CENTRAL NEWSPAPERS INC, S-3/A, 1998-12-09

CENTRAL NEWSPAPERS INC
S-3/A, 1998-12-09
NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1998.

REGISTRATION NO. 333-67077

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

CENTRAL NEWSPAPERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

<TABLE>
<S> <C> <C>
INDIANA 2711 35-0220660
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
</TABLE>

-------------------------
200 EAST VAN BUREN STREET, PHOENIX, ARIZONA 85004
602-444-1122
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

ERIC S. TOOKER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL
AND CORPORATE SECRETARY
CENTRAL NEWSPAPERS, INC.
200 EAST VAN BUREN STREET
PHOENIX, ARIZONA 85004
602-444-1100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)

------------------------

COPIES OF ALL COMMUNICATIONS TO:

<TABLE>
<S> <C>
O. WAYNE DAVIS, ESQ. WINTHROP B. CONRAD, JR., ESQ.
HENDERSON, DAILY, WITHROW & DEVOE DAVIS POLK & WARDWELL
2600 ONE INDIANA SQUARE 450 LEXINGTON AVENUE
INDIANAPOLIS, INDIANA 46204 NEW YORK, NEW YORK 10017
TELEPHONE: 317-639-4121 TELEPHONE: 212-450-4590
</TABLE>

-------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after this Registration Statement becomes effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2

THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT
SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Subject to Completion. Dated December 9, 1998.

1,162,478 Shares

[CNI LOGO]

Class A Common Stock

-------------------------

All of the shares of Common Stock in the offering are being sold by the
Nina Mason Pulliam Charitable Trust. Central Newspapers, Inc. will not receive
any of the proceeds from the sale of the shares being sold by the Charitable
Trust.

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "ECP." The last reported sale price of the Class A Common Stock was
$ per share.

See "Risk Factors" on page 8 to read about certain factors you should
consider before buying shares of the Class A Common Stock.

-------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

-------------------------

<TABLE>
<CAPTION>
Per
Share Total
--------- --------
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses, to the Charitable Trust.......... $ $
</TABLE>

The underwriters may, under certain circumstances, purchase up to an
additional 174,372 shares from the Charitable Trust at the public offering price
less the underwriting discount.

GOLDMAN, SACHS & CO. DONALDSON, LUFKIN & JENRETTE

-------------------------

Prospectus dated [ ], 1999.

<PAGE> 3

COMPANIES AND PUBLICATIONS OF CENTRAL NEWSPAPERS, INC.

ALEXANDRIA NEWSPAPERS, INC.
Alexandria Daily Town Talk
McCormick Graphics and PressWorks
Internet address: http://www.thetowntalk.com

CAREER SERVICES, INC.
Westech ExpoCorp.
JobsAmerica
High Technology Careers Magazine
Internet address:
http://www.vjf.com

CENTRAL NEWSPAPERS, INC.
Internet address: http://www.centralnews.com

HOMEBUYER'S FAIR, INC.
Internet address: http://www.homefair.com and http://www.theschoolreport.com

MUNCIE NEWSPAPERS, INC.
The Muncie Star Press
The Advertiser Group
Internet address: http//www.thestarpress.com

PHOENIX NEWSPAPERS, INC.
The Arizona Republic
The Arizona Business Gazette
Internet address: http://www.azcentral.com

TOPICS NEWSPAPERS, INC.
The Daily Ledger
15 Community Weeklies

VINCENNES NEWSPAPERS, INC.
The Vincennes Sun-Commercial

INDIANAPOLIS NEWSPAPERS, INC.
The Indianapolis Star
The Indianapolis News
Internet address: http//www.starnews.com

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<PAGE> 4

AVAILABLE INFORMATION

We file annual, quarterly, and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
These reports, proxy statements and other information can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
following Regional Offices of the Commission: New York Regional Office, 7 World
Trade Center, Suite 1300, New York, New York 10048 and Chicago Regional Office,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, the Commission maintains a Website on the Internet
(http://www.sec.gov) that contains these reports, proxy statements and other
information. These reports, proxy statements and other information are also
available for inspection and copying at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, on which the Class A
Common Stock is listed.

We have filed with the Commission a Registration Statement on Form S-3 (of
which this prospectus is a part) under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the shares of Class A Common Stock
offered hereby. This prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Statements contained in this
prospectus as to the contents of any contract or any other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit or schedule to the Registration
Statement, each such statement being qualified in all respects by such reference
and the exhibits and schedules thereto. For further information with respect to
Central Newspapers, Inc. and the Class A Common Stock, you should read the
Registration Statement, including the exhibits filed as a part thereof. The
Registration Statement and the exhibits thereto may be inspected without charge
at the office of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549
and copies thereof may be obtained from the Commission at prescribed rates.

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<PAGE> 5

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which we have previously filed (File No. 1-10333)
with the Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), are incorporated herein by reference and made a part
hereof:

1. Our Annual Report on Form 10-K for the fiscal year ended December 28,
1997, which incorporates by reference certain portions of (a) our 1997
Annual Report to Shareholders and (b) our proxy statement for the 1998
Annual Meeting of Shareholders;

2. Our Quarterly Report on Form 10-Q dated May 1, 1998;

3. Our Quarterly Report on Form 10-Q dated August 4,1998;

4. Our Quarterly Report on Form 10-Q dated November 5, 1998; and

5. The Description of Capital Stock contained in our Registration Statement
on Form 10 filed September 13, 1989.

All documents we file with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this prospectus and prior to
the termination of the offering of the shares will be deemed to be incorporated
by reference herein and to be part hereof from the date of filing of such
documents. In the case of a conflict, statements in documents most recently
filed with the Commission should be relied upon.

We will provide to you, without charge, a copy of the documents which have
been or may be incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Oral or written requests for such copies should be directed to
Central Newspapers, Inc., 200 East Van Buren Street, Phoenix, Arizona 85004,
Attention: Chief Financial Officer (telephone 602-444-1100).

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<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements appearing elsewhere, or
incorporated by reference, in this prospectus. In this prospectus, the
"Company," "we," "us" and "our" refer to Central Newspapers, Inc. and its
consolidated subsidiaries. In addition, the "Charitable Trust" or the "Selling
Shareholder" refers to the Nina Mason Pulliam Charitable Trust.

THE COMPANY

We publish the only major daily newspapers in the greater Phoenix
metropolitan area and central Indiana. Our flagship newspapers are The Arizona
Republic in Phoenix and The Indianapolis Star in Indianapolis. These newspapers
have been published for over a century. According to circulation statistics
compiled by the Newspaper Association of America, The Arizona Republic has been
one of the fastest growing major daily morning newspapers in the country over
the last three years. According to the Audit Bureau of Circulation, our
circulation penetration at December 31, 1997 as set forth below was among the
highest in the industry:

<TABLE>
<CAPTION>
DAILY SUNDAY
----- ------
<S> <C> <C>
- The Arizona Republic 41% 52%

- The Indianapolis Star
and the Indianapolis
News 42% 60%
</TABLE>

Our control of the only major daily newspaper in each of our key markets is
of critical importance in attracting and maintaining advertising which is our
principal source of revenue. Moreover, we generate in excess of 80% of our
circulation from subscriptions, thereby adding relative stability to our revenue
base.

We have benefited from the continuing economic growth and development of
our key markets. With 2.9 million residents in the greater Phoenix metropolitan
area, Phoenix is the nation's seventh largest city. In the greater Phoenix
metropolitan area, growth across several diverse economic sectors, from
manufacturing and construction to trade and services, has outpaced the national
average over the past three years. Phoenix led the nation in job growth for
1997, and its 1997 average annual unemployment rate of 2.9% was below the
national unemployment rate of 4.9%. Its manufacturing base, a substantial
portion of which comes from high technology, is projected by the Greater Phoenix
Economic Council to grow faster than the national rate. The greater Indianapolis
metropolitan area, with 1.5 million residents, has also experienced solid
economic and population growth, and its 1997 average annual unemployment rate of
2.8% was well below the national average. Its economy is anchored by a large and
diverse industrial base, including such major corporations as Eli Lilly and
Company, Conseco, Inc., and Dow AgroSciences. Large downtown development
projects such as the Convention Center, the RCA Dome and Circle Centre, a large
retail shopping center, have also bolstered the regional economy.

We also own and operate several smaller newspapers in Central Indiana and
Louisiana, as well as:

- Westech ExpoCorp., which organizes job fairs for the high tech industry;

- High Technology Careers, which publishes High Technology Careers
Magazine;

- Virtual Job Fair (http:/www.vjf.com), an internet-based resume posting
and research service;

- Homebuyer's Fair, Inc., which provides Internet services and information
for people who are moving and corporations that are relocating their
employees; and

- a commercial printer.

We have consistently grown our revenues, earnings before non-operating
income and interest expense, taxes, depreciation, amortization and costs
associated with asset impairments and workforce reductions ("EBITDA") and net
income over the last five

5
<PAGE> 7

years. For the five fiscal years ended
December 28, 1997, we recorded compound annual growth in revenues and EBITDA of
10.6% and 20.2%. For the fiscal year ended December 28, 1997, we generated
revenues of $716.1 million, EBITDA of $193.1 million and net income of $81.5
million. In 1997, we derived 76% of our revenue from advertising, 20% from
circulation, and 4% from other sources. Our EBITDA as a percentage of revenues
("EBITDA margin") was 27% for this period, representing the fifth year of
improving EBITDA margin out of the last six years. Key drivers of our financial
success include the expansion of advertising and circulation revenue in our
existing markets, the implementation of certain cost-cutting measures, the
repurchase of our common stock, and the development of product line extensions
to meet the information needs of the market we serve.

Our financial objective is to continue to build value for our shareholders
by focusing on the strengths inherent in our current markets while selectively
pursuing acquisitions. The principal elements of our strategy are as follows:

- ENHANCE ADVERTISING AND CIRCULATION REVENUE BASE. Controlling the only
major daily newspapers in our key markets affords us a competitive
advantage in attracting and maintaining advertising, especially compared
to other advertising vehicles such as radio and television broadcasting
stations, each of which individually reach a significantly smaller
audience. We continue to expand our advertising revenue base by
developing long-term relationships with key advertising accounts and
promoting cross-selling opportunities. We also recently reorganized the
sales and marketing departments at both The Arizona Republic and The
Indianapolis Star, incorporating more sales-based incentives into the
compensation structure, which we believe will produce greater
advertising revenue.

Our daily home-delivered subscription base represents more than 85% of
total circulation. The industry average is approximately 74%. This large
subscription base adds to the stability of our revenues, and we continue
to emphasize and improve the quality of daily home delivery.

- CONTINUE TO ACHIEVE COST EFFICIENCIES. We have recently identified
several areas for more efficient cost management and have begun to
pursue these opportunities. Recent initiatives include:

- the January 1997 closing of The Phoenix Gazette;

- the consolidation of The Muncie Star and the Muncie Evening
Press into The Star Press in May 1996;

- the implementation of client server computer systems in Phoenix;
and

- the consolidation of the editorial function in Indianapolis.

We continue to pursue opportunities like these, with a particular focus
on increasing production automation, improving distribution and
enhancing workforce productivity.

- SELECTIVELY PURSUE BRAND-ENHANCING ACQUISITIONS AND NEW PRODUCT
DEVELOPMENTS. We pursue acquisitions where we believe we can add or
derive significant value from our operating expertise or line extension
opportunities. Recent acquisitions include:

- the purchase of the Alexandria Daily Town Talk newspaper in
March 1996;

- the purchase of Westech in February 1997; and

- the purchase of Homebuyer's Fair in October 1997.

6
<PAGE> 8

Additional product developments include the development of web sites for
our major newspapers.

Our corporate headquarters' address is 200 East Van Buren Street, Phoenix,
Arizona 85004 and our telephone number is (602) 444-1100.

SELLING SHAREHOLDER

The Nina Mason Pulliam Charitable Trust indirectly acquired 5,073,600
shares of Class A Common Stock and 3,732,500 shares of Class B Common Stock from
the estate of Nina Mason Pulliam, the widow of our founder. On October 23, 1998,
we repurchased 2,500,000 shares of Class A Common Stock from the Charitable
Trust at $60 per share. In addition, in November 1998, we repurchased 1,500,000
shares of our Class A Common Stock from the Charitable Trust at $67 per share,
pursuant to the exercise of an option. We also have an agreement with the
Charitable Trust which provides that:

- We will register up to 1,336,850 shares of Class A Common Stock for sale
by the Charitable Trust under the federal securities laws. The offering
made by this prospectus is pursuant to this provision.

- The Charitable Trust may not otherwise sell any shares of Class A Common
Stock before September 21, 1999.

See "Selling Shareholder."

THE OFFERING

The following information assumes that the underwriters do not exercise the
option granted by the Charitable Trust to purchase additional shares in the
offering. See "Underwriting."

<TABLE>
<S> <C>
Class A Common Stock offered by the Charitable
Trust....................................... 1,162,478
Common Stock to be Outstanding after the
Offering(1):
Class A Common Stock........................ 17,407,468
Class B Common Stock........................ 29,456,720
New York Stock Exchange symbol................ "ECP"
Use of Proceeds............................... We will not receive any of the
proceeds from this offering
</TABLE>

- ---------------

(1) As of December 4, 1998 and assumes that the Charitable Trust will convert
1,888,780 shares of Class B Common Stock into 188,878 shares of Class A Common
Stock in order to facilitate this offering.

RECENT EVENTS

On December 8, 1998, our board of directors declared a two-for-one split of
the Class A and Class B Common Stock. The board also declared the regular
quarterly dividend (pre-split) of $0.24 per share of its Class A Common Stock
and $0.024 on its Class B Common Stock. The stock dividend and cash dividend
will be distributed on January 8, 1999 to holders of record of Class A and Class
B Common Stock as of the close of business on December 18, 1998.

In addition, on December 8, 1998, it was announced that Frank E. Russell
would retire as chairman of the Company at the end of the year. The board
elected current president and chief executive officer Louis A. Weil as chairman
of the Company effective December 31, 1998.

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<PAGE> 9

RISK FACTORS

You should carefully consider the risks described below before making an
investment decision. The risks and uncertainties described below are not the
only ones facing our company. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial may also impair our business
operations.

If any of the following risks actually occur, our business, financial
condition or results of operations could be materially affected. As a result,
the trading price of our Class A Common Stock could decline, and you may lose
all or part of your investment.

This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.

DEPENDENCE ON SUBSCRIPTION BASE

We derive a major source of revenue from our sale of newspapers through
subscriptions. Our daily home-delivered subscription base represents more than
85% of our total circulation, which exceeds the newspaper industry average of
approximately 74%. While our large subscription base adds relative stability to
our revenue base and we continue to improve the quality of daily home delivery,
our circulation is still largely dependent on such factors as our market
position, preferences of readers, and the development of new forms of
information dissemination (e.g. Internet). Any decline in circulation due to
such factors could have a material adverse effect on our financial condition and
results of operations.

DEPENDENCE ON LOCAL ECONOMIES

Presently, we benefit from the economic growth and development of our key
markets -- Phoenix, Arizona and Indianapolis, Indiana. Our advertising revenues
and, to a lesser extent, circulation revenues are dependent on a variety of
factors specific to the communities we serve. These factors include, among
others, the size and demographic characteristics of the local population, the
local economic conditions and local weather conditions. If any of these factors
were to be adversely affected, there could be no assurance that our financial
condition or results of operations would not be adversely affected.

NEWSPAPER INDUSTRY COMPETITION

Most of our revenues are derived from two sources: advertising expenditures
and newspaper sales. The primary competition for advertising expenditures and
newspaper sales comes from alternative sources of news and information, like
regional and national newspapers, television, radio, direct mail, the Internet,
as well as other forms of communication. These alternative sources of news and
information could materially impact our advertising and sales, and thus affect
our revenues and operating costs.

Competition for advertising expenditures is based largely upon advertiser
results, readership, advertising rates, demographics and circulation levels.
Competition for newspaper sales is based largely upon the content of the
newspaper, its price and the effectiveness of its distribution. Our control of
the only major daily newspapers in each of our key markets is of critical
importance in maintaining both sales and advertising. Thus, any direct
competition in our respective markets could impair our significant market
position and consequently have an adverse effect on our revenues and operating
costs.

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<PAGE> 10

COLLECTIVE BARGAINING AGREEMENTS

Approximately 40% of our employees are covered by a total of 23 collective
bargaining agreements. Given the large number of collective bargaining
agreements, we are frequently involved in labor negotiations. As of December 4,
1998, we were involved in ongoing negotiations with respect to five different
bargaining agreements, involving approximately 350 employees engaged in various
trades at our facilities. No assurance can be given as to the outcome of these
negotiations or as to the impact of such negotiations or agreements in the
future.

DEPENDENCE ON NEWSPRINT

Significant increases in newsprint costs, or an insufficient supply could
have a material adverse effect on our financial condition or results of
operations. This is because newsprint is the basic raw material used in our
business. We consumed approximately 179,400 metric tons of newsprint in fiscal
year 1997, and our consumption is estimated to be approximately 190,000 tons in
1998. This increase is due primarily to linage and circulation gains in 1998. We
currently obtain our newsprint from a number of suppliers, both foreign and
domestic, a majority of which are under long-term contracts.

Newsprint costs are cyclical and vary widely from period to period. Price
changes are the major factor in these fluctuations. Likewise, our newsprint
costs are affected by our changing volume needs. Our recent volume increase of
3.4% for the first nine-month period in 1998 over the comparable 1997 period was
related to increased advertising linage and circulation gains. We anticipate
that newsprint expense comparisons will continue to show slight increases during
the last quarter of 1998 due to higher prices and volume increases.

Given the fluctuations in newsprint costs, we cannot predict whether any
increase in costs of newsprint will occur or the amount or timing of any
increase.

FLUCTUATION OF QUARTERLY RESULTS

Generally, newspaper companies tend to follow a distinct and recurring
seasonal revenue pattern. The first quarter of the year (January-March) tends to
be the weakest quarter because advertising volume is then at its lowest level.
The fourth quarter (October-December) tends to be the strongest quarter, as it
includes heavy holiday season advertising. Our business reflects this
seasonality, with our peak revenues and profits generally occurring in the
second and fourth quarter of each year. We expect that seasonal fluctuations in
revenue will continue to affect our results of operations in future periods.
Therefore, results of operations in any period should not be considered
indicative of the results to be expected for any future periods.

RISKS IN GROWTH STRATEGY

Our growth strategy of strengthening our presence in our existing markets
presents risks inherent in assessing the value, strengths and weaknesses of
acquisition opportunities, in evaluating the costs of new growth opportunities
and in expanding into new products and improving our operating efficiency. We
are unable to predict the number or timing of future acquisition opportunities,
or whether any such opportunities will meet our acquisition criteria. Moreover,
if such acquisitions occur, we are unable to predict whether they will be a
success.

Likewise, our growth strategy also depends on our ability to achieve cost
efficiencies through increasing production automation, improving distribution
and enhancing work force productivity. There can be no assurances that we will
be able to successfully implement this strategy in the future.

CONTROL BY EUGENE C. PULLIAM TRUST

Although we have two classes of voting common stock, Class A Common Stock
and Class B Common Stock, holders of the Class A Common Stock have one-tenth of
one vote per share, while holders of the Class B Common Stock have one vote per
share on all matters upon which shareholders are entitled to vote. Presently, a
majority of

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<PAGE> 11

our voting power is held by the Eugene C. Pulliam Trust, which owns
approximately 73% of our Class B Common Stock and approximately 69% of our
combined voting power. The concentration of voting control by this trust may
affect decisions made on behalf of the Company. For example, this trust has the
ability to elect all of the members of the Board of Directors and thus could
control the policies and operations of our businesses. Thus, circumstances may
occur in which the interest of this trust may be in conflict with the interest
of the holders of Class A Common Stock.

ANTI-TAKEOVER EFFECT OF THE

EUGENE C. PULLIAM TRUST

Under the terms of the Eugene C. Pulliam Trust, the trustees are directed
not to take or approve any action by us that would cause the trust to have less
voting power with respect to us or any corporation into which we are merged or
consolidated, than its proportion of the voting power at the time of the
execution of the trust (54%). Specifically, the trust's provisions prohibit it
from selling, exchanging, pledging or otherwise disposing of its stock, as well
as approving any reorganization or recapitalization, including mergers and
consolidations, that would dilute the trust's voting power. As a result, this
may make it more difficult for a third party to acquire a majority of our
outstanding capital stock. Likewise, certain provisions of Indiana law
applicable to us could also delay, deter or prevent a merger, tender offer, or
other takeover attempts.

INTEREST RATE EXPOSURE

On October 23, 1998, we repurchased 2,500,000 shares of Class A Common
Stock from the Nina Mason Pulliam Charitable Trust for $150.8 million, which
includes related interest cost. In addition, in November 1998, we repurchased
1,500,000 shares of our Class A Common Stock from the Charitable Trust for
$100.5 million. These repurchases were financed with a $300 million revolving
credit facility. As a result of this indebtedness, our earnings are more
susceptible to interest rate fluctuations than before.

POTENTIAL LITIGATION EXPOSURE

We are from time to time named as defendants in litigation in which the
plaintiffs claim significant damages. As a newspaper company, we are especially
susceptible to libel and invasion of privacy actions. As a result, there is a
risk that an adverse judgment may have a material adverse effect on our
financial condition or results of operations.

RISK OF YEAR 2000 NONCOMPLIANCE

We have developed a comprehensive program to identify, evaluate, test,
upgrade or replace each of our computer and non-computer based systems in
connection with Year 2000 readiness.

Despite these efforts, we could potentially experience a disruption in our
operations as a result of potential noncompliance of certain vendors, financial
institutions, governmental agencies or other third parties or external systems.
This disruption could potentially affect various aspects of our business
operations, including the timeliness and content of certain newspapers or online
products. At this time, we are unable to determine whether the consequences of
Year 2000 failures would have a material impact on our results of operations,
liquidity or financial condition.

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<PAGE> 12

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDEND POLICY

The Class A Common Stock is listed on the New York Stock Exchange under the
symbol "ECP." The Class B Common Stock is not publicly traded. The following
table sets forth the high and low reported sale prices for the Class A Common
Stock for the periods indicated as reported on the New York Stock Exchange
Composite Tape and the dividends declared and subsequently paid with respect to
the Class A Common Stock and the Class B Common Stock for such periods:

<TABLE>
<CAPTION>
CLASS A COMMON DIVIDENDS PER
STOCK PRICE SHARE
------------------ ------------------
HIGH LOW CLASS A CLASS B
---- --- ------- -------
<S> <C> <C> <C> <C>
1996
First quarter..................................... $37 7/8 $30 3/4 $0.17 $0.017
Second quarter.................................... 38 3/8 34 1/8 0.17 0.017
Third quarter..................................... 39 3/8 33 3/8 0.19 0.019
Fourth quarter.................................... 44 1/4 38 1/4 0.19 0.019
----- ------
$0.72 $0.072
1997
First quarter..................................... $50 3/4 $43 3/8 $0.19 $0.019
Second quarter.................................... 71 5/8 47 7/8 0.19 0.019
Third quarter..................................... 76 1/4 65 7/8 0.21 0.021
Fourth quarter.................................... 76 7/8 65 3/8 0.21 0.021
----- ------
$0.80 $0.080
1998
First quarter..................................... 74 1/4 62 1/16 $0.21 $0.021
Second quarter.................................... 74 15/16 61 5/8 0.21 0.021
Third quarter..................................... 70 1/8 57 0.24 0.024
Fourth quarter (through December [ ], 1998)......
</TABLE>

On December [ ], 1998, the reported last sale price for the Class A Common
Stock was $[ ] per share on the New York Stock Exchange. On December 8,
1998, our Board of Directors declared a $0.24 dividend per share of Class A
Common Stock ($0.024 per share with respect to the Class B Common Stock) payable
on January 8, 1999, to holders of record on December 18, 1998.

While future dividends will be subject to the discretion of our Board of
Directors, the Board of Directors currently intends to continue the policy of
paying cash dividends on a quarterly basis. However, future dividends will
depend upon our results of operations, financial condition, capital expenditure
program and other factors, some of which are beyond our control. There can be no
assurance as to whether or when our Board of Directors will change the current
policy regarding dividends.

USE OF PROCEEDS

All of the shares of Class A Common Stock being offered hereby are being
sold by the Selling Shareholder. We will not receive any proceeds from the
offering.

11
<PAGE> 13

CAPITALIZATION

The following table sets forth our unaudited capitalization as of September
27, 1998, and as adjusted to reflect our repurchases of an aggregate of
4,000,000 shares of Class A Common Stock from the Charitable Trust. Funding for
these repurchases came from a $300 million revolving credit facility, which is
accounted for as long-term debt.

<TABLE>
<CAPTION>
SEPTEMBER 27, 1998
--------------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents................................... $ 32,049 $ 32,049
======== ========
Short-term borrowings....................................... $ 5,000 $ 5,000
======== ========
Long-term debt.............................................. $ -- $250,500
-------- --------
Redeemable preferred stock issued by subsidiary............. 18,920 18,920
-------- --------
Shareholders' equity:
Preferred Stock, issuable in series:
Authorized -- 25,000,000 shares
Issued -- none......................................... -- --
Class A Common Stock -- without par value:
Authorized -- 150,000,000 shares
Issued -- 21,314,058 and 17,314,058 shares............. 36,543 29,685
Class B Common Stock -- without par value:
Authorized -- 130,000,000 shares
Issued -- 31,345,500 and 31,345,500 shares............. 63 63
Retained earnings......................................... 343,707 100,065
Unamortized value of restricted stock..................... (1,419) (1,419)
Net unrealized gain on available-for-sale securities...... 1,330 1,330
-------- --------
Total shareholders' equity........................ 380,224 129,724
-------- --------
Total capitalization........................................ $399,144 $399,144
======== ========
</TABLE>

- -------------------------

(1) The adjusted retained earnings figure reflects the stock repurchases.

12
<PAGE> 14

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data in the following table (other than
the financial data for the thirty-nine weeks ended September 28, 1997 and
September 27, 1998) for each of the five fiscal years in the period ended
December 28, 1997 have been derived from our consolidated financial statements
which, for the fiscal year ended December 28, 1997, have been audited by
PricewaterhouseCoopers LLP and, with respect to the other fiscal years, have
been audited by Olive LLP (formerly Geo. S. Olive & Co. LLC), independent
auditors. See "Experts." The selected consolidated financial data should be read
in conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and notes
thereto appearing elsewhere in this prospectus and the other documents
incorporated herein by reference. The selected consolidated financial data for
the thirty-nine weeks ended September 28, 1997 and September 27, 1998 have been
derived from our unaudited financial statements and include, in the opinion of
the management, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the financial position and results of operations for
such periods. The results of operations for the thirty-nine weeks ended
September 27, 1998 are not necessarily indicative of the results expected for
the full fiscal year 1998.

13
<PAGE> 15

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
------------------------------------------------------------------------ -----------------------------
DECEMBER 26, DECEMBER 25, DECEMBER 31, DECEMBER 29, DECEMBER 28, SEPTEMBER 28, SEPTEMBER 27,
1993 1994 1995(1) 1996 1997 1997 1998
------------ ------------ ------------ ------------ ------------ ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Operating revenues:
Advertising......... $346,566 $395,450 $446,693 $479,474 $541,311 $395,790 $411,885
Circulation......... 118,032 121,823 129,537 134,133 143,153 106,545 112,376
Other............... 1,969 2,429 3,671 6,708 31,673 22,293 30,787
-------- -------- -------- -------- -------- -------- --------
466,567 519,702 579,901 620,315 716,137 524,628 555,048
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Compensation........ 199,266 217,078 222,748 228,316 239,783 177,434 181,787
Newsprint and ink... 68,336 76,247 110,085 113,171 105,467 76,846 84,100
Other operating
costs............. 106,042 116,944 129,362 137,875 177,829 128,422 145,622
Depreciation and
amortization...... 25,810 26,639 28,487 35,528 42,022 32,179 34,613
Asset impairment
cost.............. -- -- -- 4,226 -- -- --
Work force reduction
cost.............. 1,491 7,064 3,328 1,340 9,999 9,355 77
-------- -------- -------- -------- -------- -------- --------
400,945 443,972 494,010 520,456 575,100 424,236 446,199
-------- -------- -------- -------- -------- -------- --------
Operating income...... 65,622 75,730 85,891 99,859 141,037 100,392 108,849
Other income-net.... 2,417 4,965 8,154 4,009 2,152 1,751 2,808
-------- -------- -------- -------- -------- -------- --------
Income before income
taxes............. 68,039 80,695 94,045 103,868 143,189 102,143 111,657
Provision for income
taxes............. 27,948 32,847 38,048 42,431 58,797 42,304 46,231
-------- -------- -------- -------- -------- -------- --------
Income before
minority interest
and equity in
affiliate......... 40,091 47,848 55,997 61,437 84,392 59,839 65,426
Minority interest in
subsidiaries...... (3,683) (2,977) (1,409) (1,629) (2,566) (1,975) (1,937)
Equity in affiliate,
net of tax........ (4,280) (3,550) (590) 1,726 (331) (255) 803
Net income.......... $ 32,128 $ 41,321 $ 53,998 $ 61,534 $ 81,495 $ 57,609 $ 64,292
======== ======== ======== ======== ======== ======== ========
Net income per
common share:
Basic............. $ 1.21 $ 1.55 $ 2.03 $ 2.31 $ 3.17 $ 2.22 $ 2.57
Diluted........... $ 1.20 $ 1.54 $ 2.01 $ 2.28 $ 3.08 $ 2.16 $ 2.49
======== ======== ======== ======== ======== ======== ========
Average common
shares
outstanding:
Basic............. 26,571 26,621 26,651 26,619 25,732 25,918 25,061
Diluted........... 26,706 26,825 28,869 27,038 26,473 26,635 25,771
</TABLE>

14
<PAGE> 16

- -------------------------

(1) 53-week year.

