction(s)”  means any international economic sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations

-36-

Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

“Sanctioned Entity” means (a) a country or a government of a country, (b) an agency of the government of a country, (c) an organization directly or indirectly controlled by a country or its government, or (d) a person or entity resident in or determined to be resident in a country, that is subject to Sanctions.

“Sanctioned Person” means (a) a person named on the list of Specially Designated Nationals maintained by OFAC, (b) any Person operating, organized or resident in a Sanctioned Entity or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Secured Obligations” has the meaning specified in the Security Agreement.

“Secured Parties” means the Agents and the Lenders.

“Security Agreement” means that certain Security Agreement, dated as of the Closing Date, by and among the Borrower, the Guarantors and the Collateral Agent.

“Securities Laws” means the Securities Act of 1933, the Exchange Act, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Borrower within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Solvent” and “Solvency” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the assets of such Person and its Subsidiaries, on a consolidated basis, is greater than the total amount of liabilities, including contingent liabilities, of such Person and its Subsidiaries, on a consolidated basis; (b) the present fair saleable value of the assets of such Person and its Subsidiaries, on a consolidated basis, is not less than the amount that will be required to pay the probable liability of such Person and its Subsidiaries, on a consolidated basis, on their debts and liabilities, including contingent liabilities, as they become absolute and matured; (c) such Person and its Subsidiaries, on a consolidated basis, are not engaged in business or a transaction, and are not about to engage in business or a transaction, for which such Person’s and its Subsidiaries’ assets, on a consolidated basis, would constitute unreasonably small capital; and (d) such Person and its Subsidiaries do not intend to, and do not believe that they will, incur debts or liabilities, including contingent liabilities, on a consolidated basis, beyond their ability to pay such debts and liabilities as they mature.  For the purposes hereof, the amount of any contingent liability at any time shall be computed as the amount that,

-37-

in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

“Specified Real Property” means the real property and improvements owned by the Borrower or any Restricted Subsidiary at (i) 1601 McGee Street and 1701 Locust Street, Kansas City, Missouri 64108, bearing assessor’s parcel numbers 29-240-19-11 and 29-240-36-08 and (ii) 100 Midland Avenue, Lexington, Kentucky 40508-1999 bearing assessor’s parcel number 11252975.

“Stated Maturity” means, with respect to any security, the date specified in the agreement governing or certificate relating to such security as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Subsidiary”  of any Person means (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof), or (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).  Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Borrower.

“Supplemental Indenture” means the supplemental indenture to the indenture governing the 2027 Debentures and the 2029 Debentures, substantially in the form attached hereto as Exhibit F.

“Taxes”  means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Termination Date” means the Facility Maturity Date.

“TRACE” means the Trade Reporting and Compliance Engine.

“Trade Payables” means, with respect to any Person, any accounts payable to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business in connection with the acquisition of goods or services.

“Tranche A Collateral Agent” has the meaning specified in the recital of parties to this Agreement.

-38-

“Tranche B Collateral Agent” has the meaning specified in the recital of parties to this Agreement.

“Tranche A Commitment” means the amount set forth opposite each Initial Lender’s name on Schedule I hereto under the caption “Tranche A Commitment.”

“Tranche A Loan” has the meaning specified in Section 2.01(a).

“Tranche B Loan” has the meaning set forth in the preliminary statements to this Agreement.

“Transactions” means, collectively, (a) the entering into by the Loan Parties of the Loan Documents to which they are or are intended to be a party and the borrowing of the Loans hereunder and (b) the use of proceeds thereof in accordance with Section 2.11.

“Uniform Commercial Code” or “UCC”  means the New York Uniform Commercial Code or the Uniform Commercial Code of any other jurisdiction applicable to the Collateral, in each case, as in effect from time to time.

“United States” and “U.S.” mean the United States of America.

“Unrestricted Subsidiary” means (1) any Subsidiary of the Borrower that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the Borrower in the manner provided below and (2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Borrower may designate any Subsidiary of the Borrower (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

(a)        such Subsidiary or any of its Subsidiaries does not own any Equity Interests or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Borrower that is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

(b)        all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date of designation, and will at all times thereafter while they are Unrestricted Subsidiaries, consist of Non-Recourse Debt;

(c)        such designation and the Investment of the Borrower in such Subsidiary complies with Section 6.02;

(d)        such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Borrower and its Subsidiaries;

(e)        such Subsidiary is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation:

-39-

(i)       to subscribe for additional Equity Interests of such Person; or

(ii)      to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(f)        on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary with terms substantially less favorable to the Borrower than those that might have been obtained from Persons who are not Affiliates of the Borrower.

Any such designation by the Board of Directors of the Borrower shall be evidenced to the Administrative Agent by filing with the Administrative Agent a resolution of the Board of Directors of the Borrower giving effect to such designation and an officer’s  certificate certifying that such designation complies with the foregoing conditions.  If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary shall be deemed to be Incurred as of such date.

The Board of Directors of the Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Borrower could Incur at least $1.00 of additional Indebtedness pursuant to Section 6.01(a) on a pro forma basis taking into account such designation.

“U.S. Person” means a Person that is, for U.S. federal income tax purposes, a “United States person” as defined in Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning specified in Section 2.09(e)(ii)(B)(3).

“Voting Stock” of a Person means all classes of Equity Interests of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable, of such Person.

“Withholding Agent” means any Loan Party and the Administrative Agent.

“wholly-owned Subsidiary”  means a Restricted Subsidiary, all of the Equity Interests of which (other than directors’ qualifying shares or local ownership shares) is owned by the Borrower or another wholly-owned Subsidiary.

SECTION 1.02  Computation of Time Periods; Other Definitional Provisions.  With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

(a)        The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and

-40-

“including” shall be deemed to be followed by the phrase “without limitation.”  The word “will” shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i) any definition of, or reference to, any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified, (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

(b)        In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

(c)        Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

SECTION 1.03  Accounting Terms.

(a)        Generally.  All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts referred to herein shall be made in a manner such that any obligations relating to a lease that was accounted for by such Person as an operating lease as of the Closing Date and any similar lease entered into after the Closing Date by a Loan Party or any Subsidiary shall be accounted for as obligations relating to an operating lease and not as a capital lease.

(b)        Changes in GAAP.  If at any time any change in GAAP would affect the computation of any financial requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so

-41-

amended, (i) such requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such requirement made before and after giving effect to such change in GAAP.

SECTION 1.04  Times of Day.  Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

SECTION 1.05  Classes of Loans.  Loans hereunder are distinguished by “Class.” The “Class” of a Loan (or of a Commitment to make a Loan) refers to whether such Loan is a Tranche A Loan or a Tranche B Loan, each of which constitutes a Class.

ARTICLE II

AMOUNTS AND TERMS OF THE LOANS

SECTION 2.01  The Loans.

(a)        The Initial Lenders agree, on the terms and conditions hereinafter set forth, to make a loan (the “Tranche A Loan”) to the Borrower on the Closing Date in an amount not to exceed such Initial Lender’s Tranche A Commitment.

(b)        The Initial Lenders agree, on the terms and conditions hereinafter set forth, to make a loan (the “Initial Tranche B Loan”) to the Borrower on the Closing Date in an amount not to exceed such Initial Lender’s Initial Tranche B Commitment.

(c)        At any time following the Closing Date, upon at least 10 Business Days’ written notice to the Borrower (a “Conversion Request”), Chatham may elect to convert up to $75,000,000 in aggregate principal amount (less any amounts exchanged pursuant to Section 5.09(b)) of 2029 Debentures then held by it into an equal principal amount of Tranche B Loans (the “Additional Tranche B Loan”) on a date specified in the Conversion Request (the “Conversion Date”).  In connection with any Additional Tranche B Loan, Chatham shall reimburse Borrower for all costs and expenses of the Borrower in connection with the making of such Additional Tranche B Loan, including, without limitation, any tax liabilities incurred by the Borrower in connection with such conversion.

(d)        The Tranche A Loan and the Initial Tranche B Loan shall be made simultaneously by the Initial Lenders on the Closing Date.  The amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed.

SECTION 2.02  Making the Loans.

(a)        The Tranche A Loan and the Initial Tranche B Loan shall be made on the Closing Date and Borrower shall provide prior written notice to the Initial Lenders of the account into which the Cash Amount shall be deposited not less than three (3) Business Days in advance.  Subject to satisfaction or waiver of the conditions set forth in Section 3.01, the Initial Lenders

-42-

shall, before 9:00 A.M. on the date of the borrowing of such Loans, deposit funds in an amount equal to the Cash Amount into the account specified by Borrower.

(b)        Any Additional Tranche B Loan shall be deemed to be made on the Conversion Date.

SECTION 2.03  Repayment of Loans.  The Borrower shall repay to the Administrative Agent for the ratable account of the Lenders, in U.S. dollars, the aggregate principal amount of all Loans of a Class outstanding on the applicable Facility Maturity Date.

SECTION 2.04  Termination of the Commitments.  The aggregate Commitments under the Facility shall be automatically and permanently reduced to zero on the date that the Loans are made by the Initial Lenders to the Borrower pursuant to this Facility.

SECTION 2.05  Prepayments.

(a)        Ability to Prepay.  The Borrower may, upon written notice to the Administrative Agent, at any time or from time to time, voluntarily prepay any Class of Loans in whole or in part; provided that that such notice must be received by the Administrative Agent not later than 12:00 P.M. on the Business Day prior to the date of prepayment.  For the avoidance of doubt, no prepayment hereunder is required to be made in a pro rata manner between the Classes.  Each such notice shall specify the date and amount of such prepayment and the Class of Loans to be prepaid.  The Administrative Agent will promptly notify each Lender that holds Loans of the Class to be prepaid of its receipt of each such notice and of the amount of such Lender’s ratable portion of such prepayment.  If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided, that any notice of prepayment may state that such prepayment notice is conditioned upon the effectiveness of other credit facilities or other transactions, in which case such notice may be revoked by the Borrower (by written notice to Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(b)        Prepayment Amount.  In the event that the Borrower makes any voluntary prepayment under Section 2.05(a) of Tranche A Loans, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the Lenders holding such Loans, an amount equal to (1) prior to the third anniversary of the Closing Date, the principal amount of Loans being prepaid plus the Make-Whole Amount or (2) on or after the third anniversary of the Closing Date, an amount equal to the specified percentage below multiplied by the principal amount of Loans being prepaid:

Period Beginning July 15,	Price
2021	107.795	%
2022	105.846	%
2023	103.897	%
2024	101.949	%
2025 and thereafter	100.000	%

-43-

(i)       In the event that the Borrower makes any voluntary prepayment under Section 2.05(a) of Tranche B Loans, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the Lenders holding such Loans, an amount equal to the principal amount of Loans being repaid plus the Make-Whole Amount.

(ii)      All prepayments under this subsection (b) shall be made together with accrued interest to, but excluding, the date of such prepayment on the principal amount prepaid.  The Borrower shall be responsible for calculating the Make-Whole Amount. The Administrative Agent shall not be responsible for calculating the Make-Whole Amount or for reviewing and/or verifying the Borrower’s calculations.

SECTION 2.06  Interest.

(a)        Scheduled Interest.  The Borrower shall pay interest on the outstanding unpaid principal amount of each Loan owing to each Lender from the date of such Loan until such principal amount shall be paid in full, at the Applicable Rate, payable semi-annually in arrears on each Interest Payment Date and on the applicable Facility Maturity Date.

(b)        Default Interest.  Upon the occurrence and during the continuance of (x) any Default or Event of Default under Section 7.01(a) or Section 7.01(f) or (y) any other Event of Default, upon the request of the Required Lenders, the Borrower shall pay interest (“Default Interest”) on (i) the unpaid principal amount of each Loan owing to each Lender, payable in arrears on the dates referred to in Section 2.06(a), and on demand, at the rate per annum required to be paid on such Loan pursuant to Section 2.06(a), plus 100 basis points and (ii) to the fullest extent permitted by applicable law, the amount of any interest, fee or other amount payable under this Agreement or any other Loan Document to any Agent or any Lender that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at the rate per annum required to be paid on Loans pursuant to Section 2.06(a); provided,  however, that following the making of the request or the granting of the consent specified by Section 7.01 to authorize the Administrative Agent to declare the Loans due and payable (or the automatic acceleration of the maturity of the Loans) pursuant to the provisions of Section 7.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Required Lenders.

SECTION 2.07  Agent’s Fees.  The Borrower shall pay to each Agent for its own account such fees as may from time to time be agreed between the Borrower and such Agent.

SECTION 2.08  Payments and Computations.

(a)        The Borrower shall make each payment hereunder and under the other Loan Documents, irrespective of any right of counterclaim or set-off, not later than 12:00 P.M. on the day when due in U.S. dollars to the Administrative Agent at the Administrative Agent’s Account in same day funds, with payments being received by the Administrative Agent after such time being deemed to have been received on the next succeeding Business Day.  The Administrative Agent will promptly thereafter cause like funds to be distributed (i) if such payment by the Borrower is in respect of principal, interest, or any other Obligation then payable

-44-

hereunder and under the other Loan Documents to more than one Lender, to such Lenders ratably in accordance with the amounts of such respective Obligations then payable to such Lenders and (ii) if such payment by the Borrower is in respect of any Obligation then payable hereunder to one Lender, to such Lender, in each case to be applied in accordance with the terms of this Agreement.  Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register pursuant to Section 11.07(d), from and after the effective date of such Assignment and Assumption, the Administrative Agent shall make all payments hereunder and under the other Loan Documents in respect of the interest assigned thereby to the assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b)        All computations of interest shall be made by the Administrative Agent on the basis of a year of 12 months of 30 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.  Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(c)        Whenever any payment hereunder or under the other Loan Documents shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or commission, as the case may be.

(d)        Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to any Lender hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, but shall be under no obligation to, cause to be distributed to each such Lender on such due date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each such Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry practices on interbank compensation.

(e)        Subject to the Intercreditor Agreement, whenever any payment received by any Agent under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts due and payable to the Agents and the Secured Parties under or in respect of this Agreement and the other Loan Documents on any date, such payment shall be distributed by the Administrative Agent and applied by the Agents and the Secured Parties in the following order of priority:

(i)       first, to the payment of all of the fees, indemnification payments, costs and expenses (including any amounts due pursuant to Section 2.09 hereof)  that are due and

-45-

payable to the Agents (solely in their respective capacities as Agents) under or in respect of this Agreement and the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all such fees, indemnification payments, costs and expenses owing to the Agents on such date;

(ii)      second, to the payment of all of the indemnification payments, costs and expenses that are due and payable to the Lenders under Sections 11.04 hereof, Section 23 of the Security Agreement and any similar section of any of the other Loan Documents on such date, ratably based upon the respective aggregate amounts of all such indemnification payments, costs and expenses owing to the Lenders on such date;

(iii)     third, to the payment of all of the amounts that are due and payable to the Lenders under Section 2.09 hereof on such date, ratably based upon the respective aggregate amounts thereof owing to the Lenders on such date;

(iv)     fourth, to the payment of all of the accrued and unpaid interest on the Obligations that is due and payable on such date, ratably based upon the respective aggregate amounts of such interest; and

(v)      fifth, to the payment of the principal and other amounts of all of the outstanding Obligations that is due and payable on such date, ratably based upon the respective aggregate amounts of all such principal and other amounts; and

(vi)     sixth, to the Borrower or as otherwise directed by a court of competent jurisdiction.

(f)        Subject to the Intercreditor Agreement, if the Administrative Agent receives funds for application to the Obligations of the Loan Parties under or in respect of the Loan Documents under circumstances for which the Loan Documents do not specify the Loans to which, or the manner in which, such funds are to be applied, the Administrative Agent may, but shall not be obligated to, elect to distribute such funds to each of the Lenders in accordance with such Lender’s pro rata share of the aggregate principal amount of all Loans outstanding at such time, in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender, and for application to such principal of the Facility, as the Administrative Agent shall direct.

SECTION 2.09  Taxes.

(a)        Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such

-46-

deductions and withholdings applicable to additional sums payable under this Section 2.09) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b)        The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

(c)        The Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 2.09) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(d)        As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 2.09, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e)        Status of Lenders.

(i)       Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.09(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(ii)      Without limiting the generality of the foregoing:

(A)       any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a

-47-

Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)       any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1)        in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2)        executed copies of IRS Form W-8ECI;

(3)        in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit E-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10-percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or W-8BEN-E, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit E-2 on behalf of each such direct and indirect partner;

(C)       any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D)       if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in

-48-

Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(f)        If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.09 (including by the payment of additional amounts pursuant to this Section 2.09), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.09 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(g)        Each party’s obligations under this Section 2.09 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

SECTION 2.10  Sharing of Payments, Etc.  If any Lender shall obtain at any time any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise), other than as a result of an assignment pursuant to Section 11.07 (a) on account of Obligations due and payable to such Lender hereunder and under the other Loan Documents at

-49-

such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time, or (b) on account of Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time, such Lender shall, to the extent that this provision does not impair the legality under applicable Laws of the Guaranty or otherwise violate applicable law, forthwith purchase from the other Lenders such interests in the Obligations due and payable or owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided,  however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender’s ratable share (according to the proportion of (i) the purchase price paid to such Lender to (ii) the aggregate purchase price paid to all Lenders) of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such other Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered; and provided further that, so long as the Loans shall not have become due and payable pursuant to Section 7.01, any excess payment received by any Lender shall be shared on a pro rata basis only with other Lenders.  The Loan Parties agree that any Lender so purchasing an interest from another Lender pursuant to this Section 2.10 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such interest as fully as if such Lender were the direct creditor of the Loan Parties in the amount of such interest.

SECTION 2.11  Use of Proceeds.  The (a) Tranche A Loans shall be available to (i) effect the exchange with Chatham of $82,083,000 aggregate principal amount of 2027 Debentures (plus accrued and unpaid interest thereon to, but excluding, the Closing Date) and (ii) for the 2022 Debt Refinancing and the payment of fees, costs and expenses in connection with the 2022 Debt Refinancing, and (b) Initial Tranche B Loans shall be available to effect the exchange with Chatham of $193,466,000 aggregate principal amount of 2029 Debentures (plus accrued and unpaid interest thereon to, but excluding, the Closing Date).

SECTION 2.12  Evidence of Debt.

(a)        Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.  The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Administrative

-50-

Agent) to the effect that a promissory note or other evidence of indebtedness is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Loans owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender, with a copy to the Administrative Agent, a Note in substantially the form of Exhibit A hereto, respectively, payable to the order of such Lender in a principal amount equal to the Loan, of such Lender.  All references to Notes in the Loan Documents shall mean Notes, if any, to the extent issued hereunder.

(b)        The Register maintained by the Administrative Agent pursuant to Section 11.07(d) shall record (i) the date and amount of each Loan made hereunder, and the Class of such Loans, (ii) the terms of each Assignment and Assumption delivered to and accepted by it, (iii) the amount of any principal and/or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender’s share thereof.

(c)        Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided,  however, that the failure of the Administrative Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

(d)        The Borrower and the Lenders acknowledge and agree that (i) the Loans will be treated as issued with original issue discount for purposes of Sections 1272, 1273 and 1275 of the Code and (ii) they will report the Loans in a manner consistent with the foregoing and with the Borrower’s reporting for all income Tax purposes, except as required by applicable law. In addition to any information reporting required by applicable law, the Borrower will provide promptly to any Lender, upon written request, the issue date, issue price, amount of original issue discount, and yield to maturity with respect to the Loans.  Any such written request should be made to, The McClatchy Company, 2100 Q Street, Sacramento, CA 95816, Attention: Chief Financial Officer.  Notwithstanding anything in this Agreement to the contrary, commencing with the first “accrual period” (as defined under Treas. Reg. Sec. 1.1272-1(b)(1)(ii)) ending after the fifth anniversary of the Closing Date, and each accrual period thereafter, the Borrower shall, in respect of the Loans, pay in cash, on or before the end of such accrual period, both the stated interest due and payable as set forth herein and any accrued and unpaid “original issue discount” (determined in accordance with Treas. Reg. Secs. 1.1273-1 and 1.1272-1) with respect to the Loans if, but only to the extent that, the aggregate amount of such original issue discount that has accrued and has not been paid in cash from the Closing Date through the end of such accrual period (treating any payments made pursuant to this Agreement as a payment of original issue discount to the full extent required under Treas. Reg. Sec. 1.1275-2(a)) exceeds the product of the “issue price” (as defined in Treas. Reg. Sec. 1.1273-2(a)(1)) of

-51-

the Loans and the “yield to maturity” (determined in accordance with Treas. Reg. Sec. 1.1272-1(b)) on the Loans.

ARTICLE III

CONDITIONS TO EFFECTIVENESS OF LENDING

SECTION 3.01  Closing Conditions of the Initial Lenders.  The obligation of each of the Initial Lenders to make Loans under this Agreement shall become effective with respect to each Initial Lender subject to fulfilment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Required Lenders:

(a)        Representations and Warranties.  The representations and warranties made by the Loan Parties in Article IV  hereof and in the Loan Documents shall be true and correct on the date hereof and on the Closing Date.

(b)        Authorization.  At the Closing, each of the Initial Lenders shall have obtained all requisite corporate authorizations to enter into this Agreement and the related Loan Documents.

(c)        Legal Requirements.  At the Closing, entry into this Agreement and the other Loan Documents shall be legally permitted by all laws and regulations to which the parties hereto are subject.

(d)        Loan Documents.  The Loan Parties, the Initial Lenders, the Administrative Agent and the Collateral Agent shall have duly executed and delivered to the Administrative Agent the Loan Documents.

(e)        Refinancing of the 2022 Notes.  Substantially concurrent with the Closing, the Borrower shall have effected the 2022 Debt Refinancing.

(f)        Existing Credit Agreement.  The Borrower shall have obtained effective amendments to (or amendment and restatement of), or refinanced, its Existing Credit Agreement and related loan documents in order to permit the 2022 Debt Refinancing and all other documentation required by the agent and lenders thereunder in order to permit the New First Lien Debt and the Facility.

(g)        Intercreditor Agreements.  (i) The ABL Agent, the collateral agent for the New First Lien Debt and the Collateral Agent shall have entered into the Intercreditor Agreement and (ii) the Tranche A Collateral Agent and the Tranche B Collateral Agent shall have entered into the Junior Lien Intercreditor Agreement.

(h)        Supplemental Indenture.  The Supplemental Indenture shall have become effective with respect to the 2027 Debentures and the 2029 Debentures eliminating the restrictions with respect to the granting of liens and sale-and-leaseback transactions.

-52-

(i)         Legal Opinions.  The Administrative Agent shall have received duly executed opinions of counsel to the Borrower and the Guarantors addressed to the Agents and the Initial Lenders.

(j)         Financial Officer’s Certificate.  Each Agent and each Initial Lender shall have received a certificate of a financial officer of the Borrower to the effect that (A) each condition set forth in Section 3.01(a) has been satisfied, (B) no default or event of default under the Loan Documents shall have occurred and be continuing and (C) the Loan Parties taken as a whole are solvent after giving effect to the Loans, the application of the proceeds thereof in accordance with this Agreement and the payment of all estimated legal, accounting and other fees and expenses related hereto and thereto.

(k)        Secretary’s Certificate.  Each Agent and each Initial Lender shall have received a certificate from the Borrower and the Guarantors attaching thereto and certifying such documents and certificates as the Initial Lenders may reasonably request relating to the organization, existence and good standing of the Loan Parties, the authorization of the transactions contemplated by this Agreement and any other legal matters relating to each Loan Party, this Agreement or the transactions contemplated hereby, all in form and substance reasonably satisfactory to the Initial Lenders.

(l)         Guaranty and Security Documentation.  Each Agent and each Initial Lender shall have received the Security Agreement, duly executed by each Loan Party, together with the following, each in form and substance reasonably satisfactory to each Agent and each Initial Lender:

(i)       financing statements (Form UCC-1) in proper form for filing by the Borrower under the UCC in the jurisdiction of incorporation or formation, as applicable, of the applicable Loan Party as may be necessary or, in the reasonable opinion of the Initial Lenders, desirable, to perfect the security interests purported to be created by the Security Agreement to the extent they can be perfected by such filings;

(ii)      results of searches, certified copies of requests for information or other evidence or copies, or equivalent reports as of a recent date in the jurisdiction of incorporation or formation, as applicable, of the applicable Loan Party, listing all effective financing statements that name any Loan Party as debtor and that are filed in the jurisdiction in which Collateral is located on the Closing Date, together with copies of the financing statements that are identified in such search results (none of which shall cover any of the Collateral except (x) to the extent evidencing liens permitted under the Loan Documents or (y) those in respect of which the Initial Lenders shall have received termination statements (Form UCC-3) fully executed for filing;

(iii)     evidence of the completion of recordings and filings of the Intellectual Property Security Agreement in the United States Patent and Trademark Office or in the United States Copyright Office, as the case may be, as may be necessary or, in the reasonable opinion of the Initial Lenders, desirable, to perfect the security interests purported to be created by the Security Agreement; and

-53-

(iv)     subject to the terms of the Intercreditor Agreement, (x) all certificates representing the equity interests required to be pledged pursuant to the Security Agreement together with undated endorsements for transfer executed in blank and (y) promissory notes required to be pledged pursuant to the Security Agreement together with undated endorsements for transfer executed in blank, in each case, in form and substance reasonably satisfactory to the Initial Lenders.

(m)       Material Adverse Effect.  From December 31, 2017 to the Closing Date, there has not occurred any fact, circumstance, effect, change, event or development that, individually or in the aggregate, has a material adverse effect on the business, financial position, results of operations or prospects of the Loan Parties taken as a whole or on their performance of their obligations under this Agreement and the transactions contemplated thereby, in each case, except as disclosed in a document filed by the Borrower with the SEC pursuant to the Exchange Act prior to the date hereof.

(n)        No Litigation.  No court or other governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award or agency requirement (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement.

(o)        KYC.  Each Agent and each Initial Lender shall have received at least three business days prior to the Closing Date all documentation and other information about the Loan Parties as has been reasonably requested at least five business days prior to the Closing Date that it reasonably determines is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including a duly executed W-9 tax form (or such other applicable IRS tax form) of the Borrower.

SECTION 3.02  Closing Conditions of the Loan Parties.  The effectiveness of this Agreement with respect to the Loan Parties is subject to the fulfillment, on or prior to the Closing Date, of all of the following conditions, any of which may be waived in whole or in part by the Borrower on behalf of itself and the Loan Parties:

(a)        Representations and Warranties.  The representations and warranties made by the Initial Lenders in Article IV hereof and in the other Loan Documents shall be true and correct on the date hereof and on the Closing Date.

(b)        Authorization.  At the Closing, the Loan Parties shall have obtained all requisite corporate authorizations to enter into this Agreement and the other Loan Documents.

(c)        Legal Requirements.  At the Closing, entry into this Agreement and the other Loan Documents shall be legally permitted by all laws and regulations to which the parties hereto are subject.

(d)        Loan Documents.  Each of the Agents and the Initial Lenders shall have duly executed and delivered to the Loan Parties the Loan Documents.

-54-

(e)        Provision of the Loans.  The Loans shall be available to the Borrower as set forth in this Agreement.

(f)        Refinancing of the 2022 Notes.  Substantially concurrent with the Closing, the Borrower shall have effected the 2022 Debt Refinancing.

(g)        Credit Agreement.  The Borrower shall have obtained effective amendments to (or amendment and restatement of), or refinanced, the Existing Credit Agreement and related loan documents in order to permit the 2022 Debt Refinancing and all other documentation required by the agent and lenders thereunder in order to permit the New First Lien Debt and the Facility.

(h)        Intercreditor Agreement.  (i) The ABL Agent, the collateral agent for the New First Lien Debt and the Collateral Agent shall have entered into the Intercreditor Agreement and (ii) the Tranche A Collateral Agent and the Tranche B Collateral Agent shall have entered into the Junior Lien Intercreditor Agreement.

(i)         Supplemental Indenture.  The Supplemental Indenture shall have become effective with respect to the 2027 Debentures and the 2029 Debentures eliminating the restrictions with respect to the granting of liens and sale-and-leaseback transactions.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Except as set forth on the Disclosure Letter (which disclosures and responses are arranged in parts that correspond to the Sections in this Article IV to which they apply), the Loan Parties represent and warrant to each Agent and the Initial Lenders that:

SECTION 4.01  Existence, Qualification and Power.  Each Loan Party (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all corporate or similar requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.