(2) Earnings before non-operating income and interest expense (other
income-net), taxes, depreciation, amortization and costs associated with
asset impairments and workforce reductions "special charges" ("EBITDA"). We
believe that EBITDA is a valuable indicator of pre-tax profitability and
also is used commonly by the financial and investment community to analyze
communications and media companies. However, EBITDA is not derived pursuant
to generally accepted accounting principles ("GAAP") and therefore should
not be construed as an alternative to operating income or as a measure of
liquidity. EBITDA as defined herein may not be comparable to other similar
measurements, as entities define these non-GAAP measurements in different
ways.

15
<PAGE> 17

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Our principal line of business is newspaper publishing. Revenues are
derived primarily from advertising and newspaper sales in the Phoenix, Arizona
and Indianapolis, Indiana metropolitan areas. We also have an 80% interest in
the Westech group of companies, which is predominantly in the jobs fair business
and a 13.5% interest in Ponderay, a partnership formed to own a newsprint mill
in the State of Washington. The following analysis should be read in conjunction
with the fiscal 1997 consolidated financial statements and the accompanying
notes to the consolidated financial statements.

Our business tends to be seasonal, with peak revenues and profits generally
occurring in the second and fourth quarters of each year. The results for 1995,
1996 and 1997 reflect these seasonal patterns. In addition, the 1996 and 1997
fiscal years each included 52 weeks and fiscal year 1995 included 53 weeks.

RECENT EVENTS

On October 23, 1998, pursuant to a September 21, 1998 agreement, we
repurchased 2,500,000 shares of Class A Common Stock from the Nina Mason Pulliam
Charitable Trust at $60 per share (plus interest from September 16, 1998) for a
total consideration of $150.8 million. In addition, in November 1998, we
repurchased 1,500,000 shares of our Class A Common Stock, pursuant to the
exercise of an option from the Charitable Trust, at $67 per share for a total
consideration of $100.5 million. These repurchases were financed with a $300
million revolving credit facility arranged by First Chicago Capital Markets,
Inc. (a subsidiary of Bank One Corporation), and syndicated to a group of banks.
This $300 million revolving credit facility, which closed on November 10, 1998,
consists of a $200 million five-year and a $100 million 364-day revolving credit
facility. The credit facility may be used for general corporate purposes,
including the repurchase of common stock. Under the credit facility, we can
choose among loans with interest rates based on either an Alternative Base Rate
(fixed rate), an Adjusted LIBOR (floating rate), or a Competitive Bid (a
floating rate loan based on bids solicited from the lenders) as those terms are
defined in the credit agreement. We must maintain compliance with certain
covenants under the terms of the credit facility.

At our annual meeting of shareholders on May 15, 1998, our shareholders
approved an increase in the number of authorized shares of Class A Common Stock
from 75,000,000 to 150,000,000 shares and Class B Common Stock from 50,000,000
to 130,000,000 shares.

In December 1997, the Board of Directors authorized additional repurchases
of up to $100.0 million of our Class A Common Stock. The shares may be purchased
within the subsequent three years on the open market or in privately negotiated
transactions. We have repurchased a total of 897,730 shares under this
authorization through September 27, 1998 at a total cost of approximately $58.1
million. This authorization replaces the March 19, 1996, repurchase program
under which we repurchased 745,000 shares of Class A Common Stock at a cost of
approximately $33.2 million.

In October 1997, we acquired an 80% interest in Homebuyer's Fair, Inc.
which provides internet-based services and information for people who are moving
and corporations that are relocating employees. In September 1998, we increased
our ownership to 89%. We have an option to purchase the remaining 11%, which is
exerciseable on or after December 31, 2000.

In May 1997, we repurchased an aggregate of 1,177,367 shares of Class A
Common Stock from three non-profit organizations at a total cost of $58.6
million.

In February 1997, we acquired 80% of Westech for $34.8 million. Westech
consists of Westech ExpoCorp., which organizes job fairs for the high-tech
industry; High Technology Careers, which publishes High Tech-

16
<PAGE> 18

nology Careers Magazine and Virtual Job Fair (http://www.vjf.com), an
internet-based resume posting and research service; and JobsAmerica, which
organizes job fairs for service industry positions. Westech had $32.2 million in
revenues in 1997. In June 1997, Westech acquired the assets of Target Career
Fairs, a Boston-based company that organizes job fairs for the high-technology
industry in the eastern portion of the U.S., including the cities of Boston,
Raleigh, Orlando, Philadelphia and St. Louis. Target had 1996 revenues of
approximately $3.0 million.

Effective January 18, 1997, we ceased publication of the afternoon
newspaper, The Phoenix Gazette, and realigned the news gathering structure of
our morning newspaper, The Arizona Republic. These changes caused us to record a
one-time pre-tax charge to earnings of approximately $4.3 million in 1997, and
resulted in a reduction in operating expenses of approximately $5.0 million in
1997 and ongoing annual operating expense savings in future years of
approximately $6.4 million. A substantial portion of the savings are derived
from the approximately 85 positions eliminated as a result of these actions.

On January 3, 1997, we acquired the remaining 9.8% of Indianapolis
Newspapers, Inc. ("INI") common stock that we did not already own. This
transaction, which was recorded using purchase accounting, was accomplished by
issuing the minority shareholders an aggregate of 1,892 shares of newly created,
non-voting, INI preferred stock with an aggregate stated value of approximately
$18.9 million in exchange for the shares of INI common stock owned by them. The
preferred stock provides for aggregate annual dividends of approximately $1.3
million on a cumulative basis, is callable in five years by INI, and is
redeemable at any time by the shareholders of INI at the stated value plus
accrued but unpaid dividends. This transaction did not have a material effect on
earnings.

On March 12, 1996, we purchased Alexandria Newspapers, Inc. ("ANI") which
owns the Alexandria Daily Town Talk newspaper of Alexandria, Louisiana and
McCormick Graphics, Inc., a commercial printing subsidiary. The purchase price
was approximately $62.0 million in cash. The acquisition has contributed
positively to both net income and EBITDA (earnings before non-operating income
and interest expense, taxes, depreciation, amortization and special charges).

NINE MONTH PERIOD ENDED SEPTEMBER 27, 1998 COMPARED WITH THE COMPARABLE

1997 PERIOD

RESULTS OF OPERATIONS

Year-to-date diluted earnings per share for 1998 was $2.49, an increase of
15.3% over the corresponding 1997 period. The effects of work force reduction
costs (special charges) negatively impacted earnings in the first nine months of
1997 and, to a lesser extent, the second quarter of 1998. Excluding special
charges, diluted earnings per share would have been $2.50 for the 1998 nine
month period, which represented an increase of 5.5% over comparable 1997
amounts.

Operating income for the first nine months of 1998 was $108.8 million,
which represented an increase of 8.4% over the comparable 1997 period. Excluding
special charges, operating income decreased 0.7% for the nine month period over
the comparable 1997 period.

Net income for the first nine months of 1998 was $64.3 million, up 11.6%
over the prior comparable period. Had we not incurred the work force reduction
costs, net income for the nine months would have been $64.3 million versus $63.1
million for the nine month period in 1997. EBITDA for the comparable periods was
$143.5 million year-to-date, representing an increase of 1.1%, versus comparable
1997 periods.

OPERATING REVENUES

Our nine month revenues rose to $555.0 million for an increase of 5.8%,
when compared with the same 1997 period.

Total advertising revenues for the nine month period ended September 27,
1998 were $411.9 million for an increase of 4.1%, over the comparable 1997
period. The

17
<PAGE> 19

increase in advertising revenues for the nine months of 1998 was primarily due
to gains in the classified recruitment category in both major markets.

Circulation revenues for the year-to-date period increased to $112.4
million, for an increase of 5.5% when compared to 1997. The increase is
primarily due to Phoenix circulation growth, a distribution system change in
Indianapolis which resulted in a revenue increase of $4.3 million, and a home
delivered price increase in Phoenix.

Other revenues for the nine months increased $30.8 million over the first
nine months of 1997 due primarily to an increase in Westech job fair business,
online, direct marketing, and specialty publications.

The following is a summary of major market linage and circulation
statistics for the nine month periods:

<TABLE>
<CAPTION>
39 WEEKS ENDED
------------------------------
SEPTEMBER 28, SEPTEMBER 27, %
(IN THOUSANDS, EXCEPT CIRCULATION) 1997 1998 CHANGE
---------------------------------- ------------- ------------- ------
<S> <C> <C> <C>
Full run linage in six column inches:(1)
Retail.......................................... 1,875.20 1,950.50 4.0
National........................................ 333.80 333.40 (0.1)
Classified...................................... 2,365.00 2,378.20 0.6
--------- --------- ----
Total........................................... 4,574.00 4,662.10 1.9
========= ========= ====
Full run linage by major markets:
Phoenix(1)...................................... 2,075.70 2,133.20 2.8
Indianapolis.................................... 2,498.30 2,528.90 1.2
--------- --------- ----
Total........................................... 4,574.00 4,662.10 1.9
========= ========= ====
Net advertising revenue........................... $ 395,790 $ 411,885 4.1
Combined average daily circulation:
Phoenix......................................... 456,183 466,793 2.3
Indianapolis.................................... 268,421 270,221 0.7
Sunday circulation:
Phoenix......................................... 579,331 582,596 0.6
Indianapolis.................................... 392,955 390,911 (0.5)
</TABLE>

- -------------------------

(1) For comparability, linage statistics for the 39 weeks ended September 28,
1997 exclude linage of The Phoenix Gazette, which ceased publication in
January 1997.

OPERATING EXPENSES

Compensation costs, which include fringe benefits, increased 2.5% to $181.8
million for the nine month period. The year-over-year headcount decreased 2.7%
due primarily to the closure of The Phoenix Gazette and the impact of a
conversion from a carrier-based distribution arrangement to an agency-based
distribution work force in Indianapolis. These benefits were offset by increased
employee benefits, commissions and merit increases.

Newsprint and ink expense for 1998 increased 9.4% to $84.1 million for the
nine month period. The increases in newsprint expense were primarily due to
higher newsprint prices during 1998 and a volume increase of 3.4% for the nine
month period over comparable 1997 periods. These volume

18
<PAGE> 20

increases were related to increased
advertising linage and circulation gains. We anticipate that newsprint expense
comparisons may show modest increases during the fourth quarter of 1998.

Other operating costs rose 13.4% to $145.6 million for the nine month
period ending September 27, 1998. Significant items contributing to these
increases in 1998 versus the same 1997 period included:

- the circulation delivery system changes in Indianapolis;

- costs associated with outside printing of inserts and special
publications;

- new Phoenix and Indianapolis promotional/marketing programs;

- increased Arizona Republic delivery costs; and

- expenses related to the jobs fair business.

Depreciation and amortization expense for the nine month period was $34.6
million, compared with $32.2 million in 1997. The expense increases were
primarily a result of information technology projects in Phoenix as well as
pagination and remodeling projects in Indianapolis.

We recorded work force reduction costs of approximately $9.4 million for
the nine months ended September 28, 1997. Of this amount, approximately $4.2
million resulted from closure of The Phoenix Gazette where approximately 85
positions were eliminated. The balance of the charges relates to a composing
room work force reduction of 30 individuals in the third quarter and the
conversion of distribution systems in Indianapolis.

NON-OPERATING ITEMS AND EQUITY IN AFFILIATE

Other non-operating income (primarily investment income) increased 6.5% in
the first nine months of 1998 primarily due to an increase in investable cash.
Other non-operating expenses decreased year-to-date due to a reduction in
interest expense from 1997. Equity in Affiliate recorded gains in the nine month
period due to an increase in newsprint selling prices being realized by Ponderay
Newsprint Company.

FISCAL YEARS 1995, 1996 AND 1997

RESULTS OF OPERATIONS

Fiscal 1997 was the fourth consecutive year of record revenues and profits
for us. Set forth below are basic and diluted earnings per share for 1995, 1996
and 1997. All three years included work force reduction and asset impairment
costs, listed below as special charges, that negatively impacted earnings:

<TABLE>
<CAPTION>
BASIC BASIC
EARNINGS PER EARNINGS PER
SHARE BEFORE SHARE AFTER
SPECIAL SPECIAL SPECIAL
CHARGES CHARGES CHARGES
------------ ------- ------------
<S> <C> <C> <C>
1995................. $2.11 $.08 $2.03
1996................. 2.43 .12 2.31
1997................. 3.40 .23 3.17
</TABLE>

<TABLE>
<CAPTION>
DILUTED DILUTED
EARNINGS PER EARNINGS PER
SHARE BEFORE SHARE AFTER
SPECIAL SPECIAL SPECIAL
CHARGES CHARGES CHARGES
------------ ------- ------------
<S> <C> <C> <C>
1995................. $2.09 $.08 $2.01
1996................. 2.39 .11 2.28
1997................. 3.31 .23 3.08
</TABLE>

The results for 1995 include an additional week when compared with the 1997
and 1996 periods.

Operating income for 1995, 1996 and 1997 was $85.9 million, $99.9 million
and $141.0 million, respectively, rising 16.3% in 1996 and by 41.2% in 1997. The
1997 results include the effects of the Westech and McCormick acquisitions,
while 1996 includes the acquisition of McCormick for 10 months. All three years
include the effects of the special charges. EBITDA for the three year period
(excluding asset impairment and work force reduction costs) increased each year
to $117.7 million, $141.0 million and $193.1 million for 1995, 1996 and 1997,
respectively.

19
<PAGE> 21

Operating results, exclusive of special charges, acquisitions and the
fifty-third week of 1995, were as follows:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------- 1995-1996 1996-1997
(IN MILLIONS) 1995 1996 1997 % CHANGE % CHANGE
------------- ------ ------ ------ --------- ---------
<S> <C> <C> <C> <C> <C>
Advertising revenues.................. $439.3 $471.4 $521.0 7.3 10.5
Circulation revenues.................. 127.2 131.0 139.2 3.0 6.3
Other revenues........................ 3.7 3.0 4.5 (18.9) 50.0
------ ------ ------ ----- ----
TOTAL REVENUES...................... 570.2 605.4 664.7 6.2 9.8
Compensation.......................... 219.2 223.8 226.8 2.1 1.3
Newsprint and ink..................... 107.9 110.1 101.2 2.0 (8.1)
Other operating costs................. 128.0 134.5 162.4 5.1 20.7
Depreciation and amortization......... 28.5 33.4 36.9 17.2 10.5
------ ------ ------ ----- ----
TOTAL EXPENSES...................... 483.6 501.8 527.3 3.8 5.1
------ ------ ------ ----- ----
OPERATING INCOME.................... $ 86.6 $103.6 $137.4 19.6 32.6
</TABLE>

Net income was $54.0 million, $61.5 million, and $81.5 million in 1995,
1996, and 1997, respectively, for increases of 14.0% in 1996 and 32.4% in 1997.
If we had not incurred the special charges, net income would have been $56.2
million, $64.7 million and $87.5 million in 1995, 1996 and 1997, respectively.

OPERATING REVENUES

Our operating revenues rose 7.0% in 1996 and 15.4% in 1997. These
comparisons include the effects of the acquisitions and the fifty-third week of
1995. Excluding these items, operating revenues would have increased 6.2% and
9.8%, respectively.

Total advertising revenues were $446.7 million in 1995, $479.5 million in
1996 and $541.3 million in 1997. The gains in 1996 and 1997 of 7.3% and 12.9%,
respectively, were both affected by the acquisitions and the 1995 to 1996
comparison was also impacted by the fifty-third week of 1995. Excluding these
items, comparable increases would have been 7.3% and 10.5%, respectively. The
balance of the advertising revenue changes resulted primarily from increases in
advertising linage and higher advertising rates. Major market linage volumes for
the periods were:

<TABLE>
<CAPTION>
FULL RUN LINAGE IN SIX COLUMN
INCHES(1)
-------------------------------- 1995-1996 1996-1997
(IN THOUSANDS) 1995 1996 1997 % CHANGE % CHANGE
-------------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
BY ADVERTISING CATEGORY:
Retail........................... 2,708.5 2,507.2 2,679.8 (7.4) 6.9
National......................... 218.2 325.4 460.2 49.1 41.4
Classified....................... 2,666.8 2,817.6 3,110.8 5.7 10.4
-------- -------- -------- ---- ----
TOTAL.......................... 5,593.5 5,650.2 6,250.8 1.0 10.6
-------- -------- -------- ---- ----
</TABLE>

20
<PAGE> 22

<TABLE>
<CAPTION>
FULL RUN LINAGE IN SIX COLUMN
INCHES(1)
-------------------------------- 1995-1996 1996-1997
(IN THOUSANDS) 1995 1996 1997 % CHANGE % CHANGE
-------------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
BY MAJOR MARKET:
Phoenix.......................... 2,657.0 2,668.6 2,828.9 0.4 6.0
Indianapolis..................... 2,936.5 2,981.6 3,421.9 1.5 14.8
-------- -------- -------- ---- ----
TOTAL.......................... 5,593.5 5,650.2 6,250.8 1.0 10.6
-------- -------- -------- ---- ----
Net advertising revenues......... $446,693 $479,474 $541,311 7.3 12.9
</TABLE>

- -------------------------

(1) For comparability, linage statistics for 1995, 1996 and 1997 exclude linage
of The Phoenix Gazette which ceased publication in January 1997.

Advertising revenues in 1997 increased primarily due to linage gains. Areas
of particular strength in 1997 included recruitment and national advertising in
both major markets. Advertising rates are adjusted at varying times throughout
the year and in varying amounts based on local market conditions for each type
of advertising category.

Circulation revenues for 1995, 1996 and 1997 were $129.5 million, $134.1
million and $143.2 million, respectively, for increases of 3.6% for the 1996
period and 6.7% for the 1997 period. The increase in 1997 was primarily a result
of a circulation distribution system change in Indianapolis (resulting in a
revenue increase of $10.7 million in 1997) and a September 1996 increase in the
single copy price (from $1.50 to $1.75) and home delivered price (from $1.50 to
$1.80) of the Sunday newspaper, both in Indianapolis. The closure of The Phoenix
Gazette in January 1997 did not have a significant impact on revenues since The
Arizona Republic gains in daily circulation in 1997 were greater than Gazette
losses. The combined average daily and Sunday circulation for Phoenix and
Indianapolis were:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------- 1995-1996 1996-1997
(IN MILLIONS) 1995 1996 1997 % CHANGE % CHANGE
------------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
COMBINED AVERAGE DAILY CIRCULATION:
Phoenix............................... 459,109 455,131 460,184 (0.9) 1.1
Indianapolis.......................... 300,990 285,355 271,712 (5.2) (4.8)
SUNDAY AVERAGE CIRCULATION:
Phoenix............................... 581,337 583,162 583,288 0.3 --
Indianapolis.......................... 399,539 402,884 391,727 0.8 (2.8)
</TABLE>

Other revenues increased $25.0 million in 1997 versus 1996 due primarily to
Westech's jobs fair business which was acquired in 1997.

OPERATING EXPENSES

Compensation costs, which include payroll and fringe benefits, increased
2.5% to $228.3 million in 1996 and 5.0% to $239.8 million in 1997. Excluding the
acquisitions and the fifty-third week of 1995, compensation costs would have
increased 2.1% in 1996 and 1.3% in 1997. Headcount decreased 2.8% in 1996 but
compensation costs increased due to the change in the discount rates used in the
post retirement and pension calculations and one-time labor costs associated
with the move of personnel in Phoenix to a new office building. Headcount for
1997 compared with 1996 decreased approximately 3.7%, due primarily to the
Indianapolis circulation distribution system change and the closure of The
Phoenix Gazette, offset by increased

21
<PAGE> 23

headcount in the advertising, marketing and information technology areas.

Newsprint and ink expense increased 2.8% to $113.2 million in 1996 and
decreased 6.8% to $105.5 million in 1997. Excluding the acquisitions and the
fifty-third week in 1995, newsprint expense would have increased 2.0% in 1996
and decreased 8.1% for 1997. The major factor in newsprint expense fluctuations
was decreasing prices throughout 1996 which leveled out in early 1997 and
subsequent newsprint price increases over the last three quarters of 1997.
Newsprint consumption for 1997, when compared with 1996, increased 6.8% due to
higher advertising linage in both major markets and to a new product initiative
targeting the southeast region of the Phoenix metropolitan area.

Other operating costs for 1995, 1996 and 1997 were $129.4 million, $137.9
million and $177.8 million, respectively, representing increases of 6.6% and
29.0% for 1996 and 1997, respectively. Excluding the effects of the
acquisitions, and the fifty-third week of 1995, other operating costs would have
increased 5.1% and 20.7%. Items contributing to the 1996 versus 1995 increase
included:

- operating duplicate office facilities;

- implementation of a new client server computer system;

- additional circulation costs; and

- the opening of new distribution centers in Phoenix.

Significant items contributing to the 1997 increase included:

- the change in the circulation delivery system in Indianapolis, which
increased 1997 expense by $11.0 million;

- costs associated with a new Phoenix promotional/marketing program;

- higher Arizona Republic delivery costs due to increased circulation; and

- computer system design enhancements.

Depreciation and amortization expense was $28.5 million, $35.5 million and
$42.0 million for 1995, 1996 and 1997, respectively. Excluding the acquisitions,
1996 and 1997 depreciation and amortization expense would have been $33.4
million and $36.9 million, for increases of 17.2% and 10.5%. The 1997 increase
was primarily due to:

- a new office building and client server computer system in Phoenix;

- new distribution centers and inserting equipment at both locations; and

- the amortization of goodwill associated with the acquisitions.

During 1996, we recognized asset impairment costs of $2.5 million net of
tax for a Phoenix office building held for sale and a charge for the premature
retirement of a Phoenix conveyor system. These losses were recorded using the
provisions of SFAS No. 121, "Accounting for the lmpairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," which we adopted during 1996.

We recorded work force reduction costs in 1997 of $10.0 million.
Approximately $4.2 million resulted from the closure of The Phoenix Gazette,
where approximately 85 positions were eliminated. The balance of the charges
relates to composing room and transportation work force reductions of 40
individuals and the conversion from the carrier-based work force to an
agent-based circulation arrangement, both in Indianapolis.

NON-OPERATING ITEMS

Other non-operating income (primarily investment income), was $9.5 million,
$5.5 million and $4.3 million for 1995, 1996 and 1997, respectively. The
decreases from year to year reflect the reduction in investable cash resulting
from the acquisitions and the repurchases of common stock. Other non-operating
expenses increased due to interest expense on short-term borrowings used for the
repurchase of common stock.

Income tax expense for 1995, 1996 and 1997 was $38.0 million, $42.4 million
and $58.8 million, respectively, reflecting effective tax rates of 40.5%, 40.8%
and 41.1%, respectively. The increase in the effective tax rates was the result
of non-tax deductible goodwill
22
<PAGE> 24
associated with the acquisitions offset, in part, by tax benefits received from
filing a consolidated state income tax return in Arizona.

EQUITY IN AFFILIATE

Our investment in Ponderay is accounted for using the equity method, which
reflects our share of Ponderay's net income or loss and related income tax
expense or benefit. Ponderay's operating results include interest expense on its
long-term debt. Equity income (loss) from Affiliate, net of tax, was $(0.6)
million, $1.7 million and $(0.3) million in 1995, 1996 and 1997, respectively.
These changes were mostly attributable to fluctuations in newsprint prices
realized by Ponderay over the respective periods. Based upon current and
anticipated 1998 newsprint pricing, Ponderay is expected to report income in
1998. We do not anticipate making additional cash investments in Ponderay during
1998.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities is our primary source of
liquidity. Net cash provided by operating activities of $62.3 million, $122.0
million and $153.8 million in 1995, 1996 and 1997, and $112.2 million and $113.3
million for the first nine months of 1997 and 1998, respectively. Net cash
provided by operating activities, excluding the effects of net proceeds from (or
purchases of) trading securities for 1995, 1996 and 1997 were $79.9 million,
$81.3 million and $142.2 million, respectively, and $110.0 million and $115.0
million for the nine months ended September 28, 1997 and September 27, 1998,
respectively. Changes between all periods were primarily attributable to
increases in earnings and/or changes in working capital. The principal uses of
cash in the first nine months of 1998 were the repurchase of Class A Common
Stock, capital expenditures, the payment of dividends, and repayment of a $10.0
million short-term bank line of credit. The principal uses of cash in 1997 were
the repurchases of Class A Common Stock, acquisitions, capital expenditures and
the payment of dividends. As of September 27, 1998, our available cash and
investments totaled $44.9 million, a decrease of $3.6 million from the balance
at the end of 1997. Working capital (exclusive of cash) as of September 27, 1998
was $30.3 million, down $7.5 million from $37.8 million at December 28, 1997.

Total capital expenditures for 1996 were $46.5 million compared with $25.1
million for the comparable 1997 period. Capital expenditures for the first nine
months of 1998 were $30.9 million compared to $18.1 million for the comparable
1997 period. We plan approximately $34.0 million of capital expenditures in
1998. As of November 5, 1998, there were no significant formal commitments
related to future capital expenditures.

As of September 27, 1998, we had two unsecured, uncommitted credit
facilities which could provide up to $80 million in short-term financing for
general corporate purposes. At September 27, 1998, we had $5.0 million
outstanding under such facilities.

23
<PAGE> 25

as those terms are defined in the credit agreement. We must maintain compliance
with certain covenants under the terms of the credit facility.

In December 1997, the Board of Directors authorized additional repurchases
of up to $100.0 million of the Class A Common Stock. The shares may be purchased
within the subsequent three years on the open market or in privately negotiated
transactions. This authorization replaces the March 19, 1996, repurchase program
under which 745,000 shares of Class A Common Stock had been repurchased in 1997
and 1996 at a total cost of $33.2 million. During the nine months ended
September 27, 1998 we repurchased 897,730 shares at a total cost of $58.1
million.

In May 1997, we repurchased 1,177,367 shares of Class A Common Stock from
three nonprofit beneficiaries of the estate of Enid Goodrich. The aggregate
$58.6 million transaction utilized existing cash and investments for part of the
repurchase with $39.4 million being obtained from a $60 million uncommitted,
unsecured short-term bank line of credit that was obtained May 8, 1997. As of
December 28, 1997, $10.0 million remained outstanding under this short-term bank
line of credit which was repaid in the first quarter of 1998.

In February 1997, we acquired Westech for approximately $34.8 million.

We guarantee debt related to Ponderay which is discussed in Note 11 to the
Consolidated Financial Statements which are incorporated by reference in this
prospectus.

Dividends of $0.80 per share on the Class A Common Stock and $0.08 on the
Class B Common Stock were declared during 1997. Total Class A and B dividend
payments of $15.7 million, $18.6 million and $20.1 million were made in 1995,
1996 and 1997. Dividends of $0.19, $0.21, and $0.24 per share on the Class A
Common Stock and $0.019, $0.021, and $0.024 per share on the Class B Common
Stock were declared during the first, second and third quarters of 1998. The
first quarter dividends were paid in April 1998, second quarter dividends in
July 1998, and third quarter dividends in October 1998.

We have demonstrated a consistent ability to generate net cash flow from
operations. Management believes that existing cash and investments, net cash
flows from operations and currently available bank credit resources are
sufficient to enable us to maintain our current level of operations. Financing
for future investing opportunities is expected to come from a combination of
existing cash, new debt facilities and/or the use of equity.

INFLATION AND CHANGING PRICES

Over the past several years, the impact of inflation on our operations has
become less significant because of lower overall inflation rates. However, we
and the newspaper industry as a whole have experienced wide fluctuations in
newsprint pricing. Variations in newsprint pricing can have a significant impact
on earnings for any given year. We have attempted to offset newsprint price
increases through the conservation of newsprint and by increasing advertising
and circulation rates.

NEW ACCOUNTING STANDARDS

In 1996, we adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." The application
of this standard resulted in a 1996 charge to earnings of $2.5 million, net of
tax.

We adopted SFAS No.123, "Accounting for Stock Based Compensation" in 1996.
The statement prescribes accounting and reporting standards for all stock-based
compensation plans. SFAS No. 123 allows companies to continue to use existing
methods for recognizing the expense of these plans and provide pro forma
earnings per share and other disclosures in the financial statements using the
fair value method prescribed in the statement. We have elected the pro forma
disclosure provisions of this statement.

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," which estab-

24
<PAGE> 26

lished new standards in reporting earnings per share. This standard is effective
for reporting periods ending after December 15, 1997, including interim periods,
and therefore has been adopted by us. Earnings per share amounts for all prior
periods have been restated.

YEAR 2000 READINESS DISCLOSURE

STATE OF READINESS

Our Year 2000 project is on schedule to meet its objectives. We have
developed a comprehensive program to identify, evaluate, test, upgrade or
replace each of our computer and non-computer based systems in connection with
Year 2000 readiness. We have devoted significant resources to the program
including the development of a Year 2000 project team which reports to senior
management on a regular basis and the construction of a test environment
dedicated to the Year 2000 testing process. The Chief Information Officer
reports progress at every regularly scheduled Board of Directors meeting.

We have been actively implementing new systems and technology since 1995
for reasons unrelated to Year 2000, and these actions have resulted in a number
of our major information technology systems becoming Year 2000 compliant.

The discovery phase of our program has been completed and we have performed
several review audits to ensure that all susceptible systems have been
identified, including client server, desktop and all systems with embedded
computer chips. All desktop systems, application software and servers have been
updated to a compliant level and all database modules are in the process of
being upgraded. The embedded computer chip systems are in the remediation and
testing phase with a projected completion date of year-end 1998. The testing
phase of the project is also proceeding and we anticipate that testing will have
been completed or initiated for all significant systems by the end of 1998.

Letters of compliance have been requested from each of our vendors and,
wherever possible, we work with our vendors in determining an appropriate
testing and compliance process. This process is scheduled for completion by
year-end 1998. During early 1999, we anticipate using a third party auditor to
review the project. In addition, certain employees have attended a number of
Year 2000 training programs and outside consultants have been hired where
necessary.

COSTS

Total costs associated with our Year 2000 project are estimated to be
approximately $8.5 million, of which approximately $6.5 million will be incurred
through fiscal 1998 with the remainder incurred during 1999.

RISKS

Despite the efforts described above, we could potentially experience a
disruption in our operations as a result of potential non-compliance of certain
vendors, financial institutions, governmental agencies or other third-parties or
external systems. This disruption could potentially affect various aspects of
our business operations including the timeliness and content of certain
newspapers or online products. At this time, we are unable to determine whether
the consequences of Year 2000 failures would have a material impact on our
results of operations, liquidity or financial condition.

CONTINGENCY PLANS

In an effort to minimize any disruption, we are in the process of creating
a comprehensive contingency plan to address potential Year 2000 scenarios. Such
plans include maintaining an inventory of critical supplies such as newsprint,
ink and other consumables for at least a 30-45 day production cycle as well as
creating a smaller newspaper product designed to maximize advertising content.

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<PAGE> 27

FORWARD-LOOKING STATEMENTS

This document contains material that is forward-looking in nature. From
time to time, we may provide forward-looking statements relating to such matters
as anticipated financial performance, business prospects and similar matters.
These forward-looking statements may be identified by the use of words such as
"anticipate," "believe," or "expect" or derivations thereof. All forward-looking
statements are based upon information available to us at the time they are made
and we assume no obligation to update any forward-looking statements. We note
that a variety of factors could cause our actual results to differ materially
from the expectations expressed in the forward-looking statements. The risks and
uncertainties that may affect the operations, performance and results of our
business include, but are not limited to the factors set forth under "Risk
Factors."

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<PAGE> 28

BUSINESS

THE COMPANY

We publish the following newspapers which had average circulation as set
forth below for the fiscal year ended December 28, 1997:

- The Arizona Republic, average daily circulation of 460,406.

- The Indianapolis Star, average daily circulation of 228,421.

- The Indianapolis News, a daily afternoon newspaper, average daily
circulation of 41,165.

- The Alexandria Daily Town Talk, serving Rapides Parish, Louisiana and
its outlying areas, average circulation of 38,155 daily and 43,823 Sunday.

- The Star Press, in Muncie, Indiana, average circulation of 36,558 daily
and 40,690 Sunday.

- The Vincennes Sun-Commercial, in Vincennes, Indiana, average circulation
of 13,281 daily and 15,617 Sunday.

- The Daily Ledger, average daily circulation of 11,273.

- fourteen controlled circulation newspapers which are home-delivered and
free to readers serving the northern suburbs of Indianapolis, average
weekly circulation of 110,485.

We own an 80% interest in the Santa Clara, California-based Westech
companies which consist of:

- Westech ExpoCorp., an organizer of job fairs for the high tech industry;

- High Technology Careers, publisher of High Technology Careers Magazine;

- Virtual Job Fair (http://www.vjf.com), an internet-based resume posting
and research service; and

- JobsAmerica, an organizer of job fairs for service industry positions.

We also own an 89% interest in Homebuyer's Fair, Inc., which provides
internet services and information for people who are moving and corporations
that are relocating their employees, a commercial printer and a minority
interest in a newsprint mill in the State of Washington.

We seek to maintain our position as both the primary source of news and
information for our readers as well as the most effective way for advertisers to
reach their target markets. To this end, we manage our newspapers with a
commitment to the highest standards of product quality and journalistic
excellence. For example, The Arizona Republic was the first major daily
newspaper in the country to have its pages fully composed by computer
generation, enabling us to deliver higher quality products. Since 1990, our
newspapers have won Pulitzer prizes for investigative reporting and political
cartooning, as well as numerous other awards from industry organizations such as
the American Association of Sunday and Feature Editors, the Society for
Newspaper Design and the National Press Photographers' Association, among
others.

THE ARIZONA REPUBLIC

In Phoenix, we currently publish The Arizona Republic, one of the fastest
growing major daily morning newspapers in the United States, together with the
Arizona Business Gazette, a weekly newspaper. We originally acquired a 30%
interest in The Arizona Republic and The Phoenix Gazette in 1946. We have owned
100% of these newspapers since 1977. On January 18, 1997, we stopped publishing
The Phoenix Gazette. We were able to convert approximately 85% of the
subscribers of The Phoenix Gazette to The Arizona Republic.

CIRCULATION

Approximately 87% of the daily and 72% of the Sunday circulation of The
Arizona Republic was home delivered as of December 28, 1997, with the remainder
being single copy sales. The circulation level of The

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<PAGE> 29

Arizona Republic is seasonal due to the large number of part-year residents in
the Phoenix area. Typically, circulation for The Arizona Republic achieves its
highest levels in February and March and decreases during the late spring and
summer months. During 1997, the seasonal variation was approximately 66,300
daily and 87,500 Sunday. The following table shows the average paid daily
circulation for The Arizona Republic and The Phoenix Gazette for the periods
shown. The figures for fiscal years ended 1995, 1996 and 1997 are based upon
reports issued by the ABC, an independent agency that audits the circulation of
daily and Sunday newspapers, and include circulation outside the Phoenix
metropolitan statistical area ("MSA"). The figures for the 39 weeks ended
September 28 and September 27, 1997 and 1998 are based upon our records. Net
circulation revenue for the periods shown is based upon our records.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
------------------------------------------ ---------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28, SEPT. 28, SEPT. 27,
1995(1)(2) 1996(1) 1997(3) 1997(3) 1998
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
The Arizona Republic (Sunday).. 581,337 583,162 583,068 579,331 582,596
The Arizona Republic (Daily)... 387,986 406,725 460,406 456,183 466,793
The Phoenix Gazette (Daily).... 71,123 48,406 -- -- --
Net circulation revenue (in
thousands)................... $84,212 $87,790 $86,800 $65,112 $67,209
</TABLE>

- -------------------------

(1) In 1995, The Arizona Republic and The Phoenix Gazette consolidated their
newsroom staffs. Due to this combination, the morning and afternoon content
of the newspapers was similar, which caused many duplicate readers to cancel
their subscription to The Phoenix Gazette.

(2) 53-week year.

(3) Combined daily circulation includes The Arizona Republic and The Phoenix
Gazette, and net circulation revenue includes The Phoenix Gazette, through
January 18, 1997, the last day of its publication.

The Arizona Business Gazette contains business news and legal notices
relating to the Phoenix metropolitan area. The average paid circulation of the
Arizona Business Gazette was 10,351, 10,491 and 10,561 for 1995, 1996 and 1997,
respectively.

The home-delivered pricing structure for seven day subscriptions is based
on length of subscription. The home-delivered price for The Arizona
Republic(seven days) in the Phoenix MSA, ranges from $3.25 per week for a
fifty-two week subscription to $3.80 per week for an eight-week subscription.
There is also a four-week direct bank debit option of $3.25 per week. The
home-delivered price for The Arizona Republic (six days) is $2.50 per week for
all subscription terms. A weekend package comprising the Sunday paper and the
Friday and Saturday edition is offered at $3.00 per week. The single copy price
of the morning paper is $0.50 and $2.00 for the Sunday paper.

ADVERTISING

The newspapers generate revenue from two primary types of advertisements,
"run-of-paper," which are printed in the body of the newspaper, and
"preprinted," which are furnished by the advertiser and inserted into the
newspaper. We derive the majority of our advertising revenue for our Arizona
newspapers from run-of-paper advertisements. However, like other major
newspapers, The Arizona Republic has experienced an increase in advertisers' use
of preprinted advertisements in recent years. Because preprinted

28
<PAGE> 30

advertisements are furnished by the advertisers and can be distributed by
alternate means, revenues and profits from preprinted advertisements are
generally lower than those from run-of-paper advertisements. To encourage use of
run-of-paper advertisements, we structure our advertising rates to provide more
favorable rates to high volume and frequent run-of-paper advertisers.

We also structure our advertising format to accommodate the numerous
communities that comprise the Phoenix metropolitan area. The Arizona Republic
publishes "Community" sections that are inserted in up to twelve zoned editions
on certain days of the week. Zoned editions, which include news stories and
advertisements targeted to specific communities or geographic areas, provide an
important means of competing with news coverage of local newspapers and thereby
promote circulation. Other part-run sections are also provided to accommodate
the needs of advertisers for more targeted distribution.

The combined run-of-paper advertising linage for our Arizona newspapers for
the periods shown and the combined advertising revenues of the newspapers for
such periods are set forth in the following table:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
------------------------------------------ ---------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28, SEPT. 28, SEPT. 27,
1995(1) 1996 1997 1997 1998
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Advertising linage --
run-of-paper (in thousands
of six column inches):
Full-run................... 2,657 2,669 2,829 2,076 2,133
Part-run................... 1,150 1,091 1,182 821 953
Weekly..................... 245 243 242 193 147
Net advertising revenue...... $248,468 $302,294 $333,583 $243,854 $257,145
</TABLE>

- -------------------------

(1) 53-week year

DISTRIBUTION

We distribute The Arizona Republic primarily by home delivery through a
network of independent contractors. We have implemented a centralized billing
system that removes the responsibility for billing and collection from the
independent contractors. Newspapers are distributed to the independent
contractor network by an outside company which has been under contract for over
forty years.

PRODUCTION

The Arizona Republic's editing and composing functions are performed
primarily at its facility in downtown Phoenix. The Arizona Republic was the
first major daily newspaper in the country to have its pages fully composed by
computer generation, enabling us to produce a higher quality product. Electronic
pagination allows entire pages of the newspaper to be formatted at a computer
terminal. Composed pages are electronically transmitted from the newspaper's
downtown facility to its two satellite production facilities.

The Arizona Republic's two satellite production facilities are located in
Deer Valley, which is north of downtown Phoenix, and in Mesa, Arizona. The Deer
Valley facility includes four offset presses and related production equipment,
as well as circulation, advertising and editorial-offices. This facility began
production during the first quarter of 1992 with full operation commencing in
the third quarter of 1992. The Mesa facility began operation in 1982 and has
been subsequently expanded and upgraded. It has three offset presses and related
production equipment. We own an additional undeveloped site in

29
<PAGE> 31

western Maricopa County for a possible satellite production facility to meet
future growth.

INDIANAPOLIS NEWSPAPERS, INC.

In Indianapolis, our primary newspapers are The Indianapolis Star (mornings
and Sunday) and The Indianapolis News (evenings). We formed Indianapolis
Newspapers, Inc. ("INI") in 1948, through which we currently publish The
Indianapolis Star and The Indianapolis News. At the end of 1996, we owned 90.2%
of the voting equity of INI and had the right to elect INI's Board of Directors.
On January 3, 1997, we acquired the remaining voting equity of INI through the
issuance of nonvoting preferred stock of INI with an aggregate liquidation value
of $18,920,000, entitling the holders to aggregate annual dividends of
$1,324,000. The preferred stock is callable in five years by INI and is
redeemable at any time by the holders at the stated value plus any accrued but
unpaid dividends.

CIRCULATION

Approximately 81% of the daily and 80% of the Sunday circulation of The
Indianapolis Star and 80% of the daily circulation of The Indianapolis News was
home-delivered as of December 28, 1997, with the remainder being single copy
sales.

The following table shows the average paid daily circulation for The
Indianapolis Star and The Indianapolis News for the last three fiscal years. The
figures for 1995 are based upon reports issued by the ABC and include
circulation outside the Indianapolis metropolitan statistical area. Net
circulation revenue is based upon our records.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
------------------------------------------ ---------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28, SEPT. 28, SEPT. 27,
1995(1) 1996 1997 1997 1998
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
The Indianapolis Star
(Sunday)..................... 399,539 402,884 391,820 392,955 390,911
The Indianapolis Star
(Daily)...................... 227,849 230,932 228,421 226,289 233,882
The Indianapolis News
(Daily)...................... 73,141 54,423 41,165 42,132 36,339
Net circulation revenue (In
thousands)................... $39,507 $37,205 $46,444 $34,018 $37,499
</TABLE>

- -------------------------

(1) 53-week year

The home-delivered price for The Indianapolis Star (seven days) in the
Indianapolis metropolitan statistical area is $3.60 per week. The home-delivered
price for The Indianapolis News (six days) is $1.80 per week. The single copy
price is $0.50 for each daily paper. The home-delivered price of the Sunday
newspaper is $1.80, and the single copy price is $1.75.

ADVERTISING

As is the case for the Arizona newspapers, our Indianapolis newspapers
derive the majority of their advertising revenues from run-of-paper
advertisements. The Indianapolis Star and The Indianapolis News have also
experienced an increase in advertisers' use of preprinted advertisements in
recent years. To encourage use of run-of-paper advertisements, we structure our
advertising rates to provide more favorable rates to high volume and frequent
run-of-paper advertisers. The combined run-of-paper advertising linage for The
Indianapolis Star and The Indianapolis News for the past three fiscal years and
the combined advertising revenue of the newspapers for such periods are set
forth in the following table:

30
<PAGE> 32

<TABLE>
<CAPTION>
FISCAL YEAR ENDED 39 WEEKS ENDED
------------------------------------------ ---------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28, SEPT. 28, SEPT. 27,
1995(1) 1996 1997 1997 1998
------------ ------------ ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
Advertising linage -- run-of-
paper
(in thousands of
six column inches):
Full-run..................... 2,937 2,982 3,422 2,498 2,529
Net advertising revenue...... $145,267 $149,658 $167,212 $122,221 $125,459
</TABLE>

- -------------------------

(1) 53-week year

DISTRIBUTION

Through 1996, we distributed The Indianapolis Star and The Indianapolis
News primarily by home delivery through a network of approximately 3,200
carriers. Carriers are independent contractors who purchase newspapers from us
and resell them at a markup to their customers.

In 1997, our Indianapolis newspapers converted from a carrier-based
delivery system to an agency-based distribution system for the Indianapolis
metropolitan area and its eight surrounding counties. We replaced approximately
1,350 carriers with 79 independent delivery agents, who are paid on a commission
basis. We believe the conversion has:

- allowed for uniform pricing;

- resulted in higher levels of customer satisfaction; and

- helped facilitate the creation of customer data bases.

PRODUCTION

The Indianapolis Star and The Indianapolis News merged their editorial news
staffs in 1995 and share production and distribution facilities. All editorial
and production functions are handled from our facility in downtown Indianapolis,
which is equipped with six offset presses and related production and
distribution equipment.

The Indianapolis Star and The Indianapolis News have recently implemented
several formatting changes to promote greater standardization and customization.
The weather, editorial and obituary sections are now anchored daily on the same
pages, and there are weekday stand-alone classified and automotive sections, as
well as a four-page daily "Metro" section with local coverage for each of the
major metropolitan distribution areas.

SMALLER NEWSPAPERS

In March 1996, we purchased 100% of the outstanding common stock of
McCormick & Company, Inc., now Alexandria Newspapers, Inc., the parent company
of the Alexandria Daily Town Talk newspaper and McCormick Graphics, Inc., a
commercial printing subsidiary. The Alexandria Daily Town Talk serves Rapides
Parish in Central Louisiana and the outlying areas within a 50 mile radius, with
a population base of approximately 282,000. For the fiscal year ended December
28, 1997, the average paid circulation of the Alexandria Daily Town Talk was
38,155 daily and 43,823 Sunday.

We also publish The Star Press (mornings and Sundays) in Muncie,
Indiana -- we formerly published two newspapers in the Muncie market, The Muncie
Star and the Muncie Evening Press, but merged the two newspapers into The Star
Press in May 1996 in order to improve product quality and cost efficiency. The
Star Press serves Muncie and east central Indiana, which has a population base
of just over 370,000. For the fiscal year ended December 28, 1997, the average
paid circulation of The Star Press was 36,558 daily and 40,690 Sunday.

31
<PAGE> 33

We publish The Daily Ledger (which for 1997 had an average daily
circulation of 11,273) and fourteen controlled circulation newspapers (which for
1997 had an average weekly circulation of 110,485) that serve the northern
suburbs of Indianapolis, the fastest growing area of metropolitan Indianapolis.

We publish the Vincennes Sun-Commercial, a daily newspaper that serves the
city of Vincennes, Indiana, with a population of approximately 24,700. For the
fiscal year ended December 28, 1997, the average paid circulation of the
Vincennes Sun-Commercial was 13,281 (five days) and 15,617 Sunday.

The revenues earned by these smaller publications represented approximately
4%, 7% and 6% in 1995, 1996 and 1997, respectively, of our total revenues.

WESTECH

In February 1997, we acquired an 80% interest in the Santa Clara,
California-based Westech companies. Westech consists of Westech ExpoCorp, which
organizes job fairs for the high tech industry; High Technology Careers, which
publishes High Technology Careers Magazine and Virtual Job Fair
(http://www.vjf.com), an internet-based resume posting and research service; and
JobsAmerica, which organizes job fairs for service industry positions.

Westech has enjoyed rapid growth in recent years and had approximately
$32.2 million of revenue in 1997. Operating margins in this business have
historically been higher than those associated with the newspaper publishing
industry.

We believe that the acquisition of Westech is a strategic extension of our
business of matching employers and employees. A substantial portion of our
revenues are derived from recruitment advertising and, historically, recruitment
advertising has been the most important means for employers to find qualified
employees and for job seekers to find employment. We believe that:

- recruitment classified advertising will continue to be an important
avenue for job placement in the future;

- an increasing number of placements will be made using the Internet and
job fairs; and

- the acquisition of Westech should ensure that we are well positioned to
provide career services information to employers and employees through a
variety of cost-effective channels.

Westech operates predominantly in the western half of the United States.

RAW MATERIALS -- PONDERAY NEWSPRINT COMPANY

We consumed approximately 179,400 metric tons of newsprint in fiscal year
1997 and expect that consumption will increase in 1998 due primarily to linage
gains. We currently obtain newsprint from a number of suppliers, both foreign
and domestic, under long-term contracts, standard in the industry, which offer
dependable sources of newsprint at current market rates.

To provide us with an additional source of newsprint for a portion of our
needs, we joined with four other newspaper publishing companies and a major
newsprint manufacturer in forming a general partnership, Ponderay Newsprint
Company ("Ponderay"), to own and operate a newsprint mill in Usk, Washington.
The mill began operations in December 1989. We are required to purchase on an
annual basis the lesser of 13.5% of Ponderay's newsprint production or 28,400
metric tons on a "take if tendered" basis until the related debt recorded by
Ponderay is repaid.

COMPETITION

We face competition for advertising revenue from television, radio, the
Internet and direct mail programs, as well as competition for advertising and
circulation from suburban neighborhood and national newspapers and other
publications. Competition for advertising is based upon:

- circulation levels;

- readership demographics;

- advertising rates; and

32
<PAGE> 34

- advertiser results.

Competition for circulation is generally based upon:

- content;

- journalistic quality; and

- the price of the newspaper.

In Phoenix, several suburban newspapers owned by major media corporations
operate in cities that are part of the Phoenix metropolitan area and compete
with The Arizona Republic for advertising and circulation. The most significant
of these competitors is Thomson Corporation, which owns five daily newspapers in
the East Valley region. These newspapers had a combined paid daily circulation
of 93,407, compared to 186,003 for The Arizona Republic in this region in 1997,
the period for which the latest ABC audit figures are available. The Arizona
Republic recently introduced four new "Community" sections in order to maintain
its position as the leading source of news and information in this region. In
Indianapolis, our newspapers do not experience significant direct competition
from suburban newspapers.

EMPLOYEES -- LABOR

As of September 27, 1998, we had approximately 5,185 employees (including
1,452 part-time employees), 40% of whom were covered by a total of 23 collective
bargaining agreements. Given the large number of collective bargaining
agreements, we are frequently involved in labor negotiations. As of December 4,
1998, we were involved in ongoing negotiations with respect to five different
bargaining agreements, involving approximately 350 employees engaged in various
trades at our facilities. No assurance can be given as to the outcome of these
negotiations or as to their impact on us. We have never had a significant strike
or work stoppage at our operations and we consider our labor relationships with
our employees to be satisfactory.

LEGAL PROCEEDINGS

We become involved from time to time in various claims and lawsuits in the
ordinary course of our business, including libel and invasion of privacy
actions, and we are involved from time to time in various governmental and
administrative proceedings. Our management believes that the outcome of any
pending claims or proceedings will not have a significant adverse effect on us.

33
<PAGE> 35

MANAGEMENT

Our executive officers and directors are:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
Frank E. Russell........................ 78 Chairman of the Board and Assistant
Secretary
Louis A. Weil, III...................... 58 President and Chief Executive Officer;
Chairman of the Board of Phoenix
Newspapers, Inc.; Director
Thomas K. MacGillivray.................. 38 Vice President and Chief Financial
Officer
Eric S. Tooker.......................... 37 Vice President, General Counsel and
Secretary
Eugene S. Pulliam....................... 85 Publisher of The Indianapolis Star and
The Indianapolis News; Director
Dale A. Duncan.......................... 44 President and General Manager of
Indianapolis Newspapers, Inc.
John F. Oppedahl........................ 54 Publisher and Chief Executive Officer of
Phoenix Newspapers, Inc.
William A. Franke....................... 62 Director
L. Ben Lytle............................ 52 Director
Dan Quayle.............................. 52 Director
Richard Snell........................... 68 Director
</TABLE>

FRANK E. RUSSELL has been Chairman of the Company's Board of Directors and
Assistant Secretary of the Company since January 1996. Mr. Russell served as
President and Chief Executive Officer of the Company from 1979 through 1995. He
has been a Director of the Company since 1974. Mr. Russell is one of three
trustees of the Selling Shareholder. See "Selling Shareholder."

LOUIS A. WEIL, III has been President and Chief Executive Officer since
January 1996. He served as Publisher and Chief Executive Officer of The Arizona
Republic and The Phoenix Gazette and Executive Vice President of Phoenix
Newspapers, Inc. between July 1991 and January 1996. Mr. Weil served as
Publisher of Time from May 1989 to July 1991 and President and Publisher of The
Detroit News from May 1987 to May 1989. Mr. Weil serves as an independent
director of Prudential's Domestic Equity, Domestic Fixed Income, Global Fixed
Income and Municipal Bond mutual funds. He has been a Director of the Company
since 1991.

THOMAS K. MACGILLIVRAY has been Vice President since April 1997 and Chief
Financial Officer since January 1996. Previously, he was Director of Investments
from April 1993 to December 1995. He was Vice President and Equity Portfolio
Manager for Sovran Capital Management from January 1989 to March 1993.

ERIC S. TOOKER has been Vice President since April 1997 and General Counsel
and Secretary since June 1996. From November 1989 through May 1996, he was
Associate General Counsel at Conseco, Inc.

EUGENE S. PULLIAM has been the Publisher of The Indianapolis Star and The
Indianapolis News since 1975 and a Director of the Company since 1954. Mr.
Pulliam is the uncle of Dan Quayle, who is a Director of the Company.

DALE A. DUNCAN has been President and General Manager of Indianapolis
Newspapers, Inc. since January 1998. From 1995 until assuming his current
position, Mr. Duncan was Vice President, ABC Publishing Group, where he directed
the operations of the

34
<PAGE> 36

Oakland Press, Pontiac, MI; The Belleville News-Democrat, Illinois; and the
Times Leader, Wilkes-Barre, PA. Mr. Duncan also served as President and
Publisher of the Oakland Press from 1995 to 1997 and was the President and
Publisher of the Times Leader from 1986 to 1994.

JOHN F. OPPEDAHL has been Publisher and Chief Executive Officer of Phoenix
Newspapers, Inc. since January 1996. Previously, he was Executive Editor of
Phoenix Newspapers, Inc. since 1993 and Managing Editor of The Arizona Republic
from 1989 to 1993.

WILLIAM A. FRANKE has been the Chairman and Chief Executive Officer of
America West Holdings Corporation, an aviation and travel service company, since
February 1997 and the Chairman of the Board of its principal subsidiary, America
West Airlines, Inc., an airline carrier. Mr. Franke was the subsidiary's Chief
Executive Officer from December 1993 until February 1997, and its President from
May 1996 until February 1997. He is a director of America West Holdings
Corporation, America West Airlines, Inc., Phelps Dodge Corporation, Beringer
Wine Estates, Mtel Latin America, Inc. and AirTransport Association of America.
He is a director and Chairman of the Board of Airplanes Limited and a
controlling trustee and Chairman of Airplanes U.S. Trust, entities involved in
aircraft financing and leasing. He has been a director of the Company since
1990.

L. BEN LYTLE has been President and Chief Executive Officer of Anthem
Insurance Companies, Inc., an insurance holding company, since 1989 and
presently serves as Chairman of the Board of Directors of its major
subsidiaries. He is a director of Acordia, Inc., IPALCO, Inc., Duke REIT, and
Bank One, Indianapolis, N.A. He has been a Director of the Company since April
1997.

DAN QUAYLE has been Chairman of Campaign America, a political action
committee, since 1995 and Chairman of BTC, Inc., a private company through which
he operates certain of his personal business interests, since 1993. He served as
Chairman of Circle Investors, Inc., a private financial services and insurance
holding company from 1993 until February 1997, and served on the Board of
Directors of Amtran, Inc. in 1996. He was Vice President of the United States
from January 1989 to January 1993 and a United States Senator from January 1981
to January 1989. Mr. Quayle is a director of American Standard, Inc., U.S.
Filter Corporation and Circle Investors, Inc. He has been a Director of the
Company since 1993. Mr. Quayle is the nephew of Eugene S. Pulliam.

RICHARD SNELL has been Chairman of the Board and Chief Executive Officer of
Pinnacle West Capital Corporation, a utility holding company and Chairman of the
Board of Arizona Public Service Company since 1990. He is also a director of
Aztar Corporation and Bank One Arizona Corporation. He has been a Director of
the Company since September 1996.

35
<PAGE> 37

DESCRIPTION OF CAPITAL STOCK

Our authorized capital stock consists of 150,000,000 shares of Class A
Common Stock, without par value (the "Class A Common Stock"), 130,000,000 shares
of Class B Common Stock, without par value (the "Class B Common Stock"), and
25,000,000 shares of Preferred Stock (the "Preferred Stock"). As of December 4,
1998, 17,218,590 shares of Class A Common Stock were issued and outstanding,
31,345,500 shares of Class B Common Stock, convertible into 3,134,550 shares of
Class A Common Stock, were issued and outstanding, and no shares of Preferred
Stock have been issued. As of December 4, 1998, the Class A Common Stock was
held by approximately 325 shareholders of record and the Class B Common Stock
was held by 23 shareholders of record. All outstanding shares are legally
issued, fully paid and nonassessable.

CLASS A COMMON STOCK AND
CLASS B COMMON STOCK

VOTING RIGHTS

Our Articles of Incorporation provide that each share of Class A Common
Stock entitles the holder thereof to one-tenth of a vote per share on all
matters on which shareholders are entitled to vote. Each share of Class B Common
Stock entitles the holder thereof to one vote per share on all matters on which
shareholders are entitled to vote.

In general, matters submitted to the vote of the shareholders, such as the
election of directors, are voted on by holders of the Class A Common Stock and
the Class B Common Stock voting together as a single class. Holders of Class A
Common Stock and Class B Common Stock are not entitled to vote cumulatively for
the election of directors. The holders of the Class B Common Stock hold
approximately 94% of the combined voting power of the outstanding Class A Common
Stock and Class B Common Stock. Under the Indiana Business Corporation Law,
however, holders of Class A Common Stock are also entitled to vote as a separate
class to approve amendments to our Articles of Incorporation that modify rights,
preferences and powers that affect the rights of the holders adversely, or to
increase the number of authorized shares of Class A Common Stock.

DIVIDEND AND LIQUIDATION RIGHTS

Each share of Class A Common Stock and Class B Common Stock is entitled to
receive dividends if and when declared by our Board of Directors. Our Articles
of Incorporation provide that dividends must be paid on both the Class A Common
Stock and the Class B Common Stock at any time that dividends are paid on
either. It is further provided that each share of Class B Common Stock is
entitled to receive only 10% of any dividend or other distribution in cash;
stock, other than Class A Common Stock or Class B Common Stock; or other
property, including any liquidating distribution, made with respect to each
share of Class A Common Stock. To the extent that a stock dividend is involved,
holders of Class A Common Stock are entitled to receive only Class A Common
Stock in respect of those shares and holders of Class B Common Stock are
entitled to receive only Class B Common Stock in respect of those shares.
Furthermore, the Articles of Incorporation provide that stock dividends on a
class of common stock may not be paid without a concomitant stock dividend for
the other class of common stock.

TRANSFERABILITY AND CONVERTIBILITY

The Class A Common stock is freely transferable, subject to applicable
securities laws. The Class B Common Stock is also freely transferable, subject
to applicable securities laws; however, the Class B Common Stock has not been
registered under the Securities Act of 1933, as amended, and we do not plan at
any time in the future to register such stock. No trading market currently
exists for the Class B Common Stock and it is not anticipated that such a market
will develop.

36
<PAGE> 38

To allow holders of shares of Class B Common Sock to have access to
trading, our Articles of Incorporation provide that each share of Class B Common
Stock is convertible at any time at the option of the holder into one-tenth of a
share of Class A Common Stock. A shareholder desiring to sell an equity interest
represented by Class B Common Stock could thereby convert and sell, consistent
with applicable securities laws, shares of Class A Common Stock.

PREFERRED STOCK

No shares of preferred stock have been issued. The Board of Directors,
without further shareholder action, is authorized to issue up to 25,000,000
shares of preferred stock and establish the:

- designations;

- dividend rights;

- dividend rate;

- conversion rights;

- voting rights;

- terms of redemption;

- liquidation preference; and

- all other preferences and rights of any series of preferred stock.