SECTION 4.02  Authorization; No Contravention.  The Transactions have been duly authorized by all necessary corporate or other organizational action on the part of each Loan Party, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or by which such Person or the properties of such Person or any of its Restricted Subsidiaries is bound, or (ii) any order, injunction, writ or decree of any

-55-

Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any applicable Law, except in clauses (b)(i), (b)(ii) and (c) to the extent that such conflict, breach or violation would not reasonably be expected to have a Material Adverse Effect.

SECTION 4.03  Governmental Authorization, Other Consents.  No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required by any Loan Party in connection with the Transactions except for those approvals, consents, exemptions, authorizations or other actions, notices or filings which have already been obtained, taken, given or made and are in full force and effect and those approvals, consents, exemptions, authorizations, or other actions, notices or filings, the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.

SECTION 4.04  Binding Effect.  This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto.  This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as enforceability may be limited by applicable Bankruptcy Laws, laws affecting the rights of creditors generally or general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 4.05  Financial Statements; No Material Adverse Effect.

(a)        The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) to the extent required by GAAP, show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness that are required to be reflected on a balance sheet prepared in accordance with GAAP.

(b)        The unaudited consolidated balance sheets of the Borrower and its Subsidiaries dated April 1, 2018, and the related consolidated statements of income or operations and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein and (ii) fairly present in all material respects the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

-56-

(c)        Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.

SECTION 4.06  Investment Company Act.  None of the Loan Parties is or is required to be registered as an “investment company” under the Investment Company Act of 1940, as amended.

SECTION 4.07  Disclosure.  None of the representations or warranties made by any Loan Party in the Loan Documents as of the date such representations and warranties are made or deemed made, considering the context in which it was made and together with all other representations, warranties and written statements theretofore furnished by such Loan Party to each Agent and the Initial Lenders in connection with the Loan Documents and in the context of all publicly available information concerning the Loan Parties, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make such representation, warranty or written statement, in light of the circumstances under which it is made, not misleading as of the time when made or delivered.

SECTION 4.08  Subsidiaries.  As of the Closing Date, the Borrower has no Subsidiaries other than those specifically disclosed in Schedule 4.08 to the Disclosure Letter.

SECTION 4.09  Ownership of Property; Liens.  As of the Closing Date and subject to the Liens permitted by Section 6.03, each of the Loan Parties and each Restricted Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  As of the Closing Date, the Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, and the property of the Borrower and its Restricted Subsidiaries is subject to no Liens, in each case other than Liens permitted by Section 6.03.

SECTION 4.10  Taxes.  The Borrower and each of its Restricted Subsidiaries have filed all material tax returns and reports required to be filed, and have paid all material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those that are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP.  There is no tax assessment proposed in writing against the Borrower or any Restricted Subsidiary that would, if made, have a Material Adverse Effect.

SECTION 4.11  Solvency.  As of the Closing Date, after giving effect to the Transactions, the Borrower and its Subsidiaries, taken as a whole, are Solvent.

SECTION 4.12  Compliance with Laws.  Each Loan Party and each Restricted Subsidiary thereof is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it, except in such instances in which the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

-57-

SECTION 4.13  Collateral Documents.  Subject to the limitations and exceptions set forth in the Collateral Documents, all filings and other actions necessary to perfect and protect the security interest in the Collateral created under the Collateral Documents have been, to the extent required by the Collateral Documents, duly made or taken and are in full force and effect, and the Collateral Documents create in favor of the Collateral Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority (subject to Liens permitted under Section 6.03) security interest in the Collateral, securing the payment of the Secured Obligations.

SECTION 4.14  Use of Proceeds.  The proceeds from the Facility will be used solely as set forth in Section 2.11.

SECTION 4.15  OFAC Rules and Regulations, Patriot Act and FCPA.

(a)        Neither any Loan Party nor any of its Restricted Subsidiaries is in violation of (i) any of the foreign assets control regulations of OFAC or any enabling legislation or executive order relating thereto or (ii) the Patriot Act. None of the Loan Parties (A) is subject to sanctions administered by OFAC or the U.S. Department of State or (B) to the best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with any person subject to such sanctions.

(b)        None of the Loan Parties or their Restricted Subsidiaries or, to the knowledge of the Loan Parties, their respective Affiliates, directors, officers, employees or agents is in violation of any Sanctions.

(c)        None of the Loan Parties or their Restricted Subsidiaries or their respective Affiliates, directors, officers, employees or agents (i) is a Sanctioned Person or a Sanctioned Entity, (ii) has more than 15% of its assets located in Sanctioned Entities, or (iii) derives more than 15% of its operating income from investments in, or transactions with Sanctioned Persons or Sanctioned Entities. The proceeds of any Loan will not be used and have not been used, in each case directly by any Loan Party or any of its Restricted Subsidiaries or, to the knowledge of the Loan Parties, indirectly by any other Person, to fund any operations in, finance any investments or activities in or make any payments to, a Sanctioned Person or a Sanctioned Entity.

(d)        Each of the Loan Parties and their Restricted Subsidiaries and, to the knowledge of the Loan Parties, their respective directors, officers, employees or agents is in compliance with the Foreign Corrupt Practices Act (the “FCPA”), 15 U.S.C. §§ 78dd-1, et seq., the Corruption of Foreign Public Officials Act (Canada) and any applicable foreign counterpart thereto. None of the Loan Parties or their Restricted Subsidiaries or, to the knowledge of the Loan Parties, their respective directors, officers, employees or agents has made and no proceeds of any Loan will be used, in each case directly by any Loan Party or any of its Restricted Subsidiaries or, to the knowledge of the Loan Parties, indirectly by any other Person, to make a payment, offering, or promise to pay, or authorized the payment of, money or anything of value (i) in order to assist in obtaining or retaining business for or with, or directing business to, any foreign official, foreign political party, party official or candidate for foreign political office, (ii)

-58-

to a foreign official, foreign political party or party official or any candidate for foreign political office, and (iii) with the intent to induce the recipient to misuse his or her official position to direct business wrongfully to such Loan Party or its Restricted Subsidiary or to any other Person, in violation of the FCPA, the Corruption of Foreign Public Officials Act (Canada) or any applicable foreign counterpart thereto.

SECTION 4.16  No Litigation.  No action, suit, litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of any Loan Party, threatened by or against any Loan Party or against any of its property or assets (a) with respect to any of the transactions contemplated hereby, or (b) that could reasonably be expected to have a Material Adverse Effect.

ARTICLE V

AFFIRMATIVE COVENANTS

So long as any Loan or any other Obligation of any Loan Party under any Loan Document shall remain unpaid (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for which no claim has been asserted), the Loan Parties will, and (excluding Sections 5.01, 5.04, 5.05 and 5.08 below) will cause each Restricted Subsidiary to, do the following:

SECTION 5.01  Corporate Existence.  Subject to Section 6.08, the Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Borrower shall not be required to preserve any such right or franchise if the Board of Directors (or equivalent) of the Borrower shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Borrower, and that the loss thereof is not disadvantageous in any material respect to the Lenders.

SECTION 5.02  Maintenance of Properties.  The Loan Parties will cause all properties used or useful in the conduct of its respective business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 5.02 shall prevent a Loan Party or Restricted Subsidiary from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Borrower, desirable in the conduct of its business or the business of any Restricted Subsidiary and not disadvantageous in any material respect to Agents or the Lenders.

SECTION 5.03  Payment of Taxes and Other Claims.  The Loan Parties will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied or imposed upon the Loan Parties or any Restricted Subsidiary or upon the income, profits or property of the Loan Parties or any

-59-

Restricted Subsidiary, and (2) all material lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Loan Parties or any Restricted Subsidiary; provided, however, that the Loan Parties shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.

SECTION 5.04  Statement by Officers as to Default.  The Borrower will deliver to the Administrative Agent, within 120 days after the end of each fiscal year of the Borrower ending after the date hereof, a certificate, stating whether or not to the best knowledge of the signers thereof the Borrower is in default in the performance and observance of any of the terms, provisions and conditions of this Agreement (without regard to any period of grace or requirement of notice provided hereunder) and, if the Borrower shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.

SECTION 5.05  Financial Statements.  Deliver to the Administrative Agent:

(a)        as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2018), (i) a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, audited and (ii) accompanied by a report and opinion of a Registered Public Accounting Firm of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; provided that it shall not be a violation of this clause (ii) if the opinion accompanying the financial statements for the applicable fiscal year is subject to a “going concern” or like qualification solely as a result of the fact that the Facility is scheduled to mature within 365 days of the end of such fiscal year; and

(b)        as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter September 30, 2018), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter and the related consolidated statements of income or operations and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting in all material respects the financial condition, results of operations and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

Documents required to be delivered pursuant to this Section 5.05 (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which such documents are available on the SEC’s website at http://www.sec.gov.

-60-

SECTION 5.06  Compliance with Laws.  The Loan Parties shall, and shall cause each Restricted Subsidiary to, comply in all material respects with the requirements of all Laws (including, without limitation, OFAC, the Patriot Act, and FCPA, each as amended) and all orders, writs, injunctions and decrees applicable to it, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted, or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

SECTION 5.07  Books and Records.  The Loan Parties shall maintain proper books of record and account, in which full, true and correct entries in all material respects shall be made of all financial transactions and matters involving the assets and business of such Loan Party and its Subsidiaries to permit the preparation of such Persons’ financial statements required by Section 5.05 in accordance with GAAP.

SECTION 5.08  Additional Guarantors; Additional Collateral; Further Assurances.

(a)        After the Closing Date, if any Restricted Subsidiary of the Borrower provides a full recourse guaranty of the obligations under the New First Lien Debt, then, within thirty (30) (or such later date as the Administrative Agent (acting at the written direction of the Required Lenders) shall agree) after such Restricted Subsidiary provides such a guaranty, the Borrower shall cause the Collateral and Guarantee Requirement to be satisfied with respect to such Restricted Subsidiary, including the delivery of a Guaranty Supplement pursuant to Section 9.05, whereupon such Restricted Subsidiary will become a “Guarantor” and “Loan Party” for purposes of the Loan Documents.

(b)        Subject to the limitations set forth in the Collateral Documents, each Loan Party will, at the request of the Collateral Agent (acting at the written direction of the Required Lenders), execute and deliver any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable law to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the Borrower’s expense. The Borrower will provide to the Collateral Agent, from time to time upon reasonable request (acting at the written direction of the Required Lenders), evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Collateral Documents, subject to the limitations set forth therein.

(c)        With respect to any property acquired after the Closing Date by any Loan Party that is intended to be subject to the Lien created by any of the Collateral Documents but is not so subject, each Loan Party will promptly (and in any event within (i) 90 days after the acquisition of any real property with a fair market value in excess of $2,000,000 which does not constitute Excluded Property and which is not subject to a mortgage in favor of the Collateral Agent and (ii) 30 days after the acquisition of any other such property (or such later date acceptable to the Collateral Agent (acting at the written direction of the Required Lenders))), (i) execute and deliver to the Collateral Agent such amendments or supplements to the relevant

-61-

Collateral Documents or such other documents as the Collateral Agent (acting at the written direction of the Required Lenders) shall reasonably deem necessary or advisable to grant to the Collateral Agent, for the benefit of the Secured Parties, a Lien on such property subject to no Liens other than Liens permitted or not prohibited by this Agreement, and (ii) take all actions reasonably necessary to cause such Lien to be duly perfected to the extent required by such Collateral Document in accordance with all applicable requirements of Law, including, but not limited to, the filing of financing statements in such jurisdictions as may be reasonably requested by the Collateral Agent (acting at the written direction of the Required Lenders), at the Borrower’s expense. The Borrower shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Collateral Agent (acting at the written direction of the Required Lenders) shall reasonably require to confirm the validity, perfection and priority of the Lien of the Collateral Documents on such after-acquired properties.

SECTION 5.09  Exchange Rights.  At any time following:

(a)        the occurrence of a Change of Control and receipt of a written request by Chatham;

(b)        the receipt of written notice from Chatham that it desires to exchange up to $75,000,000 in aggregate principal amount (less any amounts converted pursuant to Section 2.01(c)) of 2029 Debentures then held by it; or

(c)        any other time as Chatham and the Borrower may agree;

then, in each case, Chatham may, at its sole cost and expense, exchange all or any portion of (i) the Loans held by Chatham (in the case of a request pursuant to clauses (a) or (c) above) or (ii) such 2029 Debentures (in the case of a request by Chatham pursuant to clause (b) above), for an equal principal amount of notes issued by the Borrower (such notes, the “Exchange Notes”).  The Borrower will use its commercially reasonable efforts to issue the Exchange Notes following such request, which Exchange Notes, in the case of Exchange Notes issued pursuant to clauses (a) or (c) above, shall be of a substantially similar character as the applicable Loans hereunder (including with respect to the subordination provisions of the Intercreditor Agreement and the Junior Lien Intercreditor Agreement) with such changes as necessary to include such additional provisions of the Facility as reasonably determined by the Borrower and Chatham and, in the case of Exchange Notes issued pursuant to clause (b) above, shall be of substantially similar character as the Tranche B Loans (including with respect to the subordination provisions of the Intercreditor Agreement and the Junior Lien Intercreditor Agreement and except in no case will such Exchange Notes have a maturity before July 15, 2031 and the rate of interest on such Exchange Notes shall be the rate of interest on the 2029 Debentures); provided, that the Borrower shall not have any obligation to issue any Exchange Notes if, despite using its commercially reasonable efforts, such issuance could not be completed in compliance with applicable Securities Laws; provided, further, that Chatham shall provide the Borrower with prior written notice of the identity of any proposed purchaser of such Exchange Notes and the Borrower shall have no obligation hereunder to issue such Exchange Notes unless the Borrower approves such proposed purchaser.  In connection with the issuance of any Exchange Notes, (i) Chatham shall, promptly following a request therefor, reimburse the Borrower for all costs and

-62-

expenses of the Borrower in connection with such issuance of Exchange Notes, including, without limitation, any tax liabilities incurred by the Borrower in connection with such issuance and exchange and (ii) the Borrower shall provide prior written notice thereof to the Administrative Agent.

ARTICLE VI

NEGATIVE COVENANTS

So long as any Loan or any other Obligation of any Loan Party under any Loan Document shall remain unpaid (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for which no claim has been asserted), the Loan Parties will not, and (excluding Section 6.08 below) will cause each Restricted Subsidiaries to not, at any time:

SECTION 6.01  Limitation on Indebtedness.

(a)        The Borrower will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including Acquired Indebtedness); provided,  however, that the Borrower and the Guarantors may Incur Permitted Debt if on the date thereof and, after giving effect thereto and the application of the proceeds thereof on a pro forma basis, the Consolidated Leverage Ratio for the Borrower and its Restricted Subsidiaries would be no greater than 5.75 to 1.00.

(b)        The provisions of Section 6.01(a) shall not apply to the Incurrence of the following Indebtedness:

(i)       Indebtedness of the Borrower evidenced by the (A) Loans or any Exchange Notes and (B) (1) New First Lien Debt and (2) Permitted Additional Secured Obligations so long as, in the case of this subclause (2) immediately after giving effect thereto, the aggregate principal amount of New First Lien Debt and Permitted Additional Secured Obligations then outstanding does not exceed the excess, if positive, of (x) 2.12x Consolidated EBITDA of the Borrower for the most recent four fiscal quarter period for which internal financial statements are available (with such pro forma adjustments to Consolidated EBITDA as are consistent with those set forth in the definition of “Consolidated Leverage Ratio”) minus (y) the aggregate principal amount of New First Lien Debt redeemed following the Closing Date pursuant to a mandatory redemption and, solely to the extent resulting in a reduction in the Borrower’s obligations to redeem New First Lien Debt pursuant to an excess cash flow mandatory redemption, the principal amount of New First Lien Debt retired by the Borrower pursuant to open market purchases or optional redemption of New First Lien Debt;

(ii)      Indebtedness Incurred pursuant to Debt Facilities in an aggregate principal amount not to exceed the sum of $44.8 million plus the Borrowing Base at any time outstanding;

(iii)     Guaranties by (x) the Borrower or a Guarantor (including any Restricted Subsidiary the Borrower elects to cause to become a Guarantor in connection

-63-

therewith) of Indebtedness permitted to be Incurred by the Borrower or a Restricted Subsidiary in accordance with the provisions of this Agreement, and (y) Non-Guarantor Subsidiaries of Indebtedness Incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Agreement;

(iv)     Indebtedness of the Borrower owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Borrower or any other Restricted Subsidiary; provided,  however,

(A)       if the Borrower is the obligor on Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to any New First Lien Debt;

(B)       if a Guarantor is the obligor on such Indebtedness and a Non-Guarantor Subsidiary is the obligee, such Indebtedness is subordinated in right of payment to the Guarantees of such Guarantor; and

(C)       (1) any subsequent issuance or transfer of Equity Interests or any other event that results in any such Indebtedness being beneficially held by a Person other than the Borrower or a Restricted Subsidiary of the Borrower; and (2) any subsequent sale or other transfer of any such Indebtedness to a Person other than the Borrower or a Restricted Subsidiary of the Borrower, shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by the Borrower or such Subsidiary, as the case may be;

(v)      any Indebtedness (other than the Indebtedness described in clauses (i) and (ii)) outstanding on the date hereof and any Refinancing Indebtedness Incurred in respect of any Indebtedness described in clause (i), this clause (v) or clause (vi) or Incurred pursuant to Section 6.01(a);

(vi)     Indebtedness of Persons Incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged or consolidated with or into, the Borrower or any Restricted Subsidiary (other than Indebtedness Incurred in connection with, or in contemplation of, such acquisition, merger or consolidation); provided,  however, that at the time such Person is acquired by, or merged or consolidated with, the Borrower or any Restricted Subsidiary and after giving effect to the Incurrence of such Indebtedness pursuant to this clause (vi), either (x) the Consolidated Leverage Ratio for the Borrower and its Restricted Subsidiaries would be no greater than 5.75 to 1.00 or (y) the aggregate principal of such Indebtedness at any time outstanding incurred pursuant to this clause (y) (together with all Refinancing Indebtedness in respect of Indebtedness previously Incurred pursuant to this clause (y)) shall not exceed $33.6 million;

(vii)    Indebtedness under Hedging Obligations; provided,  however, that such Hedging Obligations are entered into to fix, manage or hedge interest rate, currency or commodity exposure of the Borrower or any Restricted Subsidiary and not for speculative purposes;

-64-

(viii)   Purchase Money Indebtedness in an aggregate principal amount not to exceed $33.6 million at any one time outstanding pursuant to this clause (viii);

(ix)     Indebtedness Incurred by the Borrower or its Restricted Subsidiaries in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self-insurance obligations, performance, bid, surety, appeal and similar bonds and completion Guaranties (not for borrowed money) or security deposits, letters of credit, banker’s guarantees or banker’s acceptances, in each case in the ordinary course of business;

(x)      Indebtedness arising from agreements of the Borrower or a Restricted Subsidiary providing for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case, Incurred or assumed in connection with the acquisition or disposition of any business or assets of the Borrower or any business, assets or Equity Interests of a Subsidiary, other than Guaranties of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Equity Interests for the purpose of financing such acquisition; provided that:

(A)       the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to subsequent changes in value), actually received by the Borrower and its Restricted Subsidiaries in connection with such disposition; and

(B)       such Indebtedness is not reflected on the balance sheet of the Borrower or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet shall not be deemed to be reflected on such balance sheet for purposes of this clause (B));

(xi)     Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument, including, but not limited to, electronic transfers, wire transfers and commercial card payments drawn against insufficient funds in the ordinary course of business (except in the form of committed or uncommitted lines of credit); provided,  however, that such Indebtedness is extinguished within ten Business Days of Incurrence;

(xii)    Indebtedness Incurred by the Borrower or any Restricted Subsidiary in connection with (x) insurance premium financing arrangements not to exceed $11.2 million at any one time outstanding or (y) take-or-pay obligations in supply agreements incurred in the ordinary course of business;

(xiii)   Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial institutions Incurred in the ordinary course of business of the Borrower and its Restricted Subsidiaries with such banks or financial institutions that arises in connection with ordinary banking arrangements to provide treasury services or to manage cash balances of the Borrower and its Restricted Subsidiaries (for the avoidance of doubt, including Cash Management Obligations);

-65-

(xiv)   guarantees to suppliers or licensors (other than guarantees of Indebtedness) in the ordinary course of business;

(xv)    Indebtedness of the Borrower or any Restricted Subsidiary to the extent that the Net Cash Proceeds thereof are promptly deposited to defease or discharge any New First Lien Debt, or, following the repayment of the New First Lien Debt, to effect the repayment of the Loans or any Exchange Notes;

(xvi)   Indebtedness of the Borrower or any Restricted Subsidiary consisting of Guaranties in respect of obligations of joint ventures; provided that the aggregate principal amount of the Indebtedness incurred pursuant to this clause (xvi) shall not exceed $22.4 million at any time outstanding;

(xvii)  Indebtedness of the Borrower or any Restricted Subsidiary Incurred in connection with any Sale/Leaseback Transaction, in an aggregate principal amount not to exceed $84.0 million at any time outstanding; and

(xviii) in addition to the items referred to in clauses (i) through (xvii) above, Indebtedness of the Borrower and its Restricted Subsidiaries in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness Incurred pursuant to this clause (xviii) and then outstanding, shall not exceed $33.6 million at any time outstanding.

(c)        For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 6.01:

(i)       in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in Section 6.01(b) or could be Incurred pursuant to Section 6.01(b), the Borrower, in its sole discretion, may divide and classify such item of Indebtedness (or any portion thereof) on the date of Incurrence and may later reclassify such item of Indebtedness (or any portion thereof) in any manner that complies with this Section 6.01 and only be required to include the amount and type of such Indebtedness once; provided that all Indebtedness outstanding on the date hereof under the ABL Credit Facility shall be deemed Incurred on the Closing Date under Section 6.01(b)(ii) and may not later be reclassified;

(ii)      Guaranties of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(iii)     if obligations in respect of letters of credit are Incurred pursuant to a Debt Facility and are being treated as Incurred pursuant to Section 6.01(b)(ii) and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

(iv)     the principal amount of any Disqualified Stock of the Borrower or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Guarantor, shall

-66-

be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(v)      Indebtedness permitted by this Section 6.01 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 6.01 permitting such Indebtedness; and

(vi)     the amount of Indebtedness issued at a price that is less than the principal amount thereof shall be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value or the amortization of debt discount, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock shall not be deemed to be an Incurrence of Indebtedness for purposes of this Section 6.01. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount or the aggregate principal amount outstanding in the case of Indebtedness issued with interest payable-in-kind, (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness, (iii) in the case of the Guaranties by a specified Person of Indebtedness of another Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation and (iv) in the case of Indebtedness of others Guaranteed solely by means of a Lien on any asset or property of the Borrower or any Restricted Subsidiary (and not to their other assets or properties generally), the lesser of (x) the Fair Market Value of such asset or property on the date on which such Indebtedness is Incurred and (y) the amount of the Indebtedness so secured.

(d)        In addition, the Borrower shall not permit (i) any of its Unrestricted Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified Stock, other than Non-Recourse Debt. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 6.01, the Borrower shall be in Default of this Section 6.01) or (ii) any Indebtedness issued or borrowed by the Borrower to be refinanced with Indebtedness issued or borrowed by any Subsidiary of the Borrower.

(e)        For purposes of determining compliance with any U.S. dollar-denominated restriction on the Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated by the Borrower based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to Refinance other Indebtedness denominated in a foreign currency, and such Refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed

-67-

not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced plus the amount of any reasonable premium (including reasonable tender premiums), defeasance costs and any reasonable fees and expenses incurred in connection with the issuance of such new Indebtedness. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness that the Borrower may Incur pursuant to this Section 6.01 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to Refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being Refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such Refinancing.

SECTION 6.02  Limitation on Restricted Payments.

(a)        The Borrower shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to:

(i)       declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its Equity Interests (including any payment in connection with any merger or consolidation involving the Borrower or any of its Restricted Subsidiaries) other than:

(A)       dividends or distributions payable solely in Equity Interests of the Borrower (other than Disqualified Stock) or in options, warrants or other rights to purchase such Equity Interests of the Borrower; and

(B)       dividends or distributions by a Restricted Subsidiary payable to the Borrower or another Restricted Subsidiary (and if such Restricted Subsidiary is not a wholly-owned Subsidiary, to its other holders of common Equity Interests on a pro rata basis or on a basis that results in the receipt by the Borrower or a Restricted Subsidiary of dividends or distributions of a greater value than it would receive on a pro rata basis);

(ii)      purchase, redeem, retire or otherwise acquire for value any Equity Interests of the Borrower held by Persons other than the Borrower or a Restricted Subsidiary (other than in exchange for Equity Interests of the Borrower (other than Disqualified Stock));

(iii)     make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Junior Indebtedness other than the purchase, repurchase, redemption, defeasance or other acquisition of such Junior Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within six months of the date of purchase, repurchase, redemption, defeasance or acquisition; or

(iv)     make any Restricted Investment (all such payments and other actions referred to in clauses (i) through (iv) (other than any exception thereto) shall be referred to

-68-

as a “Restricted Payment”), unless, at the time of and after giving effect to such Restricted Payment:

(A)       no Default shall have occurred and be continuing (or would result therefrom);

(B)       immediately after giving effect to such transaction on a pro forma basis, the Borrower is able to Incur $1.00 of Permitted Additional Secured Obligations under Section 6.01(b)(i)(B)(2); and

(C)       the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Closing Date (excluding Restricted Payments made pursuant to clauses (i), (ii), (iii), (v), (vi), (vii), (viii), (ix), (x), (xii), (xiii), (xiv), (xv), (xvi) and (xvii) of Section 6.02(b)) would not exceed the sum of, without duplication:

(1)        the excess of (x) the Borrower’s cumulative Consolidated EBITDA (whether positive or negative) determined at the time of such Restricted Payment minus (y) 140% of the Borrower’s Consolidated Interest Expense, each determined for the period (taken as one accounting period) from April 2, 2018 to the end of the Borrower’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment;

(2)        100% of the aggregate Net Cash Proceeds and the Fair Market Value of marketable securities or other property received by the Borrower or a Restricted Subsidiary from the issue or sale of its Equity Interests (other than Disqualified Stock) or other capital contributions subsequent to the Closing Date, other than:

(x)        Net Cash Proceeds received from an issuance or sale of such Equity Interests to a Subsidiary of the Borrower or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Borrower or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination; and

(y)        Net Cash Proceeds received by the Borrower from the issue and sale of its Equity Interests to the extent applied to redeem New First Lien Debt or repay the Loans;

(3)        the amount by which Indebtedness of the Borrower and its Restricted Subsidiaries is reduced on the Borrower’s consolidated balance sheet upon the conversion or exchange subsequent to the Closing Date of any Indebtedness (other than Junior Indebtedness) of the Borrower or its Restricted Subsidiaries for Equity Interests (other than Disqualified Stock) of the Borrower (less the amount of any cash, or the Fair Market Value of any other property, distributed by the Borrower or its Restricted Subsidiaries upon such conversion or exchange);

-69-

(4)        100% of the Net Cash Proceeds and the Fair Market Value of property other than cash and marketable securities from the sale or other disposition (other than to the Borrower or a Restricted Subsidiary) of Restricted Investments made after the Closing Date and redemptions and repurchases of such Restricted Investments from the Borrower or its Restricted Subsidiaries and repayment of Restricted Investments in the form of loans or advances from the Borrower and its Restricted Subsidiaries and releases of Guaranties that constitute Restricted Investments by the Borrower and its Restricted Subsidiaries (other than in each case to the extent the Restricted Investment was made pursuant to Section 6.02(b)(xii));

(5)        100% of the Net Cash Proceeds and the Fair Market Value of property other than cash and marketable securities received by the Borrower or its Restricted Subsidiaries from the sale (other than to the Borrower or a Restricted Subsidiary) of the stock of an Unrestricted Subsidiary (other than in each case to the extent the Investment in such Unrestricted Subsidiary was made by the Borrower or a Restricted Subsidiary pursuant to Section 6.02(b)(xii) or to the extent such Investment constituted a Permitted Investment); and

(6)        to the extent that any Unrestricted Subsidiary of the Borrower designated as such after the Closing Date is redesignated as a Restricted Subsidiary or any Unrestricted Subsidiary of the Borrower merges into or consolidates with the Borrower or any of its Restricted Subsidiaries or any Unrestricted Subsidiary transfers, dividends or distributes assets to the Borrower or a Restricted Subsidiary, in each case after the Closing Date, the Fair Market Value of such Subsidiary as of the date of such redesignation or such merger or consolidation, or in the case of the transfer, dividend or distribution of assets of an Unrestricted Subsidiary to the Borrower or a Restricted Subsidiary, the Fair Market Value of such assets of the Unrestricted Subsidiary as determined at the time of the redesignation of such Unrestricted Subsidiary as a Restricted Subsidiary or at the time of such merger, consolidation or transfer, dividend or distribution of assets (other than an Unrestricted Subsidiary to the extent the Investment in such Unrestricted Subsidiary was made by a Restricted Subsidiary pursuant to Section 6.02(b)(xii) or to the extent such Investment constituted a Permitted Investment).