However, shares of preferred stock may not be given voting rights without
the prior approval of holders of a majority of the outstanding shares of Class B
Common Stock.

CERTAIN PROVISIONS OF INDIANA
CORPORATE LAW AND THE
EUGENE C. PULLIAM TRUST

Certain provisions of Indiana law applicable to us could delay, deter or
prevent a merger, tender offer or other takeover attempt of us. Such provisions
include those pertaining to "control shares," which only have voting rights to
the extent approved by disinterested shareholders and limitations upon business
combinations involving us and any "interested shareholder." Interested
shareholders are generally defined to include any holder of 10% or more of the
corporation's voting securities. The foregoing provisions have limited effect on
us in light of the provisions of the Eugene C. Pulliam Trust, which has voting
control of us.

Under the terms of this trust, the trustees are directed not to take or
approve any action by us that would cause the trust to have less voting power
with respect to us or any corporation into which we are merged or consolidated,
than its proportion of the voting power of us at the time of the execution of
the trust. At the time this trust was established it had stock representing 54%
of all outstanding voting common stock of us. The trust specifies that this
limitation shall last for the duration of the trust, except that this limitation
shall become void if the trustees (1) unanimously determine that a substantially
complete loss of the value of the property held in the trust is seriously
threatened and (2) obtain the written consent of two-thirds of the beneficiaries
of the trust (which consist of descendants of Eugene C. Pulliam). By its terms,
the trust will terminate twenty-one years after the death of the survivor of the
class consisting of the descendants of Eugene C. Pulliam living at the time of
the most recent amendment to the trust in May 1973. As of December 4, 1998, the
trust owned 22,907,500 shares of Class B Common Stock representing approximately
73% of the outstanding Class B Common Stock and approximately 69% of our
combined voting power.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock and Class B
Common Stock is Norwest Bank Minnesota, NA.

37
<PAGE> 39

SELLING SHAREHOLDER

The table below sets forth the beneficial ownership of our Class A Common
Stock by the Charitable Trust as of December 4, 1998 and reflects the
repurchases of an aggregate of 4,000,000 shares by us from the Charitable Trust,
and the sale of the shares offered hereby. The Selling Shareholder is a
charitable trust which, indirectly, received all of its shares of Class A Common
Stock in a bequest from the Estate of Nina Mason Pulliam. See "Prospectus
Summary -- Selling Shareholder." Mr. Frank E. Russell, one of the three trustees
of the Charitable Trust, is the Chairman of the Board of Directors of Central
Newspapers, Inc.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED AFTER
OWNED PRIOR TO SHARES TO THE REPURCHASES
THE REPURCHASES SHARES BE SOLD IN THE AND THE
AND THE OFFERING(1) SOLD TO US OFFERING(2) OFFERING(3)(4)
------------------- ------------- -------------- -------------------
NAME NUMBER PERCENT NUMBER PERCENT
- ---- --------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Nina Mason Pulliam
Charitable Trust........ 5,446,850 26% 4,000,000 1,162,478 284,372 1.3%
</TABLE>

- -------------------------

(1) Includes 373,250 shares of Class A Common Stock attributable to 3,732,500
shares of Class B Common Stock.

(2) Includes 188,878 shares of Class A Common Stock attributable to 1,888,780
shares of Class B Common Stock.

(3) Includes 10,000 shares of Class A Common Stock attributable to 100,000
shares of Class B Common Stock.

(4) Assumes that the option granted the underwriter to purchase additional
shares is not exercised.

LEGAL MATTERS

Certain legal matters in connection with the Offering will be passed upon
for us by Henderson, Daily, Withrow & DeVoe, Indianapolis, Indiana, for the
Selling Shareholder by Barnes & Thornburg, Indianapolis, Indiana, and for the
Underwriters by Davis Polk & Wardwell, New York, New York.

EXPERTS

The consolidated financial statements of Central Newspapers, Inc. as of
December 28, 1997 and for the fiscal year then ended, set forth herein, have
been included in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.

The consolidated financial statements of Central Newspapers, Inc. as of
December 29, 1996 and for each of the two fiscal years in the period ended
December 29, 1996, set forth herein, have been included in reliance on the
report of Olive LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.

With respect to the unaudited consolidated financial information of Central
Newspapers, Inc. as of September 27, 1998 and for the thirty-nine weeks then
ended incorporated by reference in this prospectus, PricewaterhouseCoopers LLP
reported that they have applied limited procedures in accordance with
professional standards for a

38
<PAGE> 40

review of such information. However, their separate report dated October 19,
1998, states that they did not audit and they do not express in opinion on that
unaudited consolidated financial information. PricewaterhouseCoopers LLP has not
carried out any significant or additional audit tests beyond those which would
have been necessary if their report had not been included. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied.
PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act for their report on the unaudited consolidated
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Securities Act.

39
<PAGE> 41

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Central Newspapers, Inc.

In our opinion, the accompanying consolidated statement of financial
position and the related consolidated statements of income, shareholders' equity
and of cash flows present fairly, in all material respects, the financial
position of Central Newspapers, Inc. and its subsidiaries at December 28, 1997,
and the results of their operations and their cash flows for the year in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. The financial statements of Central Newspapers, Inc. for the two years
ended December 29, 1996, prior to restatement of earnings per share for the
adoption of Statement of Financial Accounting Standard No. 128, were audited by
other independent accountants whose report dated February 3, 1997 expressed an
unqualified opinion on those financial statements. We have audited the
adjustments that were applied to restate the 1995 and 1996 earnings per share.
In our opinion, such adjustments are appropriate and have been properly applied
to the 1995 and 1996 financial statements.

PRICE WATERHOUSE LLP

Indianapolis, Indiana
February 2, 1998

F-1
<PAGE> 42

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED:
--------------------------------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28,
1995 1996 1997
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Operating revenues:
Advertising................................. $446,693 $479,474 $541,311
Circulation................................. 129,537 134,133 143,153
Other....................................... 3,671 6,708 31,673
-------- -------- --------
579,901 620,315 716,137
-------- -------- --------
Operating expenses:
Compensation................................ 222,748 228,316 239,783
Newsprint and ink........................... 110,085 113,171 105,467
Other operating costs....................... 129,362 137,875 177,829
Depreciation and amortization............... 28,487 35,528 42,022
Asset impairment cost....................... 4,226
Work force reduction cost................... 3,328 1,340 9,999
-------- -------- --------
494,010 520,456 575,100
-------- -------- --------
Operating income.............................. 85,891 99,859 141,037
Other income (principally investment
income)..................................... 9,502 5,486 4,318
Other expenses................................ (1,348) (1,477) (2,166)
-------- -------- --------
Income before income taxes.................... 94,045 103,868 143,189
Provision for income taxes.................... 38,048 42,431 58,797
-------- -------- --------
Income before minority interest and Equity in
Affiliate................................... 55,997 61,437 84,392
Minority interests in subsidiaries............ (1,409) (1,629) (2,566)
Equity in net earnings (loss) of Affiliate.... (590) 1,726 (331)
-------- -------- --------
Net income.................................... $ 53,998 $ 61,534 $ 81,495
======== ======== ========
Net income per common share:
Basic....................................... $ 2.03 $ 2.31 $ 3.17
Diluted..................................... 2.01 2.28 3.08
Average common shares outstanding:
Basic....................................... 26,651 26,619 25,732
Diluted..................................... 26,869 27,038 26,473
</TABLE>

See accompanying notes to consolidated financial statements.

F-2
<PAGE> 43

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

<TABLE>
<CAPTION>
DECEMBER 29, DECEMBER 28,
1996 1997
------------ ------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 36,149 $ 36,924
Marketable securities..................................... 25,612 11,524
Accounts receivable
(net of allowances of $1,638 and $2,959)............... 90,023 89,707
Inventories............................................... 8,912 10,320
Deferred income taxes..................................... 7,263 7,919
Other current assets...................................... 3,503 5,712
-------- --------
Total current assets.............................. 171,462 162,106
-------- --------
Property, plant and equipment:
Land...................................................... 18,225 18,616
Buildings and improvements................................ 121,785 122,409
Leasehold improvements.................................... 4,255 4,412
Machinery and equipment................................... 367,173 383,626
Construction in progress.................................. 1,414 8,071
-------- --------
512,852 537,134
Less accumulated depreciation.......................... 215,872 250,451
-------- --------
296,980 286,683
-------- --------
Other assets:
Land held for development................................. 3,118 3,116
Goodwill and other intangibles............................ 75,449 122,729
Investment in Affiliate................................... 8,867 8,321
Other..................................................... 31,096 31,356
-------- --------
118,530 165,522
-------- --------
TOTAL ASSETS................................................ $586,972 $614,311
======== ========
</TABLE>

F-3
<PAGE> 44

<TABLE>
<CAPTION>
DECEMBER 29, DECEMBER 28,
1996 1997
------------ ------------
(IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 19,079 $ 19,672
Short-term bank debt...................................... 10,000
Accrued compensation...................................... 17,052 20,061
Dividends payable......................................... 5,180 5,613
Accrued expenses and other liabilities.................... 13,914 16,825
Federal and state income taxes............................ 5,880 1,578
Deferred revenue.......................................... 18,034 23,618
-------- --------
Total current liabilities......................... 79,139 97,367
-------- --------
Deferred income taxes....................................... 26,602 26,882
-------- --------
Long-term debt.............................................. 2,678
-------- --------
Postretirement and other noncurrent liabilities............. 81,759 86,997
-------- --------
Minority interests in subsidiaries.......................... 9,244 1,866
-------- --------
Redeemable preferred stock Issued by subsidiary............. 18,920
-------- --------
Shareholders' Equity:
Preferred stock -- issuable in series:
Authorized -- 25,000,000 shares Issued -- none
Class A Common Stock -- without par value:
Authorized -- 75,000,000 shares
Issued and outstanding -- 23,237,711 and 22,017,626
shares................................................. 24,259 29,934
Class B Common Stock -- without par value:
Authorized -- 50,000,000 shares
Issued and outstanding -- 31,553,000 and 31,345,500
shares................................................. 63 63
Retained earnings......................................... 363,365 352,531
Unamortized value of restricted stock..................... (1,627) (1,924)
Unrealized gain on available-for-sale securities.......... 1,490 1,675
-------- --------
387,550 382,279
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $586,972 $614,311
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE> 45

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
UNREALIZED
CLASS A CLASS B UNAMORTIZED GAIN ON
COMMON STOCK COMMON STOCK VALUE OF AVAILABLE
-------------------- ------------------- RETAINED RESTRICTED FOR-SALE
SHARES AMOUNT SHARES AMOUNT EARNINGS STOCK SECURITIES
---------- ------- ---------- ------ -------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 26, 1994.... 23,483,000 $18,182 31,553,000 $63 $300,968 $ 549
Net income (53 weeks)........... 53,998
Dividends declared:
Class A Common Stock.......... (14,573)
Class B Common Stock.......... (1,957)
Exercise of stock options....... 37,611 785
Change in net unrealized gain on
available-for-sale
securities.................... 726
---------- ------- ---------- --- -------- ------- ------
BALANCE AT DECEMBER 31, 1995.... 23,520,611 18,967 31,533,000 63 338,436 1,275
Net income (52 weeks)........... 61,534
Dividends declared:
Class A Common Stock.......... (16,856)
Class B Common Stock.......... (2,272)
Exercise of stock options....... 154,700 3,928
Repurchase of Class A Common
Stock......................... (490,100) (539) (17,477)
Issuance of restricted stock.... 52,500 1,903 $(1,903)
Amortization of restricted
stock......................... 276
Change in net unrealized gain on
available-for-sale
securities.................... 215
---------- ------- ---------- --- -------- ------- ------
BALANCE AT DECEMBER 29, 1996.... 23,237,711 24,259 31,553,000 63 363,365 (1,627) 1,490
</TABLE>

F-5
<PAGE> 46

<TABLE>
<CAPTION>
UNREALIZED
CLASS A CLASS B UNAMORTIZED GAIN ON
COMMON STOCK COMMON STOCK VALUE OF AVAILABLE
-------------------- ------------------- RETAINED RESTRICTED FOR-SALE
SHARES AMOUNT SHARES AMOUNT EARNINGS STOCK SECURITIES
---------- ------- ---------- ------ -------- ----------- ----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Net income (52 weeks)........... 81,495
Dividends declared:
Class A Common Stock.......... (17,866)
Class B Common Stock.......... (2,512)
Exercise of stock options,
net........................... 174,432 6,144
Repurchase of Class A Common
Stock......................... (1,432,267) (1,600) (71,852)
Repurchase of Class B Common
Stock......................... (17,500) (99)
Issuance of restricted stock,
net of cancellations.......... 18,750 1,131 (1,131)
Amortization of restricted
stock......................... 834
Common stock conversion......... 19,000 (190,000)
Change in net unrealized gain on
available-for-sale
securities.................... 185
---------- ------- ---------- --- -------- ------- ------
BALANCE AT DECEMBER 28, 1997.... 22,017,626 $29,934 31,345,500 $63 $352,531 $(1,924) $1,675
========== ======= ========== === ======== ======= ======
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 47

CENTRAL NEWSPAPERS, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED:
--------------------------------------------
DECEMBER 31, DECEMBER 29, DECEMBER 28,
1995 1996 1997
------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Operating activities:
Net income.................................. $ 53,998 $ 61,534 $ 81,495
Items which did not use (provide) cash:
Depreciation and amortization............ 29,281 35,528 42,022
Postretirement and pension benefits...... 2,072 2,050 6,593
Asset impairment cost.................... 4,226
Unrealized gain (loss) on trading
securities............................. (1,009) 821 96
Minority interests in subsidiaries
earnings............................... 1,409 1,629 2,566
Equity in Affiliate earnings (loss)...... 540 (1,864) 331
Deferred income taxes.................... 1,791 (1,543) (583)
Other.................................... 357 634 2,299
Change in current assets and liabilities:
Net proceeds from (purchases of) trading
securities............................. (17,630) 40,671 11,631
Accounts receivable...................... (7,730) (26,320) 2,985
Inventories.............................. (983) 1,835 (1,409)
Other current assets..................... (1,429) 2,363 (1,826)
Accounts payable......................... 1,056 (1,041) 1,606
Accrued compensation..................... 749 (317) 2,935
Accrued expenses and other liabilities... (4,869) (1,617) 949
Federal and state income taxes........... 1,739 3,338 (1,905)
Deferred revenue......................... 2,941 88 4,038
-------- -------- --------
Net cash provided by operating
activities.......................... 62,283 122,015 153,823
-------- -------- --------
Investing activities:
Purchases of property, plant and
equipment................................ $(58,676) $(46,530) $(25,135)
Proceeds from disposition of assets......... 2,452 1,975 407
Purchases of available-for-sale
securities............................... (76,726) (24,659)
Proceeds from available-for-sale
securities............................... 99,051 62,243 2,057
Acquisitions................................ (60,509) (44,219)
Other....................................... (8,564) (5,557) (3,816)
-------- -------- --------
Net cash used by investing
activities.......................... (42,463) (73,037) (70,706)
-------- -------- --------
</TABLE>

F-7
<PAGE> 48

See accompanying notes to consolidated financial statements.

F-8
<PAGE> 49

CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 -- NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations -- Central Newspapers, Inc. and its subsidiaries (the
"Company") are primarily engaged in the publishing and distribution of
newspapers. Revenues are principally derived from advertising and newspaper
sales in the Phoenix, Arizona and Indianapolis, Indiana metropolitan areas. The
Company also has an 80% interest in the Westech group of companies which are
predominantly in the jobs fair business and a 13.5% interest in Ponderay
Newsprint Company ("Affiliate"), a partnership formed to own a newsprint mill in
the State of Washington.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent 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 from those estimates.

Principles of Consolidation -- The consolidated financial statements
include the accounts of the Company and all wholly-owned and majority-owned
subsidiaries. Investments in companies in which the Company exercises
significant influence are accounted for using the equity method. All significant
intercompany accounts and transactions have been eliminated.

Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year. The fiscal year 1995 included 53 weeks and the fiscal years 1996
and 1997 included 52 weeks.

Revenue Recognition -- Advertising revenue is recognized when the
advertisement appears in the newspaper. Deferred subscription revenue, which
primarily represents amounts received from customers in advance of newspaper
delivery, is included in revenue over the subscription term.

Cash Equivalents -- The Company considers highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.

Concentrations of Credit Risk -- Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of cash
equivalents, trade accounts receivable and investments in marketable securities.
The Company places its temporary cash with financial institutions and limits the
amount of credit exposure to any one financial institution. Accounts receivable
are with customers located primarily in the immediate geographical area of each
city of publication. The Company reviews a customer's credit history before
extending credit and establishes an allowance for doubtful accounts based on
factors surrounding the credit risk of specific customers, historic trends and
other information. The Company, by policy, limits the type and amount of its
investments in marketable securities.

Inventories -- Newsprint is valued at the lower of cost or market on the
last-in, first-out (LIFO) method. Other inventories are valued at the lower of
cost or market using the first-in, first-out (FIFO) and moving average methods.

Property, Plant and Equipment -- Property, plant and equipment are carried
at cost. Depreciation is computed using primarily the straight-line method based
on the estimated useful lives of the assets. The principal estimated useful
lives range from three to 15 years for machinery and equipment and 10 to 40
years for buildings and leasehold improvements.

Investment in Affiliate -- The Company uses the equity method of accounting
for its 13.5% partnership interest in Ponderay Newsprint Company.

F-9
<PAGE> 50
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Goodwill and Other Intangibles -- Goodwill acquired before 1970 is not
being amortized. Goodwill and other intangibles acquired after 1970 are being
amortized on a straight-line basis over periods of 15 to 40 years. Amortization
expense amounted to $794,000 in 1995, $1,928,000 in 1996 and $4,945,000 in 1997.
Accumulated amortization was $4,185,000 and $9,130,000 at the end of 1996 and
1997, respectively.

The Company reviews goodwill and other intangibles for impairment whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. If the undiscounted expected future cash flows from use of the
asset are less than its carrying value, an impairment loss would be recognized.

Income Taxes -- The Company provides for the determination of deferred tax
liabilities and assets at the end of each period based on the difference between
the financial statement and tax basis of assets and liabilities using tax rates
expected to be in effect when taxes are actually paid or recovered. The Company
files a consolidated federal income tax return with its wholly and
majority-owned subsidiaries.

Net Income Per Common Share -- In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share," which requires companies to present basic earnings
per share ("EPS") and diluted EPS. The Company has adopted this new standard in
1997 and has restated EPS for all prior periods.

Basic EPS is computed based upon the weighted average number of common
shares outstanding in each year. The Class B common stock is included in the
computation as if converted to Class A common stock at a ratio of 10 shares of
Class B common stock to one share of Class A common stock.

Diluted EPS includes the effect of stock options granted under the
Company's Amended and Restated Stock Compensation Plan.

Accounting Changes -- The Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," in
the first quarter of 1996. The statement establishes accounting standards for
recognizing and measuring impairment of long-lived assets, and requires reducing
the carrying amount of any impaired assets to fair value. Application of SFAS
No. 121 resulted in a charge to earnings in 1996 of approximately $2,500,000,
net of tax.

The Company also adopted SFAS No. 123, "Accounting for Stock-Based
Compensation," in 1996. The statement prescribes accounting and reporting
standards for all stock-based compensation plans. The Company has elected to
continue to use existing methods for recognizing the expense of these plans and
provide pro forma disclosures in the financial statements and EPS using the fair
value method prescribed in the statement.

Reclassifications -- Certain amounts in the financial statements have been
reclassified to conform to the 1997 presentation.

2 -- BASIC AND DILUTED EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the
basic

F-10
<PAGE> 51
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and diluted EPS computations as required by
SFAS No. 128, "Earnings Per Share":

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Basic EPS Computation:
Numerator (Net income).............................. $53,998 $61,534 $81,495
Denominator:
Average Common Shares Outstanding................... 26,651 26,619 25,732
Basic EPS........................................... 2.03 2.31 3.17
Diluted EPS Computation:
Numerator (Net income).............................. 53,998 61,534 81,495
Denominator:
Average Common Shares Outstanding................... 26,651 26,619 25,732
Stock Options....................................... 218 419 741
TOTAL..................................... 26,869 27,038 26,473
Diluted EPS......................................... $ 2.01 $ 2.28 $ 3.08
</TABLE>

3 -- ACQUISITIONS, REDEEMABLE PREFERRED STOCK AND STOCK REPURCHASES

In February 1997, the Company acquired 80% of the Santa Clara, California
based Westech group of companies for $34,800,000. The transaction was recorded
using purchase accounting. The group, which had 1997 sales of $32,200,000,
includes Westech ExpoCorp., which organizes job fairs for the high-technology
industry, High Technology Careers, which publishes High Technology Careers
Magazine and Virtual Job Fair, an Internet-based resume posting and research
service and JobsAmerica, which organizes job fairs for service industry
positions. The transaction generated $32,400,000 of goodwill which is being
amortized on a straight line basis over 15 years. In June 1997, Westech acquired
the assets of Target Career Fairs, a Boston-based company that organizes job
fairs for the high-technology industry in the eastern portion of the U.S.,
including the cities of Boston, Raleigh, Orlando, Philadelphia and St. Louis.
Target had 1996 revenues of approximately $3,000,000. The Company has an option
to purchase the remaining 20%.

In January 1997, the Company acquired the remaining 9.8% of Indianapolis
Newspapers, Inc. ("INI") common stock that it did not already own. This
transaction was accomplished by issuing to the minority shareholders an
aggregate of 1,892 shares of newly created, non-voting, INI preferred stock,
with an aggregate stated value of $18,920,000 in exchange for the shares of INI
common stock owned by them. The preferred stock provides for aggregate annual
dividends of $1,324,000 on a cumulative basis, is callable in five years by INI,
and is redeemable at any time by the shareholders of INI at the stated value
plus accrued but unpaid dividends. The total acquisition consideration of
$18,920,000 was accounted for using the purchase method of accounting. This
transaction resulted in goodwill of $8,468,000 and a reduction of the minority
interest of $9,244,000.

In March 1996, the Company acquired 100% of the outstanding common stock of
McCormick and Company, Inc. ("McCormick"), the parent company of the Alexandria
Daily Town Talk newspaper of Louisiana and McCormick Graphics, Inc., a
commercial

F-11
<PAGE> 52
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

printing subsidiary. The purchase price of approximately $62,000,000 was paid
entirely with cash. The amount of the purchase price allocated to goodwill was
approximately $47,473,000 and is being amortized over forty years.

In December 1997, the Board of Directors authorized the repurchase of up to
$100,000,000 of the Company's Class A common stock. The shares may be purchased
within the subsequent three years on the open market or in privately negotiated
transactions. This authorization replaces the March 19, 1996 repurchase program
under which 745,000 shares of Class A common stock had been repurchased at a
cost of approximately $33,200,000.

In May 1997, the Company repurchased an aggregate of 1,177,367 shares of
the Company's Class A common stock from three non-profit organizations for total
consideration of $58,600,000.

In October 1997, the Company acquired an 80% interest in Home Buyer's Fair
LLC which provides Internet-based services and information for people who are
moving and corporations which are relocating employees. The Company has an
option to purchase the remaining 20%.

4 -- MARKETABLE SECURITIES

Management determines the classification of its investments in debt and
equity securities at the time of purchase. Securities classified as
available-for-sale are carried at fair value, with unrealized gains and losses,
net of tax, reported as a separate component of shareholders' equity. Securities
classified as trading securities are carried at fair value with unrealized gains
and losses reported in earnings. The cost of securities sold is based on the
specific identification method. All marketable debt securities and preferred
stock are classified as current assets. Certain available-for-sale equity
securities are classified as noncurrent assets.

F-12
<PAGE> 53
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a summary of securities at December 29, 1996:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Available-for-Sale Securities
Debt securities of the U.S. Treasury and
agencies................................. $ 1,998 $ 1,998
Equity securities.......................... 373 $3,107 3,480
Other...................................... 268 268
------- ------ -------
2,639 3,107 5,746
------- ------ -------
Trading Securities
Debt securities of the U.S. Treasury and
agencies................................. 806 $ (4) 802
Corporate debt securities.................. 1,259 (6) 1,253
Mortgage-backed securities................. 9,576 184 9,760
Preferred stock............................ 11,070 94 (13) 11,151
Other...................................... 213 (67) 146
------- ------ ---- -------
22,924 278 (90) 23,112
------- ------ ---- -------
$25,563 $3,385 $(90) $28,858
======= ====== ==== =======
</TABLE>

The following is a summary of securities at December 28, 1997:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Available-for-Sale Securities
Equity securities........................ $ 128 $2,794 $ 2,922
Other.................................... 283 283
------- ------ -------
411 2,794 3,205
------- ------ ---- -------
Trading Securities
Preferred stock.......................... 10,945 118 $ (8) 11,055
Other.................................... 204 (18) 186
------- ---- -------
11,149 118 (26) 11,241
------- ------ ---- -------
$11,560 $2,912 $(26) $14,446
======= ====== ==== =======
</TABLE>

F-13
<PAGE> 54
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Included in the Company's earnings for 1995, 1996 and 1997 were changes in
net unrealized holding gains (losses) of $1,009,000, $(821,000), and $96,000
respectively, from trading investments.

Proceeds from the sale of available-for-sale investments totaled
approximately $99,051,000, $62,243,000, and $2,057,000 in 1995, 1996 and 1997.
Gross realized gains and losses for 1995, 1996 and 1997 on available-for-sale
investments, based upon the specific identification method, were insignificant.
The fair value of equity securities in the amounts of $2,922,000 in 1997 and
$3,246,000 in 1996 have been classified with other noncurrent assets.

5 -- EMPLOYEE BENEFIT PLANS

The Company has defined benefit plans to provide pension benefits to all
employees who have met certain eligibility requirements. Benefits are based
primarily on length of service, wages earned, age and the amount of optional
employee contributions. The Company's policy is to fund at least the minimum
amount required by ERISA. Assets of the plans consist primarily of stocks, bonds
and short-term investments. During 1996, the defined benefit plan of McCormick
was combined into the defined benefit plan of the Company. The plan assets of
McCormick exceeded the projected benefit obligation by approximately $5,308,000.

The funded status for the Company's defined benefit plans at year end:

<TABLE>
<CAPTION>
1996 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of plan benefits:
Vested...................................................... $195,864 $209,591
Nonvested................................................... 9,941 10,190
-------- --------
Accumulated benefit obligation.............................. 205,805 219,781
Effect of future salary increases......................... 11,335 14,775
-------- --------
Projected benefit obligation................................ 217,140 234,556
Plan assets at fair value................................... 241,397 279,734
-------- --------
Plan assets in excess of projected benefit obligation....... 24,257 45,178
Unrecognized SFAS No. 87 transition asset................... (6,265) (4,981)
Unrecognized prior service cost............................. 3,236 2,792
Unrecognized net gain..................................... (14,226) (39,559)
-------- --------
Prepaid pension cost........................................ $ 7,002 $ 3,430
======== ========
</TABLE>

Assumptions used in determining funded status at the end of 1996 were a 9%
rate of return, 7.5% discount rate and a 4% rate of compensation increase. The
assumptions for determining funded status at the end of 1997 were a 9% rate of
return, 7.25% discount rate and a 4% rate of compensation increase.

F-14
<PAGE> 55
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Pension expense included the following components:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost -- benefits earned during the year......... $ 4,904 $ 6,861 $ 6,572
Interest cost on projected benefit obligation:.......... 14,116 14,575 16,437
Return on assets:
Actual................................................ (48,898) (35,418) (53,472)
Deferred gain......................................... 33,542 18,274 34,885
Amortization of:
Transition asset...................................... (1,283) (1,283) (1,283)
Prior service cost.................................... 444 444 444
(Gain) loss........................................... (10) 39 (11)
-------- -------- --------
Pension expense......................................... $ 2,815 $ 3,492 $ 3,572
======== ======== ========
</TABLE>

Significant assumptions used in determining pension expense:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Expected long-term rate of return........................... 9.0% 9.0% 9.0%
Discount rate............................................... 8.75 7.00 7.50
Rate of increase in future compensation levels.............. 5.0 4.0 4.0
</TABLE>

The Company has a wage deferral plan qualified under Section 401(k) of the
Internal Revenue Code that covers all eligible employees. Company matching
contributions to this plan were $4,397,000, $4,600,000, and $4,517,000 for 1995,
1996 and 1997.

6 -- POSTRETIREMENT BENEFIT OBLIGATION

The Company sponsors postretirement medical and life insurance plans which
are available to most of its employees. In order to be eligible for these plans,
employees must retire from the Company and have been covered under an active
plan. The level of benefits provided depends on the year of retirement and years
of service. The plans are contributory with periodic adjustments in the amount
of contributions by retirees. The Company's policy is to fund these benefits as
claims and premiums are paid.

F-15
<PAGE> 56
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The status of the postretirement benefit obligation at year end:

<TABLE>
<CAPTION>
1996 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $55,048 $51,096
Fully eligible active plan participants................... 14,340 14,828
Other active plan participants............................ 20,511 21,704
------- -------
Total accumulated postretirement benefit obligation....... 89,899 87,628
Unrecognized prior service cost........................... 2,957 1,189
Unrecognized net loss..................................... (8,198) (1,330)
------- -------
Accrued postretirement benefit obligation................... $84,658 $87,487
======= =======
</TABLE>

The net postretirement benefit cost included the following components:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost -- benefits earned during the year............. $ 1,941 $ 2,859 $ 3,185
Interest cost on accumulated benefit obligation............. 5,387 5,974 6,091
Amortization of unrecognized prior service cost............. (1,927) (1,927) (1,947)
Amortization of loss (gain)................................. (241) 128 38
------- ------- -------
Postretirement benefit expense.............................. $ 5,160 $ 7,034 $ 7,367
======= ======= =======
</TABLE>

The accumulated postretirement benefit obligation was determined using a
discount rate of 7.25% and a health care cost trend rate of 7% in 1997
decreasing to 5% in the year 2000 and thereafter. Discount rates used for 1996
and 1995 were 7.5% and 7.0%, respectively. The effect of a 1% increase each year
in the health care cost trend rate would result in an increase of approximately
$8,089,000 in the accumulated postretirement benefit obligation at the end of
1997 and $1,121,000 in the aggregate service and interest components of the 1997
expense.