(b)        The provisions of Section 6.02(a) hereof shall not prohibit:

(i)       any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Equity Interests, Disqualified Stock, Junior Indebtedness or any Restricted Investment made in exchange for, or out of the proceeds of the substantially concurrent sale of, Equity Interests of the Borrower (other than (x) Disqualified Stock and (y) Equity Interests issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Borrower or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that the Net Cash Proceeds from such sale of Equity Interests shall be excluded from Section 6.02(a);

(ii)      any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Junior Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent Incurrence of Refinancing Indebtedness;

-70-

(iii)     any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of the Borrower or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of the Borrower or such Restricted Subsidiary, as the case may be, that, so long as such refinancing Disqualified Stock is permitted to be Incurred pursuant to Section 6.01;

(iv)     dividends paid within 90 days after the date of declaration if at such date of declaration such dividend would have complied with this provision;

(v)      the purchase, repurchase, redemption or other acquisition, cancellation or retirement for value of Equity Interests, or options, warrants, equity appreciation rights or other rights to purchase or acquire Equity Interests, of the Borrower held by any existing or former employees, management or directors of or consultants to the Borrower or any Subsidiary of the Borrower or their assigns, estates or heirs, in each case in connection with the repurchase provisions under employee stock option or stock purchase agreements or other compensatory agreements approved by the Board of Directors of the Borrower; provided that such purchases, repurchases, redemptions, acquisitions, cancellations or retirements pursuant to this clause (v) shall not exceed $5.6 million in the aggregate during any calendar year, although such amount in any calendar year (with any unused amounts in any year being available in succeeding years) may be increased by an amount not to exceed:

(A)       the Net Cash Proceeds from the sale of Equity Interests (other than Disqualified Stock) of the Borrower to existing or former employees or members of management of the Borrower or any of its Subsidiaries that occurs after the date hereof, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments (provided that the Net Cash Proceeds from such sales or contributions shall be excluded from Section 6.02(a)); plus

(B)       the cash proceeds of key man life insurance policies received by the Borrower or its Restricted Subsidiaries after the date hereof; less

(C)       the amount of any Restricted Payments previously made with the cash proceeds described in the clauses (A) and (B) of this clause (v);

(vi)     the accrual declaration and payment of dividends to holders of any class or series of Disqualified Stock of the Borrower issued in accordance with the terms of this Agreement;

(vii)    repurchases or other acquisitions of Equity Interests deemed to occur (i) upon the exercise of stock options, warrants, restricted stock units or other rights to purchase Equity Interests or other convertible securities if such Equity Interests represents a portion of the exercise price thereof or conversion price thereof or (ii) in connection with withholdings or similar taxes payable by any future, present or former employee, director or officer;

(viii)   the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Junior Indebtedness at a purchase price not greater than

-71-

101% of the principal amount of (plus accrued and unpaid interest on) such Junior Indebtedness in the event of a transaction permitted in accordance with provisions similar to Section 6.08;

(ix)     cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Borrower or other exchanges of securities of the Borrower or a Restricted Subsidiary in exchange for Equity Interests of the Borrower;

(x)      Restricted Payments from the proceeds of Permitted Debt if on the date thereof and, after giving effect thereto on a pro forma basis, the Consolidated Leverage Ratio for the Borrower and its Restricted Subsidiaries would be no greater than 5.75 to 1.00;

(xi)     [Reserved];

(xii)    other Restricted Payments in an aggregate amount, which, when taken together with all other Restricted Payments made pursuant to this clause (xii) (as reduced by the amount of capital returned from any such Restricted Payments that constituted Restricted Investments in the form of cash and Cash Equivalents (exclusive of amounts included in Section 6.02(a)) not to exceed $28.0 million;

(xiii)   the purchase of fractional shares of Equity Interests of the Borrower arising out of stock dividends, splits or combinations or mergers, consolidations or other acquisitions;

(xiv)   in connection with any acquisition by the Borrower or any of its Subsidiaries, the receipt or acceptance of the return to the Borrower or any of its Restricted Subsidiaries of Equity Interests of the Borrower constituting a portion of the purchase price consideration in settlement of indemnification claims or as a result of a purchase price adjustment (including consideration earn outs);

(xv)    the distribution of rights pursuant to any shareholder rights plan or the redemption of such for nominal consideration in accordance with the terms of any shareholder rights plan; or

(xvi)   payments or distributions to stockholders pursuant to appraisal rights required under applicable law in connection with any merger, consolidation or other acquisition by the Borrower or any Restricted Subsidiary;

provided,  however, that at the time of and after giving effect to any Restricted Payment permitted under clauses (vi), (x), (xii) and (xvi), no Default shall have occurred and be continuing or would occur as a consequence thereof.

(c)        The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the assets or securities proposed to be paid, transferred or issued by the Borrower or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment. The Fair Market Value of any cash Restricted Payment

-72-

shall be its face amount and any non-cash Restricted Payment shall be determined conclusively in Good Faith by the Borrower.

For purposes of determining compliance with this Section 6.02, in the event that a proposed Restricted Payment (or portion thereof) meets the criteria of more than one of the categories of Restricted Payments described in clauses (i) through (xvi) of Section 6.02(b), or is entitled to be made pursuant to Section 6.02(a), the Borrower shall be entitled to divide and classify such Restricted Payment (or portion thereof) on the date of its payment in any manner that complies with this Section 6.02.

If the Borrower or any Restricted Subsidiary makes a Restricted Investment or a Permitted Investment and the Person in which such Investment was made subsequently becomes a Restricted Subsidiary, to the extent such Investment resulted in a reduction of the amounts calculated under the first paragraph of this covenant or any other provision of this covenant or the definition of Permitted Investment (which was not subsequently reversed), then such amount shall be increased by the amount of such reduction to the extent of the lesser of (x) the amount of such Investment and (y) the Fair Market Value of such Investment at the time such Person becomes a Restricted Subsidiary.

(d)        As of the date hereof, all of the Borrower’s Subsidiaries shall be Restricted Subsidiaries. The Borrower shall not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of the defined term “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the Borrower and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall be deemed to be Restricted Payments in an amount determined as set forth in the definition of “Investment.” Such designation shall be permitted only if a Restricted Payment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the restrictive covenants set forth in this Agreement.

SECTION 6.03  Limitation on Liens.  The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur or assume any Lien (other than Permitted Liens) that secures any Indebtedness on any asset or property of the Borrower or such Restricted Subsidiary or any income or profits therefrom.

SECTION 6.04  Limitation on Restrictions on Distributions from Restricted Subsidiaries.

(a)        The Borrower shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(i)       (A) pay dividends or make any other distributions on its Equity Interests to the Borrower or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or

-73-

(B) pay any Indebtedness or other obligations owed to the Borrower or any Restricted Subsidiary (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Equity Interests);

(ii)      make any loans or advances to the Borrower or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Borrower or any Restricted Subsidiary to other Indebtedness Incurred by the Borrower or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances); or

(iii)     sell, lease or transfer any of its property or assets to the Borrower or any Restricted Subsidiary (it being understood that such transfers shall not include any type of transfer described in clause (i) or (ii) of this Section 6.04(a)).

(b)        The restrictions in Section 6.04(a) shall not prohibit encumbrances or restrictions existing under or by reason of:

(i)       any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Closing Date (including, without limitation, the New First Lien Debt, this Agreement, the Loans, any indenture governing the Exchange Notes, any collateral documents (including the Collateral Documents) relating to any of the foregoing), the ABL Intercreditor Agreement and the Intercreditor Agreement, and the ABL Credit Facility in effect on such date);

(ii)      any encumbrance or restriction with respect to a Person or assets pursuant to an agreement in effect on or before the date on which such Person became a Restricted Subsidiary or was acquired by, merged into or consolidated with the Borrower or a Restricted Subsidiary (other than Equity Interests or Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary or was acquired by, merged into or consolidated with the Borrower or in contemplation of the transaction) or such assets were acquired by the Borrower or any Restricted Subsidiary; provided that any such encumbrance or restriction shall not extend to any Person or the assets or property of the Borrower or any other Restricted Subsidiary other than the Person and its Subsidiaries or the assets and property so acquired and that, in the case of Indebtedness, was permitted to be Incurred pursuant to this Agreement;

(iii)     any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (i) or (ii) of this Section 6.04(b) or this clause (iii) or contained in any amendment, restatement, modification, renewal, supplement, refunding, replacement or Refinancing of an agreement referred to in clause (i) or (ii) of this Section 6.04(b) or this clause (iii); provided,  however, that the encumbrances and restrictions with respect to such Restricted Subsidiary contained in any such agreement are no less favorable (as determined in Good Faith by the Borrower) in any material respect, taken as a whole, to the Lenders than the encumbrances and restrictions contained in such agreements referred to in clause (i) or (ii) of this Section 6.04(b) on the date hereof or the date such Restricted

-74-

Subsidiary became a Restricted Subsidiary or was merged into or consolidated with a Restricted Subsidiary, whichever is applicable;

(iv)     in the case of Section 6.04(a)(iii), encumbrances or restrictions arising in connection with Liens permitted to be Incurred under the provisions of Section 6.03 that apply only to the assets subject to such Liens;

(v)      Purchase Money Indebtedness and Capitalized Lease Obligations permitted under this Agreement, in each case, that impose encumbrances or restrictions of the nature described in Section 6.04(a)(iii) on the property so acquired;

(vi)     contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Borrower pursuant to an agreement that has been entered into for the sale of all or a portion of the Equity Interests or assets of such Subsidiary;

(vii)    restrictions on cash or other deposits or net worth imposed by customers or lessors or required by insurance, surety or bonding companies under contracts entered into in the ordinary course of business;

(viii)   any customary provisions in joint venture agreements relating to joint ventures and other similar agreements entered into in the ordinary course of business, provided that if such joint venture is a Restricted Subsidiary, such provisions shall not materially affect the Borrower’s ability to make anticipated principal or interest payments on the Notes (as determined in Good Faith by the Borrower);

(ix)     any customary provisions in leases, subleases or licenses and other agreements entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business;

(x)      encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation, order, permit or grant;

(xi)     encumbrances or restrictions contained in or arising under indentures or debt instruments or other debt arrangements Incurred or Preferred Stock issued by Guarantors in accordance with Section 6.01 that are not more restrictive, taken as a whole (as determined in Good Faith by the Borrower), than those applicable to the Borrower in this Agreement and the Facility on the date hereof (which results in encumbrances or restrictions comparable to those applicable to the Borrower at a Restricted Subsidiary level);

(xii)    encumbrances or restrictions contained in or arising under indentures or other debt instruments or debt arrangements Incurred or Preferred Stock issued by Restricted Subsidiaries that are not Guarantors subsequent to the date hereof pursuant to clauses (ii), (v), (vi), (vii) and (xiv) of Section 6.01(b) by Restricted Subsidiaries, provided that such encumbrances and restrictions contained in any agreement or instrument shall not materially affect the Borrower’s ability to make anticipated principal or interest payments on the Notes (as determined in Good Faith by the Borrower); and

-75-

(xiii)   under any contract, instrument or agreement relating to Indebtedness of any Foreign Subsidiary which imposes restrictions solely on such Foreign Subsidiary and its Subsidiaries.

SECTION 6.05  Limitation on Sales of Assets and Subsidiary Stock.

(a)        The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, make any Asset Disposition following the date hereof unless:

(i)       the Borrower or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined as of the date of contractually agreeing to such Asset Disposition) of the assets subject to such Asset Disposition; and

(ii)      at least 75% of the consideration from such Asset Disposition received by the Borrower or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents.

The Borrower shall determine the Fair Market Value of any consideration from such Asset Disposition that is not cash or Cash Equivalents.

(b)        For the purposes of this Section 6.05, the following are deemed to be cash: (x) the assumption of Indebtedness or other liabilities of the Borrower (other than Disqualified Stock or Junior Indebtedness) or Indebtedness or other liabilities of any Restricted Subsidiary (other than Disqualified Stock or Junior Indebtedness) and the release of the Borrower or such Restricted Subsidiary from all liability on such Indebtedness or liabilities in connection with such Asset Disposition, (y) securities, notes or similar obligations received by the Borrower or any Restricted Subsidiary from the transferee that are converted within 180 days by the Borrower or such Restricted Subsidiary into cash and (z) any Designated Non-cash Consideration received by the Borrower or any of its Restricted Subsidiaries in such Asset Disposition having an aggregate Fair Market Value (determined in Good Faith by the Borrower), taken together with all other Designated Non-cash Consideration received pursuant to this clause (z) that is at that time outstanding, not to exceed $57.5 million at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

SECTION 6.06  Limitation on Affiliate Transactions.

(a)        The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Borrower (an “Affiliate Transaction”) unless:

(i)       the terms of such Affiliate Transaction, when viewed together with any related Affiliate Transactions, are not materially less favorable to the Borrower or such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable

-76-

transaction at the time of such transaction in arm’s-length dealings with a Person who is not an Affiliate;

(ii)      in the event such Affiliate Transaction involves an aggregate consideration in excess of $11.2 million, the terms of such transaction have been approved by a majority of the disinterested members of the Board of Directors of the Borrower (and such majority determines that such Affiliate Transaction satisfies the criteria in clause (i) above); and

(iii)     in the event such Affiliate Transaction involves an aggregate consideration in excess of $22.4 million, the Borrower has received a written opinion from an Independent Financial Advisor that such Affiliate Transaction is fair, from a financial point of view, to the Borrower and the Restricted Subsidiaries, as applicable, or not materially less favorable than those that might reasonably have been obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an Affiliate.

(b)        The provisions of Section 6.06(a) shall not apply to:

(i)       any (x) Restricted Payment permitted to be made pursuant to Section 6.02 and (y) Permitted Investment in any Person that is an Affiliate of the Borrower solely as a result of ownership of Investments in such Person by the Borrower or any Restricted Subsidiary;

(ii)      any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Equity Interests of the Borrower pursuant to restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans, pension plans or similar plans or agreements or arrangements approved by the Board of Directors of the Borrower;

(iii)     loans or advances to employees, officers or directors of the Borrower or any Restricted Subsidiary of the Borrower in the ordinary course of business, in an aggregate amount outstanding at any time not in excess of $5.6 million (without giving effect to the forgiveness of any such loan);

(iv)     any transaction between or among the Borrower and any Restricted Subsidiary or between or among Restricted Subsidiaries, and any Guaranties issued by the Borrower or a Restricted Subsidiary for the benefit of the Borrower or a Restricted Subsidiary;

(v)      the payment of reasonable and customary compensation (including fees, benefits, severance, change of control payments and incentive arrangements) to, and employee benefit arrangements, including, without limitation, split-dollar insurance policies, and indemnity or similar arrangements provided on behalf of, directors, officers, employees and agents of the Borrower or any Restricted Subsidiary, whether by charter, bylaw, statutory or contractual provisions;

(vi)     the existence of, and the performance of obligations of the Borrower or any of its Restricted Subsidiaries under the terms of any agreement to which the

-77-

Borrower or any of its Restricted Subsidiaries is a party as of or on the date hereof, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided,  however, that any future amendment, modification, supplement, extension or renewal entered into after the date hereof shall be permitted to the extent that its terms, taken as a whole, are not more disadvantageous to the Lenders in any material respect, as determined in Good Faith by the Borrower, than the terms of the agreements in effect on the date hereof;

(vii)    any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged with or into or consolidated with the Borrower or a Restricted Subsidiary; provided that such agreement was not entered into in contemplation of such acquisition, merger or consolidation, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Lenders, as determined in Good Faith by the Borrower, when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition or merger);

(viii)   transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services, in each case in the ordinary course of the business of the Borrower and its Restricted Subsidiaries; provided that as determined in Good Faith by the Borrower, such transactions are on terms that are not materially less favorable to the Borrower or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Borrower or such Restricted Subsidiary with an unrelated Person;

(ix)     any purchases by the Borrower’s Affiliates of Indebtedness of the Borrower or any of its Restricted Subsidiaries the majority of which Indebtedness is placed with Persons who are not Affiliates; and

(x)      any issuance or sale of Equity Interests (other than Disqualified Stock) to Affiliates of the Borrower and the granting of registration and other customary rights in connection therewith or any contribution to the Equity Interests of the Borrower or any Restricted Subsidiary.

SECTION 6.07  Limitation on Lines of Business.  The Borrower shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than a Related Business.

SECTION 6.08  Fundamental Changes.  The Borrower shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:

(a)        in case the Borrower shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the Person formed by such consolidation or into which the Borrower is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Borrower substantially as an entirety shall be a corporation, partnership or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume, by an agreement executed and delivered to the Administrative Agent, the due and punctual payment of the principal of and any premium and

-78-

interest on all Loans and the performance or observance of every covenant of this Agreement on the part of the Borrower to be performed or observed;

(b)        immediately after giving effect to such transaction and treating any Indebtedness which becomes an obligation of the Borrower, each Guarantor as a result of such transaction as having been incurred by the Borrower, each Guarantor at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing;

(c)        if, as a result of any such consolidation or merger or such conveyance, transfer or lease, properties or assets of the Borrower would become subject to a Lien, which would not be permitted by this Agreement, the Borrower, or such successor Person, as the case may be, shall take such steps as shall be necessary effectively to secure the Loans equally and ratably with (or prior to) all indebtedness secured thereby; and

(d)        the Borrower has delivered to the Administrative Agent an officer’s certificate, stating that such consolidation, merger, conveyance, transfer or lease and, if an assumption agreement is required in connection with such transaction, such agreement shall comply with this Section 6.08, and that all conditions precedent herein provided for relating to such transaction have been complied with.

(e)        Upon any consolidation of the Borrower with, or merger of the Borrower into, any other Person or any conveyance, transfer or lease of the properties and assets of the Borrower substantially as an entirety in accordance with this Section 6.08, the successor Person formed by such consolidation or into which the Borrower or the Borrower is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Borrower under this Agreement with the same effect as if such successor Person had been named as the Borrower and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Agreement and the Loans.

ARTICLE VII

EVENTS OF DEFAULT

SECTION 7.01  Events of Default.  If any of the following events (“Events of Default”) shall occur and be continuing:

(a)        Default in any payment of interest on any Loan when due, and the continuance of such Default for 30 days; or

(b)        Default in the payment of principal of or premium, if any, on any Loan when due at the Facility Maturity Date, upon declaration of acceleration or otherwise; or

(c)        Failure by the Borrower to comply with its obligations under Section 6.08; or

-79-

(d)        Failure by the Borrower to comply for 45 days after notice as provided below with any of its obligations under Article V or Article VI (in each case, other than matters that would constitute an Event of Default under clause (c)); or

(e)        Failure by the Borrower or any Guarantor to comply for 60 days after notice as provided below with its other agreements (except as provided in clauses (a) through (d) above) contained in this Agreement or the Collateral Documents; or

(f)        Default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any indebtedness for money borrowed by the Borrower or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Borrower or any of its Restricted Subsidiaries), other than Indebtedness owed to the Borrower or a Restricted Subsidiary, whether such indebtedness or guarantee now exists or is created after the Closing Date, which default:

(i)       is caused by a failure to pay principal on such indebtedness at its final stated maturity within the grace period provided in the agreements or instruments governing such indebtedness (“payment default”); or

(ii)      results in the acceleration of such indebtedness prior to its stated final maturity;

and, in each case, the principal amount of such indebtedness, together with the principal amount of any other such indebtedness under which there has been a payment default or the maturity of which has been so accelerated, aggregates $28.0 million or more; or

(g)        The entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary, in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary under any applicable Federal or State law, or appointing a custodian, receive, liquidator, assignee, trustee, sequestrator or other similar official of the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary or of any substantial part of its or their respective property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or

-80-

(h)        The commencement by the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary of a voluntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of a Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of a Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary or of any substantial part of its or their respective property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Borrower or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary in furtherance of any such action; or

(i)         Failure by the Borrower or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final and non-appealable judgments aggregating in excess of $28.0 million (net of any amounts that are covered by insurance issued by a reputable and creditworthy insurance company (as determined in the good faith by the Borrower) that has not contested coverage), which judgments remain unsatisfied or undischarged for any period of 60 consecutive days during which a stay of enforcement of such judgments shall not be in effect; or

(j)         any Guarantee of a Significant Subsidiary or group of Restricted Subsidiaries that taken together as of the latest audited consolidated financial statements for the Borrower and its Restricted Subsidiaries would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Agreement) or is declared null and void in a judicial proceeding or any Guarantor that is a Significant Subsidiary or group of Guarantors that taken together as of the latest audited consolidated financial statements of the Borrower and its Restricted Subsidiaries would constitute a Significant Subsidiary denies or disaffirms its obligations under the Agreement, its Guarantee, any Collateral Document or the Intercreditor Agreement and the Borrower fails to cause such Restricted Subsidiary or Restricted Subsidiaries, as the case may be, to rescind such denials or disaffirmations within 30 days; or

(k)        with respect to any Collateral having a fair market value in excess of $11.2 million, individually or in the aggregate, (i) the failure of the security interest with respect to

-81-

such Collateral under the Collateral Documents, at any time, to be in full force and effect for any reason, other than in accordance with the terms of the Collateral Documents and the terms of this Agreement or the Intercreditor Agreement, as applicable, and other than the satisfaction in full of all obligations under this Agreement, if such failure continues for 60 days or (ii) the assertion by the Borrower or any Guarantor, in any pleading in any court of competent jurisdiction, that any such security interest is invalid or unenforceable, except in each case for the failure or loss of perfection resulting from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents if such assertion is not rescinded within 30 days.

then, and in any such event, the Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Loans, all interest thereon and all other amounts payable under this Agreement and the other Loan Documents to be forthwith due and payable, whereupon the Loans, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower to the extent permitted by applicable law; provided, however, that, in the event of an actual or deemed entry of an order for relief with respect to the Borrower under clauses (g) or (h) above, the Loans, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower to the extent permitted by applicable law.

ARTICLE VIII

THE AGENTS

SECTION 8.01  Authorization and Action.

(a)        Each Lender (on behalf of itself and its Affiliates in their capacities as a Lender) hereby appoints The Bank of New York Mellon to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto.

(b)        Each Lender holding Tranche A Loans hereby appoints The Bank of New York Mellon to act on its behalf as the Tranche A Collateral Agent hereunder and under the other Loan Documents and authorizes the Tranche A Collateral Agent to take such actions on its behalf and to exercise such powers are delegated to the Tranche A Collateral Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto, including acting as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations.  Each Lender holding Tranche B Loans hereby appoints The Bank of New York Mellon to act on its behalf as the Tranche B Collateral Agent hereunder and under the other Loan Documents and authorizes the Tranche B Collateral Agent to take such actions on its behalf and to exercise such powers are delegated to the Tranche B Collateral Agent by the terms hereof or

-82-

thereof, together with such actions and powers as are reasonably incidental thereto, including acting as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations.

(c)        The provisions of this Article are solely for the benefit of the Agents and the Lender, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.  It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between the contracting parties.

SECTION 8.02  Agents Individually.  Any Person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent and the term “Lender” or “Lender’s” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each Person serving as an Agent hereunder in its individual capacity.  Each such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Agent hereunder and without any duty to account therefor to the Lender.

SECTION 8.03  Duties of Agents; Exculpatory Provisions.

(a)        The Agents’ duties hereunder and under the other Loan Documents are solely mechanical and administrative in nature and no Agent shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents.  Without limiting the generality of the foregoing, no Agent:

(i)       shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; and

(ii)      shall have any duty to take any discretionary action or exercise any discretionary powers and shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive the advice or concurrence of the Required Lenders and until the instructions are received, each Agent shall act, or refrain from acting, as it deems advisable.  No Agent shall be required to take any action that, in its opinion or the opinion of its counsel, may expose such Agent to liability or that is contrary to any Loan Document or applicable law;

(iii)     shall, except as expressly set forth herein and in other Loan Documents, have any duty to disclose, and shall be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Agent or any of its Affiliates in any capacity.

(b)        No Agent shall be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the

-83-

Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 7.01 or 11.01), or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment.  No Agent shall be deemed to have knowledge of any Default or the event or events that give or may give rise to any Default unless and until written notice describing such Default and such event or events is given to a Responsible Officer of such Agent by the Borrower or any Lender and stating that such notice is a “Notice of Default.”  If the Agent receives such a notice, then it shall give prompt notice thereof to the Lenders and the Borrower (if such notice is received from a Lender).

(c)        If any Agent so requests, it shall first be indemnified to its satisfaction from the Lenders or Required Lenders, as applicable, against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any action under this Agreement or any other Loan Document.  No provision of this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby, or the transactions contemplated hereby or thereby shall require any Agent to: (i) expend or risk its own funds or provide indemnities in the performance of any of its duties hereunder or the exercise of any of its rights or power or (ii) otherwise incur any financial liability in the performance of its duties or the exercise of any of its rights or powers.

(d)        No Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the perfection or priority of any Lien or security interest created or purported to be created by the Collateral Documents, or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than (but subject to the foregoing clause (ii)) to confirm receipt of items expressly required to be delivered to such Agent.  Neither any Agent nor any of their Related Parties shall be responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by any Agent, a Loan Party or any other Person given in, pursuant to or in connection with any Loan Document.

(e)        Nothing in this Agreement or any other Loan Document shall require any Agent to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to each Agent that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by any Agent.

(f)        Before an Agent acts or refrains from acting, it may require an officer’s certificate from the Borrower satisfactory to such Agent with respect to the proposed action or inaction, such certificate to be given at the Borrower’s expense.  No Agent shall be liable for any action it takes or omits to take in good faith in reliance upon such certificate.  Whenever in the administration of the Loan Documents any Agent shall deem it necessary or desirable that a

-84-

matter be proved or established before taking or suffering or omitting to take any act under any Loan Document, such matter (unless other evidence in respect thereof is herein specifically prescribed) may, in the absence of gross negligence or willful misconduct on the part of such Agent, be deemed to be conclusively proved and established by an officers’ certificate delivered to such Agent, and such certificate, in the absence of gross negligence or willful misconduct on the part of such Agent, shall be full warrant to that Agent for any action taken, suffered or omitted to be taken by it under the Loan Documents upon the faith thereof.  The Agents shall not be responsible or liable for any failure or delay in the performance of their obligations under this Agreement or the other Loan Documents arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military disturbances; sabotage; epidemics; riots; business interruptions; loss or malfunctions of utilities, computer (hardware or software) or communication services; accidents; labor disputes; acts of civil or military authority and governmental action.  In no event shall any Agent be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether such Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.  No Agent shall be required to qualify in any jurisdiction in which it is not presently qualified to perform its obligations as Agent or to enforce any rights and remedies in any foreign jurisdiction.  No Agent shall be liable for any error of judgment made in good faith by a Responsible Officer of such Agent unless it shall be proved that such Agent was negligent in ascertaining the pertinent facts.

(g)        The Agents have accepted and are bound by this Agreement and the other Loan Documents executed by the Agents as of the date of this Agreement and, as directed in writing by the Required Lenders, the Agents shall execute additional Loan Documents delivered to them after the date of this Agreement; provided, however, that such additional Loan Documents do not adversely affect the rights, privileges, benefits and immunities of any Agent.  No Agent (in its capacity as an Agent hereunder) will otherwise be bound by, or be held obligated by, the provisions of any loan agreement, indenture or other agreement governing the Obligations (other than this Agreement and the other Loan Documents to which such Agent is a party).

(h)        No written direction given to the Agents by the Required Lenders or the Borrower or any Loan Party that in the sole judgment of such Agent imposes, purports to impose or might reasonably be expected to impose upon such Agent any obligation or liability not set forth in or arising under this Agreement and the other Loan Documents will be binding upon such Agent unless such Agent elects, at its sole option, to accept such direction.

SECTION 8.04  Reliance by Agents.  Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person.  Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon.  In determining compliance with any condition hereunder to the making of any Loans that by its terms must be fulfilled to the

-85-

satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loans.  Each Agent may consult with legal counsel (who may be counsel for the Borrower or any other Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.  Delivery of any reports, information and documents to any Agent is for informational purposes only and such Agent’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Borrower’s compliance with any of its covenants hereunder.

SECTION 8.05  Delegation of Duties.  Each Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by such Agent.  Each Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties.  Each such sub agent and the Related Parties of each Agent and each such sub agent shall be entitled to the benefits of all provisions of this Article VIII and Article XI (as though such sub-agents were the “Administrative Agent” or the “Collateral Agent,” as the case may be, under the Loan Documents) as if set forth in full herein with respect thereto.  The Agents shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-appealable judgment that an Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.

SECTION 8.06  Resignation of Agents.  Any Agent may at any time give notice of its resignation to the Lenders and the Borrower.  Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a commercial bank with an office in the United States or an Affiliate of any such commercial bank with an office in the United States.  If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation (such 30-day period, the “Lender Appointment Period”), then the retiring Agent’s resignation shall nonetheless become effective and (i) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that, in the case of any resignation by the Collateral Agent, the retiring Collateral Agent shall continue to hold any Collateral until such time as a successor Collateral Agent is appointed), and (ii) all payments, communications and determinations provided to be made by, to or through the retiring Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this paragraph.  Upon the acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this paragraph).  The fees payable by the Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor.  After the retiring Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and

-86-

Section 11.04 shall continue in effect for the benefit of such retiring Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Agent.

SECTION 8.07  Non-Reliance on Agents and Other Lenders.  Each Lender acknowledges that it is solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Agreement and the other Loan Documents and that it has, independently and without reliance upon any Agent or any other Lender or any of their respective Related Parties and based on such documents and information, as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to be solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with this Agreement and the other Loan Documents, including but not limited to:

(a)        the financial condition, status and capitalization of the Borrower and each other Loan Party;

(b)        the legality, validity, effectiveness, adequacy or enforceability of this Agreement and each other Loan Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Loan Document;

(c)        determining compliance or non-compliance with any condition hereunder to the making of Loans; and

(d)        the adequacy, accuracy and/or completeness of any information delivered by any Agent and any other Lender or by any other Person under or in connection with this Agreement or any other Loan Document, the transactions contemplated by this Agreement and the other Loan Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Loan Document.

SECTION 8.08  Agents May File Proofs of Claim.

(a)        In case of the pendency of any proceeding under any Bankruptcy Law or any other judicial proceeding relative to any Loan, any Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether such Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(b)        to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Agents (including any claim for the reasonable compensation, expenses, disbursements and Loans of the Lenders and the Agents and their respective agents and counsel

-87-

and all other amounts due to the Lenders and the Agents under Sections 2.07 and 11.04) allowed in such judicial proceeding; and

(c)        to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to such Agent and, in the event that such Agent shall consent to the making of such payments directly to the Lenders, to pay to such Agent any amount due for the reasonable compensation, expenses, disbursements and Loans of the Agents and their agents and counsel, and any other amounts due the Agents hereunder and under the other Loan Documents.

SECTION 8.09  Collateral and Guaranty Matters.

(a)        The Secured Parties irrevocably authorize the Collateral Agent,

(i)       to release any Lien on any property granted to or held by the Collateral Agent under any Loan Document (w) pursuant to the terms of any Loan Document or the Intercreditor Agreement, (x) upon termination of all Commitments and payment in full of all Obligations (other than contingent indemnification obligations not then payable for which no claim has been asserted), (y) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition not prohibited by the Loan Documents, or (z) subject to Section 11.01, if approved, authorized or ratified in writing by the Required Lenders;

(ii)      to subordinate any Lien on any property granted to or held by the Collateral Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 6.03; and

(iii)     to release any Guarantor from its obligations under the Guaranty if (A) such Person ceases to be a Restricted Subsidiary of Borrower as a result of a transaction not prohibited by the Loan Documents, (B) permitted by Section 6.08(e), (C) such Person becomes an Excluded Subsidiary, or (D) such Guarantor is released from its guarantee of the New First Lien Debt that required such Guarantor to become a Guarantor hereunder (and such Guarantor would not otherwise be required to become a Guarantor hereunder pursuant to Section 5.08(a)).

Upon request by the Collateral Agent at any time, the Required Lenders will confirm in writing the Collateral Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 8.09.

(b)        No Agent shall be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Collateral Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall any Agent be

-88-

responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.

(c)        Beyond the exercise of reasonable care in the custody thereof, the Collateral Agent shall not have any duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto.  Neither Agent shall be responsible for (i) perfecting, maintaining, monitoring, preserving or protecting the security interest or Liens granted under this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, (ii) the filing, re-filing, recording, re-recording or continuing or any document, financing statement, mortgage, assignment, notice, instrument of further assurance or other instrument in any public office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on or the payment of taxes with respect to any of the Collateral.  The actions described in items (i) through (iii) shall be the sole responsibility of the Borrower.  The Collateral Agent shall be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property and shall not be liable or responsible for any loss or diminution in the value of any of the Collateral, by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.

(d)        No Agent shall be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in any of the Collateral, whether impaired by operation of law or by reason of any of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of such Agent (as determined by a final, nonappealable judgment by a court of competent jurisdiction), for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.  Each Agent hereby disclaims any representation or warranty to the present and future holders of the Obligations concerning the perfection of the liens granted hereunder or in the value of any of the Collateral.

(e)        In the event that the Collateral Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Collateral Agent’s sole discretion may cause the Collateral Agent to be considered an “owner or operator” under any environmental laws or otherwise cause the Collateral Agent to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver.  No Agent will be liable to any person for any environmental liabilities and costs or any environmental liabilities or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

-89-

SECTION 8.10  Indemnification.

(a)        Each Lender severally agrees to indemnify each Agent (to the extent not promptly reimbursed by the Borrower) from and against such Lender’s ratable share (determined as provided below) of any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, charges or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents (collectively, the “Indemnified Costs”); provided,  however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, charges or disbursements resulting from such Agent’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction.  Without limitation of the foregoing, each Lender agrees to reimburse each Agent promptly upon demand for its ratable share of any costs and expenses (including, without limitation, fees and expenses of counsel) payable by the Borrower under Section 11.04, to the extent that such Agent is not promptly reimbursed for such costs and expenses by the Borrower.  In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.10 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person.

(b)        For purposes of this Section 8.10, each Lender’s ratable share of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Loans outstanding at such time and owing to such Lender’s and (ii) the aggregate unused portions of such Lender’s Commitments at such time.  The failure of any Lender to reimburse any Agent, promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent, as the case may be, as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent, as the case may be, for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent, as the case may be, for such other Lender’s ratable share of such amount.  Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 8.10 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents and the resignation of any Agent.

SECTION 8.11  Tax Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), and (ii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative

-90-

Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph.

SECTION 8.12  Lien Priority Confirmation.  Each Lender and the Administrative Agent on behalf of the Lenders agree that:

(a)        All obligations under the New First Lien Debt and the ABL Obligations will be and are secured by Liens in priority to Liens securing the Obligations under the Loan Documents pursuant to the provisions of, and in the manner described in, the Intercreditor Agreement.

(b)        The Tranche A Loans will be secured by Liens in priority to the Liens securing the Tranche B Loans on the terms set forth in the Junior Lien Intercreditor Agreement.

(c)        The Administrative Agent and each of the Lenders in respect of the Obligations in respect of this Agreement and the Loan Documents represented thereby are bound by the provisions of the Intercreditor Agreement, including without limitation the provisions relating to the ranking of Liens and the order of application of proceeds from enforcement thereof; and

(d)        The Administrative Agent and each of the Lenders consent to and direct the Collateral Agent to perform the Collateral Agent’s obligations under the Intercreditor Agreement, the Junior Lien Intercreditor Agreement and the Collateral Documents.

Subject to the terms of the Intercreditor Agreement, the foregoing provisions of this Section 8.12 are intended for the enforceable benefit of, and will be enforceable as a third party beneficiary by, the ABL Collateral Agent, all holders of New First Lien Debt, each existing and future representative of New First Lien Debt and the Collateral Agent.

ARTICLE IX

GUARANTY

SECTION 9.01  Guaranty; Limitation of Liability.

(a)        Subject to Article X, each Guarantor, jointly and severally, hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all Obligations of each other Loan Party now or hereafter existing under or in respect of the Loan Documents (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing Obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such Obligations, the “Guaranteed Obligations”), and agrees to pay any and all expenses (including, without limitation, reasonable and documented fees and expenses of counsel) incurred by the Administrative Agent or any other Secured Party in enforcing any rights under this Guaranty or any other Loan Document.  Without limiting the generality of the foregoing to the fullest extent

-91-

permitted by applicable law, each Guarantor’s liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by any other Loan Party to any Secured Party under or in respect of the Loan Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving such other Loan Party.

(b)        Each Guarantor, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons that this Guaranty and the Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law to the extent applicable to this Guaranty and the Obligations of each Guarantor hereunder.  To effectuate the foregoing intention, the Administrative Agent, the other Secured Parties and the Guarantors hereby irrevocably agree that the Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.

(c)        Subject to Article X, each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Guaranty or any other guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor and each other guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

SECTION 9.02  Guaranty Absolute.  Each Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents (including Article X), regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Secured Party with respect thereto.  The Obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions.  To the fullest extent permitted by applicable law, the liability of each Guarantor under this Guaranty shall be irrevocable, absolute and unconditional irrespective of, and each Guarantor hereby irrevocably waives to the fullest extent permitted by applicable law any defenses it may now have or hereafter acquire in any way relating to, any or all of the following:

(b)        any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto;

(c)        any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other Obligations of any other Loan Party under or in respect of the Loan Documents, or any other amendment or waiver of or any consent to departure from any Loan Document, including, without limitation, any increase in the

-92-

Guaranteed Obligations resulting from the extension of additional credit to any Loan Party or any of its Subsidiaries or otherwise;

(d)        any taking, exchange, release or non-perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations;

(e)        any manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other Obligations of any Loan Party under the Loan Documents or any other assets of any Loan Party or any of its Subsidiaries;

(f)        any change, restructuring or termination of the corporate structure or existence of any Loan Party or any of its Subsidiaries;

(g)        any failure of any Secured Party to disclose to any Loan Party any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party now or hereafter known to such Secured Party (each Guarantor waiving any duty on the part of the Secured Parties to disclose such information);

(h)        the failure of any other Person to execute or deliver this Agreement, any Guaranty Supplement or any other guaranty or agreement or the release or reduction of liability of any Guarantor or other guarantor or surety with respect to the Guaranteed Obligations; or

(i)         any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a discharge of, any Loan Party or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Secured Party or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party or otherwise, all as though such payment had not been made.

SECTION 9.03  Waivers and Acknowledgments.

(a)        Each Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law, promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that any Secured Party protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against any Loan Party or any other Person or any Collateral.

-93-

(b)        Each Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law, any right to revoke this Guaranty and acknowledges that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future.

(c)        Each Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law, (i) any defense arising by reason of any claim or defense based upon an election of remedies by any Secured Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Loan Parties, any other guarantor or any other Person or any Collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of such Guarantor hereunder.

(d)        Each Guarantor acknowledges that the Collateral Agent may, without notice to or demand upon such Guarantor and without affecting the liability of such Guarantor under this Guaranty, foreclose under any mortgage by non-judicial sale, and each Guarantor hereby waives, to the fullest extent permitted by applicable law,  any defense to the recovery by the Collateral Agent and the other Secured Parties against such Guarantor of any deficiency after such non-judicial sale and any defense or benefits that may be afforded by applicable law.

(e)        Each Guarantor hereby unconditionally and irrevocably waives, to the fullest extent permitted by applicable law, any duty on the part of any Secured Party to disclose to such Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any other Loan Party or any of its Subsidiaries now or hereafter known by such Secured Party.

(f)        Each Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Loan Documents and that the waivers set forth in Section 9.02 and this Section 9.03 are knowingly made in contemplation of such benefits.

SECTION 9.04  Subrogation.  Each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower, any other Loan Party or any other insider guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s Obligations under or in respect of this Guaranty or any other Loan Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower, any other Loan Party or any other insider guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower, any other Loan Party or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for

-94-

which no claim has been asserted).  If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for which no claim has been asserted), and (b) the Termination Date, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising.  If (i) any Guarantor shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for which no claim has been asserted), and (iii) the Termination Date shall have occurred, the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

SECTION 9.05  Guaranty Supplements.  Upon the execution and delivery by any Person of a guaranty supplement in substantially the form of Exhibit D hereto (each, a “Guaranty Supplement”), when required by Section 5.08(a), (a) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and each reference in this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Guarantor” shall also mean and be a reference to such Additional Guarantor and (b) each reference herein to “this Guaranty,” “hereunder,” “hereof” or words of like import referring to this Guaranty, and each reference in any other Loan Document to the “Guaranty,” “thereunder,” “thereof” or words of like import referring to this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty Supplement.

SECTION 9.06  Continuing Guaranty; Assignments.

(a)        This Guaranty is a continuing guaranty and shall remain in full force and effect until the latest of (i) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Guaranty (other than contingent indemnification obligations (including costs and expenses related thereto) not then payable for which no claim has been asserted) and (ii) the Termination Date; provided that with respect to any Guarantor, if (A) such Person ceases to be a Restricted Subsidiary of Borrower as a result of a transaction not prohibited by the Loan Documents, (B) permitted by Section 6.08(e), (C) such Person becomes an Excluded Subsidiary, or (D) such Guarantor is released from its guarantee of the New First Lien Debt that required such Guarantor to become a Guarantor hereunder (and such Guarantor is not otherwise required to be a Guarantor pursuant to Section 5.08(a)), the Guaranty will terminate and the

-95-

Administrative Agent will, reasonably promptly, at the Borrower’s expense, execute and deliver to such Guarantor such documents as such Guarantor may reasonably request to evidence, without recourse, representation or warranty, the release of such Guarantor from the Guaranty.

(b)        This Guaranty is a continuing guaranty and shall (i) be binding upon each Guarantor, its successors and assigns and (ii) inure to the benefit of and be enforceable by the Secured Parties and their successors, transferees and assigns.  Without limiting the generality of clause (ii) of the immediately preceding sentence, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Loans owing to it and any Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, in each case as and to the extent provided in Section 11.07.  Except as otherwise permitted pursuant to Section 6.08, no Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld) and the Required Lenders.

ARTICLE X

SUBORDINATION OF GUARANTEE

SECTION 10.01  Agreement to Subordinate.  The Guarantors agree, and each Lender agrees, that the payment of all Guaranteed Obligations owing in respect of the Loans is subordinated in right of payment, to the extent and in the manner provided in this Article X, to the prior payment in cash in full of all existing and future Priority Indebtedness and that the subordination is for the benefit of and enforceable by the holders of such Priority Indebtedness.

SECTION 10.02  Liquidation, Dissolution, Bankruptcy.  Upon any payment or distribution of the assets of a Guarantor to creditors upon a total or partial liquidation or dissolution of such Guarantor or in a reorganization of, or similar proceeding relating to, such Guarantor or its property:

(a)        the holders of Priority Indebtedness shall be entitled to receive payment in full in cash of such Priority Indebtedness before Lenders shall be entitled to receive any payment;

(b)        until the Priority Indebtedness is paid in full in cash, any payment or distribution to which Lenders would be entitled but for the subordination provisions of this Article X shall be made to holders of such Priority Indebtedness as their interests may appear; and

(c)        if a distribution is made to Lenders that, due to the subordination provisions of this Article X, should not have been made to them, such Lenders will be required to hold it in trust for the holders of Priority Indebtedness and pay it over to them as their interests may appear.

-96-

SECTION 10.03  Default on Priority Indebtedness.  No Guarantor shall pay principal of, premium, if any, or interest on the Guaranteed Obligations or make any payment with respect to the Guaranteed Obligations (collectively, “pay the Guaranteed Obligations”) if either of the following occurs (a “Priority Payment Default”):

(a)        any Obligation on any Priority Indebtedness is not paid in full in cash when due (after giving effect to any applicable grace period); or

(b)        any other default on Priority Indebtedness occurs and the maturity of such Priority Indebtedness is accelerated in accordance with its terms;

unless, in either case, the Priority Payment Default has been cured or waived and any such acceleration has been rescinded or such Priority Indebtedness has been discharged or paid in full in cash; provided, however, that a Guarantor shall be entitled to pay the Guaranteed Obligations without regard to the foregoing if the Guarantor and the Administrative Agent receive written notice approving such payment from the Representatives of all Priority Indebtedness with respect to which the Priority Payment Default has occurred and is continuing.

During the continuance of any default (other than a Priority Payment Default) (a “Non-Priority Payment Default”) with respect to any Priority Indebtedness pursuant to which the maturity thereof may be accelerated without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, no Guarantor shall pay the Guaranteed Obligations for a period (a “Payment Blockage Period”) commencing upon the receipt by the Administrative Agent (with a copy to the Borrower) of written notice (a “Blockage Notice”) of such Non-Priority Payment Default from the Representative of such Priority Indebtedness specifying an election to effect a Payment Blockage Period and ending 179 days thereafter.  The Payment Blockage Period shall end earlier if such Payment Blockage Period is terminated (i) by written notice to the Administrative Agent and the Borrower from the Person or Persons who gave such Blockage Notice; (ii) because the default giving rise to such Blockage Notice is cured, waived or otherwise no longer continuing; or (iii) because such Priority Indebtedness has been discharged or repaid in full in cash.

Notwithstanding the provisions described in the immediately preceding paragraph (but subject to the provisions contained in the first paragraph of this Section 10.03 and Section 10.02 hereof), unless the holders of such Priority Indebtedness or the Representative of such Priority Indebtedness shall have accelerated the maturity of such Priority Indebtedness, the Guarantors shall be entitled to resume paying the Guaranteed Obligations after the end of such Payment Blockage Period.  The Guaranteed Obligations shall not be subject to more than one Payment Blockage Period in any consecutive 360-day period irrespective of the number of defaults with respect to Priority Indebtedness during such period; provided that if any Blockage Notice is delivered to the Administrative Agent by or on behalf of the holders of Priority Indebtedness (other than the holders of Indebtedness under the New First Lien Debt), a Representative of holders of Indebtedness under the New First Lien Debt may give another Blockage Notice within such period.  However, in no event shall the total number of days during which any Payment Blockage Period or Periods on the Guaranteed Obligations is in effect exceed 179 days in the aggregate during any consecutive 360-day period, and there must be at

-97-

least 181 days during any consecutive 360-day period during which no Payment Blockage Period, is in effect.  Notwithstanding the foregoing, however, no default that existed or was continuing on the date of delivery of any Blockage Notice to the Administrative Agent shall be, or be made, the basis for a subsequent Blockage Notice unless such default shall have been waived for a period of not less than 90 days (it being acknowledged that any subsequent action, or any breach of any financial covenants during the period after the date of delivery of a Blockage Notice, that, in either case, would give rise to a Non-Priority Payment Default pursuant to any provisions under which a Non-Priority Payment Default previously existed or was continuing shall constitute a new Non-Priority Payment Default for this purpose).

SECTION 10.04  Acceleration of Payment of Guaranteed Obligations.  If payment of the Guaranteed Obligations is accelerated because of an Event of Default, the Borrower shall promptly notify the holders of the Priority Indebtedness or the Representative of such Priority Indebtedness of the acceleration; provided that any failure to give such notice shall have no effect whatsoever on the provisions of this Article X; provided, further that so long as there shall remain outstanding Indebtedness under the New First Lien Debt, a Blockage Notice with respect to the New First Lien Debt may only be given by the respective Representative thereunder unless otherwise agreed to in writing by the respective requisite holders as set forth therein.  If any Priority Indebtedness is outstanding, no Guarantor may pay the Guaranteed Obligations until five Business Days after the Representatives of all the issues of Priority Indebtedness receive notice of such acceleration and, thereafter, may pay the Notes only if this Agreement otherwise permits payment at that time.

SECTION 10.05  When Distribution Must Be Paid Over.  If a distribution is made to Lenders that, due to the subordination provisions of this Article X, should not have been made to them, such Lenders are required to hold it in trust for the holders of Priority Indebtedness and pay it over to them as their interests may appear.

SECTION 10.06  Subrogation After all Priority Indebtedness is paid in full and until the Guaranteed Obligations are paid in full, Lenders shall be subrogated to the rights of holders of such Priority Indebtedness to receive distributions applicable to such Priority Indebtedness.  A distribution made under this Article X to holders of such Priority Indebtedness which otherwise would have been made to Lenders is not, as between the Guarantors and Lenders, a payment by the Guarantors on such Priority Indebtedness.

SECTION 10.07  Relative Rights.  This Article X defines the relative rights of Lenders and holders of Priority Indebtedness.  Nothing in this Indenture shall:

(a)        impair, as between a Guarantor and Lenders, the obligation of a Guarantor, which is absolute and unconditional, to pay the Guaranteed Obligations;

(b)        prevent the Administrative Agent or any Lender from exercising its available remedies upon a Default, subject to the terms of the Intercreditor Agreement and the rights of holders of Priority Indebtedness to receive payments or distributions otherwise payable to Lenders and such other rights of such holders of Priority Indebtedness as set forth herein; or

-98-

(c)        affect the relative rights of Lenders and creditors of a Guarantor other than their rights in relation to holders of Priority Indebtedness.

SECTION 10.08  Subordination May Not Be Impaired by Guarantor.  No right of any holder of Priority Indebtedness to enforce the subordination of the Guaranteed Obligations shall be impaired by any act or failure to act by a Guarantor or by its failure to comply with this Agreement.

SECTION 10.09  Rights of Administrative Agent.  Notwithstanding Section 10.03 hereof, the Administrative Agent may continue to make payments on the Guaranteed Obligations and shall not be charged with knowledge of the existence of facts that would prohibit the making of any payments unless, not less than five Business Days prior to the date of such payment, the Administrative Agent receives written notice satisfactory to it that payments may not be made under this Article X.  A Representative or a holder of Priority Indebtedness shall be entitled to give the notice; provided, however, that, if an issue of Priority Indebtedness has a Representative, only the Representative shall be entitled to give the notice.

SECTION 10.10  Distribution or Notice to Representative.  Whenever any Person is to make a distribution or give a notice to holders of Priority Indebtedness, such Person shall be entitled to make such distribution or give such notice to their Representative (if any).  Any such Representative shall provide its contact information to the Administrative Agent.

SECTION 10.11  Article X Not to Prevent Events of Default or Limit Right To Accelerate.  The failure to make a payment pursuant to the Guaranteed Obligations by reason of any provision in this Article X shall not be construed as preventing the occurrence of a Default.  Nothing in this Article X shall have any effect on the right of the Lenders or Administrative Agent to accelerate the Guaranteed Obligations.

SECTION 10.12  Administrative Agent and the Lenders Entitled To Rely.  Upon any payment or distribution pursuant to this Article X, the Administrative Agent and the Lenders shall be entitled to rely (a) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 hereof are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Administrative Agent and the Lenders or (c) upon the Representatives of Priority Indebtedness for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of such Priority Indebtedness, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article X.  In the event that the Administrative Agent determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Priority Indebtedness to participate in any payment or distribution pursuant to this Article X, the Administrative Agent shall be entitled to request such Person to furnish evidence to the reasonable satisfaction of the Administrative Agent as to the amount of such Priority Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article X, and, if such evidence is not furnished, the Administrative Agent shall be entitled to defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

-99-

SECTION 10.13  Administrative Agent to Effectuate Subordination.  Each Lender agrees to be bound by this Article X and authorizes and expressly directs the Administrative Agent, on its behalf, to take such action as may be necessary or appropriate to effectuate the subordination between the Lenders and the holders of Priority Indebtedness as provided in this Article X and appoints the Administrative Agent as attorney-in-fact for any and all such purposes.

SECTION 10.14  Administrative Agent Not Fiduciary for Lenders of Priority Indebtedness.  The Administrative Agent shall not be deemed to owe any fiduciary duty to the holders of Priority Indebtedness and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Lenders or the Borrower or any other Person, money or assets to which any holders of Priority Indebtedness shall be entitled by virtue of this Article X or otherwise.

SECTION 10.15  Reliance by Lenders of Priority Indebtedness on Subordination Provisions.  Each Lender acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Priority Indebtedness, whether such Priority Indebtedness was created or acquired before or after the issuance of the Loans, to acquire and continue to hold, or to continue to hold, such Priority Indebtedness and such holder of such Priority Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Priority Indebtedness.

Without in any way limiting the generality of the foregoing paragraph, the holders of Priority Indebtedness may, at any time and from time to time, without the consent of or notice to the Administrative Agent or the Lenders, without incurring responsibility to the Administrative Agent or the Lenders and without impairing or releasing the subordination provided in this Article X or the obligations hereunder of the Lenders to the holders of the Priority Indebtedness, do any one or more of the following:

(a)        change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Priority Indebtedness, or otherwise amend or supplement in any manner Priority Indebtedness, or any instrument evidencing the same or any agreement under which Priority Indebtedness is outstanding;

(b)        sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Priority Indebtedness;

(c)        release any Person liable in any manner for the payment or collection of Priority Indebtedness; and

(d)        exercise or refrain from exercising any rights against a Guarantor and any other Person.

-100-

ARTICLE XI

MISCELLANEOUS

SECTION 11.01  Amendments, Etc.  No amendment or waiver of any provision of this Agreement or the Notes, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders (voting as a single Class), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided,  however, that

(a)        no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, do any of the following at any time:

(i)       change the percentage of the aggregate unpaid principal amount of the Loans, that shall be required for the Lenders or any of them to take any action hereunder,

(ii)      except in connection with a transaction permitted under Section 6.08 or as set forth in Section 9.06, release one or more Guarantors (or otherwise limit such Guarantors’ liability with respect to the Obligations owing to the Agents and the Lenders under the Guaranty) if such release or limitation is in respect of all or substantially all of the value of the Guaranty to the Lenders,

(iii)     except as permitted by or pursuant to the terms of the Loan Documents, release all or substantially all of the Collateral in any transaction or series of related transactions, or

(iv)     amend this Section 11.01 or reduce the proportion of Lenders required for any action, waiver or consent hereunder or change the definition of “Required Lenders”,

(b)        no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender specified below for such amendment, waiver or consent:

(i)       reduce the principal of, or stated rate of interest on, the Loans owed to a Lender or any fees or other amounts stated to be payable hereunder or under the other Loan Documents to such Lender without the consent of such Lender; or

(ii)      postpone any date scheduled for any payment of principal of, or interest on, the Loans (including, but not limited to, the applicable Facility Maturity Date) pursuant to Sections 2.03 or 2.06 or any date fixed for any payment of fees hereunder in each case payable to any Agent or a Lender without the consent of such Agent or Lender, as the case may be;

provided further that no amendment, waiver or consent shall, unless in writing and signed by an Agent in addition to the Lenders required above to take such action, affect the rights or duties of such Agent under this Agreement or the other Loan Documents; and

(c)        notwithstanding the foregoing, upon the due execution and delivery of an assumption agreement and all other documents required by Section 6.08 by any successor Person and the Borrower, the Administrative Agent shall, without the consent of the Lenders, execute such assumption agreement on behalf of all Lenders to evidence the assumption of the due and

-101-

punctual payment of the principal of and any premium and interest on all Loans and the performance or observance of every covenant of this Agreement by such successor Person.

SECTION 11.02  Notices, Etc.