7 -- WORK FORCE REDUCTION

The Company has reduced its work force in response to The Phoenix Gazette
closure, changes in distribution methods in Indianapolis, economic conditions,
increasing costs and changes in technology. Early retirement incentive programs
contributed to the staff reductions. Employees were offered early retirement
benefits through a non-qualified supplemental retirement plan and those
terminated due to job eliminations received severance payments. Work force
reduction costs include retirement benefits, severance payments, carrier
conversion incentives, agency signing bonuses and professional support.

F-16
<PAGE> 57
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

OTHER INCOME AND OTHER EXPENSES

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Income items:
Interest.................................................... $7,213 $5,196 $2,598
Change in unrealized gain on trading securities............. 1,009 (821) (96)
Gain on disposition of assets............................... 72 90
Dividend.................................................... 572 960 830
Other....................................................... 708 79 896
------ ------ ------
Total....................................................... 9,502 5,486 4,318
------ ------ ------
Expense items:
Interest.................................................... 238 618 1,710
Loss on disposition of assets............................... 357 463 56
Other....................................................... 753 396 400
------ ------ ------
Total....................................................... $1,348 $1,477 $2,166
====== ====== ======
</TABLE>

9 -- INCOME TAXES

The provision for income taxes, exclusive of tax effects from equity in
earnings of Affiliate, consisted of:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
State:
Currently payable........................................... $ 7,347 $ 8,007 $10,903
Deferred.................................................... 354 (301) (60)
------- ------- -------
7,701 7,706 10,843
------- ------- -------
Federal:
Currently payable........................................... 28,910 35,967 48,477
Deferred.................................................... 1,437 (1,242) (523)
------- ------- -------
30,347 34,725 47,954
------- ------- -------
Provision for income taxes.................................. $38,048 $42,431 $58,797
======= ======= =======
</TABLE>

F-17
<PAGE> 58
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Components of net deferred income tax liability:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
(No valuation allowance required)
<S> <C> <C> <C>
Depreciation.............................................. $ 53,520 $ 55,533 $57,796
Pension................................................... 562 2,490 2,878
Other..................................................... 1,731 1,647 1,933
-------- -------- -------
Gross deferred tax liability.............................. 55,813 59,670 62,607
-------- -------- -------
Postretirement benefits................................... (33,124) (33,938) (35,488)
Vacation.................................................. (3,857) (3,995) (3,767)
Other..................................................... (2,596) (2,398) (4,351)
-------- -------- -------
Gross deferred tax asset.................................. (39,577) (40,331) (43,606)
-------- -------- -------
Net deferred income tax liability......................... $ 16,236 $ 19,339 $19,001
======== ======== =======
</TABLE>

Reconciliation of the U.S. federal statutory tax rate to the effective tax
rate:

<TABLE>
<CAPTION>
1995 1996 1997
-------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Federal statutory tax rate................ $32,916 35.0% $36,354 35.0% $50,116 35.0%
State taxes net of federal tax effect..... 5,006 5.3 5,009 4.8 7,048 5.0
Goodwill and other........................ 126 0.2 1,068 1.0 1,633 1.1
------- ---- ------- ---- ------- ----
Provision for income taxes................ $38,048 40.5% $42,431 40.8% $58,797 41.1%
======= ==== ======= ==== ======= ====
</TABLE>

10 -- INVENTORIES

Newsprint inventory, valued at LIFO, amounted to $6,455,000 and $7,710,000
at the end of 1996 and 1997. If the FIFO inventory valuation method had been
exclusively used for newsprint, the value would have been $3,352,000 and
$5,139,000 higher, respectively. Other inventories, consisting primarily of
newspaper production supplies, amounted to $2,457,000 and $2,610,000 at the end
of 1996 and 1997.

11 -- INVESTMENT IN AFFILIATE

The Company, through its subsidiaries, has a 13.5% partnership interest in
Ponderay Newsprint Company, which was formed to own a newsprint mill in the
State of Washington. Under the terms of a loan agreement, the Company has
guaranteed certain partnership bank debt in the amount of $16,875,000. At the
end of 1996 and 1997, $36,400,000 had been invested in Ponderay.

The Company has committed to purchase for use in Phoenix the lesser of
13.5% of annual newsprint production or 28,400 metric tons on a "take if
tendered" basis until the debt is repaid. Newsprint purchased from Ponderay
amounted to $22,177,000 during 1996 and $23,735,000 during 1997.

F-18
<PAGE> 59
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Summarized financial data for Affiliate:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Results of operations:
Net sales............................................. $151,690 $160,979 $131,330
Net income (loss)..................................... (4,666) 22,399 (4,040)
Financial position
Current assets........................................ $ 27,881 $ 17,934 $ 22,150
Property and equipment, at cost -- net................ 278,224 263,013 250,038
Other assets.......................................... 3,457 3,098 2,433
-------- -------- --------
$309,562 $284,045 $274,621
======== ======== ========
Current liabilities................................... $ 37,252 $ 18,336 $ 29,018
Long-term debt ($125 million guaranteed by
partners).......................................... 229,048 200,048 183,982
Partners' capital..................................... 43,262 65,661 61,621
-------- -------- --------
$309,562 $284,045 $274,621
======== ======== ========
</TABLE>

Summary of the Company's investment in Affiliate:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Investment, beginning of year............................... $3,989 $ 5,843 $8,867
Equity in partnership income (loss)......................... (630) 3,024 (546)
Additional investments...................................... 2,484
------ ------- ------
Investment, end of year..................................... $5,843 $ 8,867 $8,321
====== ======= ======
Equity in Affiliate:
Equity in partnership income (loss)......................... $ (630) $ 3,024 $ (546)
Current income tax expense.................................. (606) (1,425) (377)
Deferred tax benefit........................................ 696 265 593
Other....................................................... (50) (138) (1)
------ ------- ------
Equity in net earnings (loss) of Affiliate.................. $ (590) $ 1,726 $ (331)
====== ======= ======
</TABLE>

12 -- SHORT-TERM BORROWINGS AND LONG-TERM DEBT

In May 1997, the Company entered into a $60,000,000 unsecured, uncommitted,
short-term credit agreement of which $39,400,000 was drawn to partially fund the
repurchase of stock. As of December 28, 1997, $10,000,000 remained outstanding
on the short-term credit agreement at an annual interest rate of approximately
6%.

Included in accrued expenses and other liabilities is the $2,678,000 amount
relating to

F-19
<PAGE> 60
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the 50-year 4 1/2% debentures due
December 1, 1998. The trust indenture contains various requirements and
restrictions as to the financial activities of INI and its subsidiary. There are
certain restrictions on capital expenditures and dividend payments by INI.

Interest expense on these facilities and other debt amounted to $121,000 in
1995, $347,000 in 1996 and $1,710,000 in 1997.

13 -- RENTAL EXPENSE AND LEASE COMMITMENTS

Rental expense for 1995, 1996 and 1997 amounted to $4,429,000, $5,000,000
and $5,532,000. Future obligations for minimum annual rentals under
noncancelable long-term leases are not significant.

14 -- CAPITAL STOCK AND STOCK COMPENSATION PLAN

Class A common stock is entitled to 1/10 of a vote per share. The Class B
common stock has one vote per share while its dividend and liquidation
distributions are 1/10 of the amount of Class A common stock. Class B common
stock may be converted into Class A common stock at a ratio of ten shares of
Class B common stock for one share of Class A common stock. The Eugene C.
Pulliam Trust ("Trust") owns Class B common stock which provides the Trust the
majority voting control of the Company. At December 28, 1997, the Company has
reserved 2,400,537 shares of Class A common stock for issuance under its Stock
Compensation Plan, 500,000 shares for issuance under its 401(k) plan and
3,134,550 shares for issuance upon conversion of Class B common stock.

Dividends declared per share:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Class A common stock........................................ $ .62 $ .72 $ .80
Class B common stock........................................ .062 .072 .080
</TABLE>

The Company's Stock Compensation Plan provides for the granting of stock
options and the issuance of restricted stock grants to certain officers, key
employees and members of the Board of Directors. Options issued under this plan
are granted at prices determined by the Stock Option Committee of the Board of
Directors but not less than fair market value on the date of the grant. Options
granted may be incentive or non-qualified options with a term of 10 years.
Options granted before December 25, 1994, and Board of Director member options
are currently exercisable. Options granted in 1995 and prior to September 13,
1996, are exercisable three years from date of grant and options granted after
September 13, 1996, become exercisable ratably over a three year period
beginning on the first anniversary of the grant.

The Company has historically accounted for employee stock compensation in
accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees."
Under APB No. 25, no compensation costs are recognized if options are granted at
an exercise price equal to the current market value of the stock. SFAS No. 123,
"Accounting for Stock-Based Compensation," was adopted by the Company on January
1, 1996. As permitted by SFAS No. 123, the Company has elected to continue
accounting for employee stock compensation under the APB No. 25 rules, but
disclose pro forma results using SFAS No. 123's alternative accounting
treatment, which calculates the total compensation expense to be recognized as
the fair value of the award at the date of grant. The fair value of options
granted in 1995, 1996 and 1997 was estimated on the grant date using the

F-20
<PAGE> 61
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Black-Scholes option pricing model using the following assumptions:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Risk-free interest rates.................................. 6.0-7.0% 6.5-6.6% 6.2%
Dividend yields........................................... 2.0% 2.0% 1.2%
Expected volatility....................................... 27.0% 27.0% 29.0%
Weighted average expected life of options................. 6 years 4-6 years 4 years
</TABLE>

Under SFAS No. 123, compensation cost is recognized in the amount of the
estimated fair value of the options and amortized to expense over the options'
vesting period. The pro forma effects on net income and earnings per share of
this statement are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C>
Net income:
As reported............................................... $53,998 $61,534 $81,495
Pro forma................................................. 53,543 60,316 79,656
Earnings per share:
As reported
Basic....................................................... $ 2.03 $ 2.31 $ 3.17
Diluted..................................................... 2.01 2.28 3.08
Pro forma
Basic....................................................... 2.00 2.27 3.10
Diluted..................................................... 1.99 2.23 3.01
</TABLE>

F-21
<PAGE> 62
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following is a summary of the status of the Company's Stock
Compensation Plan as of and for the three years ended December 28, 1997:

<TABLE>
<CAPTION>
WEIGHTED AVERAGE
SHARES PER SHARE
RESERVED SHARES ------------------
FOR UNDER EXERCISE MARKET
GRANTS OPTION PRICE PRICE
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Outstanding, December 25, 1994................ 2,055,950 868,450 $21.34 $27.13
Additional reserved......................... 800,000
Granted..................................... 543,000 28.34 28.34
Exercised................................... (52,850) (52,850) 20.35 28.81
Cancelled................................... (7,500) 23.75 --
--------- --------- ------ ------
Outstanding, December 31, 1995................ 2,803,100 1,351,100 24.18 31.38
Granted..................................... 339,000 37.36 37.36
Exercised................................... (154,700) (154,700) 19.20 36.08
Cancelled................................... (51,500) 26.58 --
Restricted Shares........................... (52,500)
--------- --------- ------ ------
Outstanding, December 29, 1996................ 2,595,900 1,483,900 27.63 42.88
Granted..................................... 123,975 48.45 48.45
Exercised................................... (176,613) (176,613) 21.53 59.44
Restricted shares-net....................... (18,750)
Cancelled................................... (10,050) 32.16 --
--------- --------- ------ ------
Outstanding, December 28, 1997................ 2,400,537 1,421,212 $30.18 $70.06
========= ========= ====== ======
</TABLE>

The following table summarizes information about stock options outstanding
at December 28, 1997:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE
------------------------------ ------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AVERAGE EXERCISE EXERCISE
EXERCISE PRICE RANGE SHARES LIFE(a) PRICE SHARES PRICE
- -------------------- ------ ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
$15.00-$24.99 476,950 5.1 $22.53 476,950 $22.53
$25.00-$34.99 504,000 7.6 28.41 6,000 30.22
$35.00-$44.99 316,837 8.6 37.37 72,817 37.75
$45.00-$54.99 114,425 9.2 46.57 4,000 51.75
$55.00-$74.99 9,000 9.8 72.50 --
--------- -------
1,421,212 7.1 30.18 559,767 24.81
========= =======
</TABLE>

- -------------------------

(a) Weighted average contractual life remaining in years

The Company issued restricted stock grants to certain key executives who
have a critical impact on the long-term performance of the Company. The
Compensation Committee of the Board of Directors awarded 52,500 shares and
19,250 shares of Class A common stock in 1996 and 1997, respectively, whereby
transfer restrictions lapse at the end

F-22
<PAGE> 63
CENTRAL NEWSPAPERS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of five years from the award date or as early as three years upon achieving
certain performance goals. The restricted stock grants have all the rights of
shareholders, including the right to receive dividends, except for conditions
regarding transferability of shares or upon the termination of employment. Upon
issuance of the shares, unearned compensation equivalent to the market value at
the date of grant was recorded as unamortized value of restricted stock and is
being charged to earnings over the period during which the restrictions lapse.
During 1996 and 1997, compensation expense in the amount of $276,000 and
$834,000 respectively, has been recorded related to these restricted stock
grants.

15 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of the Company's financial instruments approximate the
fair value. The Company has guaranteed $16,875,000 of Ponderay debt. The
carrying value approximates the guaranteed amount.

16 -- CONTINGENCIES

There are various libel and other legal actions that have arisen in the
normal course of business and are now pending against the Company. It is the
opinion of management that final disposition of such litigation will not have
any material adverse effect on the Company's financial position or results of
operations.

F-23
<PAGE> 64

UNDERWRITING

The Selling Shareholder and the underwriters for the offering (the
"Underwriters") named below have entered into an underwriting agreement with
respect to the Class A Common Stock being offered. Subject to certain
conditions, each Underwriter has severally agreed to purchase the number of
shares indicated in the following table. Goldman, Sachs & Co. is the
representative of the Underwriters.

<TABLE>
<CAPTION>
Underwriters Number of Shares
------------ ----------------
<S> <C>
Goldman, Sachs & Co.........................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
----------------
Total.....................................................
================
</TABLE>

-------------------------

If the Underwriters sell more shares than the total number set forth in the
table above, the Underwriters have an option to buy up to an additional 174,372
shares from the Selling Shareholder to cover such sales. They may exercise that
option for 30 days. If any shares are purchased pursuant to this option, the
Underwriters will severally purchase shares in approximately the same proportion
as set forth in the table above.

The following table shows the per share and the total underwriting
discounts and commissions to be paid to the Underwriters by the Selling
Shareholder. Such amounts are shown assuming both no exercise and full exercise
of the Underwriters' option to purchase additional shares.

<TABLE>
<CAPTION>
Paid by the Selling Shareholder
-------------------------------
No Full
Exercise Exercise
-------- --------
<S> <C> <C>
Per share............ $ $
Total................ $ $
</TABLE>

Shares sold by the Underwriters to the public will initially be offered at
the public offering price set forth on the cover of this prospectus. Any shares
sold by the Underwriters to securities dealers may be sold at a discount of up
to $ per share from the initial public offering price. Any such securities
dealers may resell any shares purchased from the Underwriters to certain other
brokers or dealers at a discount of up to $ per share from the initial
public offering price. If all the shares are not sold at the initial offering
price, the representatives may change the offering price and the other selling
terms.

The Company, the Selling Shareholder, and the Eugene C. Pulliam Trust, as
well as the directors and other executive officers of the Company, have agreed
that, during the period beginning from the date of this prospectus and
continuing and including the date 90 days after the date of the Prospectus, they
will not offer, sell, contract to sell or otherwise dispose of any shares of
Class A Common Stock or any security convertible into or exchangeable for shares
of Class A Common Stock without the prior written consent of Goldman, Sachs &
Co., except as otherwise provided in the Underwriting Agreement.

In connection with the offering, the Underwriters may purchase and sell
shares of Class A Common Stock in the open market. These transactions may
include short sales, stabilizing transactions and purchases to cover positions
created by short sales. Short sales involve the sale by the Underwriters of a
greater number of shares than they are required to purchase in the offerings.
Stabilizing transactions consist of certain bids or purchases made for the
purpose of preventing or retarding a decline in the market price of the Class A
Common Stock while the offering is in progress.

The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repur-

U-1
<PAGE> 65

chased shares sold by or for the account of such Underwriter in stabilizing or
short covering transactions.

These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Class A Common Stock. As a result, the price of
the Class A Common Stock may be higher than the price that otherwise might exist
in the open market. If these activities are commenced, they may be discontinued
by the Underwriters at any time. These transactions may be effected on the NYSE,
in the over-the-counter market or otherwise.

The Selling Shareholder estimates, that its share of the total expenses of
the offering, excluding underwriting discounts and commissions, will be
approximately $ .

The Company and the Selling Shareholder have agreed to indemnify several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.

U-2
<PAGE> 66

- ------------------------------------------------------------
- ------------------------------------------------------------

No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the shares offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in
this prospectus is current only as of its date.

-------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information..................... 3
Incorporation of Certain Documents by
Reference............................... 4
Prospectus Summary........................ 5
Risk Factors.............................. 8
Price Range of Common Stock and Dividend
Policy.................................. 11
Use of Proceeds........................... 11
Capitalization............................ 12
Selected Consolidated Financial Data...... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................. 16
Business.................................. 27
Management................................ 34
Description of Capital Stock.............. 36
Selling Shareholder....................... 38
Legal Matters............................. 38
Experts................................... 38
Index to Consolidated Financial
Statements.............................. F-1
Underwriting.............................. U-1
</TABLE>

- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------

1,162,478 Shares
CENTRAL NEWSPAPERS, INC.
Class A Common Stock

cni logo
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
Representatives of the Underwriters

- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE> 67

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all fees and expenses payable in connection
with the issuance and distribution of the shares of Class A Common Stock, other
than underwriting discounts and commissions. All such fees and expenses will be
paid by the Selling Shareholder and the Company. All the amounts shown are
estimates, except for the Securities and Exchange Commission registration fee
and the NASD filing fee.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $25,365
NASD filing fee............................................. $ 9,624
"Blue Sky" fees and expenses................................ --
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Printing expenses........................................... *
Miscellaneous............................................... *
-------
Total............................................. *
=======
* To be filed
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Sections 23-1-37-1 -- 23-1-37-15 of the Indiana Business Corporation Law
permit a corporation to indemnify directors and officers against liability
incurred in certain proceedings if the individual's conduct was in good faith
and the individual reasonably believed, in the case of conduct in the
individual's official capacity, that such conduct was in the best interests of
the corporation and, in all other cases, believed such conduct was at least not
opposed to the best interests of the corporation. If the proceeding is criminal,
the individual must either have had no reasonable cause to believe that such
conduct was unlawful or had reasonable cause to believe that such conduct was
lawful. The statute requires a corporation to indemnify an individual who is
wholly successful in the defense of any such proceeding against reasonable
expenses incurred by such individual, unless the Articles of Incorporation
provide otherwise. The corporation may pay for or reimburse the reasonable
expenses incurred by a director or officer who is a party to a proceeding in
advance of final disposition of the proceeding if certain conditions are
satisfied. Unless otherwise provided in the Articles of Incorporation, a
director or officer may apply for court ordered indemnification, which will
include reasonable expenses incurred to obtain the indemnification order if the
court determines that the director is entitled to mandatory indemnification or
that the director is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances. Except in the case of mandatory
indemnification, a corporation may indemnify a director of officer only after it
is determined that the individual meets the standard of conduct described above.
In addition, a corporation may also indemnify and advance expenses to an
officer, whether or not a director, to the extent, consistent with public
policy, that may be provided by its Articles of Incorporation, by-laws, general
or specific action of its board of directors or contract. Section 23-1-37-14 of
the Indiana Business Corporation Law empowers an Indiana corporation to purchase
and maintain insurance on behalf of any director or officer against any
liability asserted against, or incurred by, such individual in any such capacity
or arising out of his or her status as such, whether or not the corporation
would have had the power to indemnify against such liability.

II-1
<PAGE> 68

The Amended and Restated Articles of Incorporation of the Registrant permit
the Registrant to indemnify any person who is or was a director or officer of
the Registrant to the fullest extent allowed by law.

The Registrant also carries liability insurance covering officers and
directors.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
4.1 Amended and Restated Articles of Incorporation of Central
Newspapers, Inc.*
4.2 The Amended and Restated Code of By-Laws of Central
Newspapers, Inc.*
5.1 Opinion of Henderson, Daily, Withrow & DeVoe as to legality
of the shares.
10.1 Stock Purchase Agreement by and between the Nina Mason
Pulliam Charitable Trust and Central Newspapers, Inc., dated
as of September 21, 1998 incorporated by reference to Form
10-Q dated November 5, 1998.
10.2 Standstill and Option Agreement by and between the Nina
Mason Pulliam Charitable Trust and Central Newspapers, Inc.
dated as of September 21, 1998 incorporated by reference to
Form 10-Q dated November 5, 1998.
10.3 Stock Purchase Agreement by and between the Nina Mason
Pulliam Charitable Trust and Central Newspapers, Inc., dated
as of November 13, 1998.
10.4 Credit Agreement among Central Newspapers, Inc., The First
National Bank of Chicago, Bank of Montreal, and Norwest Bank
Minnesota dated as of November 10, 1998.
10.5 First Amendment to Credit Agreement among Central
Newspapers, Inc., The First National Bank of Chicago, Bank
of Montreal, and Norwest Bank of Minnesota dated as of
November 16, 1998.
15.1 Awareness Letter of PricewaterhouseCoopers LLP.*
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Olive LLP (formerly Geo. S. Olive & Co. LLC).
23.3 Consent of Henderson, Daily, Withrow & DeVoe (contained in
the opinion filed as Exhibit 5.1 to this Registration
Statement).
24.1 Powers of Attorney.*
</TABLE>

- ---------------

* Previously filed

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.

(2) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant

II-2
<PAGE> 69

pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was declared
effective.

(3) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted against the registrant by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

II-3
<PAGE> 70

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Phoenix, Arizona on the 9th day of December, 1998.

CENTRAL NEWSPAPERS, INC.

By: /s/ LOUIS A. WEIL, III
------------------------------------
President & Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ LOUIS A. WEIL, III President, Chief Executive December 9, 1998
- --------------------------------------------------- Officer and Director
Louis A. Weil, III (Principal Executive
Officer)

/s/ THOMAS K. MACGILLIVRAY Vice President and Chief December 9, 1998
- --------------------------------------------------- Financial Officer
Thomas K. MacGillivray (Principal Financial and
Accounting Officer)

* Director December 9, 1998
- ---------------------------------------------------
William A. Franke

* Director December 9, 1998
- ---------------------------------------------------
L. Ben Lytle

* Director December 9, 1998
- ---------------------------------------------------
Eugene S. Pulliam

* Director December 9, 1998
- ---------------------------------------------------
Dan Quayle

* Director December 9, 1998
- ---------------------------------------------------
Frank E. Russell

* Director December 9, 1998
- ---------------------------------------------------
Richard Snell

*By: /s/ ERIC S. TOOKER
- ---------------------------------------------------
Attorney-in-Fact
</TABLE>

II-4
<PAGE> 71

EXHIBIT INDEX

- ---------------

* Previously filed

II-5

<PAGE> 1
Exhibit 5.1

[HENDERSON, DAILY, WITHROW & DEVOE LETTERHEAD]

November 16, 1998

Central Newspapers, Inc.
200 East Van Buren Street
Phoenix, Arizona 85004

Ladies and Gentlemen:

In connection with the sale by a certain selling shareholder of up to
1,336,850 shares of Class A common stock, no par value ("Common Stock") of
Central Newspapers, Inc. (the "Company"), including 174,372 shares to be sold by
the Selling Shareholder in the event of exercise of an over-allotment option by
the underwriters, we have examined the Company's Amended and Restated Articles
of Incorporation, its Amended and Restated Code of By-laws, applicable
resolutions adopted by the Board of Directors of the Company and such other
documents and records as we have deemed necessary for the giving of this
opinion. We have also examined the Registration Statement on Form S-3, No.
333-67077 (the "Registration Statement"), filed with the Securities and Exchange
Commission pursuant to the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), for the purpose of registering the shares of
Common Stock for sale. Based on our examination, we are of the opinion that:

(1) The Company has been duly formed and is validly existing as a
corporation under the laws of the State of Indiana with full power and
authority to conduct the business in which it is engaged as described
in the Registration Statement.

(2) All necessary action has been taken by the Company's Board of
Directors to authorize the registration of the Common stock and no
action by the Company's shareholders is required.

(3) The Common Stock will be validly issued, fully paid and non-assessable
when (i) the Registration Statement has become effective; and (ii) the
shares of
<PAGE> 2
HENDERSON, DAILY, WITHROW & DEVOE

Central Newspapers, Inc.
200 East Van Buren Street
Phoenix, Arizona 85004
November 16, 1998
Page 2 of 2 pages

Common Stock have been sold and paid for as provided in the
Registration Statement.

We hereby consent to the use of our name under the caption "Legal
Matters" in the prospectus constituting a part of the Registration Statement
and further consent to the filing of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

[HENDERSON, DAILY, WITHROW & DEVOE]

OWD:kac

<PAGE> 1
Exhibit 10.3

STOCK PURCHASE AGREEMENT

This Agreement is made as of this 13th day of November, 1998, by and
between the NINA MASON PULLIAM CHARITABLE TRUST, an Indiana trust (the
"Trust"), and CENTRAL NEWSPAPERS, INC., an Indiana corporation (the "Company").

RECITALS

A. The Trust holds shares of the Class A and Class B common stock of the
Company (the "Shares").

B. The Company desires to purchase from the Trust and the Trust desires to
sell to the Company the equivalent of One Million Five Hundred Thousand
(1,500,000) shares of Class A Common Stock from the Shares (the "Redeemed
Shares").

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein and subject to and upon the terms and conditions hereinafter
set forth, it is hereby agreed as follows:

ARTICLE I
PURCHASE OF REDEEMED SHARES

1.1. This transaction may be completed through one or more closings in
increments of 500,000 shares each, however, all such closings must be completed
within thirty (30) days of the date hereof. On each date agreed upon by the
Trust and the Company as a closing date of this transaction (each such date
hereinafter referred to as a "Closing Date"), the Trust will deliver to the
Company, at the Company's offices in Indianapolis, Indiana, the certificate or
certificates representing the portion of the Redeemed Shares to be purchased at
such closing, a stock power duly executed in blank and such other instruments
as the Company shall deem necessary to transfer ownership of such shares to the
Company. At each such closing, the Company will deliver to the Trust a
certified or cashiers check or wire funds transfer in an amount equal to the
portion of the Purchase Price (as hereinafter defined) to be paid at such
closing. The aggregate purchase price for the Redeemed Shares is One Hundred
Million Five Hundred Thousand Dollars ($100,500,000) or $67 per Redeemed Share,
plus interest on such amount as is unpaid from time to time at the rate of five
percent (5%) per annum from the date hereof through the Closing Date,
calculated on the basis of a 365 day year (the "Purchase Price").

1.2. The Company represents and warrants as follows:

(a) This Agreement is the valid and binding obligation of the Company,
enforceable in accordance with its terms, and the execution and
performance of this Agreement by the Company will not result in any
violation of or be in conflict

1
<PAGE> 2
with or constitute a default under any contract, agreement, instrument,
judgment, decree or other indenture to which the Company is a party or by
which the Company otherwise is bound; and

(b) No person, corporation or other entity has, nor as a result of the
transactions contemplated hereby will have, any right, interest, or valid
claim against the Trust, the Company or any other person, for any
commission, fee or other compensation as a finder or broker or in any
similar capacity arising out of any action taken by the Company.

ARTICLE II
REPRESENTATIONS AND COVENANTS OF THE TRUST

The Trust hereby represents and warrants as follows as of each Closing Date:

(a) The Trust will be the sole owner of the Redeemed Shares, and that each of
the Redeemed Shares will be free and clear of liens, encumbrances, claims
of others and transfer restrictions of any kind with the exception of any
restrictive legend placed on the certificate(s);

(b) The Trust has full power and authority to sell the Redeemed Shares to the
Company in accordance with the provisions hereof;

(c) This Agreement is the valid and binding obligation of the Trust
enforceable in accordance with its terms, and the execution and
performance of this Agreement by the Trust will not result in any
violation of or be in conflict with or constitute a default under any
contract, agreement, instrument, judgment, decree or other indenture to
which the Trust is a party or by which the Trust otherwise is bound;

(d) No person, corporation or other entity has, nor as a result of the
transactions contemplated hereby will have, any right, interest, or valid
claim against the Trust, the Company or any other person, for any
commission, fee or other compensation as a finder or broker or in any
similar capacity arising out of any action taken by the Trust; and

(e) The Trust has had access to all information it desires concerning the
Company and its subsidiaries and operations, and has had the opportunity
to ask such questions of officers of the Company as the Trust has deemed
necessary or appropriate in order to enable the Trust to determine whether
to authorize the sale of the Redeemed Shares on the terms herein
specified. The Trust has reviewed all information it deems material to
making its decision to sell the Redeemed Shares hereunder.

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<PAGE> 3
ARTICLE III
CONDITIONS PRECEDENT

All obligations of the parties under this Agreement are subject to the
arrangement of financing for the transaction on terms and conditions acceptable
to the Company.