(a)        Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(i)       if to the Borrower, the Administrative Agent or the Collateral Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 11.02; and

(ii)      if to any other Lender, to the address, fax number, electronic mail address or telephone number designated by such party in a written notice to the Borrower and the Administrative Agent;

provided,  however, that materials and information described in Section 11.02(b) shall be delivered to the Administrative Agent in accordance with the provisions thereof or as otherwise specified to the Borrower by the Administrative Agent.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile or electronic mail shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).  Delivery by facsimile or electronic mail of an executed counterpart of a signature page to any amendment or waiver of any provision of this Agreement or the Notes shall be effective as delivery of an original executed counterpart thereof.

(b)        The Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including, without limitation, all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default or Event of Default under this Agreement, or (iii) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Loan thereunder (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to an electronic mail address specified by the Administrative Agent to the Borrower.  In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent in the manner specified in the Loan Documents

-102-

but only to the extent requested by the Administrative Agent.  The Borrower further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on IntraLinks or a substantially similar electronic transmission system (the “Platform”).

(c)        THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS.  NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM.  IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “AGENT PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED, HOWEVER, IN NO EVENT SHALL SUCH LIABILITY EXTEND TO DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE).

(d)        The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents.  Each Lender agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents.  Each Lender agrees (i) to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address.  Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

(e)        The Agents shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Agreement and sent by unsecured e-mail, pdf, facsimile transmission or other similar unsecured electronic methods; provided, however, that the Borrower shall amend the incumbency certificate provided by the

-103-

Borrower in accordance with Section 3.01 whenever a person is to be added or deleted from the list.  If the Borrower elects to give any Agent Instructions using e-mail or facsimile instructions (or instructions by a similar electronic method) and such Agent in its discretion elects to act upon such Instructions, such Agent’s reasonable understanding of such Instructions shall be deemed controlling.  The Borrower understands and agrees that the Agents cannot determine the identity of the actual sender of such Instructions and that the Agents shall conclusively presume that directions that purport to have been sent by an authorized officer listed on the incumbency certificate provided to such Agent have been sent by such authorized officer.  The Borrower shall be responsible for ensuring that only authorized officers transmit such Instructions to the Agents and that the Borrower and all authorized officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Borrower.  No Agent shall be liable for any losses, costs or expenses arising directly or indirectly from such Agent’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction.  The Borrower agrees: (i) to assume all risks arising out of the use of e-mail or facsimile instructions (or instructions by a similar electronic method) to submit Instructions to the Agents, including without limitation the risk of such Agent acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Agents and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Borrower; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the applicable Agent immediately upon learning of any compromise or unauthorized use of the security procedures.

SECTION 11.03  No Waiver; Remedies.  No failure on the part of any Lender or any Agent to exercise, and no delay in exercising, any right hereunder or under any Note or any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 11.04  Costs and Expenses.

(a)        The Borrower agrees to pay on demand (i) all reasonable and documented costs and expenses of each Agent and the Initial Lenders in connection with the preparation, negotiation, execution, delivery, performance, administration, modification and amendment of, or any consent or waiver under, the Loan Documents (including, without limitation, (A) all due diligence, collateral review, syndication, transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses and (B) the reasonable and documented fees and expenses of counsel for each Agent with respect thereto, with respect to advising such Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party or any of its Subsidiaries arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or

-104-

other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto); provided, that, in the case of the Initial Lenders, all costs and expenses referenced in this Section 11.04(a) shall be capped at $750,000, and (ii) all costs and expenses of each Agent and each Lender in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including, without limitation, the reasonable and documented fees and expenses of counsel for the Administrative Agent and each Lender with respect thereto).

(b)        Each Loan Party, jointly and severally, agrees to indemnify, defend and save and hold harmless each Agent, each Lender and each of their Affiliates and their respective officers, directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities, fees, expenses and charges (including, without limitation, reasonable and documented fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) it exercising its powers, rights or remedies or performing its duties hereunder or under the Loan Documents, the Facilities, the actual or proposed use of the proceeds of the Loans, the Loan Documents or any of the transactions contemplated thereby, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.  In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 11.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Loan Party, its directors, shareholders or creditors, any Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the Transactions is consummated.  The Borrower also agrees not to assert any claim against any Agent, any Lender or any of their Affiliates, or any of their respective officers, directors, employees, agents and advisors, on any theory of liability, for special, indirect, consequential or punitive damages arising out of or otherwise relating to the Facilities or the Loan Documents.

(c)        If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including, without limitation, fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender, in its sole discretion (but without any obligation to do so).

(d)        Without prejudice to the survival of any other agreement of any Loan Party hereunder or under any other Loan Document, the agreements and obligations of the Borrower contained in Section 2.09 and this Section 11.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any of the other Loan Documents and the resignation of any Agent.

SECTION 11.05  Right of Set-off.  Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 7.01 to authorize the Administrative Agent to declare the Loans due

-105-

and payable pursuant to the provisions of Section 7.01, each Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Agent, such Lender or such Affiliate to or for the credit or the account of the Borrower against any and all of the Obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether such Agent or such Lender shall have made any demand under this Agreement and although such Obligations may be unmatured.  Each Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application; provided,  however, that the failure to give such notice shall not affect the validity of such set-off and application.  The rights of each Agent and each Lender and their respective Affiliates under this Section 11.05 are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Agent, such Lender and their respective Affiliates may have.

SECTION 11.06  Binding Effect.  This Agreement shall become effective when it shall have been executed by the Borrower and each Agent and the Administrative Agent shall have been notified by the Initial Lenders that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, each Indemnified Party, each Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld) and each Lender (except as set forth and in compliance with Section 6.08).

SECTION 11.07  Successors and Assigns.

(a)        Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of the Loans owing to it and the Note or Notes held by it); provided,  however, that (i) each such assignment shall be of a uniform, and not a varying, percentage of all rights and obligations under and in respect of any or all of the Facility, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender, an Affiliate of any Lender or an Approved Fund of any Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the aggregate amount of the Commitments being assigned to such Eligible Assignee pursuant to such assignment (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event be less than $5,000,000 in the case of the Facility (or such lesser amount as shall be approved by the Borrower, such consent not to be unreasonably withheld or delayed), (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acknowledgment and recording in the Register, an Assignment and Assumption, together with any Note or Notes (if any) subject to such assignment and (if requested by the Administrative Agent) a processing and recordation fee of $3,500.

(b)        Upon such execution, delivery, acceptance and recording, from and after the effective date specified in such Assignment and Assumption, (i) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, have the rights and obligations of a Lender

-106-

hereunder and (ii) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Assumption, relinquish its rights (other than its rights under Sections 2.09 and 11.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(c)        By executing and delivering an Assignment and Assumption, each Lender assignor thereunder and each assignee thereunder confirm to and agree with each other and the other parties thereto and hereto as follows:  (i) other than as provided in such Assignment and Assumption, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 5.05 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon any Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(d)        The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at its address referred to in Section 11.02 a copy of each Assignment and Assumption delivered to and acknowledged by it and a register for the recordation of the names and addresses of the Lenders and principal amount (and stated interest) of the Loans owing under the Facility to, each Lender from time to time (the “Register”).  This provision is intended to be and shall be interpreted so that the Loans evidenced by the Loan Documents are treated as being in registered form in accordance with Section 5f.103-1(c) of the Regulations.  The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agents and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Agent or any Lender at any reasonable time and from time to time upon reasonable prior notice.

-107-

(e)        Upon its receipt of an Assignment and Assumption executed by an assigning Lender and an assignee, together with any Note or Notes (if any) subject to such assignment, the Administrative Agent shall, if such Assignment and Assumption has been completed and is in substantially the form of Exhibit B hereto, (i) acknowledge such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower and each other Agent.  In the case of any assignment by a Lender, within five Business Days after its receipt of such notice and any Note or Notes (if any) subject to such assignment, the Borrower, at the expense of the Eligible Assignee, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note or Notes (if any) a new Note to the order of such Eligible Assignee in an amount equal to the Loans assumed by it under the Facility pursuant to such Assignment and Assumption and, if any assigning Lender that had a Note or Notes prior to such assignment has retained a Loan hereunder, a new Note to the order of such assigning Lender in an amount equal to the Loan retained by it hereunder.  Such new Note or Notes shall be dated the effective date of such Assignment and Assumption and shall otherwise be in substantially the form of Exhibit A hereto.

(f)        Any Lender may, in connection with any assignment or proposed assignment pursuant to this Section 11.07, disclose to the assignee or proposed assignee any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided,  however, that, prior to any such disclosure, the assignee or proposed assignee shall agree to preserve the confidentiality of any information received by it from such Lender.

(g)        Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Loans owing to it and the Note or Notes (if any) held by it) including, without limitation, creating such a security interest in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System; provided that no such pledge shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(h)        Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Loans owing to it and any Note or Notes held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that, unless and until such trustee actually becomes a Lender in compliance with the definition of “Eligible Assignee” and the other provisions of this Section 11.07, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

(i)         Notwithstanding anything to the contrary contained herein, no Lender may issue or sell participations unless such participation also constitutes an assignment that complies with this Section 11.07.

-108-

SECTION 11.08  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  Delivery by facsimile or .pdf of an executed counterpart of a signature page to this Agreement shall be effective as delivery of an original executed counterpart of this Agreement.

SECTION 11.09  Release of Collateral.  Upon (A) the sale, lease, transfer or other disposition of any item of Collateral of any Loan Party (including, without limitation, as a result of the sale, to the extent not prohibited by the terms of the Loan Documents, of the Loan Party that owns such Collateral) not prohibited by the terms of the Loan Documents, (B) the designation of any Loan Party as an Excluded Subsidiary pursuant to the terms hereof, (C) the terms of any Loan Document, (D) a Guarantor being released from its guarantee of the New First Lien Debt that required such Guarantor to become a Guarantor hereunder (and such Guarantor is not otherwise be required to become a Guarantor hereunder pursuant to Section 5.08(a)), with respect to Collateral owned by such Person, or (E) termination of all Commitments and payment in full of all Obligations (other than contingent indemnification obligations not then payable for which no claim has been asserted), the Liens granted to the Collateral Agent under the Collateral Documents shall automatically be released and the Collateral Agent will, reasonably promptly, at the Borrower’s expense, execute and deliver to such Loan Party such documents as such Loan Party may reasonably request to evidence,  without recourse, representation or warranty, the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents in accordance with the terms of the Loan Documents.  In connection with any request for a release of Collateral pursuant to this Section 11.09, the Borrower shall deliver an officer’s certificate to the Collateral Agent certifying that all conditions precedent to such release (if any) have been satisfied and the release is authorized and permitted by the terms of this Agreement and the Loan Documents.

SECTION 11.10  Survival of Agreement.  All covenants, agreements, representations and warranties made by the Loan Parties herein, in the other Loan Documents and in the certificates or other instruments prepared or delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lenders and shall survive the making by the Lenders of the Loans and the execution and delivery of the Loan Documents (it being understood that the representations and warranties are made only as of the Closing Date), regardless of any investigation made by such persons or on their behalf, and all such covenants and agreements shall continue in full force and effect as long as the principal of or any accrued interest on any Loans, or any fee due hereunder, or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not been terminated.  Without prejudice to the survival of any other agreements contained herein, indemnification and reimbursement obligations contained herein (including pursuant to Sections 2.09 and 11.04) shall survive the payment in full of the principal and interest hereunder and the termination of the Commitments or this Agreement and the resignation of any Agent.

SECTION 11.11  Patriot Act Notice.  Each Lender and each Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of

-109-

the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender or such Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act.  The Borrower shall, and shall cause each of its Subsidiaries to, provide such information and take such actions as are reasonably requested by any Agent or any Lender in order to assist the Agents and the Lenders in maintaining compliance with the Patriot Act.

SECTION 11.12  Jurisdiction, Etc.

(a)        Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County, and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable Law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or in any other Loan Document shall affect any right that any Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Loan Party or its properties in the courts of any jurisdiction.

(b)        Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 11.12(a).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(c)        Each party hereto irrevocably consents to service of any and all legal process, summons, notices and documents in any suit, action or proceeding brought in the United States of America arising out of or in connection with this Agreement or any other Loan Document by the mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such process to such party at its address specified in Section 11.02.  Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

(d)        If the interest rate hereunder on the Obligations is or becomes in excess of the maximum interest rate which the Borrowers are permitted by Law to contract or agree to pay, the rate of interest hereunder on the Obligations shall be deemed to be immediately reduced to

-110-

such maximum rate and all previous payments in excess of such maximum interest rate shall be deemed to have been payments in reduction of principal and not of interest.

SECTION 11.13  Governing Law.  This Agreement and the other Loan Documents (except, as to any other Loan Document, as expressly set forth therein) shall be governed by, and construed in accordance with, the law of the State of New York.

SECTION 11.14  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 11.15  No Advisory or Fiduciary Responsibility.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Agents and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Agents and the Lenders, on the other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Agents and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) none of the Agents nor any Lender has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Agents and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and none of the Agents nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates.  To the fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Agents or any Lender with respect to any breach or

-111-

alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

SECTION 11.16  No Manipulation.  Each Initial Lender represents and warrants to the Loan Parties as of the date hereof and the Closing Date that it is not entering into this Agreement, or directly or indirectly engaging or intending to engage in any hedging or other activity in connection with this Agreement to raise, depress or manipulate, or attempt to raise, depress or manipulate, the price of any securities of any Loan Party, any securities convertible into or exchangeable for any securities of any Loan Party, or any derivatives transaction (including, without limitation, any credit default swap) or similar instrument relating to any Loan Party or any securities of any Loan Party (a “Derivative”).

SECTION 11.17  Derivatives Trading Activities.  In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), each party to this Agreement acknowledges and agrees, and acknowledges its respective Affiliates’ understanding and agreement, that none of (a) the terms of this Agreement, any Loan made hereunder or any other transaction contemplated hereby or (b) the decision of any Loan Party to enter into this Agreement or consummate any such Loan or  transaction is or will be influenced by or be contingent on (x) the manner or method in which any Initial Lender or any of its Affiliates or any party acting on its behalf may establish, maintain, adjust or unwind any Derivative or (y) any communication, whether written or oral, between any Loan Party, on the one hand, and any Initial Lender, the Administrative Agent or any of their respective Affiliates, on the other hand, with respect to whether, when, how or in what manner or method such party or any party acting on its behalf may establish, maintain, adjust or unwind in any Derivative.

SECTION 11.18  Pari Passu Ranking.  The Borrower and the Lenders agree that the Obligations of the Borrower are not subordinated in right of payment to any Indebtedness of the Borrower.

[REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

-112-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.-

THE MCCLATCHY COMPANY,
	as Borrower
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Chief Financial Officer
MCCLATCHY NEWSPAPERS, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
MCCLATCHY MANAGEMENT SERVICES, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	President
MCCLATCHY U.S.A., INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

MCCLATCHY INVESTMENT COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
MIAMI HERALD MEDIA COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
THE CHARLOTTE OBSERVER PUBLISHING COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
STAR-TELEGRAM, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

MCCLATCHY INTERACTIVE WEST,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
BELLINGHAM HERALD PUBLISHING, LLC,
	as Guarantor
By: Pacific Northwest Publishing Company, Inc., its sole member
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
CYPRESS MEDIA, LLC,
	as Guarantor
By: Cypress Media, Inc., its sole member
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

IDAHO STATESMAN PUBLISHING, LLC,
	as Guarantor
By: Pacific Northwest Publishing Company, Inc., its sole member
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
OLYMPIAN PUBLISHING, LLC,
	as Guarantor
By: Pacific Northwest Publishing Company, Inc., its sole member
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
SAN LUIS OBISPO TRIBUNE, LLC,
	as Guarantor
By: The McClatchy Company, its sole member
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

MCCLATCHY INTERACTIVE LLC,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Manager
CYPRESS MEDIA, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
NOR-TEX PUBLISHING, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
MAIL ADVERTISING CORPORATION,
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

OLYMPIC-CASCADE PUBLISHING, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
TACOMA NEWS, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
PACIFIC NORTHWEST PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
THE BRADENTON HERALD, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

ABOARD PUBLISHING, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
KEYNOTER PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
BISCAYNE BAY PUBLISHING, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
MACON TELEGRAPH PUBLISHING COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

COLUMBUS LEDGER-ENQUIRER, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
QUAD COUNTY PUBLISHING, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	President
KELTATIM PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
WICHITA EAGLE AND BEACON PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

LEXINGTON H-L SERVICES, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
GULF PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
HLB NEWSPAPERS, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
LEE’S SUMMIT JOURNAL, INCORPORATED,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

BELTON PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
CASS COUNTY PUBLISHING COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
THE NEWS AND OBSERVER PUBLISHING COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
NITTANY PRINTING AND PUBLISHING COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

EAST COAST NEWSPAPERS, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
THE STATE MEDIA COMPANY,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President
THE SUN PUBLISHING COMPANY, INC.,
	as Guarantor
By:	/s/ R. Elaine Lintecum
Name:	R. Elaine Lintecum
Title:	Vice President

[Signature Page to Credit Agreement]

THE BANK OF NEW YORK MELLON,
	as Administrative Agent and Collateral Agent
By:	/s/ Latoya S. Elvin
Name:	Latoya S. Elvin
Title:	Vice President

[Signature Page to Credit Agreement]

CHATHAM ASSET HIGH YIELD MASTER FUND, LTD., as Initial Lender
By:	Chatham Asset Management, LLC
	Investment Advisor
By	/s/ Anthony R. Melchiorre
	Name: Anthony R. Melchiorre
	Title: Managing Member
CHATHAM FUND, LP, as Initial Lender
By:	Chatham Asset Management, LLC
	Investment Advisor
By	/s/ Anthony R. Melchiorre
	Name: Anthony R. Melchiorre
	Title: Managing Member
CHATHAM EVEREST FUND, LP, as Initial Lender
By:	Chatham Asset Management, LLC
	Investment Advisor
By	/s/ Anthony R. Melchiorre
	Name: Anthony R. Melchiorre
	Title: Managing Member
CHATHAM ASSET PRIVATE DEBT AND STRATEGIC CAPITAL FUND, LP, as Initial Lender
By:	Chatham Asset Management, LLC
	Investment Advisor
By	/s/ Anthony R. Melchiorre
	Name: Anthony R. Melchiorre
	Title: Managing Member

[Signature Page to Credit Agreement]

SCHEDULE I

Commitments

Tranche A Commitment

Lender	Aggregate Commitment	Cash Amount	Cash Amount Repayable at Maturity
Chatham Asset High Yield Master Fund, Ltd.	$73,172,000.00	$27,934,400.00	$34,918,000.00
Chatham Fund, LP	$22,064,000.00	$8,302,400.00	$10,378,000.00
Chatham Everest Fund, LP	$21,780,000.00	$8,483,200.00	$10,604,000.00
Chatham Asset Private Debt and Strategic Capital Fund, LP	$40,076,000.00	$15,280,000.00	$19,100,000.00
Total:	$157,083,000.00	$60,000,000.00	$75,000,000.00

Initial Tranche B Commitment

Lender	Commitment
Chatham Asset High Yield Master Fund, Ltd.	$142,236,600.00
Chatham Fund, LP	$8,954,400.00
Chatham Everest Fund, LP	$26,275,000.00
Chatham Asset Private Debt and Strategic Capital Fund, LP	$16,000,000.00
Total:	$193,466,000.00

SCHEDULE II

Guarantors

McClatchy Newspapers, Inc.

McClatchy Management Services, Inc.

San Luis Obispo Tribune, LLC

Star-Telegram, Inc.

McClatchy Interactive LLC

The Charlotte Observer Publishing Company

McClatchy U.S.A., Inc.

Miami Herald Media Company

Cypress Media, LLC

McClatchy Interactive West

Idaho Statesman Publishing, LLC

Bellingham Herald Publishing, LLC

Olympian Publishing, LLC

McClatchy Investment Company

Pacific Northwest Publishing Company, Inc.

The Bradenton Herald, Inc.

Keynoter Publishing Company, Inc.

Aboard Publishing, Inc.

Biscayne Bay Publishing, Inc.

Macon Telegraph Publishing Company

Columbus Ledger-Enquirer, Inc.

Quad County Publishing, Inc.

Wichita Eagle and Beacon Publishing Company, Inc.

Keltatim Publishing Company, Inc.

Lexington H-L Services, Inc.

Gulf Publishing Company, Inc.

HLB Newspapers, Inc.

Lee's Summit Journal, Incorporated

Belton Publishing Company, Inc.

Cass County Publishing Company

Cypress Media, Inc.

The News and Observer Publishing Company

Nittany Printing and Publishing Company

East Coast Newspapers, Inc.

The State Media Company

The Sun Publishing Company, Inc.

Nor-Tex Publishing, Inc.

Mail Advertising Corporation

Tacoma News, Inc.

Olympic-Cascade Publishing, Inc.

SCHEDULE 11.02

Addresses for Notices

If to the Borrower:

c/o The McClatchy Company

2100 “Q” Street

Sacramento, CA 95816

Attention: Vice President, General Counsel

Facsimile: (916) 321-1869

If to the Administrative Agent:

The Bank of New York Mellon

2001 Bryan Street, Suite 1000

Dallas, Texas 75201

E-mail Address: lpcoe-dallasagentsvcs@bnymellon.com

Facsimile: (214) 468-5539

If to the Collateral Agent:

The Bank of New York Mellon

2001 Bryan Street, Suite 1000

Dallas, Texas 75201

E-mail Address: lpcoe-dallasagentsvcs@bnymellon.com

Facsimile: (214) 468-5539

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Craig I. Forman, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The McClatchy Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 9, 2018	/s/ Craig I. Forman
	Craig I. Forman
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, R. Elaine Lintecum, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The McClatchy Company;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 9, 2018	/s/ R. Elaine Lintecum
	R. Elaine Lintecum
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The McClatchy Company (the “Company”) on Form 10-Q for the fiscal period ended July 1, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Craig I. Forman, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2018	/s/ Craig I. Forman
	Craig I. Forman
	Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to The McClatchy Company and will be retained by The McClatchy Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certificate is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of The McClatchy Company (the “Company”) on Form 10-Q for the fiscal period ended July 1, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Elaine Lintecum, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 9, 2018	/s/ R. Elaine Lintecum
	R. Elaine Lintecum
	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to The McClatchy Company and will be retained by The McClatchy Company and furnished to the Securities and Exchange Commission or its staff upon request.

The foregoing certificate is being furnished to the Securities and Exchange Commission as an exhibit to the Form 10-Q and shall not be considered filed as part of the Form 10-Q.

XML

Document and Entity Information - shares	6 Months Ended
	Jul. 01, 2018	Aug. 03, 2018
Entity Registrant Name	MCCLATCHY CO
Entity Central Index Key	0001056087
Document Type	10-Q
Document Period End Date	Jul. 01, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-30
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Common Class A
Entity Common Stock, Shares Outstanding		5,347,337
Common Class B
Entity Common Stock, Shares Outstanding		2,428,191

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
REVENUES - NET:
Net revenues	$ 204,348	$ 225,120	$ 403,206	$ 446,332
OPERATING EXPENSES:
Compensation	77,937	86,823	157,149	178,231
Newsprint, supplements and printing expenses	13,761	16,459	27,420	34,304
Depreciation and amortization	19,222	19,624	38,455	39,428
Other operating expenses	91,817	90,104	181,466	184,821
Other asset write-downs			59	1,957
Operating expenses, total	202,737	213,010	404,549	438,741
OPERATING INCOME (LOSS)	1,611	12,110	(1,343)	7,591
NON-OPERATING INCOME (EXPENSE):
Interest expense	(17,939)	(20,292)	(36,835)	(40,746)
Interest income	169	136	306	289
Equity income (loss) in unconsolidated companies, net	2,314	(159)	1,046	(96)
Impairments related to equity investments, net		(46,147)		(169,147)
Loss on extinguishment of debt, net	(19)	(869)	(5,368)	(869)
Retirement benefit expense	(2,779)	(3,328)	(5,557)	(6,655)
Other - net	(104)	23	(65)	83
Non-operating income (expense), total	(18,358)	(70,636)	(46,473)	(217,141)
Loss before income taxes	(16,747)	(58,526)	(47,816)	(209,550)
Income tax (benefit) expense	3,618	(21,080)	11,490	(76,529)
NET LOSS	$ (20,365)	$ (37,446)	$ (59,306)	$ (133,021)
Net loss per common share:
Net loss per share - basic (in dollars per share)	$ (2.62)	$ (4.91)	$ (7.66)	$ (17.49)
Net loss per share - diluted (in dollars per share)	$ (2.62)	$ (4.91)	$ (7.66)	$ (17.49)
Weighted average number of common shares:
Basic (in shares)	7,761	7,622	7,741	7,605
Diluted (in shares)	7,761	7,622	7,741	7,605
Advertising
REVENUES - NET:
Net revenues	$ 106,953	$ 125,239	$ 206,840	$ 245,128
Audience
REVENUES - NET:
Net revenues	84,825	89,915	171,103	181,331
Other
REVENUES - NET:
Net revenues	$ 12,570	$ 9,966	$ 25,263	$ 19,873

XML

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
NET LOSS	$ (20,365)	$ (37,446)	$ (59,306)	$ (133,021)
Pension and post retirement plans:
Change in pension and post-retirement benefit plans, net of taxes of $0, $(1,714), $0 and $(3,428)	5,549	2,570	11,099	5,141
Investment in unconsolidated companies:
Other comprehensive income, net of taxes of $0, $(2,649), $0 and $(2,697)		3,974		4,046
Other comprehensive income	5,549	6,544	11,099	9,187
Comprehensive loss	$ (14,816)	$ (30,902)	$ (48,207)	$ (123,834)

XML

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Change in pension and post-retirement benefit plans, taxes	$ 0	$ (1,714,000)	$ 0	$ (3,428,000)
Other comprehensive income, taxes	$ 0	$ (2,649,000)	$ 0	$ (2,697,000)

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jul. 01, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 20,128	$ 99,387
Trade receivables (net of allowances of $2,919 and $3,225 )	71,939	101,081
Other receivables	10,319	11,556
Newsprint, ink and other inventories	9,164	7,918
Assets held for sale	6,050	6,332
Other current assets	19,532	19,000
Total current assets	137,132	245,274
Property, plant and equipment, net	246,520	257,639
Intangible assets:
Identifiable intangibles - net	204,259	228,222
Goodwill	705,174	705,174
Total intangible assets	909,433	933,396
Investments and other assets:
Investments in unconsolidated companies	7,371	7,172
Other assets	64,551	62,437
Total investments and other assets	71,922	69,609
TOTAL ASSETS	1,365,007	1,505,918
Current liabilities:
Current portion of long-term debt		74,140
Accounts payable	35,387	31,856
Accrued pension liabilities	8,941	8,941
Accrued compensation	21,893	24,050
Income taxes payable	12,715	10,133
Unearned revenue	62,058	60,436
Accrued interest	7,624	7,954
Other accrued liabilities	16,127	18,832
Total current liabilities	164,745	236,342
Non-current liabilities :
Long-term debt	688,359	707,252
Deferred income taxes	26,237	28,062
Pension and postretirement obligations	589,238	599,763
Financing obligations	105,401	91,905
Other long-term obligations	45,544	46,926
Total non-current liabilities	1,454,779	1,473,908
Commitments and contingencies
Stockholders' equity:
Additional paid-in capital	2,216,168	2,215,109
Accumulated deficit	(2,032,071)	(1,970,097)
Treasury stock at cost, 43,155 shares and 3,157 shares	(422)	(51)
Accumulated other comprehensive loss	(438,270)	(449,369)
Total stockholders' equity	(254,517)	(204,332)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	1,365,007	1,505,918
Common Class A
Stockholders' equity:
Common stock	54	52
Common Class B
Stockholders' equity:
Common stock	$ 24	$ 24

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jul. 01, 2018	Dec. 31, 2017
Trade receivables, allowance	$ 2,919	$ 3,225
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Treasury stock, shares	43,155	3,157
Common Class A
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	5,385,339	5,256,325
Common Class B
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	2,428,191	2,443,191

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (59,306)	$ (133,021)
Reconciliation to net cash provided by (used in) operating activities:
Depreciation and amortization	38,455	39,428
Gain on disposal of property and equipment (excluding other asset write-downs)	(2,820)	(3,694)
Retirement benefit expense	5,557	6,655
Stock-based compensation expense	1,061	1,461
Equity (income) loss in unconsolidated companies	(1,046)	96
Impairments related to equity investments		169,147
Distributions of income from equity investments	2,876
Loss on extinguishment of debt, net	5,368	869
Other asset write-downs	59	1,957
Other	(1,942)	(3,371)
Changes in certain assets and liabilities:
Trade receivables	26,474	24,634
Inventories	(1,246)	1,097
Other assets	(1,141)	280
Accounts payable	3,531	(4,135)
Accrued compensation	(2,157)	2,189
Income taxes	789	(85,517)
Accrued interest	(330)	(204)
Other liabilities	(4,890)	(2,105)
Net cash provided by operating activities	9,292	15,766
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(5,872)	(4,626)
Proceeds from sale of property, plant and equipment and other	4,025	8,932
Contributions to cost and equity investments	(1,925)	(2,683)
Other, net		(11)
Net cash provided by (used in) investing activities	(3,772)	1,612
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of public notes	(99,826)	(15,675)
Proceeds from sale-leaseback financial obligations	15,749
Purchase of treasury shares	(371)	(287)
Other	(331)	716
Net cash provided by (used in) financing activities	(84,779)	(15,246)
Increase (decrease) in cash, cash equivalents and restricted cash	(79,259)	2,132
Cash, cash equivalents and restricted cash at beginning of period	131,354	36,248
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$ 52,095	$ 38,380

XML

SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jul. 01, 2018

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

THE MCCLATCHY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(UNAUDITED)

1.  SIGNIFICANT ACCOUNTING POLICIES

Business and Basis of Accounting

The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer,  The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI.

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. 

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the second-quarter periods and 26 weeks for the six-month periods. See Note 9, Subsequent Events, for a discussion of recent refinancing transactions subsequent to the end of our second quarter of 2018.

Fair Value of Financial Instruments

We account for certain assets and liabilities at fair value.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date.

Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies.

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents, accounts receivable and accounts payable.  As of July 1, 2018, and December 31, 2017,  the carrying amount of these items approximates fair value because of the short maturity of these financial instruments.

Long-term debt.  The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. At July 1, 2018 and December 31, 2017, the estimated fair value of long-term debt, including the current portion of long-term debt, was $639.2 million and $810.7 million, respectively. At July 1, 2018, and December 31, 2017, the carrying value of our long-term debt, including the current portion of long-term debt, if any, was $688.4 million and $781.4 million, respectively.

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets.

Newsprint, ink and other inventories

Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the six months ended June 25, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the quarter and six months ended July 1, 2018.

Property, Plant and Equipment

Depreciation expense with respect to property, plant and equipment is summarized below:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Depreciation expense	$	7,295	$	7,531	$	14,492	$	15,252

Assets Held for Sale

During the six months ended July 1, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the six months ended July 1, 2018, and is included in other asset write-downs on our condensed consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale.

Intangible Assets and Goodwill

We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenue growth, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarter and six months ended July 1, 2018 or June 25, 2017.

Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We had no impairment of newspaper mastheads during the quarter and six months ended July 1, 2018, or June 25, 2017. 

Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarter and six months ended July 1, 2018, or June 25, 2017.      

Financial Obligations

Financial obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, and real property previously owned by The Sacramento Bee that was sold and leased back during the third quarter of 2017. In April 2018, we sold and leased back real property owned by The State in Columbia, SC, and as a result, our long-term financial obligations increased by approximately $14.6 million during the second quarter of 2018.

Segment Reporting

We operate 30 media companies, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East.

Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: 

			Other
	Minimum		Comprehensive
	Pension and		Loss
	Post-		Related to
	Retirement		Equity
(in thousands)	Liability		Investments		Total
Balance at December 31, 2017	$	(442,406)	$	(6,963)	$	(449,369)
Amounts reclassified from AOCL		11,099		—		11,099
Other comprehensive income		11,099		—		11,099
Balance at July 1, 2018	$	(431,307)	$	(6,963)	$	(438,270)

	Amount Reclassified from AOCL
	Quarters Ended				Six Months Ended
(in thousands)	July 1,		June 25,		July 1,		June 25,		Affected Line in the Condensed
AOCL Component	2018		2017		2018		2017		Consolidated Statements of Operations
Minimum pension and post-retirement liability	$	5,549	$	4,284	$	11,099	$	8,569	Retirement benefit expense
		—		(1,714)		—		(3,428)	Benefit for income taxes (1)
	$	5,549	$	2,570	$	11,099	$	5,141	Net of tax

_____________________

(1)There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. 

Income Taxes

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but the company is able to determine a reasonable estimate, the company must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740, Income Taxes, on the basis of the provisions of the tax laws that were in effect immediately before the Tax Act was enacted. We continue to evaluate the tax implications of the changes to the Tax Act for which our accounting was incomplete, including the impact on state taxes, certain compensation arrangements and depreciation. We will record appropriate adjustments, if any, in the periods in which we conclude our analysis.

A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes. As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and six months ended July 1, 2018, we recorded a valuation allowance charge of $10.1 million and $24.4 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of July 1, 2018, was $134.1 million.

We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. 

Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense.

Earnings Per Share (EPS)

Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following:

	Quarters Ended		Six Months Ended
	July 1,	June 25,	July 1,	June 25,
(shares in thousands)	2018	2017	2018	2017
Anti-dilutive common stock equivalents	198	388	201	325

Cash Flow Information

Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:

	July 1,		December 31,
(in thousands)	2018		2017
Cash and equivalents	$	20,128	$	99,387
Restricted cash included in other assets(1)		31,967		31,967
Total cash, cash equivalents and restricted cash	$	52,095	$	131,354

_____________________

(1)Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. 

Cash paid for interest and income taxes and other non-cash activities consisted of the following:

	Six Months Ended
	July 1,		June 25,
(in thousands)	2018		2017
Interest paid (net of amount capitalized)	$	29,244	$	35,127
Income taxes paid (net of refunds)		12,019		8,870
Other non-cash investing and financing activities related to pension plan transactions:
Reduction of financing obligation due to sale of real properties by pension plan		(2,667)		—
Reduction of PP&E due to sale of real properties by pension plan		(2,854)		—

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis but it did not have an impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively but it did not have an impact on our condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $1.0 million in the six months ended June 25, 2017, on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “Leases.” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new lease standard does not substantially change lessor accounting. In 2018, the FASB issued ASU No. 2018-01 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact this standard will have on our condensed consolidated financial statements, but expect an increase in assets and liabilities on our condensed consolidated balance sheet. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. Consequently, the standard eliminates the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the standard only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This standard also requires certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

XML

REVENUES

6 Months Ended

Jul. 01, 2018

REVENUES

REVENUES

2. REVENUES

Adoption of ASC 2014-09 (Topic 606), “Revenue from Contracts with Customers”

On January 1, 2018, we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

We recorded a net increase to opening accumulated deficit of $2.7 million as of January 1, 2018, due to the cumulative impact of adopting Topic 606, with the impact primarily related to our audience revenues. The impact to revenues as a result of applying Topic 606 was an increase of $0.1 million and $0.4 million for the quarter and six months ended July 1, 2018, respectively, compared to applying Topic 605.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

All revenues recognized on the condensed consolidated statements of operations are the result of contracts with customers, except for revenues associated with lease income where we are the lessor through a sublease arrangement, as these are out of the scope of Topic 606.

Advertising Revenues

We generate revenues primarily by delivering advertising on our digital media sites, on our partners’ websites and in our newspapers. These advertising revenues are generated through digital and print performance obligations that are included in contracts with customers, which are typically one year or less in duration or commitment. There are no differences in the treatment of digital and print advertising performance obligations or the recognition of revenues for retail, national, classified, and direct marketing revenue categories under Topic 606.  

We generate advertising revenues through digital products that are sold on cost-per-thousand impressions (“CPM”) which means that an advertiser pays based upon number of times their ad is displayed on our owned and operated websites and apps, our partners’ websites, ad exchanges, in a video pre-roll or a programmatic bidding exchange. Such revenues are recognized according to the timing outlined in the contract. 

There are also monthly marketing campaigns which may include multiple products such as items sold by CPM, reputation management, search engine marketing and search engine optimization. In these arrangements as well as in a CPM sale, the contracted goods and services are performed over the specific contract term and the transfer of the performance obligation occurs as the benefits are consumed by the customer. As such, revenue is recognized daily regardless of the performance obligations classification of timing of being point in time or overtime.

Print advertising is advertising that is printed in a publication, inserted into a publication, or physically mailed to a customer. Our performance obligations for print products are directly associated with the inclusion of the advertisement in the final publication and delivery of the product on the contracted distribution day. Revenues are recognized at the point in time that the newspaper publication is delivered and distribution of the advertisement is satisfied.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration. We estimate these amounts based on the expected value approach.

For ads placed on our partners’ websites or selling a product hosted or managed by partners, we evaluate whether we are the principal or agent. Generally, we report advertising revenues for ads placed on our partners’ websites or for the resale of their products on a gross basis; that is, the amounts billed to our customers are recorded as revenues, and amounts paid to our partners for their products or advertising space are recorded as operating expenses. Where we are the principal, we are primarily responsible to our customers for fulfillment of the contract goals though, from time to time, the use of third party goods or services. Our control is further supported by our level of discretion in establishing price and in some cases, controlling inventory before it is transferred to the customer. 

Most products, including the printed newspaper advertising product, banner ads on our websites and video ads on our owned and operated player are reported on a gross basis. However, there are some third party products and services that we offer to customers, such as Cars.com and various revenue share arrangements such as exchange platforms, that are reported on a net basis. Revenues are earned through being a reseller of a product or participating in an exchange where control over the service provided is limited and costs of the arrangement are net of revenue received.

Audience Revenues

Audience revenues include digital and print subscriptions or a combination of both at various frequencies of delivery. Our subscribers typically pay us in advance of when their subscriptions start or shortly thereafter. Our performance obligation to subscribers of our digital products is the real-time access to news and information delivered through multiple digital platforms. Our performance obligation to our traditional print subscribers is delivery of the physical newspaper according to their subscription plan. Revenues related to digital and print subscriptions are recognized each day that a product is delivered to the subscriber. 

Digital subscriptions may be purchased for a day, month, quarter, or year, and revenue is reported daily over the term of the contract.

Traditional print subscriptions may have various frequencies of delivery based upon the subscribers delivery preference. Revenues are recognized based upon each delivery, therefore at a point in time.  

Certain subscribers may enter into a grace period (“grace”) after their previous contract term has expired but before payment has be received on the renewal. Grace is granted as a continuation of the subscription contract, in order to not disrupt service, and the extension is accounted for as variable consideration. We estimate these revenue amounts based on the expected amount to be received, taking into account the expected discontinuation of service or nonpayment based on historical experience.

Other Revenues

Other revenues include primarily commercial printing and distribution revenues. The commercial print agreements are between us and a third party publisher to print and make available for distribution the finished products. Commercial print contracts are for a daily finished product and each day’s product is unique, or a separate performance obligation.  Revenue is recorded at a point in time upon completion of each day’s print project.

The performance obligation for distribution revenues is the transportation of third-party published products to their subscribers or stores for resale. Distribution is performed substantially the same over the life of the contract and revenue is recognized at the point in time  each performance obligation is completed.

We report distribution revenues from the third-party publishers on a gross basis. That is, the amounts that we bill to third party publishers to deliver their finished product to their customers is recorded as revenues, and the amounts paid to our independent carriers to deliver the third party product is recorded as operating expenses.

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its standalone selling price. We generally determine standalone selling prices for audience revenue contracts based upon observable market values and the adjusted market assessment. For advertising revenue contracts with multiple performance obligations, stand alone selling price is based on the prices charged to customers or on an adjusted market assessment.

Unearned Revenues

We record unearned revenues when cash payments are received or due in advance of our performance, including amounts which are refundable. The increase in the unearned revenue balance for the six months ended July 1, 2018, was primarily driven by cash payments received or due in advance of satisfying our performance obligations, offset by $49.1 million of revenues recognized that were included in the unearned revenue balance as of December 31, 2017.

Our payment terms vary for advertising and subscriber customers. Subscribers generally pay in advance of up to one year. Advertiser payments are due within 30 days of invoice issuance and therefore amounts paid in advance are not significant. For advertisers that are considered to be at a higher risk of collectability due to payment history or credit processing, we require payment before the products or services are delivered to the customer. 

Practical Expedients and Exemptions

We expense sales commissions when incurred because the amortization period would have been one year or less if capitalized. These costs are recorded within compensation expenses.

We record usage-based royalties promised in exchange for use of our intellectual property, including but not limited to photographs and articles. These royalty revenues are accrued when estimates of usage and recoverability are made. These revenues are recorded within other revenues.

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

XML

INTANGIBLE ASSETS AND GOODWILL

6 Months Ended

Jul. 01, 2018

INTANGIBLE ASSETS AND GOODWILL

INTANGIBLE ASSETS AND GOODWILL

3.  INTANGIBLE ASSETS AND GOODWILL

Intangible assets subject to amortization (primarily advertiser lists, subscriber lists and developed technology), mastheads and goodwill consisted of the following: 

	December 31,		Amortization		July 1,
(in thousands)	2017		Expense		2018
Intangible assets subject to amortization	$	839,284	$	—	$	839,284
Accumulated amortization		(761,013)		(23,963)		(784,976)
		78,271		(23,963)		54,308
Mastheads		149,951		—		149,951
Goodwill		705,174		—		705,174
Total	$	933,396	$	(23,963)	$	909,433

Amortization expense with respect to intangible assets is summarized below:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Amortization expense	$	11,927	$	12,093	$	23,963	$	24,176

The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: 

	Amortization
	Expense
Year	(in thousands)
2018 (Remainder)	$	23,697
2019		24,154
2020		803
2021		680
2022		655
2023		667

XML

INVESTMENTS IN UNCONSOLIDATED COMPANIES

6 Months Ended

Jul. 01, 2018

INVESTMENTS IN UNCONSOLIDATED COMPANIES

INVESTMENTS IN UNCONSOLIDATED COMPANIES

4.  INVESTMENTS IN UNCONSOLIDATED COMPANIES

On June 19, 2017, we along with the then-existing ownership group of CareerBuilder, LLC (“CareerBuilder”) announced that we had entered into an agreement to sell a majority of the collective ownership interest in CareerBuilder to an investor group. The transaction closed on July 31, 2017. We received $73.9 million from the closing of the transaction, consisting of approximately $7.3 million in normal distributions and $66.6 million of gross proceeds.

As a result of the closing of the transaction, our ownership interest in CareerBuilder was reduced to approximately 3.0% from 15.0%. As a result, we recorded $45.6 million and $168.6 million in pre-tax impairment charges on our equity investment in CareerBuilder during the quarter and six months ended June 25, 2017, respectively.

In the quarter and six months ended July 1, 2018, we received distributions totaling approximately $2.8 million from CareerBuilder, which relate to returns of earnings. Our investment in CareerBuilder is accounted for under the cost method (measurement alternative under ASU 2016-01).

XML

LONG-TERM DEBT

6 Months Ended

Jul. 01, 2018

LONG-TERM DEBT

LONG-TERM DEBT

5.  LONG-TERM DEBT

Our long-term debt consisted of the following:

	Face Value at		Carrying Value
	July 1,		July 1,		December 31,
(in thousands)	2018		2018		2017
Notes:
9.00% senior secured notes due in 2022	$	344,101	$	339,976	$	433,819
7.150% debentures due in 2027		89,188		85,458		85,262
6.875% debentures due in 2029		276,230		262,925		262,311
Long-term debt	$	709,519	$	688,359	$	781,392
Less current portion		—		—		74,140
Total long-term debt, net of current	$	709,519	$	688,359	$	707,252

Our outstanding notes are stated net of unamortized debt issuance costs, and unamortized discounts, if applicable, totaling $21.2 million and $23.7 million as of July 1, 2018, and December 31, 2017, respectively.

Debt Redemptions, Repurchases and Loss on Extinguishment of Debt

During the first six months of 2018 and 2017, we reduced our outstanding debt as follows:

	Six Months Ended
	July 1,		June 25,
	2018		2017
(in thousands)	Face Value		Face Value
9.00% senior secured notes due in 2022	$	95,529	$	15,000

During the quarter and six months ended July 1, 2018, we redeemed $0.5 million of our 9.00% senior secured notes due in 2022 (“2022 Notes”) at par through a tender offer that expired on May 22, 2018, and we wrote off the associated debt issuance costs. Also during in the six months ended July 1, 2018, we redeemed $75.0 million of our 2022 Notes, which we had previously announced in December 2017, and we repurchased $20.0 million of the 2022 Notes through a privately negotiated transaction. We redeemed and repurchased the $95.0 million in 2022 Notes at a premium and wrote off the associated debt issuance costs. As a result of all of these transactions, we recorded a loss on the extinguishment of debt of $19.0 thousand and $5.4 million during the quarter and six months ended July 1, 2018, respectively.

During the quarter and six months ended June 25, 2017, we repurchased a total $15.0 million of our 2022 Notes through a privately negotiated transaction. We repurchased these notes at a premium and wrote off debt issuance costs resulting in a loss on the extinguishment of debt of $0.9 million being recorded during the quarter and six months ended June 25, 2017.

As discussed below, subsequent to July 1, 2018, we refinanced and replaced a significant portion of our debt outstanding at such time, with other long-term debt, therefore, we have continued to classify it as long-term in nature.

Debt Refinancing in July 2018

On July 16, 2018, we entered into an Indenture (“2026 Notes Indenture”), among the Company, subsidiaries of the Company party thereto as guarantors and The Bank of New York Mellon Trust Company, N.A., as trustee and collateral agent (“2026 Notes Trustee”), pursuant to which we issued $310.0 million aggregate principal amount of 9.00% Senior Secured Notes due 2026 (“2026 Notes”) as described more fully under the section “2026 Senior Secured Notes and Indenture” below.

In connection with the issuance of the 2026 Notes and other junior debt instruments described below and as discussed more fully in Note 9, “Subsequent Events,” we completed a refinancing of all of our 2022 Notes and substantially all of our debentures, and our revolving credit facilities. On July 16, 2018, we deposited sufficient funds with The Bank of New York Mellon Trust Company, N.A., as trustee (“2022 Notes Trustee”) for the our 2022 Notes, to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes to, but excluding, the redemption date. The 2022 Notes were issued under an Indenture, dated as of December 18, 2012, among the Company, subsidiaries of the Company party thereto as guarantors and the 2022 Notes Trustee (“2022 Notes Indenture”).

As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof.

On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes.

ABL Credit Agreement

Also on July 16, 2018, we entered into a Credit Agreement, among the Company, the subsidiaries of the Company party thereto as borrowers and Wells Fargo Bank, N.A. (“Wells Fargo”), as administrative agent (“ABL Credit Agreement”). The ABL Credit Agreement provides for up to $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. Our obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement as described more fully in Note 9.

Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on the London Interbank Offered Rate (“LIBOR”) for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% and one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans.

The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days.

In connection with entering into the ABL Credit Agreement and the refinancing of our 2022 Notes as described above, we terminated our Third Amended and Restated Credit Agreement, which had a maturity date of December 18, 2019 and had no borrowings outstanding as of the end of our second quarter of 2018 or as of July 16, 2018, the date of termination.

Separately we are party to an Issuance and Reimbursement Agreement (“LC Agreement”) with Bank of America, N.A., under which we may request letters of credit be issued on our behalf in an aggregate face amount not to exceed $35.0 million. We had standby letters of credit totaling $29.7 million outstanding under the LC Agreement as of July 1, 2018. We are required to provide cash collateral equal to 101% of the aggregate undrawn stated amount of each outstanding letter of credit. We expect this LC Agreement will remain in place for up to 90 days from July 16, 2018, as we transition our letters of credit to the ABL Credit Agreement. Cash collateral associated with this LC Agreement is classified in our condensed consolidated balance sheets in other assets.

2026 Senior Secured Notes and Indenture

As discussed above, on July 16, 2018, we entered into the 2026 Notes Indenture, pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.

The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum.  Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. 

We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture).

The 2026 Notes Indenture contains covenants that, among other things, restrict our ability and our restricted subsidiaries to:

· incur certain additional indebtedness and issue preferred stock;

· make certain distributions, investments and other restricted payments;

· sell assets;

· agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

· create liens;

· merge, consolidate or sell substantially all of our assets, taken as a whole; and

· enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

Junior Lien Term Loan Agreement

On July 16, 2018, we entered into a Junior Lien Term Loan Credit Agreement, among the Company, the guarantors party thereto, the lenders party thereto and The Bank of New York Mellon, as administrative agent and collateral agent (“Junior Term Loan Agreement”). The Junior Term Loan Agreement provides for a $157.1 million secured term loan (“Tranche A Junior Term Loans”) and a $193.5 million term loan (“Tranche B Junior Term Loans”). The Tranche A Junior Term Loans mature on July 15, 2030 and the Tranche B Junior Term Loans mature on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement. 

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the holder of approximately $82.1 million in aggregate principal amount of 2027 Debentures (as defined in Note 9) and approximately $193.5 million in aggregate principal amount of 2029 Debentures (as defined in Note 9) and to pay fees, costs, and expenses in connection with our debt refinancing.

Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. 

In general, the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture.

Other Debt

After giving effect to the Junior Term Loan Agreements, we have $7.1 million aggregate principal amount of 2027 Debentures and $82.8 million aggregate principal amount of 2029 Debentures outstanding as discussed more fully in Note 9.

XML

EMPLOYEE BENEFITS

6 Months Ended

Jul. 01, 2018

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

6.  EMPLOYEE BENEFITS

Pension Plan

We maintain a qualified defined benefit pension plan (“Pension Plan”), which covers eligible current and former employees and has been frozen since March 31, 2009.  No new participants may enter the Pension Plan and no further benefits will accrue. However, years of service continue to count toward early retirement calculations and vesting of benefits previously earned.

We also have a limited number of supplemental retirement plans to provide certain key current and former employees with additional retirement benefits.  These plans are funded on a pay-as-you-go basis and the accrued pension obligation is largely included in other long-term obligations.

The elements of retirement benefit expense are as follows:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Pension plans:
Interest Cost		19,789		21,367	$	39,577	$	42,734
Expected return on plan assets		(22,624)		(22,393)		(45,248)		(44,785)
Actuarial loss		6,296		5,084		12,591		10,168
Net pension expense		3,461		4,058		6,920		8,117
Net post-retirement benefit credit		(682)		(730)		(1,363)		(1,462)
Net retirement benefit expenses	$	2,779	$	3,328	$	5,557	$	6,655

In May 2018, the Pension Plan sold the Lexington real property for approximately $4.1 million and we terminated our lease on the property. The property was included in the real property contributions that we made to the Pension Plan in fiscal year 2011. As a result of the sale by the Pension Plan, we recognized a $0.2 million loss on the sale of the Lexington property in the other operating expenses on the condensed consolidated statement of operations for the quarter and six months ended July 1, 2018.  

401(k) Plan

We have a deferred compensation plan (“401(k) plan”), which enables eligible employees to defer compensation. During the fourth quarter of 2017, we announced the reinstatement of a company matching contribution program beginning with the first pay check paid in 2018. Our matching contributions in the quarter and six months ended July 1, 2018, were $0.6 million and $1.3 million, respectively, and are recorded in our compensation line item of our condensed consolidated statement of operations. Also during the fourth quarter of 2017, we terminated the 401(k) plan supplemental contribution that was tied to performance.

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jul. 01, 2018

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

7.  COMMITMENTS AND CONTINGENCIES

In December 2008, carriers of The Fresno Bee filed a class action lawsuit against us and The Fresno Bee in the Superior Court of the State of California in Fresno County captioned Becerra v. The McClatchy Company (“Fresno case”) alleging that the carriers were misclassified as independent contractors and seeking mileage reimbursement. In February 2009, a substantially similar lawsuit, Sawin v. The McClatchy Company, involving similar allegations was filed by carriers of The Sacramento Bee (“Sacramento case”) in the Superior Court of the State of California in Sacramento County. The class consists of roughly 5,000 carriers in the Sacramento case and 3,500 carriers in the Fresno case. The plaintiffs in both cases are seeking unspecified restitution for mileage reimbursement. With respect to the Sacramento case, in September 2013, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code. In the Fresno case, in March 2014, all wage and hour claims were dismissed and the only remaining claim is an equitable claim for mileage reimbursement under the California Civil Code.

The court in the Sacramento case trifurcated the trial into three separate phases, independent contractor status, liability and restitution. On September 22, 2014, the court in the Sacramento case issued a tentative decision following the first phase, finding that the carriers that contracted directly with The Sacramento Bee during the period from February 2005 to July 2009 were misclassified as independent contractors. We objected to the tentative decision but the court ultimately adopted it as final. In June 2016, we were dismissed from the lawsuit, leaving The Sacramento Bee as the sole defendant. On August 30, 2017, the court issued a statement of decision ruling that the court would not hold a phase two trial but would, instead, assume liability from the evidence previously submitted and from the independent contractor agreements. We objected to this decision but the court adopted it as final. The third phase has not yet been defined.

The court in the Fresno case bifurcated the trial into two separate phases: the first phase addressed independent contractor status and liability for mileage reimbursement and the second phase was designated to address restitution, if any. The first phase of the Fresno case began in the fourth quarter of 2014 and concluded in late March 2015. On April 14, 2016, the court in the Fresno case issued a statement of final decision in favor of us and The Fresno Bee. Accordingly, there will be no second phase. The plaintiffs filed a Notice of Appeal on November 10, 2016.

We continue to defend these actions vigorously and expect that we ultimately will prevail. As a result, we have not established a reserve in connection with the cases. While we believe that a material impact on our condensed consolidated financial position, results of operations or cash flows from these claims is unlikely, given the inherent uncertainty of litigation, a possibility exists that future adverse rulings or unfavorable developments could result in future charges that could have a material impact. We have and will continue to periodically reexamine our estimates of probable liabilities and any associated expenses and make appropriate adjustments to such estimates based on experience and developments in litigation.

Other than the cases described above, we are subject to a variety of legal proceedings (including libel, employment, wage and hour, independent contractor and other legal actions) and governmental proceedings (including environmental matters) that arise from time to time in the ordinary course of our business. We are unable to estimate the amount or range of reasonably possible losses for these matters. However, we currently believe, after reviewing such actions with counsel, that the expected outcome of pending actions will not have a material effect on our condensed consolidated financial statements. No material amounts for any losses from litigation that may ultimately occur have been recorded in the condensed consolidated financial statements as we believe that any such losses are not probable.

We have certain indemnification obligations related to the sale of assets including but not limited to insurance claims and multi-employer pension plans of disposed newspaper operations. We believe the remaining obligations related to disposed assets will not be material to our financial position, results of operations or cash flows.

As of July 1, 2018, we had $29.7 million of standby letters of credit secured under the LC Agreement.

XML

STOCK PLANS

6 Months Ended

Jul. 01, 2018

STOCK PLANS

STOCK PLANS

8.  STOCK PLANS

Stock Plans Activity

The following table summarizes the restricted stock units (“RSUs”) activity during the six months ended July 1, 2018:

		Weighted
		Average Grant
		Date Fair
	RSUs	Value
Nonvested — December 31, 2017	245,794	$	11.55
Granted	218,580	$	9.10
Vested	(99,244)	$	13.31
Forfeited	(2,490)	$	11.41
Nonvested — July 1, 2018	362,640	$	9.59

The total fair value of the RSUs that vested during the six months ended July 1, 2018, was $0.9 million.

The following table summarizes the stock appreciation rights (“SARs”) activity during the six months ended July 1, 2018: 

		Weighted		Aggregate
		Average		Intrinsic Value
	SARs	Exercise Price		(in thousands)
Outstanding December 31, 2017	156,175	$	32.12	$	—
Expired	(24,825)	$	38.60
Outstanding July 1, 2018	131,350	$	30.89	$	—

Stock-Based Compensation

All stock-based payments, including grants of stock appreciation rights, restricted stock units and common stock under equity incentive plans, are recognized in the financial statements based on their grant date fair values. As of July 1, 2018, we had two stock-based compensation plans. Stock-based compensation expenses are reported in the compensation line item in the condensed consolidated statements of operations. Total stock-based compensation expense for the periods presented in this report, are as follows:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Stock-based compensation expense	$	320	$	432	$	1,061	$	1,461

XML

SUBSEQUENT EVENTS

6 Months Ended

Jul. 01, 2018

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

9.  SUBSEQUENT EVENTS

Fifth Supplemental Indenture

On July 13, 2018, in connection with our outstanding 7.15% debentures due November 1, 2027 (“2027 Debentures”) and 6.875% debentures due March 15, 2029 (“2029 Debentures” and together with the 2027 Debentures, “Debentures”), we entered into a Fifth Supplemental Indenture (“Supplemental Indenture”) by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (“Debentures Trustee”), supplementing that certain Indenture, dated as of November 4, 1997, by and between the Company and the Debentures Trustee (“Debentures Indenture”), pursuant to which the Debentures were issued. 