ARTICLE IV
GENERAL

4.1. This transaction results from the Company exercising its option under
that certain Standstill and Option Agreement dated September 21, 1998 by and
between the Company and the Trust (the "Option Agreement"). The Option Agreement
and this Agreement constitute the entire agreement between the parties with
respect to the subject matter hereof and supersedes and merges all prior
understandings and agreements concerning the subject matter hereof. This
Agreement may only be modified or amended in writing.

4.2. This Agreement shall be governed and construed in all respects under
the laws of the State of Indiana.

4.3. This Agreement may be executed in counterparts, each one of which
shall constitute one and the same Agreement and each one of which shall be
deemed an original.

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

CENTRAL NEWSPAPERS, INC.

By: /s/ Eric S. Tooker
--------------------------------------------
Eric S. Tooker, Vice President and Secretary

THE NINA MASON PULLIAM CHARITABLE TRUST

By: /s/ Frank E. Russell
--------------------------------------------
Printed: Frank E. Russell
---------------------------------------
Title: Trustee
-----------------------------------------

<PAGE> 1

Exhibit 10.4

CREDIT AGREEMENT

This Credit Agreement, dated as of November 10, 1998 is among CENTRAL
NEWSPAPERS, INC., an Indiana corporation, the Lenders from time to time party
hereto, THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent, BANK OF
MONTREAL, as Syndication Agent, and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Documentation Agent. The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

"Absolute Rate" means, with respect to an Absolute Rate Loan made by a
given Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower pursuant to Section 2.4.6.

"Absolute Rate Advance" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate Interest
Period.

"Absolute Rate Auction" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to Section 2.4.

"Absolute Rate Interest Period" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than 30 and not more than
180 days commencing on a Business Day selected by the Borrower pursuant to this
Agreement, but in no event extending beyond the Multi-Year Facility Termination
Date. If an Absolute Rate Interest Period would end on a day which is not a
Business Day, such Absolute Rate Interest Period shall end on the next
succeeding Business Day.

"Absolute Rate Loan" means a Loan which bears interest at an Absolute
Rate.

"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Borrower or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.

"Administrative Agent" means The First National Bank of Chicago in its
capacity as contractual representative of the Lenders pursuant to Article X, and
not in its individual capacity as a Lender, and any successor Administrative
Agent appointed pursuant to Article X.

"Advance" means a borrowing hereunder (or, in the case of a Committed
Advance, the conversion or continuation thereof) consisting of the aggregate
amount of the several Loans made by some or all of the Lenders to the Borrower
on the same Borrowing Date (or date of conversion or continuation), of the same
Type and, in the case of a Fixed Rate Advance, for the same Interest Period, and
includes both a Committed Advance and a Competitive Bid Advance.
<PAGE> 2
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person owns 10% or
more of any class of voting securities (or other ownership interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock, by contract or otherwise.

"Agent" means the Administrative Agent, the Syndication Agent and the
Documentation Agent, collectively and severally.

"Aggregate Combined Commitment" means the aggregate of the Aggregate Short
Term Facility Commitment and the Aggregate Multi-Year Facility Commitment, as
reduced from time to time pursuant to the terms hereof.

"Aggregate Multi-Year Facility Commitment" means at any date the sum of
the Multi-Year Facility Commitments of the Lenders at such date, with the
initial Aggregate Multi-Year Facility Commitment being $200,000,000.

"Aggregate Short Term Facility Commitment" means at any date the sum of
the Short Term Facility Commitments of the Lenders at such date, with the
initial Aggregate Short Term Facility Commitment being $100,000,000.

"Agreement" means this credit agreement, as it may be amended or modified
and in effect from time to time.

"Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.4.

"Alternate Base Rate" means, for any day, a rate of interest per annum,
equal to the higher of (i) the Corporate Base Rate for such day and (ii) the sum
of the Federal Funds Effective Rate for such day plus 1/2% per annum.

"Applicable Fee Rate" means, at any time, the percentage rate per annum at
which the facility fees payable pursuant to Section 2.6.1(i) and (ii) below are
accruing (without regard to usage) at such time as set forth in the Pricing
Schedule.

"Applicable Margin" means, with respect to Eurodollar Committed Advances
at any time, the percentage rate per annum. which is applicable at such time
with respect to Eurodollar Committed Advances as set forth in the Pricing
Schedule.

"Arranger" means First Chicago Capital Markets, Inc., a Delaware
corporation, and its successors.

"Article" means an article of this Agreement unless another document is
specifically referenced.

"Authorized Officer" means any of the President, Chief Financial Officer,
Controller or any Vice President of the Borrower, acting singly.

"Borrower" means Central Newspapers, Inc., an Indiana corporation, and
its successors and assigns.

"Borrowing Date" means a date on which an Advance is made hereunder.

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<PAGE> 3
"Business Day" means (i) with respect to any borrowing, payment or rate
selection of Eurodollar Advances, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago and New York for the conduct of
substantially all of their commercial lending activities and on which dealings
in United States dollars are carried on in the London interbank market and (ii)
for all other purposes, a day (other than a Saturday or Sunday) on which banks
generally are open in Chicago for the conduct of substantially all of their
commercial lending activities.

"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its
Subsidiaries prepared in accordance with Agreement Accounting Principles.

"Capitalized Lease" of a Person means any lease of Property by such Person
as lessee which would be capitalized on a balance sheet of such Person prepared
in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of the
obligations of such Person under Capitalized Leases which would be shown as a
liability on a balance sheet of such Person prepared in accordance with
Agreement Accounting Principles.

"Cash Equivalent Investments" means (i) short-term obligations of, or
fully guaranteed by, the United States of America, (ii) commercial paper rated
A-1 or better by S&P or P-1 or better by Moody's, (iii) demand deposit accounts
maintained in the ordinary course of business, and (iv) certificates of deposit
issued by and time deposits with commercial banks (whether domestic or foreign)
having capital and surplus in excess of $100,000,000; provided in each case that
the same provides for payment of both principal and interest (and not principal
alone or interest alone) and is not subject to any contingency regarding the
payment of principal or interest.

"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or any Lending Installation or any corporation
controlling any Lender.

"Change in Control" means (i) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting stock
of the Borrower; or (ii) The Eugene C. Pulliam Trust shall cease to own, free
and clear of all Liens or other encumbrances, at least 54% of the outstanding
shares of voting stock of the Borrower on a fully diluted basis.

"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

"Commitment" means for any Lender such Lender's Multi-Year Facility
Commitment and Short Term Facility Commitment.

"Commitment Schedule" means a schedule provided to the Borrower and the
Lenders by the Administrative Agent from time to time setting forth the current
Aggregate Combined Commitment, the Aggregate Short Term Facility Commitment, and
the Aggregate Multi-Year Facility Commitment and, for each Lender, such Lender's
Short Term Facility Commitment, Multi-Year Facility Commitment and Percentage
Share (as such schedule may be modified from time to time pursuant to the terms
hereof), with the Commitment Schedule in effect at the date hereof being
attached hereto as Schedule I).

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<PAGE> 4
"Committed Advance" means an Advance consisting of the aggregate amount of
the several Committed Loans made by the Lenders to the Borrower at the same
time, of the same Type and, in the case of Eurodollar Committed Advances, for
the same Eurodollar Interest Period.

"Committed Borrowing Notice" is defined in Section 2.3.5.

"Committed Loan" means a Short Term Loan or a Multi-Year Loan (or any
conversion or continuation thereof).

"Competitive Bid Advance" means an Advance consisting of the aggregate
amount of the several Competitive Bid Loans made by some or all of the Lenders
to the Borrower at the same time, at the same interest basis, and for the same
Interest Period.

"Competitive Bid Acceptance Notice" is defined in Section 2.4.6.

"Competitive Bid Credit Limit" means on any date 50% of the Aggregate
Combined Commitment on such date.

"Competitive Bid Loan" means, with respect to a Lender, a loan made by
such Lender pursuant to Section 2.4.

"Competitive Bid Margin" means the margin above or below the applicable
Eurodollar Base Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added to or subtracted
from such Eurodollar Base Rate.

"Competitive Bid Note" means any promissory note issued at the request of
a Lender pursuant to Section 2.4.8 in substantially the form of Exhibit A, with
appropriate insertions, duly executed and delivered to the Administrative Agent
by the Borrower for the account of such Lender and payable to the order of such
Lender, including any amendment, modification, renewal or replacement of such
promissory note.

"Competitive Bid Quote" means a Competitive Bid Quote substantially in the
form of Exhibit B completed and delivered by a Lender to the Administrative
Agent in accordance with Section 2.4.4.

"Competitive Bid Quote Request" means a Competitive Bid Quote Request
substantially in the form of Exhibit C completed and delivered by the Borrower
to the Administrative Agent in accordance with Section 2.4.2.

"Compliance Certificate" means a compliance certificate, substantially in
the form of Exhibit D, signed by the chief financial officer of the Borrower.

"Consolidated Funded Indebtedness" means, at any date of calculation, the
aggregate dollar amount of Indebtedness of the Borrower and its Subsidiaries
which has actually been funded and is outstanding at such time, whether or not
such amount is due or payable at such date.

"Consolidated Net Income" means, for any period of calculation, the net
income (or loss) of the Borrower and its Subsidiaries calculated on a
consolidated basis for such period.

"Consolidated Net Worth" means, at any date of calculation, the
consolidated stockholders' equity of the Borrower and its Subsidiaries
calculated on a consolidated basis as of such date.

"Contingent Obligation" of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any

4
<PAGE> 5
other Person, or agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any creditor of
such other Person against loss, including, without limitation, any comfort
letter, operating agreement or take-or-pay contract or application for a Letter
of Credit (under which such Person is the applicant).

"Conversion/Continuation Notice" is defined in Section 2.3.6.

"Controlled Group" means all members of a controlled group of corporations
or other business entities and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code.

"Corporate Base Rate" means a rate per annum equal to the corporate base
rate of interest announced by First Chicago from time to time, changing when and
as said corporate base rate changes.

"Credit Guaranty" means a credit guaranty substantially in the form of
Exhibit E .

"Default" means an event described in Article VII.

"Documentation Agent" means Norwest Bank Minnesota, National Association,
in its capacity as contractual representative of the Lenders pursuant to Article
X, and not in its individual capacity as a Lender.

"EBITDA" means, for any period and with respect to any Person and all such
Person's Subsidiaries on a consolidated basis, (i) the net earnings (or loss)
after taxes for such period taken as a single accounting period, plus (ii)
depreciation, depletion and amortization expense for such period, plus (iii)
federal, state and local income (or equivalent) taxes paid or accrued for such
period, plus (iv) total interest expense for such period (including amortization
of capitalized Indebtedness issuance costs), whether paid or accrued (including
the interest component of Capitalized Leases), including all commissions,
discounts and other fees and charges owed with respect to letters of credit,
plus (v) extraordinary, unusual or non-recurring losses and non-cash charges for
any disposition of businesses or early extinguishment of Indebtedness for such
period, minus (vi) any cash payments with respect to any non-cash charges and
expenses related to the disposition of businesses or early extinguishment of
Indebtedness previously taken into account for such period, in each case
determined in accordance with Agreement Accounting Principles and, in the case
of clauses (ii) through (vi), to the extent included in the determination of net
earnings (or loss) for such period.

"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to (i) the
protection of the environment, (ii) the effect of the environment on human
health, (iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or (iv)
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, hazardous substances or
wastes or the clean-up or other remediation thereof.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any rule or regulation issued thereunder.

"Eurodollar Advance" means a Eurodollar Committed Advance or a
Eurodollar Bid Advance, as applicable.

"Eurodollar Auction" means a solicitation of Competitive Bid Quotes
setting forth Competitive Bid Margins pursuant to Section 2.4.

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<PAGE> 6
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance for the
relevant Eurodollar Interest Period, the rate determined by the Administrative
Agent to be the rate at which First Chicago offers to place deposits in U.S.
dollars with first-class banks in the London interbank market at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Eurodollar Interest Period, in the approximate amount of First Chicago's
Percentage Share of the relevant Eurodollar Committed Loan (in the case of a
Eurodollar Committed Advance) or in the approximate amount of the Eurodollar Bid
Rate Advance requested by the Borrower (in the case of a Eurodollar Bid Rate
Advance), and having a maturity approximately equal to such Eurodollar Interest
Period.

"Eurodollar Bid Rate" means, with respect to a Competitive Bid Loan made
by a Lender for the relevant Eurodollar Interest Period, the sum of (i) the
Eurodollar Base Rate and (ii) the Competitive Bid Margin offered by such Lender
and accepted by the Borrower pursuant to Section 2.4.6.

"Eurodollar Bid Rate Advance" means a Competitive Bid Advance which
bears interest at a Eurodollar Bid Rate.

"Eurodollar Bid Rate Loan" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.

"Eurodollar Committed Advance" means a Committed Advance which bears
interest at a Eurodollar Rate.

"Eurodollar Committed Loan" means a Committed Loan which bears interest at
a Eurodollar Rate.

"Eurodollar Interest Period" means, with respect to a Eurodollar Advance,
a period of one, two, three or six months commencing on a Business Day selected
by the Borrower pursuant to this Agreement. Such Eurodollar Interest Period
shall end on (but exclude) the day which corresponds numerically to such date
one, two, three or six months thereafter, provided, however, that if there is no
such numerically corresponding day in such next, second, third or sixth
succeeding month, such Eurodollar Interest Period shall end on the last Business
Day of such next, second, third or sixth succeeding month. If a Eurodollar
Interest Period would otherwise end on a day which is not a Business Day, such
Eurodollar Interest Period shall end on the next succeeding Business Day,
provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Eurodollar Interest Period shall end on the immediately
preceding Business Day.

"Eurodollar Loan" means a Eurodollar Committed Loan or a Eurodollar Bid
Rate Loan, as applicable.

"Eurodollar Rate" means, with respect to a Eurodollar Committed Advance
for the relevant Eurodollar Interest Period, the sum of (i) the quotient of (a)
the Eurodollar Base Rate applicable to such Eurodollar Interest Period, divided
by (b) one minus the Reserve Requirement (expressed as a decimal) applicable to
such Eurodollar Interest Period, plus the Applicable Margin. The Eurodollar Rate
shall be rounded to the next higher multiple of 1/16 of 1% if the rate is not
such a multiple.

"Excluded Taxes" means, in the case of each Lender or applicable Lending
Installation and the Administrative Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (i) the jurisdiction under the
laws of which such Lender or the Administrative Agent is incorporated or
organized or (ii) the jurisdiction in which the Administrative Agent's or such
Lender's principal executive office or such Lender's applicable Lending
Installation is located.

"Exhibit" refers to an exhibit to this Agreement, unless another document
is specifically referenced.

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<PAGE> 7
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m. (Chicago
time) on such day on such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by the
Administrative Agent in its sole discretion.

"Fee Letter" is defined in Section 2.6.2.

"Financials" means the annual or quarterly financial statements of the
Borrower delivered pursuant to Section 6.1(i) or (ii).

"First Chicago" means The First National Bank of Chicago in its individual
capacity, and its successors.

"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.

"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.

"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.

"Fixed Rate" means the Eurodollar Rate, the Eurodollar Bid Rate or the
Absolute Rate.

"Fixed Rate Advance" means an Advance which bears interest at a Fixed
Rate.

"Fixed Rate Loan" means a Loan which bears interest at a Fixed Rate.

"Floating Rate" means, for any day, a rate per annum equal to the
Alternate Base Rate for such day.

"Floating Rate Advance" means a Committed Advance which bears interest at
the Floating Rate.

"Floating Rate Loan" means a Committed Loan which bears interest at the
Floating Rate.

"Guarantor" means any Person executing a Guaranty and Guarantor
Subordination Agreement as required pursuant to the terms of the Loan Documents.

"Guarantor Subordination Agreement" means a subordination agreement in the
form of that attached hereto as Exhibit F.

"Indebtedness" of a Person means such Person's (i) obligations for
borrowed money, (ii) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Liens or payable out of the
proceeds or production from property now or hereafter owned or acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances, or other
instruments, (v) obligations of such Person to purchase securities or other
property arising out of or in connection with the sale of the same or
substantially similar securities or property, (vi) Capitalized Lease Obligations
and (vii) any other obligation for borrowed money or other financial
accommodation which in accordance with Agreement Accounting Principles would be
shown as a liability on the consolidated balance sheet of such Person.

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<PAGE> 8
"Interest Period" means an Absolute Rate Interest Period or a
Eurodollar Interest Period.

"Investment" of a Person means any loan, advance (other than commission,
travel and similar advances to officers and employees made in the ordinary
course of business), extension of credit (other than accounts receivable arising
in the ordinary course of business on terms customary in the trade) or
contribution of capital by such Person; stocks, bonds, mutual funds, partnership
interests, notes, debentures or other securities owned by such Person; any
deposit accounts and certificate of deposit owned by such Person; and structured
notes, derivative financial instruments and other similar instruments or
contracts owned by such Person.

"Invitation for Competitive Bid Quotes" means an Invitation for
Competitive Bid Quotes substantially in the form of Exhibit G, completed and
delivered by the Administrative Agent to the Lenders in accordance with Section,
2.4.3.

"Lenders" means the lending institutions listed on the signature pages of
this Agreement and their respective successors and assigns.

"Lending Installation" means, with respect to a Lender or the
Administrative Agent, the office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent listed on the signature pages hereof or on a
Schedule or otherwise selected by such Lender or the Administrative Agent
pursuant to Section 2.14.

"Letter of Credit" of a Person means a letter of credit or similar
instrument which is issued upon the application of such Person or upon which
such Person is an account party or for which such Person is in any way liable.

"Level I Status" exists at any date if, as at the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, the Leverage
Ratio is less than or equal to 1.00 to 1.00.

"Level II Status" exists at any date if, as at the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status and (ii) the Leverage Ratio is
less than or equal to 1.50 to 1.00.

"Level III Status" exists at any date if, as of the last day of the fiscal
quarter of the Borrower referred to in the most recent Financials, (i) the
Borrower has not qualified for Level I Status or Level II Status and (ii) the
Leverage Ratio is less than or equal to 2.00 to 1.00.

"Level IV Status" exists at any date if the Borrower has not qualified for
Level I Status, Level II Status or Level III Status.

"Leverage Ratio" means, as at any date of calculation, the ratio of (i)
Consolidated Funded Indebtedness to (ii) EBITDA, calculated for the four full
immediately preceding fiscal quarters then most recently ended.

"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention
agreement).

"Loan" means, with respect to a Lender, such Lender's loan made pursuant
to Article II (or, in the case of a loan made pursuant to Section 2.3, any
conversion or continuation thereof).

"Loan Documents" means this Agreement and the Notes and all documents,
instruments and agreements relating hereto and thereto.

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<PAGE> 9
"Material Adverse Effect" means a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower and its Subsidiaries taken as a whole, (ii) the
ability of the Borrower to perform its obligations under the Loan Documents, or
(iii) the validity or enforceability of any of the Loan Documents or the rights
or remedies of the Administrative Agent or the Lenders thereunder.

"Material Indebtedness" is defined in Section 7.5.

"Multiemployer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Borrower or any
member of the Controlled Group is a party to which more than one employer is
obligated to make contributions.

"Multi-Year Facility" is defined in Section 2.1.

"Multi-Year Facility Commitment" means at any date for each Lender the
maximum dollar amount which such Lender has committed to advance under Section
2.3.1 below, as such commitment is described on the then current Commitment
Schedule.

"Multi-Year Facility Note" means a promissory note issued at the request
of a Lender pursuant to Section 2.4.8 in substantially the form of Exhibit H,
with appropriate insertions, duly executed and delivered to the Administrative
Agent by the Borrower for the account of such Lender and payable to the order of
such Lender, including any amendment, modification, renewal or replacement of
such promissory note.

"Multi-Year Facility Termination Date" means November 9, 2003, as such
date may be extended by written agreement of the Borrower, the Administrative
Agent and the Lenders, or any earlier date on which the Aggregate Multi-Year
Facility Commitment is reduced to zero or otherwise terminated pursuant to the
terms hereof.

"Multi-Year Loan" is defined in Section 2.3.1 below.

"Non-U.S. Lender" is defined in Section 3.5(iv).

"Notes" means, collectively, the Competitive Bid Notes and the Short
Term Facility Notes and the Multi-Year Facility Notes; and "Note" means any
one of the Notes.

"Notice of Assignment" is defined in Section 12.3.2.

"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Administrative Agent or any indemnified party arising
under the Loan Documents.

"Other Taxes" is defined in Section 3.5(ii).

"Participants" is defined in Section 12.2.1.

"Payment Date" means the last day of each March, June, September and
December.

"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto,

"Permitted Acquisition" means an Acquisition (i) of the stock or assets of
a Person in the same or a related line of business as the Borrower (it being
acknowledged and agreed that cable and broadcast

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<PAGE> 10
television, radio and other media operations constitute related lines of
business), (ii) approved by the board of directors and shareholders of the
Person whose stock or assets are being acquired, and (iii) as to which the
Borrower has provided to the Administrative Agent and each of the Lenders a
certified pro forma covenant compliance certificate, in form and detail
satisfactory to the Administrative Agent and each of the Lenders and
demonstrating to their satisfaction that following the consummation of such
Acquisition the Borrower will be in compliance with the financial covenants set
forth in Sections 6.18 below and that after giving effect to such Acquisition
there shall not otherwise exist a Default or Unmatured Default hereunder.

"Percentage Share" means for each Lender that percentage which the sum of
such Lender's Multi-Year Facility Commitment and Short Term Facility Commitment
bears to the Aggregate Combined Commitment.

"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.

"Plan" means an employee pension benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which the Borrower or any member of the Controlled Group may have any
liability.

"Pricing Schedule" means the schedule attached hereto as Schedule II, as
the same may be amended from time to time with the consent of the Borrower, the
Administrative Agent and the Lenders.

"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.

"Purchasers" is defined in Section 12.3. 1.

"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto or other
regulation or official interpretation of said Board of Governors relating to
reserve requirements applicable to member banks of the Federal Reserve System.

"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.

"Reports" is defined in Section 9.6.

"Required Lenders" means Lenders in the aggregate having at least 51% of
the Aggregate Combined Commitment (but in the event there are three or more
Lenders, not less than three Lenders),

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or, if the Aggregate Combined Commitment has been terminated or otherwise
reduced to zero, Lenders in the aggregate holding at least 51% of the aggregate
unpaid principal amount of the outstanding Advances (but in the event there are
three or more Lenders, not less than three Lenders).

"Reserve Requirement" means, with respect to a Eurodollar Interest Period,
the maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

"Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

"Schedule" refers to a specific schedule to this Agreement, unless another
document is specifically referenced.

"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

"Short Term Facility" is defined in Section 2.1.

"Short Term Facility Commitment" means at any date for each Lender the
maximum dollar amount which such Lender has committed to advance under Section
2.3.2 below, as such commitment is described on the then current Commitment
Schedule.

"Short Term Facility Note" means a promissory note issued at the request
of a Lender pursuant to Section 2.4.8 in substantially the form of Exhibit I,
with appropriate insertions, duly executed and delivered to the Administrative
Agent by the Borrower for the account of such Lender and payable to the order of
such Lender, including any amendment, modification, renewal or replacement of
such promissory note.

"Short Term Facility Termination Date" means November 9, 1999, as such
date may be extended by written agreement of the Borrower, the Administrative
Agent and the Lenders, or any earlier date on which the Aggregate Short Term
Facility Commitment is reduced to zero or otherwise terminated pursuant to the
terms hereof.

"Short Term Loan" is defined in Section 2.3.2 below.

"Significant Subsidiary" means any Subsidiary of the Borrower which, based
on consolidating statements most recently delivered to the Administrative Agent
either (i) has revenue, including sales to unaffiliated customers and affiliated
customers, equal to 10% or more of combined revenue of the Borrower or (ii) has
combined tangible assets equal to 10% or more of the combined tangible assets of
the Borrower.

"Single Employer Plan" means a Plan maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group.

"Status" means Level I Status, Level II Status, Level III Status or
Level IV status.

"Subordinated Indebtedness" of a Person means any Indebtedness of such
Person the payment of which is subordinated to payment of the Obligations to the
written satisfaction of the Required Lenders.

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"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a Subsidiary of the Borrower.

"Substantial Portion" means, with respect to the Property of the Borrower
and its Subsidiaries, Property which (i) represents more than 10% of the
consolidated assets of the Borrower and its Subsidiaries as would be shown in
the consolidated financial statements of the Borrower and its Subsidiaries as at
the beginning of the twelve-month period ending with the month in which such
determination is made, or (ii) is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and its
Subsidiaries as reflected in the financial statements referred to in clause (i)
above.

"Syndication Agent" means Bank of Montreal in its capacity as contractual
representative of the Lenders pursuant to Article X, and not in its individual
capacity as a Lender.

"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes.

"Transferee" is defined in Section 12.4.

"Type" means, with respect to any Advance, its nature as an Absolute
Bid Rate Advance, a Eurodollar Bid Rate Advance, a Eurodollar Committed
Advance or a Floating Rate Advance.

"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations.

"Unmatured Default" means an event which but for the lapse of time or the
giving of notice, or both, would constitute a Default.

"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization 100% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.

"Year 2000 Issues" means anticipated costs, problems and uncertainties
associated with the inability of certain computer applications to effectively
handle data including dates on and after January 1, 2000, as such inability
affects the business, operations and financial condition of the Borrower and its
Subsidiaries and of the Borrower's and its Subsidiaries' material customers,
suppliers and vendors.

"Year 2000 Program" is defined in Section 5.19.

The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms.

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ARTICLE II

THE CREDIT

2.1 Description of Facilities. Upon the terms and subject to the
conditions set forth in this Agreement: (i) the Lenders hereby grant to the
Borrower a short term revolving credit facility (the "Short Term Facility") and
a multi-year revolving credit facility (the "Multi-Year Facility") pursuant to
which each Lender severally agrees to make Committed Loans to the Borrower in
accordance with Section 2.3; and (ii) the parties hereto agree that each Lender
may, in its sole discretion, make bids to make Competitive Bid Loans to the
Borrower in accordance with Section 2.4; provided that in no event may the
aggregate principal amount of all outstanding Advances exceed the Aggregate
Combined Commitment.

2.2. Availability of Facility. Subject to all of the terms and conditions
of this Agreement, the Short Term Facility is available from the date of this
Agreement to the Short Term Facility Termination Date and the Multi-Year
Facility is available from the date of this Agreement to the Multi-Year Facility
Termination Date.

2.3. Committed Advances.

2.3.1. Multi-Year Commitment. From and including the date of this
Agreement and prior to the Multi-Year Facility Termination Date, the Lenders
severally agree, on the terms and conditions set forth in this Agreement, to
advance their respective Percentage Shares of loans requested by the Borrower
hereunder from time to time (collectively, the "Multi-Year Loans," and,
severally, a "Multi-Year Loan"); provided, however, that no Lender shall be
required to advance amounts hereunder in excess, at any time outstanding, of
such Lender's Multi-Year Commitment, and, provided further, that the aggregate
amount of Multi-Year Loans at any one time outstanding shall not exceed the
lesser of:

(i) The Aggregate Multi-Year Facility Commitment, and

(ii) The Aggregate Combined Commitment minus the sum of: (a)
the aggregate dollar amount of Short Term Loans outstanding, and (b) the
aggregate dollar amount of Competitive Bid Loans outstanding.

Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow Multi-Year Loans at any time prior to the Multi-Year Facility
Termination Date. Each Lender's Multi-Year Facility Commitment shall expire and
be reduced to zero on the Multi-Year Facility Termination Date.

2.3.2. Short Term Commitment. From and including the date of this
Agreement and prior to the Short Term Facility Termination Date, the Lenders
severally agree, on the terms and conditions set forth in this Agreement, to
advance their respective Percentage Shares of loans requested by the Borrower
hereunder from time to time (collectively, the "Short Term Loans," and,
severally, a "Short Term Loan"); provided, however, that no Lender shall be
required to advance amounts hereunder in excess, at any time outstanding, of
such Lender's Short Term Facility Commitment, and, provided further, that the
aggregate amount of Short Term Loans at any one time outstanding shall not
exceed the lesser of:

(i) The Aggregate Short Term Facility Commitment, and

(ii) The Aggregate Combined Commitment minus the sum of: (a)
the aggregate dollar amount of Multi-Year Loans outstanding, and (b) the
aggregate dollar amount of

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Competitive Bid Loans outstanding.

Subject to the terms of this Agreement, the Borrower may borrow, repay and
reborrow Short Term Loans at any time prior to the Short Term Facility
Termination Date. Each Lender's Short Term Facility Commitment shall expire and
be reduced to zero on the Short Term Facility Termination Date.

2.3.3. Types of Committed Advances. The Committed Advances may be
Floating Rate Advances or Eurodollar Committed Advances, or a combination
thereof, selected by the Borrower in accordance with Sections 2.3.5 and 2.3.6;
provided, however, that there shall not be more than six Eurodollar Committed
Advances outstanding at any one time.

2.3.4. Minimum Amount of Each Committed Advance. Each Committed
Advance shall be in the minimum amount of $5,000,000 (and in multiples of
$1,000,000 if in excess thereof); provided, however, that any Alternate Base
Rate Advance may be in the amount of the unused Aggregate Combined Commitment.