The Supplemental Indenture was entered into in connection with our refinancing of existing indebtedness to amend the Debentures Indenture to eliminate certain restrictive covenants.

2026 Notes Indenture

On July 16, 2018, we entered into the 2026 Notes Indenture pursuant to which we issued $310.0 million aggregate principal amount of the 2026 Notes in a private placement to qualified institutional buyers in the United States in reliance on Rule 144A under the Securities Act of 1933, as amended (“Securities Act”), and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act.

The 2026 Notes mature on July 15, 2026, and bear interest at a rate of 9.00% per annum. Interest on the 2026 Notes is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2019. 

We may redeem the 2026 Notes, in whole or in part, at any time on or after July 15, 2022, at specified redemption prices and may also redeem up to 40% of the aggregate principal amount of the 2026 Notes using the proceeds of certain equity offerings completed before July 15, 2021, at specified redemption prices, in each case, as set forth in the 2026 Notes Indenture. Prior to July 15, 2022, we may also redeem some or all of the 2026 Notes at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, up to, but excluding, the redemption date and a “make-whole” premium.

We will be required to redeem the 2026 Notes from the net cash proceeds of certain asset dispositions and from a portion of our excess cash flow (as defined in the 2026 Notes Indenture).

If we experience specified changes of control triggering events, we must offer to repurchase the 2026 Notes at a repurchase price equal to 101% of the principal amount of the 2026 Notes repurchased, plus accrued and unpaid interest, if any, to, but excluding the applicable repurchase date.

The 2026 Notes Indenture contains covenants that, among other things, restrict the ability of us and our restricted subsidiaries to:

· incur certain additional indebtedness and issue preferred stock;

· make certain distributions, investments and other restricted payments;

· pay dividends;

· sell assets;

· agree to any restrictions on the ability of restricted subsidiaries to make payments to us;

· create liens;

· merge, consolidate or sell substantially all of our assets, taken as a whole; and

· enter into certain transactions with affiliates.

These covenants are subject to a number of other limitations and exceptions set forth in the 2026 Notes Indenture.

The 2026 Notes Indenture provides for customary events of default, including, but not limited to, failure to pay principal and interest, failure to comply with covenants, agreements, or conditions, and certain events of bankruptcy or insolvency involving us and our significant subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2026 Notes under the 2026 Notes Indenture will become due and payable immediately without further action or notice. If any other event of default under the 2026 Notes Indenture occurs or is continuing, the 2026 Notes Trustee or holders of at least 25% in aggregate principal amount of the then outstanding 2026 Notes under the 2026 Notes Indenture may declare all of such 2026 Notes to be due and payable immediately.

ABL Credit Agreement

On July 16, 2018, we entered into the ABL Credit Agreement, which provides for a $65.0 million secured asset-backed revolving credit facility with a letter of credit subfacility and a swing line subfacility. In addition, the ABL Credit Agreement provides for a $35.0 million cash secured letter of credit facility. The commitments under the ABL Credit Agreement expire July 16, 2023. The Borrowers’ obligations under the ABL Credit Agreement are guaranteed by us and certain of our subsidiaries meeting materiality thresholds set forth in the ABL Credit Agreement.

The borrowing base under the ABL Credit Agreement is comprised of 85% of eligible advertising accounts; the lesser of (i) 80% of eligible unbilled advertising accounts receivable and (ii) $3.0 million; and the lesser of (i) $6.0 million and (ii) 50% of the book value of eligible inventory, in each case subject to reserves established by the administrative agent (“Borrowing Base”). The proceeds of the loans under the ABL Credit Agreement may be used for working capital and general corporate purposes. The Borrowers have the right to prepay loans under the ABL Credit Agreement in whole or in part at any time without penalty. Subject to availability under the Borrowing Base, amounts repaid may be reborrowed. 

As of July16, 2018, under the ABL Credit Agreement we had availability of $46.4 million, and $10.0 million was borrowed to pay expenses associated with the refinancing transactions (leaving $36.4 million in additional availability).  The $10.0 million outstanding under the ABL Credit Agreement was repaid during the third quarter of 2018. The borrowing base is recalculated monthly and is not expected to be subject to material changes in availability except in the fourth quarter of 2018 and early in the first quarter of 2019 when it is expected to increase as a result of the seasonality of advertising sales around year-end holiday periods (and resulting growth in advertising accounts receivable balances).

Loans under the ABL Credit Agreement bear interest, at our option, at either a rate based on LIBOR for the applicable interest period or a base rate, in each case plus a margin. The base rate is the highest of Wells Fargo’s publicly announced prime rate, the federal funds rate plus 0.50% or one-month LIBOR plus 1.0%. The margin ranges from 1.75% to 2.25% for LIBOR loans and 0.75% to 1.25% for base rate loans and is determined based on average excess availability. Interest on the loans is payable quarterly in arrears with respect to base rate loans and at the end of an interest period (and at three month intervals if the interest period exceeds three months) in the case of LIBOR loans.

The ABL Credit Agreement requires, at any time the availability under our revolving credit facility falls below the greater of 12.5% of the total facility size or approximately $8.1 million, to maintain a minimum fixed charge coverage ratio of 1.10 to 1.00 until such time as the availability under our revolving credit facility exceeds such threshold for 30 consecutive days.

The ABL Credit Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the ABL Credit Agreement contains customary negative covenants limiting our ability and the ability of our subsidiaries, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the ABL Credit Agreement immediately due and payable and may exercise the other rights and remedies provided for under the ABL Credit Agreement and related loan documents. The events of default under the ABL Credit Agreement include, subject to grace periods in certain instances, payment defaults, cross defaults with certain other indebtedness, breaches of covenants or representations and warranties, change in control of us and certain bankruptcy and insolvency events with respect to us meeting a materiality threshold set forth in the ABL Credit Agreement.

Junior Lien Term Loan Agreement

On July 16, 2018, we entered into the Junior Term Loan Agreement, which provides for a $157.1 million Tranche A Junior Term Loans and a $193.5 million Tranche B Junior Term Loans (collectively “Junior Term Loans”).  The Tranche A Junior Term Loans mature and principal is payable on July 15, 2030 and the Tranche B Junior Term Loans mature and principal is payable on July 15, 2031. Our obligations under the Junior Term Loan Agreement are guaranteed by our subsidiaries that guarantee the 2026 Notes as set forth in the Junior Term Loan Agreement.  Pursuant to the terms of the Junior Term Loan Agreement, affiliates of Chatham Asset Management, LLC may elect to convert up to $75.0 million in aggregate principal amount of 2029 Debentures owned by them into an equal principal amount of Tranche B Junior Term Loans or notes with terms substantially similar to the Tranche B Junior Term Loans upon written notice to us.

The Junior Term Loans were issued at premiums in order to use the proceeds of the loans to repurchase certain unsecured debentures at a quoted value as the close of business on July 13, 2018, and to use the remaining proceeds, along with the issuance of our 2026 Notes, to repurchase our 2022 Notes (see “Satisfaction and Discharge of 2022 Notes” and discussions below). 

The proceeds of the loans under the Junior Term Loan Agreement were used to effect the exchange with the lender of approximately $82.1 million in aggregate principal amount of 2027 Debentures, approximately $193.5 million in aggregate principal amount of 2029 Debentures and to pay fees, costs and expenses in connection with the debt refinancing.

We have the right to prepay loans under the Junior Term Loan Agreement, in whole or in part, at any time, at (i) specified prices that decline over time, plus accrued and unpaid interest, if any, in the case of Tranche A Junior Term Loans, and (ii) a price equal to 100% of the principal amount thereof, plus a “make-whole” premium and accrued and unpaid interest, if any, in the case of the Tranche B Junior Term Loans. Amounts prepaid may not be reborrowed. 

Tranche A Junior Term Loans bear interest at a rate per annum equal to 7.795% and Tranche B Junior Term Loans bear interest at a rate per annum equal to 6.875%. Interest on the loans is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019. 

The Junior Term Loan Agreement contains customary affirmative covenants, including covenants regarding the payment of taxes and other obligations, maintenance of insurance, reporting requirements and compliance with applicable laws and regulations. Further, the Junior Term Loan Agreement contains customary negative covenants limiting the ability of us, among other things, to incur debt, grant liens, make investments, make certain restricted payments and sell assets, subject to certain exceptions. Upon the occurrence and during the continuance of an event of default, the lenders may declare all outstanding principal and accrued and unpaid interest under the Junior Term Loan Agreement immediately due and payable and may exercise the other rights and remedies provided for under the Junior Term Loan Agreement and related loan documents. In general the affirmative and negative covenants of the Junior Term Loan Agreement are substantially the same as the covenants in the 2026 Notes Indenture.

Satisfaction and Discharge of 2022 Notes

On July 16, 2018, we deposited sufficient funds with the 2022 Notes Trustee to pay the redemption price payable in respect of all outstanding 2022 Notes, plus accrued and unpaid interest on the 2022 Notes up to, but excluding, the redemption date. The 2022 Notes were issued under the 2022 Notes Indenture.

As a consequence of the foregoing, we satisfied and discharged our obligations (subject to certain exceptions) under the 2022 Notes Indenture and the related security documents in accordance with the satisfaction and discharge provisions of the 2022 Notes Indenture. Upon the satisfaction and discharge of the 2022 Notes Indenture on July 16, 2018, all of the liens on the collateral securing the 2022 Notes were released and we and the guarantors were discharged from our respective obligations under the 2022 Notes and the guarantees thereof.

On July 16, 2018, the 2022 Notes Trustee, at our direction, delivered a notice of redemption to holders of all $344.1 million in aggregate principal amount of outstanding 2022 Notes. We paid a redemption premium of $15.5 million, which was equal to 4.5% of the outstanding principal amount.

The following table summarizes our ABL Credit Agreement and long-term debt as of July 16, 2018:

	Face Value at
	July 16,
(in thousands)	2018
ABL Credit Agreement	$	10,000
Notes:
9.00% senior secured notes due in 2026		310,000
7.795% tranche A junior term loan due in 2030		157,083
6.875% tranche B junior term loan due in 2030		193,466
7.150% unsecured debentures due in 2027		7,105
6.875% unsecured debentures due in 2029		82,764
Total long-term debt	$	760,418

The $10.0 million on the ABL Credit Agreement debt is due within the next five years and all other debt is due thereafter.

We expect to record a gain on extinguishment of debt related to our debt refinancing in the third quarter of 2018.

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jul. 01, 2018

SIGNIFICANT ACCOUNTING POLICIES

Business and Basis of Accounting

Business and Basis of Accounting

The McClatchy Company (“Company,” “we,” “us” or “our”) operates 30 media companies in 14 states, providing each of its communities with high-quality news and advertising services in a wide array of digital and print formats. We are a publisher of brands such as the Miami Herald, The Kansas City Star, The Sacramento Bee, The Charlotte Observer,  The (Raleigh) News & Observer, and the (Fort Worth) Star-Telegram. We are headquartered in Sacramento, California, and our Class A Common Stock is listed on the NYSE American under the symbol MNI.

Preparation of the financial statements in conformity with accounting principles generally accepted in the United States and pursuant to the rules and regulation of the Securities and Exchange Commission requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. The condensed consolidated financial statements include the Company and our subsidiaries. Intercompany items and transactions are eliminated. 

In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, that are necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. The financial statements contained in this report are not necessarily indicative of the results to be expected for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”). Each of the fiscal periods included herein comprise 13 weeks for the second-quarter periods and 26 weeks for the six-month periods. See Note 9, Subsequent Events, for a discussion of recent refinancing transactions subsequent to the end of our second quarter of 2018.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

We account for certain assets and liabilities at fair value.  The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

Level 1 – Unadjusted quoted prices available in active markets for identical investments as of the reporting date.

Level 2 – Observable inputs to the valuation methodology are other than Level 1 inputs and are either directly or indirectly observable as of the reporting date and fair value can be determined through the use of models or other valuation methodologies.

Level 3 – Inputs to the valuation methodology are unobservable inputs in situations where there is little or no market activity for the asset or liability, and the reporting entity makes estimates and assumptions related to the pricing of the asset or liability including assumptions regarding risk.

Our policy is to recognize significant transfers between levels at the actual date of the event or circumstance that caused the transfer. 

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Cash and cash equivalents, accounts receivable and accounts payable.  As of July 1, 2018, and December 31, 2017,  the carrying amount of these items approximates fair value because of the short maturity of these financial instruments.

Long-term debt.  The fair value of our long-term debt is determined using quoted market prices and other inputs that were derived from available market information, including the current market activity of our publicly-traded notes and bank debt, trends in investor demand for debt and market values of comparable publicly-traded debt. These are considered to be Level 2 inputs under the fair value measurements and disclosure guidance and may not be representative of actual value. At July 1, 2018 and December 31, 2017, the estimated fair value of long-term debt, including the current portion of long-term debt, was $639.2 million and $810.7 million, respectively. At July 1, 2018, and December 31, 2017, the carrying value of our long-term debt, including the current portion of long-term debt, if any, was $688.4 million and $781.4 million, respectively.

Certain assets are measured at fair value on a nonrecurring basis; that is, they are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). Our non-financial assets that may be measured at fair value on a nonrecurring basis are assets held for sale, goodwill, intangible assets not subject to amortization and equity method investments. All of these are measured using Level 3 inputs. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. The significant unobservable inputs include the expected cash flows and the discount rates that we estimate market participants would seek for bearing the risk associated with such assets.

Newsprint, ink and other inventories

Newsprint, ink and other inventories

Newsprint, ink and other inventories are stated at the lower of cost (based principally on the first‑in, first‑out method) and net realizable value. During the six months ended June 25, 2017, we recorded a $2.0 million write‑down of non-newsprint inventory, which is reflected in the other asset write-downs line on our condensed consolidated statement of operations. There were no similar write-downs of newsprint, ink or other inventories during the quarter and six months ended July 1, 2018.

Property, Plant and Equipment

Property, Plant and Equipment

Depreciation expense with respect to property, plant and equipment is summarized below:

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Depreciation expense	$	7,295	$	7,531	$	14,492	$	15,252

Assets Held For Sale

Assets Held for Sale

During the six months ended July 1, 2018, we began to actively market for sale the land and buildings at two of our media companies. In connection with classifying these assets as assets held for sale, the carrying value of the land and building at one of the properties was reduced to its estimated fair value less selling costs, as determined based on the current market conditions and the estimated selling price. As a result, an impairment charge of $0.1 million was recorded during the six months ended July 1, 2018, and is included in other asset write-downs on our condensed consolidated statement of operations. The land and building at this property were sold during the quarter ended July 1, 2018, with no gain or additional loss. The assets at the second property remain classified as assets held for sale.

Intangible Assets and Goodwill

Intangible Assets and Goodwill

We test for impairment of goodwill annually at year‑end, or whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The required approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. Impairment testing is done at a reporting unit level. We perform this testing on our operating segments, which are also considered our reporting units. An impairment loss is recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. The fair value of our reporting units is determined using a combination of a discounted cash flow model and market based approaches. The estimates and judgments that most significantly affect the fair value calculation are assumptions related to revenue growth, newsprint prices, compensation levels, discount rate, hypothetical transaction structures, and for the market based approach, private and public market trading multiples for newspaper assets. We consider current market capitalization, based upon the recent stock market prices plus an estimated control premium, in determining the reasonableness of the aggregate fair value of the reporting units. We had no impairment of goodwill during the quarter and six months ended July 1, 2018 or June 25, 2017.

Newspaper mastheads (newspaper titles and website domain names) are not subject to amortization and are tested for impairment annually at year‑end, or more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test consists of a comparison of the fair value of each newspaper masthead with its carrying amount. We use a relief-from-royalty approach, which utilizes the discounted cash flow model to determine the fair value of each newspaper masthead. We had no impairment of newspaper mastheads during the quarter and six months ended July 1, 2018, or June 25, 2017. 

Long‑lived assets such as intangible assets subject to amortization (primarily advertiser and subscriber lists) are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. The carrying amount of each asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of such asset group. We had no impairment of long‑lived assets subject to amortization during the quarter and six months ended July 1, 2018, or June 25, 2017.

Financial Obligations

Financial Obligations

Financial obligations consist of contributions of real properties to the Pension Plan in 2016 and 2011, and real property previously owned by The Sacramento Bee that was sold and leased back during the third quarter of 2017. In April 2018, we sold and leased back real property owned by The State in Columbia, SC, and as a result, our long-term financial obligations increased by approximately $14.6 million during the second quarter of 2018.

Segment Reporting

Segment Reporting

We operate 30 media companies, providing each of our communities with high-quality news and advertising services in a wide array of digital and print formats. We have two operating segments that we aggregate into a single reportable segment because each has similar economic characteristics, products, customers and distribution methods. Our operating segments are based on how our chief executive officer, who is also our Chief Operating Decision Maker (“CODM”), makes decisions about allocating resources and assessing performance. The CODM is provided discrete financial information for the two operating segments. Each operating segment consists of a group of media companies and both operating segments report to the same segment manager. One of our operating segments (“Western Segment”) consists of our media companies’ operations in the West and Midwest, while the other operating segment (“Eastern Segment”) consists primarily of media operations in the Carolinas and East.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Our accumulated other comprehensive loss (“AOCL”) and reclassifications from AOCL, net of tax, consisted of the following: 

			Other
	Minimum		Comprehensive
	Pension and		Loss
	Post-		Related to
	Retirement		Equity
(in thousands)	Liability		Investments		Total
Balance at December 31, 2017	$	(442,406)	$	(6,963)	$	(449,369)
Amounts reclassified from AOCL		11,099		—		11,099
Other comprehensive income		11,099		—		11,099
Balance at July 1, 2018	$	(431,307)	$	(6,963)	$	(438,270)

	Amount Reclassified from AOCL
	Quarters Ended				Six Months Ended
(in thousands)	July 1,		June 25,		July 1,		June 25,		Affected Line in the Condensed
AOCL Component	2018		2017		2018		2017		Consolidated Statements of Operations
Minimum pension and post-retirement liability	$	5,549	$	4,284	$	11,099	$	8,569	Retirement benefit expense
		—		(1,714)		—		(3,428)	Benefit for income taxes (1)
	$	5,549	$	2,570	$	11,099	$	5,141	Net of tax

_____________________

(1)There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance.    

Income Taxes

Income Taxes

We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted. The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (i) reducing the U.S. federal corporate rate from 35% to 21%; (ii) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (iii) creating a new limitation on deductible interest expense; (iv) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (v) bonus depreciation that will allow for full expensing of qualified property; and (vi) limitations on the deductibility of certain executive compensation.

The SEC staff issued Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides that the measurement period for the tax effects of the Tax Act should not extend more than one year from the date the Tax Act was enacted. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but the company is able to determine a reasonable estimate, the company must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740, Income Taxes, on the basis of the provisions of the tax laws that were in effect immediately before the Tax Act was enacted. We continue to evaluate the tax implications of the changes to the Tax Act for which our accounting was incomplete, including the impact on state taxes, certain compensation arrangements and depreciation. We will record appropriate adjustments, if any, in the periods in which we conclude our analysis.

A tax valuation allowance is required when it is more-likely-than-not that all or a portion of deferred tax assets may not be realized. The timing of recording or releasing a valuation allowance requires significant judgment. Establishment and removal of a valuation allowance requires us to consider all positive and negative evidence and to make a judgmental decision regarding the amount of valuation allowance required as of a reporting date. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as operating profitability. The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

We performed our assessment of the deferred tax assets during the third and fourth quarters of 2017, weighing the positive and negative evidence as outlined in ASC 740-10, Income Taxes. As we have incurred three years of cumulative pre-tax losses, such objective negative evidence limits our ability to give significant weight to other positive subjective evidence, such as projections for future growth and profitability. As of December 31, 2017, our valuation allowance against a majority of our deferred tax assets was $109.7 million. For the quarter and six months ended July 1, 2018, we recorded a valuation allowance charge of $10.1 million and $24.4 million, respectively, which is recorded in income tax (benefit) expense on our condensed consolidated statements of operations. Our valuation allowance as of July 1, 2018, was $134.1 million.

We will continue to maintain a valuation allowance against our deferred tax assets until we believe it is more likely than not that these assets will be realized in the future. If sufficient positive evidence arises in the future that provides an indication that all of or a portion of the deferred tax assets meet the more likely than not standard, the valuation allowance may be reversed, in whole or in part, in the period that such determination is made. 

Current generally accepted accounting principles prescribe a recognition threshold and measurement of a tax position taken or expected to be taken in an enterprise’s tax returns. We recognize accrued interest related to unrecognized tax benefits in interest expense. Accrued penalties are recognized as a component of income tax expense.

Earnings Per Share (EPS)

Earnings Per Share (EPS)

Basic EPS excludes dilution from common stock equivalents and reflects income divided by the weighted average number of common shares outstanding for the period.  Diluted EPS is based upon the weighted average number of outstanding shares of common stock and dilutive common stock equivalents in the period.  Common stock equivalents arise from dilutive stock appreciation rights and restricted stock units, and are computed using the treasury stock method. Anti-dilutive common stock equivalents are excluded from diluted EPS. The weighted average anti-dilutive common stock equivalents that could potentially dilute basic EPS in the future, but were not included in the weighted average share calculation, consisted of the following:

	Quarters Ended		Six Months Ended
	July 1,	June 25,	July 1,	June 25,
(shares in thousands)	2018	2017	2018	2017
Anti-dilutive common stock equivalents	198	388	201	325

Cash Flow Information

Cash Flow Information

Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:

	July 1,		December 31,
(in thousands)	2018		2017
Cash and equivalents	$	20,128	$	99,387
Restricted cash included in other assets(1)		31,967		31,967
Total cash, cash equivalents and restricted cash	$	52,095	$	131,354

_____________________

(1)Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease. 

Cash paid for interest and income taxes and other non-cash activities consisted of the following:

	Six Months Ended
	July 1,		June 25,
(in thousands)	2018		2017
Interest paid (net of amount capitalized)	$	29,244	$	35,127
Income taxes paid (net of refunds)		12,019		8,870
Other non-cash investing and financing activities related to pension plan transactions:
Reduction of financing obligation due to sale of real properties by pension plan		(2,667)		—
Reduction of PP&E due to sale of real properties by pension plan		(2,854)		—

Recently Adopted and Issued Not Yet Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09 (“Topic 606”), “Revenue from Contracts with Customers.” Topic 606 supersedes the revenue recognition requirements in Topic 605 "Revenue Recognition." ASU 2014-09 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. Topic 606 requires revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In 2016 and 2017, the FASB issued additional updates: ASU No. 2016-08, 2016-10, 2016-11, 2016-12, 2016-20 and 2017-05. These updates provided further guidance and clarification on specific items within the previously issued update. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. See Note 2 for further details.

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” ASU 2016-01 addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. We adopted ASU 2016-01 as of January 1, 2018, on a prospective basis but it did not have an impact on our condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” ASU 2016-15 addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. We adopted ASU 2016-15 as of January 1, 2018, retrospectively but it did not have an impact on our condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” ASU 2016-18 addresses the presentation of restricted cash in the statement of cash flows. The standard requires an entity to include restricted amounts with cash and cash equivalents in the statement of cash flows. An entity will no longer present transfers between cash and cash equivalents and restricted amounts on the statement of cash flows. We adopted ASU 2016-18 as of January 1, 2018, using the retrospective transition method to each period presented. As a result of the adoption, net cash provided by operating activities was adjusted to exclude the changes in restricted cash, resulting in a decrease of $1.0 million in the six months ended June 25, 2017, on our condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Accounting Standards Codification 842 (“ASC 842”)) and it replaces the existing guidance in ASC 840, “Leases.” ASC 842 requires lessees to recognize most leases on their balance sheets as lease liabilities with corresponding right-of-use assets. The new lease standard does not substantially change lessor accounting. In 2018, the FASB issued ASU No. 2018-01 that provides further guidance and clarification on specific items within the previously issued update. ASC 842 is effective for us for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. We are evaluating the impact this standard will have on our condensed consolidated financial statements, but expect an increase in assets and liabilities on our condensed consolidated balance sheet. We plan to finalize our determination of the impact by the end of the fourth quarter of 2018.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis. The income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected credit losses during the period. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. It is effective for us for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted for interim or annual reporting periods beginning after December 15, 2018. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

In February 2018, the FASB issued ASU No. 2018-02, “Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU 2018-02 allows for reclassification of stranded tax effects resulting from the Tax Act from accumulated other comprehensive income to retained earnings. Consequently, the standard eliminates the stranded tax effects resulting from the Tax Act and will improve the usefulness of information reported to financial statement users. However, because the standard only relates to the reclassification of the income tax effects of the Tax Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. This standard also requires certain disclosures about the stranded tax effects. It is effective for us for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. We are currently in the process of evaluating the impact of the adoption on our condensed consolidated financial statements.

XML

SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jul. 01, 2018

SIGNIFICANT ACCOUNTING POLICIES

Schedule of components of property, plant and equipment

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Depreciation expense	$	7,295	$	7,531	$	14,492	$	15,252

Schedule of components of accumulated other comprehensive loss, net of tax

			Other
	Minimum		Comprehensive
	Pension and		Loss
	Post-		Related to
	Retirement		Equity
(in thousands)	Liability		Investments		Total
Balance at December 31, 2017	$	(442,406)	$	(6,963)	$	(449,369)
Amounts reclassified from AOCL		11,099		—		11,099
Other comprehensive income		11,099		—		11,099
Balance at July 1, 2018	$	(431,307)	$	(6,963)	$	(438,270)

Schedule of reclassification out of accumulated other comprehensive income

	Amount Reclassified from AOCL
	Quarters Ended				Six Months Ended
(in thousands)	July 1,		June 25,		July 1,		June 25,		Affected Line in the Condensed
AOCL Component	2018		2017		2018		2017		Consolidated Statements of Operations
Minimum pension and post-retirement liability	$	5,549	$	4,284	$	11,099	$	8,569	Retirement benefit expense
		—		(1,714)		—		(3,428)	Benefit for income taxes (1)
	$	5,549	$	2,570	$	11,099	$	5,141	Net of tax

_____________________

(1)There is no income tax benefit associated with the quarter and six months ended July 1, 2018, due to the recognition of a valuation allowance. 

Summary of anti-dilutive stock options

	Quarters Ended		Six Months Ended
	July 1,	June 25,	July 1,	June 25,
(shares in thousands)	2018	2017	2018	2017
Anti-dilutive common stock equivalents	198	388	201	325

Reconciliation of cash, cash equivalents and restricted cash

Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:

	July 1,		December 31,
(in thousands)	2018		2017
Cash and equivalents	$	20,128	$	99,387
Restricted cash included in other assets(1)		31,967		31,967
Total cash, cash equivalents and restricted cash	$	52,095	$	131,354

_____________________

(1)Restricted cash balances are certificates of deposits secured against letters of credit primarily related to contractual agreements with our workers’ compensation insurance carrier and a certain property lease.    