2.3.5. Method of Selecting Types and Eurodollar Interest Periods for
New Committed Advances. The Borrower shall select the Type of Committed Advance
and, in the case of each Eurodollar Committed Advance, the Eurodollar Interest
Period applicable thereto, from time to time. The Borrower shall give the
Administrative Agent irrevocable notice (a "Committed Borrowing Notice") not
later than 11:00 a.m. (Chicago time) at least one Business Day before the
Borrowing Date of each Floating Rate Advance and three Business Days before the
Borrowing Date for each Eurodollar Committed Advance, specifying:

(i) The Borrowing Date, which shall be a Business Day, for
such Committed Advance,

(ii) The aggregate amount of such Committed Advance,

(iii) The Type of Committed Advance selected, and

(iv) In the case of each Eurodollar Committed Advance, the
Eurodollar Interest Period applicable thereto.

2.3.6. Conversion and Continuation of Outstanding Advances. Floating
Rate Advances shall continue as Floating Rate Advances unless and until such
Floating Rate Advances are converted into Eurodollar Committed Advances pursuant
to this Section 2.3.6 or are repaid in accordance with Section 2.7. Each
Eurodollar Committed Advance shall continue as a Eurodollar Committed Advance
until the end of the then applicable Eurodollar Interest Period therefor, at
which time such Eurodollar Committed Advance shall be automatically converted
into a Floating Rate Advance unless (x) such Eurodollar Committed Advance is or
was repaid in accordance with Section 2.7 or (y) the Borrower shall have given
the Administrative Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Eurodollar Interest Period, such Eurodollar
Committed Advance continue as a Eurodollar Committed Advance for the same or
another Eurodollar Interest Period. Subject to the terms of Section 2.3.4, the
Borrower may elect from time to time to convert all or any part of a Floating
Rate Advance into a Eurodollar Committed Advance. The Borrower shall give the
Administrative Agent irrevocable notice (a "Conversion/Continuation Notice") of
each conversion of a Floating Rate Advance into a Eurodollar Committed Advance
or continuation of a Eurodollar Committed Advance not later than 11:00 a.m.
(Chicago time) at least three Business Days prior to the date of the requested
conversion or continuation, specifying:

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(i) The requested date, which shall be a Business Day, of such
conversion or continuation,

(ii) The aggregate amount and Type of the Committed Advance
which is to be converted or continued, and

(iii) The amount of such Committed Advance which is to be
converted into or continued as a Committed Advance and the duration of the
Eurodollar Interest Period related thereto.

2.3.7. Noteless Agreement; Evidence of Indebtedness.

(i) 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 Committed Loan made by such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder.

(ii) The Administrative Agent shall also maintain accounts in
which it will record (a) the amount of each Committed Loan made hereunder,
the Type thereof and the Eurodollar Interest Period (if any) with respect
thereto, (b) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to each Lender hereunder and (c)
the amount of any sum received by the Administrative Agent hereunder from
the Borrower and each Lender's share thereof.

(iii) The entries maintained in the accounts maintained
pursuant to paragraphs (i) and (ii) above shall be prima facie evidence of
the existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Administrative Agent or any Lender to
maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrower to repay the Obligations in accordance with
their terms.

(iv) Any Lender may request that its Multi-Year Loans be
evidenced by a Multi-Year Facility Note and that its Short Term Loans be
evidenced by a Short Term Facility Note. In such event, the Borrower shall
prepare, execute and deliver to such Lender a Multi-Year Facility Note and
a Short Term Facility Note payable to the order of such Lender.
Thereafter, the Committed Loans evidenced by such Multi-Year Facility Note
and such Short Term Facility Note and interest thereon shall at all times
(including after any assignment pursuant to Section 12.3) be represented
by one or more Multi-Year Facility Notes and Short Term Facility Notes
payable to the order of the payee named therein or any assignee pursuant
to Section 12.3, except to the extent that any such Lender or assignee
subsequently returns any such notes for cancellation and requests that
such Committed Loans once again be evidenced as described in paragraphs
(i) and (ii) above.

2.4. Competitive Bid Advances.

2.4.1. Competitive Bid Option; Repayment of Competitive Bid
Advances. In addition to Committed Advances pursuant to Section 2.3, but subject
to all of the terms and conditions of this Agreement (including, without
limitation, the limitation set forth in Section 2.1 as to the maximum aggregate
principal amount of all outstanding Advances hereunder), the Borrower may, as
set forth in this Section 2.4, request the Lenders, prior to the Multi-Year
Facility Termination Date, to make offers to make Competitive Bid Advances to
the Borrower in amounts which, when added to the aggregate dollar amount of
other Competitive Bid Advances outstanding will not exceed the Competitive Bid
Credit Limit. Each Lender may, but shall have no obligation to, make such offers
and the Borrower

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may, but shall have no obligation to, accept any such offers in the manner set
forth in this Section 2.4. Each Competitive Bid Advance shall be repaid in full
by the Borrower on the last day of the Interest Period applicable thereto.

2.4.2. Competitive Bid Quote Request. When the Borrower wishes to
request offers to make Competitive Bid Loans under this Section 2.4, the
Borrower shall transmit to the Administrative Agent by telecopy a Competitive
Bid Quote Request so as to be received no later than (x) 10:00 a.m. (Chicago
time) at least five Business Days prior to the Borrowing Date proposed therein,
in the case of a Eurodollar Auction, or (y) 9:00 a.m. (Chicago time), at least
one Business Day prior to the Borrowing Date proposed therein, in the case of an
Absolute Rate Auction, specifying, in accordance with all of the terms of this
Agreement:

(i) The proposed Borrowing Date for such Competitive Bid
Advance;

(ii) The aggregate principal amount of such Competitive Bid
Advance;

(iii) Whether the Competitive Bid Quotes requested are to set
forth a Competitive Bid Margin or an Absolute Rate, or both; and

(iv) The Interest Period applicable thereto.

A Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within five Business Days (or upon reasonable prior notice to the Lenders,
such other number of days as the Borrower and the Administrative Agent may agree
upon) of any other Competitive Bid Quote Request. Each Competitive Bid Quote
Request shall be in a minimum amount of $10,000,000 or a larger multiple of
$5,000,000. A Competitive Bid Quote Request that does not conform substantially
to the format of Exhibit C shall be rejected, and the Administrative Agent shall
promptly notify the Borrower of such rejection by telecopy.

2.4.3. Invitation for Competitive Bid Quotes. Promptly upon receipt
of a Competitive Bid Quote Request that is not rejected pursuant to Section
2.4.2, the Administrative Agent shall send to each of the Lenders by telecopy an
Invitation for Competitive Bid Quotes which shall constitute an invitation by
the Borrower to each Lender to submit Competitive Bid Quotes offering to make
the Competitive Bid Loans to which such Competitive Bid Quote Request relates in
accordance with this Section 2.4.

2.4.4. Submission and Contents of Competitive Bid Quotes.

(i) Each Lender may, in its sole discretion, submit a
Competitive Bid Quote containing an offer or offers to make Competitive
Bid Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this Section
2.4.4 and must be submitted to the Administrative Agent by telecopy at its
offices specified in or pursuant to Article XIII not later than (a) (1)
12:45 p.m. (Chicago time), in the case of First Chicago and (2) 1:00 p.m.
(Chicago time), in the case of each other Lender, at least four Business
Days prior to the proposed Borrowing Date in the case of a Eurodollar
Auction, or (b) (1) 8:45 a.m. (Chicago time), in the case of First Chicago
and (2) 9:00 a.m. (Chicago time), in the case of each other Lender, on the
proposed Borrowing Date in the case of an Absolute Rate Auction (or, in
any such case upon reasonable prior notice to the Lenders, such other time
and date as the Borrower and the Administrative Agent may agree upon;
provided that, so long as First Chicago is the Administrative Agent
hereunder, it shall be required to submit its Competitive Bid Quotes not
less than fifteen minutes prior to the other Lenders). Subject to Articles
IV and VIII, any Competitive Bid Quote so made shall be

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irrevocable except with the written consent of the Administrative Agent
given on the instructions of the Borrower.

(ii) Each Competitive Bid Quote shall in any case specify: (a)
the proposed Borrowing Date, which shall be the same as that set forth in
the applicable Invitation for Competitive Bid Quotes; (b) the principal
amount of the Competitive Bid Loan for which each such offer is being
made, (1) which may be greater than, less than or equal to the Commitment
of the quoting Lender, but in no case greater than the unutilized
Aggregate Combined Commitment, (2) which principal amount must be at least
$10,000,000 and integral multiples of $5,000,000 if in excess thereof, and
(3) which principal amount may not exceed the principal amount of
Competitive Bid Loans for which offers were requested; (c) in the case of
a Eurodollar Auction, the Competitive Bid Margin offered for each such
Competitive Bid Loan; (d) the minimum or maximum amount, if any, of the
Competitive Bid Loan which may be accepted by the Borrower; (e) in the
case of an Absolute Rate Auction, the Absolute Rate offered for each such
Competitive Bid Loan; (f) the applicable Interest Period; and (g) the
identity of the quoting Lender.

(iii) The Administrative Agent shall reject any Competitive
Bid Quote that: (a) is not substantially in the form of Exhibit B or does
not specify all of the information required by Section 2.4.4(ii); (b)
contains qualifying, conditional or similar language, other than any such
language contained in Exhibit B; (c) proposes terms other than or in
addition to those set forth in the applicable Invitation for Competitive
Bid Quotes; or (d) arrives after the time set forth in Section 2.4.4(i).

(iv) If any Competitive Bid Quote shall be rejected pursuant
to Section 2.4.4(iii), then the Administrative Agent shall notify the
relevant Lender of such rejection as soon as practicable.

2.4.5. Notice to Borrower. The Administrative Agent shall promptly
notify the Borrower of the terms of (i) any Competitive Bid Quote submitted by a
Lender that is in accordance with Section 2.4.4 and (ii) any Competitive Bid
Quote that is in accordance with Section 2.4.4 and amends, modifies or is
otherwise inconsistent with a previous Competitive Bid Quote submitted by such
Lender with respect to the same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded by the Administrative
Agent unless such subsequent Competitive Bid Quote specifically states that it
is submitted solely to correct a manifest error in such former Competitive Bid
Quote. The Administrative Agent's notice to the Borrower shall specify the
aggregate principal amount of Competitive Bid Loans for which offers have been
received for each Interest Period specified in the related Competitive Bid Quote
Request and the respective principal amounts and Competitive Bid Margins or
Absolute Rates, as the case may be, so offered.

2.4.6. Acceptance and Notice by Borrower. Subject to the receipt of
the notice from the Administrative Agent referred to in Section 2.4.5, not later
than (i) 11:00 a.m. (Chicago time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction or (ii) 11:00 a.m.
(Chicago time) on the proposed Borrowing Date, in the case of an Absolute Rate
Auction, the Borrower shall notify the Administrative Agent of the Borrower's
acceptance or rejection of the offers so notified to it pursuant to Section
2.4.5; provided, however, that the failure by the Borrower to give such notice
to the Administrative Agent shall be deemed to be a rejection by the Borrower of
all such offers. In the case of acceptance, such notice (a "Competitive Bid
Acceptance Notice") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Borrower may accept or reject any
Competitive Bid Quote in whole or in part (subject to the terms of Section
2.4.4(ii)(d); provided that:

(a) The aggregate principal amount of each Competitive Bid
Advance may not exceed the applicable amount set forth in the related
Competitive Bid Quote Request;

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(b) The principal amount of each Competitive Bid Advance must
be at least $10,000,000 (and an integral multiple of $5,000,000 if in
excess thereof);

(c) Acceptance of offers may only be made on the basis of
ascending Competitive Bid Margins or Absolute Rates, as the case may be;
and

(d) The Borrower may not accept any offer of the type
described in Section 2.4.4(iii) or that otherwise fails to comply with the
requirements of this Agreement for the purpose of obtaining a Competitive
Bid Loan under this Agreement.

2.4.7. Allocation by the Administrative Agent. If offers are made by
two or more Lenders with the same Competitive Bid Margins or Absolute Rates, as
the case may be, for a greater aggregate principal amount than the amount in
respect of which offers are permitted to be accepted for the related Interest
Period, the principal amount of Competitive Bid Loans in respect of which such
offers are accepted shall be allocated by the Administrative Agent among such
Lenders as nearly as possible (in such multiples as the Administrative Agent may
deem appropriate) in proportion to the aggregate principal amount of such
offers; provided, however, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Administrative
Agent of the amounts of Competitive Bid Loans shall be conclusive in the absence
of manifest error. The Administrative Agent shall promptly, but in any event on
the same Business Day in the case of Eurodollar Bid Rate Advances, and by 11:30
a.m. (Chicago time) on the same Business Day in the case of Absolute Rate
Advances, notify each Lender of its receipt of a Competitive Bid Acceptance
Notice and the aggregate principal amount of each Competitive Bid Advance
allocated to each participating Lender.

2.4.8. Evidence of Indebtedness of Competitive Bid Advances.

(i) 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 Competitive Bid Loan made by such Lender from time to
time, including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.

(ii) The entries maintained in the accounts maintained pursuant to
paragraph (i) shall be prima facie evidence of the existence and amounts of the
Obligations therein recorded; provided, however, that the failure of the
Administrative Agent or any Lender to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Obligations in accordance with their terms.

(iii) Any Lender may request that its Competitive Bid Loans be
evidenced by a Competitive Bid Note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a Competitive Bid Note payable to the order
of such Lender. Thereafter, the Competitive Bid Loans evidenced by such
Competitive Bid Note and interest thereon shall at all times (including after
any assignment pursuant to Section 12.3) be represented by one or more
Competitive Bid Notes payable to the order of the payee named therein or any
assignee pursuant to Section 12.3, except to the extent that any such Lender or
assignee subsequently returns any such Competitive Bid Note for cancellation and
requests that such Competitive Bid Loans once again be evidenced as described in
paragraph (i) above.

2.4.9. Administration Fee. The Borrower hereby agrees to pay to the
Administrative Agent an administration fee of $500 per Competitive Bid Quote
Request transmitted by the Borrower to the Administrative Agent pursuant to
Section 2.4.2. Such administration fee shall be payable in arrears on each
Payment Date hereafter and on the Facility Termination Date for any period then
ending for which such fee, if any, shall not have been theretofore paid.

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2.5. Method of Borrowing. On each Borrowing Date, each Lender shall make
available its Loan or Loans, if any, not later than 1:00 p.m., Chicago time, in
funds immediately available to the Administrative Agent, in Chicago, Illinois at
its address specified pursuant to Article XIII. The Administrative Agent will
make the funds so received from the Lenders available to the Borrower at the
Administrative Agent's aforesaid address.

2.6. Fees. The Borrower agrees to pay the following fees:

2.6.1. Lender Fees. To the Administrative Agent for distribution to
each Lender:

(i) For the period from the date hereof to and including the
Multi-Year Facility Termination Date, a facility fee equal to the product
of: (a) such Lender's Multi-Year Facility Commitment (whether used or
unused) times (b) the percentage indicated as the Applicable Fee Rate for
the facility fee, said facility fee to be payable in arrears on each
Payment Date hereafter and on the Multi-Year Facility Termination Date or
earlier termination of the Multi-Year Facility;

(ii) For the period from the date hereof to and including the
Short Term Facility Termination Date, a facility fee equal to the product
of: (a) such Lender's Short Term Facility Commitment (whether used or
unused) times (b) the percentage indicated as the Applicable Fee Rate for
the facility fee, said facility fee to be payable in arrears on each
Payment Date hereafter and on the Short Term Facility Termination Date or
earlier termination of the Short Term Facility;

(iii) For each calendar quarter following the date hereof
during which the daily average balance of Loans outstanding during such
calendar quarter exceeds 50% of the daily average Aggregate Combined
Commitment during such calendar quarter, a utilization fee calculated on
the daily average balance of Loans outstanding during such calendar
quarter at a per annum rate equal to 0.05%, said utilization fee, if any,
to be payable in arrears on each Payment Date; and

(iv) A one time, upfront fee computed against each Lender's
initial Commitment hereunder at the rate of: (1) 0.10% for each Lender
with an initial Commitment of at least $50,000,000, and (2) 0.05% for each
Lender with an initial Commitment of less than $50,000,000.

2.6.2. Administrative Agent and Arranger Fees. The Borrower agrees
to pay certain fees to the Administrative Agent and the Arranger on the dates
and in the amounts set forth in that certain fee letter dated concurrently
herewith (as amended or modified from time to time, the "Fee Letter") among the
Borrower, the Administrative Agent and the Arranger.

2.7. Reductions in Commitments; Principal Payments.

2.7.1. Reductions in Commitments. The Borrower may permanently
reduce pro rata among the Lenders the Aggregate Short Term Facility Commitment
and/or the Aggregate Multi-Year Facility Commitment, with a concomitant
reduction in the Aggregate Combined Commitment, in whole, or in part in the
minimum amount of $25,000,000, upon at least three Business Days' written notice
to the Administrative Agent, which notice shall specify the amount of any such
reduction, provided, however, that the amount of the Aggregate Short Term
Facility Commitment may not be reduced below the aggregate principal amount of
the outstanding Short Term Loans and the Aggregate Multi-Year Facility
Commitment may not be reduced below the aggregate principal amount of the
outstanding Multi-Year Loans.

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2.7.2. Principal Payments.

(i) Optional Payments. The Borrower may from time to time pay,
without penalty or premium, all outstanding Floating Rate Advances, or, in
a minimum aggregate amount of $1,000,000 or any integral multiple of
$100,000 in excess thereof, any portion of the outstanding Floating Rate
Advances upon one Business Day's prior notice to the Administrative Agent.
The Borrower may from time to time pay, subject to the payment of any
funding indemnification amounts required by Section 3.4, without penalty
or premium, all outstanding Eurodollar Committed Advances, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of
$100,000 in excess thereof, any portion of the outstanding Eurodollar
Committed Advances upon three Business Days' prior notice to the
Administrative Agent. A Competitive Bid Advance may not be paid prior to
the last day of the applicable Interest Period.

(ii) Mandatory Prepayments. The Borrower shall immediately pay
to the Administrative Agent for distribution to the Lenders in accordance
with their respective Percentage Shares (or in the case of prepayment of
Competitive Bid Loans, pro rata to the holders of Competitive Bid Loans
outstanding)

(1) The amount by which on any date the aggregate dollar
amount of Multi-Year Loans outstanding exceeds the limitations of
Section 2.3.1 above;

(2) The amount by which on any date the aggregate dollar
amount of Short Term Loans outstanding exceeds the limitations of
Section 2.3.2 above; and

(3) The amount by which on any date the aggregate dollar
amount of Competitive Bid Loans outstanding exceeds the limitations
of Section 2.4.1 above;

accompanied, in the case of any prepayment of a Fixed Rate Loan, by any
amounts payable with respect thereto pursuant to Section 3.4 below.
Amounts prepaid hereunder shall be allocated by the Lenders first against
Loans other than Fixed Rate Loans and then against Fixed Rate Loans.

(iii) Termination. Any outstanding Short Term Loans and all
Obligations relating thereto shall be paid in full by the Borrower on the
Short Term Facility Termination Date and all Multi-Year Loans and all
other unpaid Obligations shall be paid in full by the Borrower on the
Multi-Year Facility Termination Date.

2.8. Changes in Interest Rate, etc. Each Floating Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Floating Rate Advance is made or is automatically
converted from a Eurodollar Committed Advance into a Floating Rate Advance
pursuant to Section 2.3.6, to but excluding the date it is paid or is converted
into a Eurodollar Committed Advance pursuant to Section 2.3.6 hereof, at a rate
per annum equal to the Floating Rate for such day. Changes in the rate of
interest on that portion of any Advance maintained as a Floating Rate Advance
will take effect simultaneously with each change in the Alternate Base Rate.
Each Fixed Rate Advance shall bear interest on the outstanding principal amount
thereof from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such

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<PAGE> 21
Interest Period at the interest rate determined by the Administrative Agent as
applicable to such Fixed Rate Advance based upon the Borrower's selections under
Sections 2.3 and 2.4 and otherwise in accordance with the terms hereof. No
Interest Period may end after the Facility Termination Date.

2.9. Rates Applicable After Default. Notwithstanding anything to the
contrary contained in Section 2.3.5 or 2.3.6, during the continuance of a
Default or Unmatured Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Committed Advance may be made as, converted into or continued as a Eurodollar
Committed Advance. During the continuance of a Default or Unmatured Default the
Required Lenders may, at their option, by notice to the Borrower (which notice
may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 8.2 requiring unanimous consent of the Lenders to changes
in interest rates), declare that (i) each Fixed Rate Advance shall bear interest
for the remainder of the applicable Interest Period at the sum of the rate
otherwise applicable to such Fixed Rate Advance during such Interest Period plus
2% per annum and (ii) each Floating Rate Advance shall bear interest at a rate
per annum equal to the sum of the Floating Rate in effect from time to time plus
2% per annum, provided that, during the continuance of a Default under Section
7.6 or 7.7, the interest rates set forth in clauses (i) and (ii) above shall be
applicable to all Advances without any election or action on the part of the
Administrative Agent or any Lender.

2.10. Method of Payment. All payments of the Obligations hereunder shall
be made, without setoff, deduction, or counterclaim, in immediately available
funds to the Administrative Agent at the Administrative Agent's address
specified pursuant to Article XIII, or at any other Lending Installation of the
Administrative Agent specified in writing by the Administrative Agent to the
Borrower, by 12:00 noon (Chicago time) on the date when due and shall be applied
ratably by the Administrative Agent among the Lenders. Each payment delivered to
the Administrative Agent for the account of any Lender shall be delivered
promptly by the Administrative Agent to such Lender in the same type of funds
that the Administrative Agent received at its address specified pursuant to
Article XIII or at any Lending Installation specified in a notice received by
the Administrative Agent from such Lender. The Administrative Agent is hereby
authorized to charge the account of the Borrower maintained with First Chicago
for each payment of principal, interest and fees as it becomes due hereunder.

2.11. Telephonic Notices. The Borrower hereby authorizes the Lenders and
the Administrative Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrower. The Borrower agrees
to deliver promptly to the Administrative Agent a written confirmation, if such
confirmation is requested by the Administrative Agent or any Lender, of each
telephonic notice signed by an Authorized Officer. If the written confirmation
differs in any material respect from the action taken by the Administrative
Agent and the Lenders, the records of the Administrative Agent and the Lenders
shall govern absent manifest error.

2.12. Interest Payment Dates; Interest and Fee Basis. Interest accrued on
each Floating Rate Advance shall be payable, in arrears, on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which such Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any Floating Rate Advance converted into a Eurodollar
Committed Advance on a day other than a Payment Date shall be payable on the
date of conversion. Interest accrued on each Fixed Rate Advance shall be payable
on the last day of its applicable Interest Period, on any date on which such
Fixed Rate Advance is prepaid, whether by acceleration or otherwise, and at
maturity. Interest accrued on each Fixed Rate Advance having an Interest Period
longer than three months shall also be payable on the last day of each
three-month interval during such Interest Period. Interest and facility fees
shall be calculated for actual days elapsed on the basis of a 360-day year.
Interest shall be

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payable for the day an Advance is made but not for the day of any payment on the
amount paid if payment is received prior to 12:00 noon (Chicago time). If any
payment of principal of or interest on an Advance shall become due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and, in the case of a principal payment, such extension of time
shall be included in computing interest in connection with such payment.

2.13. Notification of Advances, Interest Rates, Prepayments and Commitment
Reductions. Promptly after receipt thereof, the Administrative Agent will notify
each Lender of the contents of each commitment reduction notice, Committed
Borrowing Notice, Conversion/Continuation Notice, Competitive Bid Acceptance
Notice, and repayment notice received by it hereunder. The Administrative Agent
will notify each Lender of the interest rate applicable to each Fixed Rate
Advance promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Alternate Base Rate.

2.14. Lending Installations. Each Lender may book its Loans at any Lending
Installation selected by such Lender and may change its Lending Installation
from time to time. All terms of this Agreement shall apply to any such Lending
Installation and the Loans and any Notes issued hereunder shall be deemed held
by each Lender for the benefit of such Lending Installation. Each Lender may, by
written notice to the Administrative Agent and the Borrower in accordance with
Article XIII, designate replacement or additional Lending Installations through
which Loans will be made by it and for whose account Loan payments are to be
made.

2.15. Non-Receipt of Funds by the Agent. Unless the Borrower or a Lender,
as the case may be, notifies the Administrative Agent prior to the date on which
it is scheduled to make payment to the Administrative Agent of (i) in the case
of a Lender, the proceeds of a Committed Loan or (ii) in the case of the
Borrower, a payment of principal, interest or fees to the Administrative Agent
for the account of the Lenders, that it does not intend to make such payment,
the Administrative Agent may assume that such payment has been made. The
Administrative Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Administrative Agent, the recipient of such payment shall, on
demand by the Administrative Agent, repay to the Administrative Agent the amount
so made available together with interest thereon in respect of each day during
the period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day, or (y) in the case of payment by the
Borrower, the interest rate applicable to the relevant Loan.

2.16 Guarantors. As additional credit support for the Obligations, the
Borrower shall cause to be executed and delivered to the Administrative Agent
from each of the Significant Subsidiaries of the Company, including, without
limitation, any Significant Subsidiary of the Borrower formed subsequent to the
date of the initial Advance hereunder: (i) a Credit Guaranty, and (ii) a
Guarantor Subordination Agreement.

ARTICLE III

YIELD PROTECTION; TAXES

3.1. Yield Protection. If, on or after the date of this Agreement, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or
applicable Lending Installation with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:

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(i) Subjects any Lender or any applicable Lending Installation to
any Taxes, or changes the basis of taxation of payments (other than with
respect to Excluded Taxes) to any Lender with respect of its Eurodollar
Loans, or

(ii) Imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended
by, any Lender or any applicable Lending Installation (other than reserves
and assessments taken into account in determining the interest rate
applicable to Eurodollar Advances), or

(iii) Imposes any other condition the result of which is to increase
the cost to any Lender or any applicable, Lending Installation of making,
funding or maintaining its Eurodollar Loans or reduces any amount
receivable by any Lender or any applicable Lending Installation in
connection with its Eurodollar Loans, or requires any Lender or any
applicable Lending Installation to make any payment calculated by
reference to the amount of Eurodollar Loans held or interest received by
it, by an amount deemed material by such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its Eurodollar Loans or
Commitment or to reduce the return received by such Lender or applicable Lending
Installation in connection with such Eurodollar Loans or Commitment, then,
within 15 days of demand by such Lender, the Borrower shall pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction in amount received.

3.2. Changes in Capital Adequacy Regulations. If a Lender determines the
amount of capital required or expected to be maintained by such Lender, any
Lending Installation of such Lender or any corporation controlling such Lender
is increased as a result of a Change, then, within 15 days of demand by such
Lender, the Borrower shall pay such Lender the amount necessary to compensate
for any shortfall in the rate of return on the portion of such increased capital
which such Lender determines is attributable to this Agreement, its Loans or its
Commitment to make Loans hereunder (after taking into account such Lender's
policies as to capital adequacy).

3.3. Availability of Types of Advances. If any Lender determines that
maintenance of its Eurodollar Loans at a suitable Lending Installation would
violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (i) deposits
of a type and maturity appropriate to match fund Eurodollar Advances are not
available or (ii) the interest rate applicable to a Type of Advance does not
accurately reflect the cost of making or maintaining such Advance, then the
Administrative Agent shall suspend the availability of the affected Type of
Advance and require any affected Eurodollar Advance to be repaid or, in the case
of a Eurodollar Committed Advance, converted to a Floating Rate Advance, subject
to the payment of any funding indemnification amounts required by Section 3.4.

3.4. Funding Indemnification. If any payment of a Fixed Rate Advance
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment or otherwise, or a Fixed Rate
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower will indemnify each Lender for any
loss or cost incurred by it resulting therefrom, including, without limitation,
any loss or cost in liquidating or employing deposits acquired to fund or
maintain such Eurodollar Advance.

3.5. Taxes.

(i) All payments by the Borrower to or for the account of any Lender
or the Administrative Agent hereunder or under any Note shall be made free
and clear of and without deduction for any and all Taxes. If the Borrower
shall be required by law to deduct any Taxes

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<PAGE> 24

from or in respect of any sum payable hereunder to any Lender or the
Administrative Agent, (a) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.5) such Lender
or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (b)
the Borrower shall make such deductions, (c) the Borrower shall pay the
full amount deducted to the relevant authority in accordance with
applicable law and (d) the Borrower shall furnish to the Administrative
Agent the original copy of a receipt evidencing payment thereof within 30
days after such payment is made.

(ii) In addition, the Borrower hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder
Agreement or under any Note or from the execution or delivery of, or
otherwise with respect to, this Agreement or any Note ("Other Taxes").

(iii) The Borrower hereby agrees to indemnify the Administrative
Agent and each Lender for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed on
amounts payable under this Section 3.5) paid by the Administrative Agent
or such Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Payments due under
this indemnification shall be made within 30 days of the date the
Administrative Agent or such Lender makes demand therefor pursuant to
Section 3.6.

(iv) Each Lender that is not incorporated under the laws of the
United States of America or a state thereof (each a "Non-U.S. Lender")
agrees that it will, not less than ten Business Days after the date of
this Agreement, (i) deliver to each of the Borrower and the Administrative
Agent two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224, certifying in either case that such Lender is entitled
to receive payments under this Agreement without deduction or withholding
of any United States federal income taxes, and (ii) deliver to each of the
Borrower and the Administrative Agent a United States Internal Revenue
Form W-8 or W-9, as the case may be, and certify that it is entitled to an
exemption from United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the
Administrative Agent (x) renewals or additional copies of such form (or
any successor form) on or before the date that such form expires or
becomes obsolete, and (y) after the occurrence of any event requiring a
change in the most recent forms so delivered by it, such additional forms
or amendments thereto as may be reasonably requested by the Borrower or
the Administrative Agent. All forms or amendments described in the
preceding sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to
the date on which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrower and the Administrative
Agent that it is not capable of receiving payments without any deduction
or withholding of United States federal income tax.