Schedule of cash paid for interest and income taxes and other non-cash activities

	Six Months Ended
	July 1,		June 25,
(in thousands)	2018		2017
Interest paid (net of amount capitalized)	$	29,244	$	35,127
Income taxes paid (net of refunds)		12,019		8,870
Other non-cash investing and financing activities related to pension plan transactions:
Reduction of financing obligation due to sale of real properties by pension plan		(2,667)		—
Reduction of PP&E due to sale of real properties by pension plan		(2,854)		—

XML

INTANGIBLE ASSETS AND GOODWILL (Tables)

6 Months Ended

Jul. 01, 2018

INTANGIBLE ASSETS AND GOODWILL

Schedule of intangible assets and goodwill

	December 31,		Amortization		July 1,
(in thousands)	2017		Expense		2018
Intangible assets subject to amortization	$	839,284	$	—	$	839,284
Accumulated amortization		(761,013)		(23,963)		(784,976)
		78,271		(23,963)		54,308
Mastheads		149,951		—		149,951
Goodwill		705,174		—		705,174
Total	$	933,396	$	(23,963)	$	909,433

Summary of amortization expense with respect to intangible assets

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Amortization expense	$	11,927	$	12,093	$	23,963	$	24,176

Amortization expense for the five succeeding fiscal years

The estimated amortization expense for the remainder of fiscal year 2018 and the five succeeding fiscal years is as follows: 

	Amortization
	Expense
Year	(in thousands)
2018 (Remainder)	$	23,697
2019		24,154
2020		803
2021		680
2022		655
2023		667

XML

LONG-TERM DEBT (Tables)

6 Months Ended

Jul. 01, 2018

LONG-TERM DEBT

Summary of company's long-term debt

	Face Value at		Carrying Value
	July 1,		July 1,		December 31,
(in thousands)	2018		2018		2017
Notes:
9.00% senior secured notes due in 2022	$	344,101	$	339,976	$	433,819
7.150% debentures due in 2027		89,188		85,458		85,262
6.875% debentures due in 2029		276,230		262,925		262,311
Long-term debt	$	709,519	$	688,359	$	781,392
Less current portion		—		—		74,140
Total long-term debt, net of current	$	709,519	$	688,359	$	707,252

Summary of reduction of outstanding debt

	Six Months Ended
	July 1,		June 25,
	2018		2017
(in thousands)	Face Value		Face Value
9.00% senior secured notes due in 2022	$	95,529	$	15,000

XML

EMPLOYEE BENEFITS (Tables)

6 Months Ended

Jul. 01, 2018

EMPLOYEE BENEFITS

Schedule of elements of retirement expense

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Pension plans:
Interest Cost		19,789		21,367	$	39,577	$	42,734
Expected return on plan assets		(22,624)		(22,393)		(45,248)		(44,785)
Actuarial loss		6,296		5,084		12,591		10,168
Net pension expense		3,461		4,058		6,920		8,117
Net post-retirement benefit credit		(682)		(730)		(1,363)		(1,462)
Net retirement benefit expenses	$	2,779	$	3,328	$	5,557	$	6,655

XML

STOCK PLANS (Tables)

6 Months Ended

Jul. 01, 2018

STOCK PLANS

Summary of the restricted stock units ("RSUs") activity

		Weighted
		Average Grant
		Date Fair
	RSUs	Value
Nonvested — December 31, 2017	245,794	$	11.55
Granted	218,580	$	9.10
Vested	(99,244)	$	13.31
Forfeited	(2,490)	$	11.41
Nonvested — July 1, 2018	362,640	$	9.59

Summary of the stock appreciation rights ("SARs") activity

The following table summarizes the stock appreciation rights (“SARs”) activity during the six months ended July 1, 2018: 

		Weighted		Aggregate
		Average		Intrinsic Value
	SARs	Exercise Price		(in thousands)
Outstanding December 31, 2017	156,175	$	32.12	$	—
Expired	(24,825)	$	38.60
Outstanding July 1, 2018	131,350	$	30.89	$	—

Summary of stock-based compensation expense

	Quarters Ended				Six Months Ended
	July 1,		June 25,		July 1,		June 25,
(in thousands)	2018		2017		2018		2017
Stock-based compensation expense	$	320	$	432	$	1,061	$	1,461

XML

SUBSEQUENT EVENTS (Tables)

6 Months Ended

Jul. 01, 2018

SUBSEQUENT EVENTS

Summary of ABL Credit Agreement and long-term debt

	Face Value at
	July 16,
(in thousands)	2018
ABL Credit Agreement	$	10,000
Notes:
9.00% senior secured notes due in 2026		310,000
7.795% tranche A junior term loan due in 2030		157,083
6.875% tranche B junior term loan due in 2030		193,466
7.150% unsecured debentures due in 2027		7,105
6.875% unsecured debentures due in 2029		82,764
Total long-term debt	$	760,418

XML

SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 01, 2018 USD ($) company item	Jul. 01, 2018 USD ($) company item	Dec. 31, 2017 USD ($)
Investments in Unconsolidated Companies Activity
Number of media companies | company	30	30
Number of states | item	14	14
Length of fiscal quarter	91 days	182 days
Long-term debt fair value disclosure
Estimated fair value of long-term debt	$ 639,200	$ 639,200	$ 810,700
Long-term debt	$ 688,359	$ 688,359	$ 781,392

XML

SIGNIFICANT ACCOUNTING POLICIES - PP&E, Intangibles (Details)	3 Months Ended		6 Months Ended
	Jul. 01, 2018 USD ($)	Jun. 25, 2017 USD ($)	Jul. 01, 2018 USD ($) segment company property	Jun. 25, 2017 USD ($)
Property, plant and equipment
Other asset write-downs			$ 59,000	$ 1,957,000
Depreciation expense	$ 7,295,000	$ 7,531,000	$ 14,492,000	15,252,000
Assets held for sale
Number of media companies with assets held for sale | company			2
Facilities with reduced carrying value | property			1
Impairment charge of assets held for sale			$ 100,000
Gain (loss) on sale of property	0
Intangible assets:
Goodwill impairment charge	0	0	0	0
Impairment charge of newspaper masthead	0	0	0	0
Intangible assets subject to amortization, net
Impairment of long-lived assets subject to amortization	0	$ 0	$ 0	0
Financial Obligations
Increase in financing obligations	14,600,000
Segment reporting
Number of operating segments | segment			2
Other asset write-downs
Property, plant and equipment
Write-down of non-newsprint inventory	$ 0		$ 0	$ 2,000,000

XML

SIGNIFICANT ACCOUNTING POLICIES - AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Changes in stockholders' equity
Balance at the beginning of the period			$ (449,369)
Amounts reclassified from AOCL			11,099
Other comprehensive income	$ 5,549	$ 6,544	11,099	$ 9,187
Balance at the end of the period	(438,270)		(438,270)
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Retirement benefit expense	2,779	3,328	5,557	6,655
Benefit for income taxes	3,618	(21,080)	11,490	(76,529)
Net of tax	20,365	37,446	59,306	133,021
Minimum Pension and Post-Retirement Liability
Changes in stockholders' equity
Balance at the beginning of the period			(442,406)
Amounts reclassified from AOCL			11,099
Other comprehensive income			11,099
Balance at the end of the period	(431,307)		(431,307)
Minimum Pension and Post-Retirement Liability | Amount Reclassified from AOCI
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Retirement benefit expense	5,549	4,284	11,099	8,569
Benefit for income taxes		(1,714)		(3,428)
Net of tax	5,549	$ 2,570	11,099	$ 5,141
Other Comprehensive Loss Related to Equity Investments
Changes in stockholders' equity
Balance at the beginning of the period			(6,963)
Balance at the end of the period	$ (6,963)		$ (6,963)

XML

SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended			6 Months Ended	12 Months Ended
	Jul. 01, 2018	Dec. 31, 2017	Sep. 24, 2017	Jul. 01, 2018	Dec. 31, 2017
SIGNIFICANT ACCOUNTING POLICIES
Statutory rate (as a percent)				21.00%	35.00%
Measurement period					1 year
Number of years of pre-tax losses		3 years	3 years
Increase in valuation allowance	$ 10.1			$ 24.4
Valuation allowance against majority of deferred tax assets		$ 109.7			$ 109.7
Valuation allowance	$ 134.1			$ 134.1

XML

SIGNIFICANT ACCOUNTING POLICIES - EPS (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Anti-dilutive stock options
Weighted average anti-dilutive stock options
Anti-dilutive stock options (in shares)	198	388	201	325

XML

SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Jul. 01, 2018	Dec. 31, 2017	Jun. 25, 2017	Dec. 25, 2016
Reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets to the total of the same such amounts shown above:
Cash equivalents	$ 20,128	$ 99,387
Restricted cash included in other assets	31,967	31,967
Cash, cash equivalents and restricted cash	$ 52,095	$ 131,354	$ 38,380	$ 36,248

XML

SIGNIFICANT ACCOUNTING POLICIES - Cash Flow (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017
Cash Flow Information
Interest paid (net of amount capitalized)	$ 29,244	$ 35,127
Income taxes paid (net of refunds)	12,019	$ 8,870
Other non-cash financing activities
Reduction of financing obligation due to sale of real properties by pension plan	(2,667)
Reduction of PP&E due to sale of real properties by pension plan	$ (2,854)

XML

SIGNIFICANT ACCOUNTING POLICIES - Adopted Pronouncements (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net cash provided by operating activities			$ 9,292	$ 15,766
Labor and Related Expense	$ 77,937	$ 86,823	157,149	178,231
Pension and Other Postretirement Benefit Expense	$ 2,779	$ 3,328	$ 5,557	6,655
2016-18
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net cash provided by operating activities				$ (1,000)

XML

REVENUES (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 01, 2018	Jul. 01, 2018	Jan. 01, 2018	Dec. 31, 2017
Revenues
Accumulated deficit	$ (2,032,071)	$ (2,032,071)		$ (1,970,097)
Maximum
Revenues
Contract duration		1 year
Before and after Topic 606 | 2014-09
Revenues
Accumulated deficit			$ (2,700)
Revenues	$ 100	$ 400

XML

REVENUES - Unearned Revenues (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jul. 01, 2018	Dec. 31, 2017
REVENUES
Cash payments received or due in advance satisfying performance obligations		$ 49.1
Subscribers advance payment term (in years)	1 year
Advertiser maximum payment (in days)	30 days

XML

REVENUES - Practical Expedients and Exemptions (Details)	6 Months Ended
	Jul. 01, 2018
REVENUES
Practical expedient incremental cost of obtaining contract	true
Practical expedient, remaining performance obligation	true

XML

INTANGIBLE ASSETS AND GOODWILL (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Intangible assets subject to amortization, gross
Balance at the beginning of the period			$ 839,284,000
Balance at the end of the period	$ 839,284,000		839,284,000
Accumulated amortization
Balance at the beginning of the period			(761,013,000)
Amortization Expense	(11,927,000)	$ (12,093,000)	(23,963,000)	$ (24,176,000)
Balance at the end of the period	(784,976,000)		(784,976,000)
Intangible assets subject to amortization, net
Balance at the beginning of the period			78,271,000
Amortization Expense	(11,927,000)	(12,093,000)	(23,963,000)	(24,176,000)
Balance at the end of the period	54,308,000		54,308,000
Mastheads
Balance at the beginning of the period			149,951,000
Impairment Charges	0	0	0	0
Balance at the end of the period	149,951,000		149,951,000
Goodwill [Roll Forward]
Balance at the beginning of the period			705,174,000
Goodwill impairment charge	0	0	0	0
Balance at the end of the period	705,174,000		705,174,000
Total
Balance at the beginning of the period			933,396,000
Amortization Expense	(11,927,000)	$ (12,093,000)	(23,963,000)	$ (24,176,000)
Balance at the end of the period	$ 909,433,000		$ 909,433,000

XML

INTANGIBLE ASSETS AND GOODWILL - Amortization (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Estimated amortization expense
Amortization expense	$ 11,927	$ 12,093	$ 23,963	$ 24,176
2018 (Remainder)	23,697		23,697
2019	24,154		24,154
2020	803		803
2021	680		680
2022	655		655
2023	$ 667		$ 667

XML

INVESTMENTS IN UNCONSOLIDATED COMPANIES (Details) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended
	Jul. 31, 2017	Jul. 30, 2017	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Investments in unconsolidated companies and joint ventures
Distributions of income from equity investments					$ 2,876
Write down of certain unconsolidated investments				$ 46,147		$ 169,147
Career Builder LLC
Investments in unconsolidated companies and joint ventures
Proceeds from sale	$ 73,900
Distributions of income from equity investments	7,300		$ 2,800		$ 2,800
Gross proceeds	$ 66,600
Write down of certain unconsolidated investments				$ 45,600		$ 168,600
Ownership interest (as a percent)	3.00%	15.00%

XML

LONG-TERM DEBT (Details) - USD ($) $ in Thousands	Jul. 01, 2018	Dec. 31, 2017
Long-term debt disclosures
Face Value	$ 709,519
Total long-term debt, net of current	709,519
Carrying value	688,359	$ 781,392
Less current portion		74,140
Total long-term debt, net of current	688,359	707,252
Unamortized debt issuance costs and discounts	$ 21,200	$ 23,700
9.00% senior secured notes due in 2022
Long-term debt disclosures
Interest rate (as a percent)	9.00%	9.00%
Face Value	$ 344,101
Carrying value	$ 339,976	$ 433,819
7.150% unsecured debentures due in 2027
Long-term debt disclosures
Interest rate (as a percent)	7.15%	7.15%
Face Value	$ 89,188
Carrying value	$ 85,458	$ 85,262
6.875% unsecured debentures due in 2029
Long-term debt disclosures
Interest rate (as a percent)	6.875%	6.875%
Face Value	$ 276,230
Carrying value	$ 262,925	$ 262,311

XML

LONG-TERM DEBT - Debt Redemptions, Repurchases and Loss on Extinguishment of Debt (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017	Dec. 31, 2017
LONG-TERM DEBT
Loss on extinguishment of debt, net	$ (19)	$ (869)	$ (5,368)	$ (869)
9.00% senior secured notes due in 2022
LONG-TERM DEBT
Face value debt reduced	95,529	15,000	95,529	15,000
Debt redeemed through tender offer	$ 500		500
Amount of debt redeemed			$ 75,000
Debt repurchased privately		$ 15,000		$ 15,000	$ 20,000

XML

LONG-TERM DEBT - Debt Refinancing (Details) - USD ($) $ in Millions		6 Months Ended
	Jul. 16, 2018	Jul. 01, 2018	Dec. 31, 2017
9.00% senior secured notes due in 2022
LONG-TERM DEBT
Interest rate (as a percent)		9.00%	9.00%
Amount of debt redeemed		$ 75.0
Forecast | 9.00% senior secured notes due in 2022
LONG-TERM DEBT
Amount of debt redeemed	$ 344.1
Forecast | 9.00% senior secured notes due in 2026
LONG-TERM DEBT
Aggregate principal amount of notes issued	$ 310.0
Interest rate (as a percent)	9.00%

XML

LONG-TERM DEBT - Credit Agreement (Details) $ in Millions	Jul. 16, 2018 USD ($)	Jul. 01, 2018 USD ($)	Dec. 31, 2017	Oct. 21, 2014 USD ($)
Letter of credit
LONG-TERM DEBT
Outstanding letters of credit		$ 29.7
9.00% senior secured notes due in 2022
LONG-TERM DEBT
Interest rate (as a percent)		9.00%	9.00%
Third Amended and Restated Credit Agreement | 9.00% senior secured notes due in 2022 | Revolving credit facility
LONG-TERM DEBT
Outstanding line of credit		$ 0.0
LC Agreement | Bank of America
LONG-TERM DEBT
Duration of LC Agreement from July 16, 2018		90 days
LC Agreement | Bank of America | Letter of credit
LONG-TERM DEBT
Maximum borrowing capacity				$ 35.0
Outstanding letters of credit		$ 29.7
Percentage of aggregate undrawn amount of letter of credit required to provide cash collateral		101.00%
Forecast | ABL Credit Agreement | LIBOR
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	1.00%
Forecast | ABL Credit Agreement | Federal funds rate
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	0.50%
Forecast | ABL Credit Agreement | Minimum | LIBOR
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	1.75%
Forecast | ABL Credit Agreement | Minimum | Base rate
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	0.75%
Forecast | ABL Credit Agreement | Maximum
LONG-TERM DEBT
Interest payable period	3 months
Forecast | ABL Credit Agreement | Maximum | LIBOR
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	2.25%
Forecast | ABL Credit Agreement | Maximum | Base rate
LONG-TERM DEBT
Basis spread on variable rate (as a percent)	1.25%
Forecast | ABL Credit Agreement | Revolving credit facility
LONG-TERM DEBT
Minimum fixed charge coverage ratio	1.10
Minimum percentage of loan amount maintain	12.50%
Minimum amount of debt maintain	$ 8.1
Number of threshold consecutive days	30 days
Forecast | ABL Credit Agreement | Wells Fargo | Revolving credit facility
LONG-TERM DEBT
Maximum borrowing capacity	$ 65.0
Forecast | ABL Credit Agreement | Wells Fargo | Letter of credit
LONG-TERM DEBT
Maximum borrowing capacity	$ 35.0

XML

LONG-TERM DEBT - Junior Lien Term Loan Agreement (Details) - USD ($) $ in Thousands	Jul. 16, 2018	Jul. 01, 2018	Dec. 31, 2017
LONG-TERM DEBT
Aggregate principal amount of outstanding, redemptions notice issued		$ 709,519
Carrying value of long-term debt		$ 688,359	$ 781,392
7.150% unsecured debentures due in 2027
LONG-TERM DEBT
Interest rate (as a percent)		7.15%	7.15%
Aggregate principal amount of outstanding, redemptions notice issued		$ 89,188
Carrying value of long-term debt		$ 85,458	$ 85,262
6.875% unsecured debentures due in 2029
LONG-TERM DEBT
Interest rate (as a percent)		6.875%	6.875%
Aggregate principal amount of outstanding, redemptions notice issued		$ 276,230
Carrying value of long-term debt		$ 262,925	$ 262,311
Forecast | Tranche A | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon
LONG-TERM DEBT
Maximum borrowing capacity	$ 157,100
Forecast | Tranche B | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon
LONG-TERM DEBT
Maximum borrowing capacity	193,500
Forecast | 7.150% unsecured debentures due in 2027 | The Bank of New York Mellon
LONG-TERM DEBT
Carrying value of long-term debt	7,100
Forecast | 7.150% unsecured debentures due in 2027 | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon
LONG-TERM DEBT
Proceeds from Issuance of Long-term debt	$ 82,100
Forecast | 7.795% tranche A junior term loan due in 2030 | Tranche A | The Bank of New York Mellon
LONG-TERM DEBT
Interest rate (as a percent)	7.795%
Forecast | 6.875% unsecured debentures due in 2029 | The Bank of New York Mellon
LONG-TERM DEBT
Carrying value of long-term debt	$ 82,800
Forecast | 6.875% unsecured debentures due in 2029 | Junior Lien Term Loan Credit Agreement | The Bank of New York Mellon
LONG-TERM DEBT
Proceeds from Issuance of Long-term debt	$ 193,500
Forecast | 6.875% unsecured debentures due in 2029 | Tranche B | The Bank of New York Mellon
LONG-TERM DEBT
Interest rate (as a percent)	6.875%

XML

EMPLOYEE BENEFITS (Details) - Pension plan	6 Months Ended
	Jul. 01, 2018 USD ($) item
EMPLOYEE BENEFITS
Number of new participants | item	0
Further benefits | $	$ 0

XML

EMPLOYEE BENEFITS - Retirement and Post retirement costs - (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2018	Jul. 01, 2018	Jun. 25, 2017	Jul. 01, 2018	Jun. 25, 2017
Retirement expense for continuing operations
Net pension expense		$ 2,779	$ 3,328	$ 5,557	$ 6,655
Matching contributions		600		1,300
Pension plan
Retirement expense for continuing operations
Interest cost		19,789	21,367	39,577	42,734
Expected return on plan assets		(22,624)	(22,393)	(45,248)	(44,785)
Actuarial loss		6,296	5,084	12,591	10,168
Net pension expense		3,461	4,058	6,920	8,117
Proceeds from sale of real property location	$ 4,100
(Loss) on sale of real property location		(200)		(200)
Post-retirement plans
Retirement expense for continuing operations
Net pension expense		$ (682)	$ (730)	$ (1,363)	$ (1,462)

XML

COMMITMENTS AND CONTINGENCIES - Legal Proceedings (Details) $ in Millions	1 Months Ended		6 Months Ended
	Feb. 28, 2009 item	Dec. 31, 2008 item	Jul. 01, 2018 USD ($) item
Letter of credit
Contingencies
Outstanding letters of credit | $			$ 29.7
"Sacramento Case"
Contingencies
Number of carriers	5,000
Number of phases			3
"Fresno Case"
Contingencies
Number of carriers		3,500
Number of phases			2

XML

STOCK PLANS - Activity (Details) $ / shares in Units, $ in Millions	6 Months Ended
	Jul. 01, 2018 USD ($) $ / shares shares
RSUs
RSU's
Nonvested at the beginning of the period (in shares) | shares	245,794
Granted (in shares) | shares	218,580
Vested (in shares) | shares	(99,244)
Forfeited (in shares) | shares	(2,490)
Nonvested at the end of the period (in shares) | shares	362,640
Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 11.55
Granted (in dollars per share) | $ / shares	9.10
Vested (in dollars per share) | $ / shares	13.31
Forfeited (in dollars per share) | $ / shares	11.41
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 9.59
Additional disclosures
Total fair value | $	$ 0.9
Stock options and SARs
Options/SARs
Outstanding at the beginning of the period (in shares) | shares	156,175
Expired (in shares) | shares	(24,825)
Outstanding at the end of the period (in shares) | shares	131,350
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 32.12
Expired (in dollars per share) | $ / shares	38.60
Outstanding at the end of the period (in dollars per share) | $ / shares	$ 30.89

XML

STOCK PLANS - Stock-based compensation (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2018 USD ($)	Jun. 25, 2017 USD ($)	Jul. 01, 2018 USD ($) item	Jun. 25, 2017 USD ($)
STOCK PLANS
Number of stock-based compensation plans | item			2
Stock-based compensation expense | $	$ 320	$ 432	$ 1,061	$ 1,461

XML

SUBSEQUENT EVENTS (Details) $ in Thousands	Jul. 16, 2018 USD ($)	Jul. 13, 2018	Jul. 01, 2018 USD ($)	Dec. 31, 2017
Lessor of
Long-term debt			$ 709,519
9.00% senior secured notes due in 2022
Subsequent Events
Interest rate (as a percent)			9.00%	9.00%
Lessor of
Long-term debt			$ 344,101
6.875% unsecured debentures due in 2029
Subsequent Events
Interest rate (as a percent)			6.875%	6.875%
Lessor of
Long-term debt			$ 276,230
7.150% unsecured debentures due in 2027
Subsequent Events
Interest rate (as a percent)			7.15%	7.15%
Lessor of
Long-term debt			$ 89,188
Subsequent event
Lessor of
Long-term debt	$ 760,418
Subsequent event | ABL Credit Agreement
Subsequent Events
Maximum borrowing capacity	$ 46,400
Percentage of Eligible Advertising Accounts	85.00%
Percentage of Eligible Unbilled Advertising Accounts Receivable	80.00%
Lessor of
Value of unbilled advertising accounts receivable	$ 3,000
Book value of eligible inventory	$ 6,000
Book value of eligible inventory (as a percent)	50.00%
Amount borrowed	$ 10,000
Remaining borrowing capacity	36,400
Long-term debt	$ 10,000
Subsequent event | ABL Credit Agreement | Revolving credit facility
Subsequent Events
Minimum percentage of loan amount maintain	12.50%
Maximum borrowing capacity	$ 65,000
Lessor of
Minimum amount of debt maintain	$ 8,100
Minimum fixed charge coverage ratio	1.10
Number of threshold consecutive days	30 days
Subsequent event | ABL Credit Agreement | Letter of credit
Subsequent Events
Maximum borrowing capacity	$ 35,000
Subsequent event | ABL Credit Agreement | Maximum
Lessor of
Interest payable period	3 months
Subsequent event | Junior Lien Term Loan Credit Agreement
Lessor of
Principal amount of debt (as a percent)	100.00%
Subsequent event | Junior Lien Term Loan Credit Agreement | Tranche A
Subsequent Events
Interest rate (as a percent)	7.795%
Maximum borrowing capacity	$ 157,100
Subsequent event | Junior Lien Term Loan Credit Agreement | Tranche B
Subsequent Events
Interest rate (as a percent)	6.875%
Maximum borrowing capacity	$ 193,500
Subsequent event | LIBOR | ABL Credit Agreement
Lessor of
Basis spread on variable rate (as a percent)	1.00%
Subsequent event | LIBOR | ABL Credit Agreement | Minimum
Lessor of
Basis spread on variable rate (as a percent)	1.75%
Subsequent event | LIBOR | ABL Credit Agreement | Maximum
Lessor of
Basis spread on variable rate (as a percent)	2.25%
Subsequent event | Federal funds rate | ABL Credit Agreement
Lessor of
Basis spread on variable rate (as a percent)	0.50%
Subsequent event | Base rate | ABL Credit Agreement | Minimum
Lessor of
Basis spread on variable rate (as a percent)	0.75%
Subsequent event | Base rate | ABL Credit Agreement | Maximum
Lessor of
Basis spread on variable rate (as a percent)	1.25%
Subsequent event | 9.00% senior secured notes due in 2022 | Junior Lien Term Loan Credit Agreement
Lessor of
Repayments of long-term debt	$ 193,500
Subsequent event | 6.875% unsecured debentures due in 2029
Subsequent Events
Interest rate (as a percent)	6.875%	6.875%
Lessor of
Long-term debt	$ 82,764
Subsequent event | 6.875% unsecured debentures due in 2029 | Junior Lien Term Loan Credit Agreement | Tranche B
Lessor of
Debt conversion amount	$ 75,000
Subsequent event | 7.150% unsecured debentures due in 2027
Subsequent Events
Interest rate (as a percent)	7.15%	7.15%
Lessor of
Long-term debt	$ 7,105
Subsequent event | 7.150% unsecured debentures due in 2027 | Junior Lien Term Loan Credit Agreement
Lessor of
Repayments of long-term debt	$ 82,100
Subsequent event | 9.00% senior secured notes due in 2026
Subsequent Events
Interest rate (as a percent)	9.00%
Repurchase price (as percent)	101.00%
Minimum percentage of loan amount maintain	25.00%
Lessor of
Long-term debt	$ 310,000
Subsequent event | 9.00% senior secured notes due in 2026 | Private Placement
Subsequent Events
Interest rate (as a percent)	9.00%
Aggregate principal amount of notes issued	$ 310,000

XML

SUBSEQUENT EVENTS - Others (Details) - USD ($) $ in Thousands		6 Months Ended
	Jul. 16, 2018	Jul. 01, 2018	Jul. 13, 2018	Dec. 31, 2017
Subsequent Events
Face Value		$ 709,519
9.00% senior secured notes due in 2022
Subsequent Events
Amount of debt redeemed		$ 75,000
Interest rate (as a percent)		9.00%		9.00%
Face Value		$ 344,101
7.150% unsecured debentures due in 2027
Subsequent Events
Interest rate (as a percent)		7.15%		7.15%
Face Value		$ 89,188
6.875% unsecured debentures due in 2029
Subsequent Events
Interest rate (as a percent)		6.875%		6.875%
Face Value		$ 276,230
Subsequent event
Subsequent Events
Face Value	$ 760,418
Subsequent event | 9.00% senior secured notes due in 2022
Subsequent Events
Amount of debt redeemed	344,100
Redemption premium paid	$ 15,500
Redemption of debt as a percentage of principle amount	4.50%
Subsequent event | 9.00% senior secured notes due in 2026
Subsequent Events
Redemption of debt as a percentage of principle amount	100.00%
Interest rate (as a percent)	9.00%
Face Value	$ 310,000
Subsequent event | 9.00% senior secured notes due in 2026 | Maximum
Subsequent Events
Redemption of debt as a percentage of principle amount	40.00%
Subsequent event | 7.795% tranche A junior term loan due in 2030
Subsequent Events
Interest rate (as a percent)	7.795%
Face Value	$ 157,083
Subsequent event | 6.875% tranche B junior term loan due in 2030
Subsequent Events
Interest rate (as a percent)	6.875%
Face Value	$ 193,466
Subsequent event | 7.150% unsecured debentures due in 2027
Subsequent Events
Interest rate (as a percent)	7.15%		7.15%
Face Value	$ 7,105
Subsequent event | 6.875% unsecured debentures due in 2029
Subsequent Events
Interest rate (as a percent)	6.875%		6.875%
Face Value	$ 82,764
Subsequent event | ABL Credit Agreement
Subsequent Events
Face Value	$ 10,000
Subsequent event | ABL Credit Agreement | Maximum
Subsequent Events
Debt term (in years)	5 years