(v) For any period during which a Non-U.S. Lender has failed to
provide the Borrower with an appropriate form pursuant to clause (iv),
above (unless such failure is due to a change in treaty, law or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, occurring subsequent to the date on which a
form originally was required to be provided), such Non-U.S. Lender shall
not be entitled to indemnification under this Section 3.5 with respect to
Taxes imposed by the United States; provided that, should a Non-U.S.
Lender which is otherwise exempt from or subject to a reduced rate of
withholding tax become subject to Taxes because of its failure to deliver
a form

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<PAGE> 25
required under clause (iv), above, the Borrower shall take such steps as
such Non-U.S. Lender shall reasonably request to assist such Non-U.S.
Lender to recover such Taxes.

(vi) Any Lender that is entitled to an exemption from or reduction
of withholding tax with respect to payments under this Agreement or any
Note pursuant to the law of any relevant jurisdiction or any treaty shall
deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and
executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate.

3.6. Lender Statements; Survival of Indemnity. To the extent reasonably
possible, each Lender shall designate an alternate Lending Installation with
respect to its Eurodollar Loans to reduce any liability of the Borrower to such
Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of
Eurodollar Advances under Section 3.3, so long as such designation is not, in
the judgment of such Lender, disadvantageous to such Lender. Each Lender shall
deliver a written statement of such Lender to the Borrower (with a copy to the
Administrative Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4
or 3.5. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Loan shall be calculated as though each Lender funded its Eurodollar
Loan through the purchase of a deposit of the type and maturity corresponding to
the deposit used as a reference in determining the Eurodollar Rate applicable to
such Loan, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of any Lender shall be
payable on demand after receipt by the Borrower of such written statement. The
obligations of the Borrower under Sections 3.1, 3.2, 3.4 and 3.5 shall survive
payment of the Obligations and termination of this Agreement.

3.7. Obligation of Lenders to Mitigate; Replacement of Lenders. Each
Lender agrees that:

(i) As promptly as practicable after the officer of such Lender
responsible for administering the Loans of such Lender becomes aware of
any event or condition that would entitle such Lender to receive payments
under Sections 3.1, 3.2 or 3.5 above or to cease making Eurodollar Loans
pursuant to Paragraph 3.3 above, such Lender will use reasonable efforts
(1) to make, issue, fund or maintain the affected Loans of such Lender
through another lending office of such Lender or (2) take such other
measures as such Lender may deem reasonable, if as a result thereof the
additional amounts which would otherwise be required to be paid to such
Lender pursuant to Sections 3.1, 3.2 or 3.5 above would be materially
reduced or eliminated or the conditions rendering such Lender incapable of
making Eurodollar Loans under Section 3.3 above no longer would be
applicable, and if, as determined by such Lender in its sole discretion,
the making, issuing, funding or maintaining such Loans through such other
lending office or in accordance with such other measures, as the case may
be, would not otherwise materially adversely affect such Loans or the
interests of such Lender.

(ii) If the Company receives a notice pursuant to Sections 3.1, 3.2
or 3.5 above or a notice pursuant to Section 3.3 above stating that a
Lender is unable to extend Eurodollar Loans (for reasons not generally
applicable to the Required Lenders), so long as (1) no Default or
Unmatured Default shall have occurred and be continuing, (2) the Company
has obtained a commitment from another Lender or another financial
institution reasonably acceptable to the Administrative Agent to purchase
at par such Lender's Loans, Commitment and accrued interest and fees and
to assume all obligations of the Lender to be replaced under the Loan
Documents, and (3) such Lender to be replaced is unwilling to withdraw the
notice delivered to

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the Company, upon thirty (30) days' prior written notice to such Lender
and the Administrative Agent and payment of any amounts due under Sections
3.1, 3.2 and 3.5 above, the Company may require, at the Company's expense
and subject to Section 3.4 above, the Lender giving such notice to assign,
without recourse, all of its Loans, Commitment and accrued interest and
fees to such other Lender or financial institution pursuant to the
provisions of Article XII below.

ARTICLE IV

CONDITIONS PRECEDENT

4.1. Initial Advance. The Lenders shall not be required to make the
initial Advance hereunder unless the Borrower has furnished to the
Administrative Agent, with sufficient copies for the Lenders:

(i) Copies of the articles or certificate of incorporation of the
Borrower, together with all amendments thereto, and a certificate of
existence, each certified by the appropriate governmental officer in its
jurisdiction of incorporation.

(ii) Copies, certified by the Secretary or an Assistant Secretary of
the Borrower, of its by-laws.

(iii) Copies, certified by the Secretary or an Assistant Secretary
of the Borrower and each of the Significant Subsidiaries existing at the
date of the initial Advance hereunder, of Board of Directors' resolutions
of such Person and of resolutions or actions of any other body authorizing
the execution of the Loan Documents to which such Person is a party.

(iv) Incumbency certificates, executed by the Secretary or an
Assistant Secretary of the Borrower and each of the Significant
Subsidiaries existing at the date of the initial Advance hereunder, which
shall identify by name and title and bear the signatures of the Authorized
Officers and any other officers of such Person authorized to sign the Loan
Documents to which such Person is a party, upon which certificate the
Administrative Agent and the Lenders shall be entitled to rely until
informed of any change in writing by such Person.

(v) A certificate, signed by the chief financial officer of the
Borrower, stating that on the initial Borrowing Date no Default or
Unmatured Default has occurred and is continuing.

(vi) A written opinion of counsel to the Borrower and each of its
Subsidiaries, addressed to the Lenders in substantially the form of
Exhibit J.

(vii) From each of the Significant Subsidiaries of the Borrower
existing on the date of the initial Advance hereunder, a Credit Guaranty
and a Guarantor Subordination Agreement.

(viii) Any Notes requested by a Lender pursuant to Section 2.3 or
2.4 payable to the order of each such requesting Lender.

(ix) Written money transfer instructions, in substantially the form
of Exhibit K, addressed to the Administrative Agent and signed by an
Authorized Officer, together with such other related money transfer
authorizations as the Administrative Agent may have reasonably requested.

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<PAGE> 27
(x) The upfront fee payable to each Lender pursuant to Section
6.2.1(iv) above and such fees as shall be payable to the Administrative
Agent and the Arranger pursuant to the Fee Letter.

(xi) Information satisfactory to the Administrative Agent and the
Required Lenders regarding the Borrower's Year 2000 Program.

(xii) Such other documents as any Lender or its counsel may have
reasonably requested.

4.2. Each Advance. The Lenders shall not be required to make any
Advance unless on the applicable Borrowing Date:

(i) There exists no Default or Unmatured Default.

(ii) The representations and warranties contained in Article V are
true and correct as of such Borrowing Date except to the extent any such
representation or warranty is stated to relate solely to an earlier date,
in which case such representation or warranty shall have been true and
correct on and as of such earlier date.

(iii) All legal matters incident to the making of such Advance are
satisfactory to the Lenders and their counsel.

Each Committed Borrowing Notice with respect to each Committed Advance and each
Competitive Bid Acceptance Notice with respect to each such Competitive Bid
Advance shall constitute a representation and warranty by the Borrower that the
conditions contained in Sections 4.2(i) and (ii) have been satisfied. Any Lender
may require a duly completed Compliance Certificate as a condition to making an
Advance.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

5.1. Existence and Standing. Each of the Borrower and its Subsidiaries is
a corporation, partnership (in the case of Subsidiaries only) or limited
liability company duly and properly incorporated or organized, as the case may
be, validly existing and (to the extent such concept applies to such entity) in
good standing under the laws of its jurisdiction of incorporation or
organization and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted where failure to have such
authority could reasonably be expected to have a Material Adverse Effect.

5.2. Authorization and Validity. The Borrower has the power and authority
and legal right to execute and deliver the Loan Documents and to perform its
obligations thereunder. The execution and delivery by the Borrower of the Loan
Documents and the performance of its obligations thereunder have been duly
authorized by proper corporate proceedings, and the Loan Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject also to the availability of equitable
remedies if equitable remedies are sought.

5.3. No Conflict; Government Consent. Neither the execution and delivery
by the Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
(i) any law, rule, regulation, order, writ, judgment,

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injunction, decree or award binding on the Borrower or any of its Subsidiaries
or (ii) the Borrower's or any Subsidiary's articles or certificate of
incorporation, partnership agreement, certificate of partnership, articles or
certificate of organization, by-laws, or operating or other management
agreement, as the case may be, or (iii) the provisions of any indenture,
instrument or agreement to which the Borrower or any of its Subsidiaries is a
party or is subject, or by which it, or its Property, is bound if such violation
could reasonably be expected to have a Material Adverse Effect, or conflict with
or constitute a default thereunder if such conflict or default could reasonably
be expected to have a Material Adverse Effect, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of the Borrower or
a Subsidiary pursuant to the terms of any such indenture, instrument or
agreement. No order, consent, adjudication, approval, license, authorization, or
validation of, or filing, recording or registration with, or exemption by, or
other action in respect of any governmental or public body or authority, or any
subdivision thereof, which has not been obtained by the Borrower or any of its
Subsidiaries, is required to be obtained by the Borrower or any of its
Subsidiaries in connection with the execution and delivery of the Loan
Documents, the borrowings under this Agreement, the payment and performance by
the Borrower of the Obligations or the legality, validity, binding effect or
enforceability of any of the Loan Documents.

5.4. Financial Statements. The December 31, 1997 consolidated financial
statements of the Borrower and its Subsidiaries heretofore delivered to the
Lenders were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of the Borrower and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.

5.5. Material Adverse Change. Since December 31, 1997 there has been no
change in the business, Property, prospects, condition (financial or otherwise)
or results of operations of the Borrower and its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect.

5.6. Taxes. The Borrower and its Subsidiaries have filed all United States
federal tax returns and all other tax returns which are required to be filed and
have paid all taxes due pursuant to said returns or pursuant to any assessment
received by the Borrower or any of its Subsidiaries, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have been
provided in accordance with Agreement Accounting Principles and as to which no
Lien exists. The United States income tax returns of the Borrower and its
Subsidiaries have been audited by the Internal Revenue Service through the
fiscal year ended December 31, 1994. No tax liens have been filed and no claims
are being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of the Borrower and its Subsidiaries in respect of any
taxes or other governmental charges are adequate.

5.7. Litigation and Contingent Obligations. Except as set forth on
Schedule III, there is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the knowledge of any of their officers,
threatened against or affecting the Borrower or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Loans. Other than any liability
incident to any litigation, arbitration or proceeding which (i) could not
reasonably be expected to have a Material Adverse Effect or (ii) is set forth on
Schedule III, the Borrower has no material contingent obligations not provided
for or disclosed in statements referred to in Section 5.4.

5.8. Subsidiaries. Schedule IV contains an accurate list of all
Subsidiaries of the Borrower as of the date of this Agreement, setting forth
their respective jurisdictions of organization and the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries an identifying which Subsidiaries are Significant
Subsidiaries. All of the issued and outstanding shares of capital stock or other
ownership interests of such Subsidiaries have been (to the extent such concepts
are relevant with respect to such ownership interests) duly authorized and
issued and are fully paid and non-assessable.

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5.9. ERISA. There are no Unfunded Liabilities under any Single Employer
Plans. Neither the Borrower nor any other member of the Controlled Group has
incurred, or is reasonably expected to incur, any withdrawal liability to
Multiemployer Plans. Each Plan complies in all material respects with all
applicable requirements of law and regulations, no Reportable Event has occurred
with respect to any Plan. Neither the Borrower nor any other member of the
Controlled Group has withdrawn from any Multiemployer Plan or initiated steps to
do so, and neither the Borrower nor any other member of the Controlled Group has
withdrawn from any Single Employer Plan under circumstances in which the
withdrawal resulted in any funding liability that has not been fully paid. No
steps have been taken to reorganize or terminate any Plan.

5.10. Accuracy of Information. No information, exhibit or report furnished
by the Borrower or any of its Subsidiaries to the Administrative Agent or to any
Lender in connection with the negotiation of, or compliance with, the Loan
Documents contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading.

5.11. Regulation U. Margin stock (as defined in Regulation U) constitutes
less than 25% of the value of those assets of the Borrower and its Subsidiaries
which are subject to any limitation on sale, pledge, or other restriction
hereunder.

5.12. Material Agreements. Neither the Borrower nor any Subsidiary is a
party to any agreement or instrument or subject to any charter or other
corporate restriction which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in (i) any agreement to which it is a party, or (ii) any
agreement or instrument evidencing or governing Indebtedness if, in any such
case default thereunder could reasonably be expected to have a Material Adverse
Effect.

5.13. Compliance With Laws. The Borrower and its Subsidiaries have
complied with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of their respective
businesses or the ownership of their respective Property except for any failure
to comply with any of the foregoing which could not reasonably be expected to
have a Material Adverse Effect.

5.14. Ownership of Properties. Except as set forth on Schedule V, on the
date of this Agreement, the Borrower and its Subsidiaries will have good title,
free of all Liens other than those permitted by Section 6.14, to all of the
Property and assets reflected in the Borrower's most recent consolidated
financial statements provided to the Administrative Agent as owned by the
Borrower and its Subsidiaries.

5.15. Plan Assets; Prohibited Transactions. The Borrower is not an entity
deemed to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101
of an employee benefit plan (as defined in Section 3(3) of ERISA) which is
subject to Title I of ERISA or any plan (within the meaning of Section 4975 of
the Code), and neither the execution of this Agreement nor the making of Loans
hereunder gives rise to a prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Code.

5.16. Environmental Matters. In the ordinary course of its business, the
officers of the Borrower consider the effect of Environmental Laws on the
business of the Borrower and its Subsidiaries, in the course of which they
identify and evaluate potential risks and liabilities accruing to the Borrower
due to Environmental Laws. On the basis of this consideration, the Borrower has
concluded that it is in compliance with all applicable Environmental Laws
failure to comply with which could reasonably be expected to have a Material
Adverse Effect. Neither the Borrower nor any Subsidiary has received any notice
to the effect that its operations are not in material compliance with

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any of the requirements of applicable Environmental Laws or are the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any toxic or hazardous waste or substance into
the environment, which non-compliance or remedial action could reasonably be
expected to have a Material Adverse Effect.

5.17. Investment Company Act. Neither the Borrower nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.

5.18. Public Utility Holding Company Act. Neither the Borrower nor any
Subsidiary is a "holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

5.19. Year 2000. The Borrower has made an assessment of the Year 2000
Issues and has a realistic and achievable program for remediating the Year 2000
Issues on a timely basis (the "Year 2000 Program"). Based on such assessment and
on the Year 2000 Program the Borrower does not reasonably anticipate that Year
2000 Issues will have a Material Adverse Effect.

ARTICLE VI

COVENANTS

During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

6.1. Financial Reporting. The Borrower will maintain, for itself and each
Subsidiary, a system of accounting established and administered in accordance
with generally accepted accounting principles, and furnish to the Lenders:

(i) Within 90 days after the close of each of its fiscal years, an
unqualified audit report certified by independent certified public
accountants acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated and consolidating basis
(consolidating statements need not be certified by such accountants) for
itself and its Subsidiaries, including balance sheets as of the end of
such period, related profit and loss and reconciliation of surplus
statements, and a statement of cash flows, accompanied by (a) any
management letter prepared by said accountants, and (b) a certificate of
said accountants that, in the course of their examination necessary for
their certification of the foregoing, they have obtained no knowledge of
any Default or Unmatured Default, or if, in the opinion of such
accountants, any Default or Unmatured Default shall exist, stating the
nature and status thereof.

(ii) Within 60 days after the close of the first three quarterly
periods of each of its fiscal years, for itself and its Subsidiaries,
consolidated unaudited balance sheets as at the close of each such period
and consolidated profit and loss and reconciliation of surplus statements
and a statement of cash flows for the period from the beginning of such
fiscal year to the end of such quarter, all certified by its chief
financial officer.

(iii) Together with the financial statements required under Sections
6. l(i) and (ii), a Compliance Certificate signed by its chief financial
officer showing the calculations necessary

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to determine compliance with this Agreement and stating that no Default or
Unmatured Default exists, or if any Default or Unmatured Default exists,
stating the nature and status thereof.

(iv) Within 270 days after the close of each fiscal year, a
statement of the Unfunded Liabilities of each Single Employer Plan,
certified as correct by an actuary enrolled under ERISA.

(v) As soon as possible and in any event within 10 days after the
Borrower knows that any Reportable Event has occurred with respect to any
Plan, a statement, signed by the chief financial officer of the Borrower,
describing said Reportable Event and the action which the Borrower
proposes to take with respect thereto.

(vi) As soon as possible and in any event within 10 days after
receipt by the Borrower, a copy of (a) any notice or claim to the effect
that the Borrower or any of its Subsidiaries is or may be liable to any
Person as a result of the release by the Borrower, any of its
Subsidiaries, or any other Person of any toxic or hazardous waste or
substance into the environment, and (b) any notice alleging any violation
of any federal, state or local environmental, health or safety law or
regulation by the Borrower or any of its Subsidiaries, which, in either
case, could reasonably be expected to have a Material Adverse Effect.

(vii) Promptly upon the furnishing thereof to the shareholders of
the Borrower, copies of all financial statements, reports and proxy
statements so furnished.

(viii) Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which
the Borrower or any of its Subsidiaries files with the Securities and
Exchange Commission.

(ix) Such other information (including non-financial information) as
the Administrative Agent or any Lender may from time to time reasonably
request.

6.2. Use of Proceeds. The Borrower will, and will cause each Subsidiary
to, use the proceeds of the Advances for general corporate purposes, including
the repurchase of common stock. The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U).

6.3. Notice of Default. The Borrower will, and will cause each Subsidiary
to, give prompt notice in writing to the Lenders of the occurrence of any
Default or Unmatured Default and of any other development, financial or
otherwise (including, without limitation, developments with respect to Year 2000
Issues), which could reasonably be expected to have a Material Adverse Effect.

6.4. Conduct of Business. The Borrower will, and will cause each
Significant Subsidiary to, carry on and conduct its business in substantially
the same manner and in substantially the same fields of enterprise as it is
presently conducted and do all things necessary to remain duly incorporated or
organized, validly existing and (to the extent such concept applies to such
entity) in good standing as a domestic corporation, partnership or limited
liability company in its jurisdiction of incorporation or organization, as the
case may be, and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted.

6.5. Taxes. The Borrower will, and will cause each Subsidiary to, timely
file complete and correct United States federal and applicable foreign, state
and local tax returns required by law and pay

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when due all taxes, assessments and governmental charges and levies upon it or
its income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with Agreement Accounting Principles.

6.6. Insurance. The Borrower will, and will cause each Subsidiary to,
maintain with financially sound and reputable insurance companies insurance on
all their Property in such amounts and covering such risks as is consistent with
sound business practice, and the Borrower will furnish to any Lender upon
request full information as to the insurance carried.

6.7. Compliance with Laws. The Borrower will, and will cause each
Subsidiary to, comply with all laws, rules, regulations, orders, writs,
judgments, injunctions, decrees or awards to which it may be subject including,
without limitation, all Environmental Laws, failure to comply with which could
reasonably be expected to have a Material Adverse Effect.

6.8. Maintenance of Properties. The Borrower will, and will cause each
Subsidiary to, do all things necessary to maintain, preserve, protect and keep
its Property in good repair, working order and condition, and make all necessary
and proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times to the extent in any
such case failure so to do could reasonably be expected to have a Material
Adverse Effect.

6.9. Inspection. The Borrower will, and will cause each Subsidiary to,
permit the Administrative Agent and the Lenders, by their respective
representatives and agents, to inspect any of the Property, books and financial
records of the Borrower and each Subsidiary, to examine and make copies of the
books of accounts and other financial records of the Borrower and each
Subsidiary, and to discuss the affairs, finances and accounts of the Borrower
and each Subsidiary with, and to be advised as to the same by, their respective
officers at such reasonable times and intervals as the Administrative Agent or
any Lender may designate.

6.10. Dividends. The Borrower will not, nor will it permit any Subsidiary
to, declare or pay any dividends or make any distributions on its capital stock
(other than dividends payable in its own capital stock) or redeem, repurchase or
otherwise acquire or retire any of its capital stock at any time outstanding;
provided, however, that: (i) any Subsidiary may declare and pay dividends or
make distributions to the Borrower or to a Wholly-Owned Subsidiary, (ii) any
Subsidiary may declare and pay dividends or make distributions to minority
shareholders of such Subsidiary existing on the date of this Agreement to the
extent such dividends or distributions are contractually required to be paid and
so long as at the date of declaration and payment and both before and after
giving effect thereto there does not exist a Default or an Unmatured Default,
and (iii) the Borrower may redeem, repurchase or otherwise acquire or retire its
common stock and declare or pay dividends and make distributions on its capital
stock so long as at the date of such event and both before and after giving
effect thereto there does not exist a Default or an Unmatured Default.

6.11. Merger. The Borrower will not, nor will it permit any Significant
Subsidiary to, merge or consolidate with or into any other Person, except that a
Significant Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.

6.12. Sale of Assets. The Borrower will not, nor will it permit any
Guarantor to, lease, sell or otherwise dispose of its Property to any other
Person, except:

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(i) Sales of inventory in the ordinary course of business.

(ii) Leases, sales and other dispositions of its Property to Persons
other than the Borrower or a Guarantor that do not exceed for the Borrower
and all Guarantors from and after the date of this Agreement $60,000,000
in the aggregate.

(iii) Any transfer of an interest in accounts or notes receivable on
a limited recourse basis, provided that such transfer qualifies as a sale
under Agreement Accounting Principles and that the amount of such
financing does not exceed $10,000,000 at any one time outstanding.

(iv) Leases, sales and other dispositions of Property to the
Borrower or a Guarantor.

6.13. Investments and Acquisitions. The Borrower will not, nor will it
permit any Subsidiary to, make or suffer to exist any Investments (including
without limitation, loans and advances to, and other Investments in,
Subsidiaries), or commitments therefor, or to create any Subsidiary or to become
or remain a partner in any partnership or joint venture, or to make any
Acquisition of any Person, except:

(i) Cash Equivalent Investments.

(ii) Existing Investments in Subsidiaries and other Investments in
existence on the date hereof and described in Schedule VI.

(iii) Investments constituting Permitted Acquisitions.

(iv) Other Investments in an aggregate amount not to exceed
$5,000,000.

6.14. Indebtedness. The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

(i) The Obligations.

(ii) Indebtedness existing on the date hereof and described in
Schedule VII hereto and, unless otherwise noted on said Schedule VII, all
refundings and refinancings thereof; provided, however, that in no event
shall any refunding or refinancing increase the dollar amount of such
Indebtedness or the interest rate, if any, applicable thereto.

(iii) Subordinated Indebtedness.

(iv) Indebtedness secured by Liens permitted under Section 6.15
below.

(v) Capitalized Leases.

(vi) Indebtedness of any Subsidiary to the Borrower.

(vii) Other unsecured Indebtedness of Borrower which is pari passu
with or junior in right of payment to the Obligations.

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6.15. Liens. The Borrower will not, nor will it permit any Subsidiary to,
create, incur, or suffer to exist any Lien in, of or on the Property of the
Borrower or any of its Subsidiaries, except:

(i) Liens for taxes, assessments or governmental charges or levies
on its Property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being contested in good
faith and by appropriate proceedings and for which adequate reserves in
accordance with Agreement Accounting Principles shall have been set aside
on its books.

(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past
due or which are being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on its books.

(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation.

(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do
not in any material way affect the marketability of the same or interfere
with the use thereof in the business of the Borrower or its Subsidiaries.

(v) Liens in respect of equipment or real property acquired by the
Borrower or any Subsidiary, which are created within 180 days after the
acquisition of such property to secure Indebtedness incurred to finance
all or a part of the purchase price of such property, provided that (a) no
such Lien shall extend to or cover any other property of the Borrower or
such Subsidiary, as the case may be, and (b) the aggregate principal
amount of the Indebtedness secured by all such Liens shall not exceed
$25,000,000.

(vi) Liens existing on the date hereof and described in Schedule V.

(vii) Liens incurred in connection with any transfer of an interest
in accounts or notes receivable which is permitted pursuant to Section
6.12(iii).

(viii) Liens securing other Indebtedness in an aggregate amount not
to exceed $10,000,000.

6.16. Affiliates. The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction (including, without limitation, the
purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to the Borrower or
such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction.

6.17. Sale of Accounts. The Borrower will not, nor will it permit any
Subsidiary to, sell or otherwise dispose of any notes receivable or accounts
receivable, with or without recourse except to the extent permitted by Section
6.12(iii).

6.18. Financial Covenants.

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6.18.1. Minimum Consolidated Net Worth. The Borrower will maintain,
as at the last day of each fiscal quarter, a minimum Consolidated Net Worth
equal to: (i) $175,000,000, plus (ii) the sum of: (a) commencing with the fiscal
quarter ending September 27, 1998 and without deduction for the loss in any
fiscal quarter, 50% of Consolidated Net Income for such fiscal quarter (if
positive), plus (b) 80% of the proceeds (net of customary and reasonable
transaction costs) of all equity issuances of the Borrower and its consolidated
Subsidiaries occurring after June 28, 1998.

6.18.2. Leverage Ratio. The Borrower will maintain, as at the last
day of each fiscal quarter, a Leverage Ratio not greater than 2.50:1.00.

6.19. Year 2000. The Borrower will take and will cause each of its
Subsidiaries to take all such actions as are reasonably necessary to
successfully implement the Year 2000 Program and to assure that Year 2000 Issues
will not have a Material Adverse Effect. At the request of the Administrative
Agent the Borrower will provide a description of the Year 2000 Program together
with any updates or progress reports with respect thereto.

ARTICLE VII

DEFAULTS

The occurrence of any one or more of the following events shall constitute
a Default:

7.1. Any representation or warranty made or deemed made by or on behalf of
the Borrower or any of its Subsidiaries to the Lenders or the Administrative
Agent under or in connection with this Agreement, any Loan, or any certificate
or information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.

7.2. Nonpayment of principal of any Loan when due, or nonpayment of
interest upon any Loan or of any commitment fee or other obligations under any
of the Loan Documents within five days after the same becomes due.

7.3. The breach by the Borrower of any of the terms or provisions of
any of Sections 6.2 and 6.10 through 6.18, inclusive.

7.4. The breach by the Borrower (other than a breach which constitutes a
Default under another Section of this Article VII) of any of the terms or
provisions of this Agreement which is not remedied within 30 days after written
notice from the Administrative Agent or any Lender.

7.5. Failure of the Borrower or any of its Subsidiaries to pay when due
any Indebtedness aggregating in excess of $25,000,000 ("Material Indebtedness");
or the default by the Borrower or any of its Subsidiaries in the performance
(beyond the applicable grace period with respect thereto, if any) of any term,
provision or condition contained in any agreement under which any such Material
Indebtedness was created or is governed, or any other event shall occur or
condition exist, the effect of which default or event is to cause, or to permit
the holder or holders of such Material Indebtedness to cause, such Material
Indebtedness to become due prior to its stated maturity; or any Material
Indebtedness of the Borrower or any of its Subsidiaries shall be declared to be
due and payable or required to be prepaid or repurchased (other than by a
regularly scheduled payment) prior to the stated maturity thereof; or the
Borrower or any of its Subsidiaries shall not pay, or admit in writing its
inability to pay, its debts generally as they become due.

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7.6. The Borrower or any of its Subsidiaries shall (i) have an order for
relief entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors, (iii)
apply for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
Substantial Portion of its Property, (iv) institute any proceeding seeking an
order for relief under the Federal bankruptcy laws as now or hereafter in effect
or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution,
winding up, liquidation, reorganization, arrangement, adjustment or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it, (v)
take any corporate or partnership action to authorize or effect any of the
foregoing actions set forth in this Section 7.6 or (vi) fail to contest in good
faith any appointment or proceeding described in Section 7.7.

7.7. Without the application, approval or consent of the Borrower or any
of its Subsidiaries, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section
7.6(iv) shall be instituted against the Borrower or any of its Subsidiaries and
such appointment continues undischarged or such proceeding continues undismissed
or unstayed for a period of 30 consecutive days.

7.8. Any court, government or governmental agency shall condemn, seize or
otherwise appropriate, or take custody or control of, all or any portion of the
Property of the Borrower and its Subsidiaries which, when taken together with
all other Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a Substantial
Portion.

7.9. The Borrower or any of its Subsidiaries shall fail within 30 days to
pay, bond or otherwise discharge any judgment or order for the payment of money
in excess of $25,000,000 which is not stayed on appeal or otherwise being
appropriately contested in good faith.

7.10. The Unfunded Liabilities of all Single Employer Plans shall exceed
in the aggregate $100,000 or any Reportable Event shall occur in connection with
any Plan.

7.11. The Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that it has incurred
withdrawal liability to such Multiemployer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multiemployer Plans by
the Borrower or any other member of the Controlled Group as withdrawal liability
(determined as of the date of such notification), exceeds $100,000 or requires
payments exceeding $100,000 per annum.

7.12. The Borrower or any other member of the Controlled Group shall have
been notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of Title IV
of ERISA, if as a result of such reorganization or termination the aggregate
annual contributions of the Borrower and the other members of the Controlled
Group (taken as a whole) to all Multiemployer Plans which are then in
reorganization or being terminated have been or will be increased over the
amounts contributed to such Multiemployer Plans for the respective plan years of
each such Multiemployer Plan immediately preceding the plan year in which the
reorganization or termination occurs by an amount exceeding $100,000.

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7.13. The Borrower or any of its Subsidiaries shall (i) be the subject of
any proceeding or investigation pertaining to the release by the Borrower, any
of its Subsidiaries or any other Person of any toxic or hazardous waste or
substance into the environment, or (ii) violate any Environmental Law, which, in
the case of an event described in clause (i) or clause (ii), could reasonably be
expected to have a Material Adverse Effect.

7.14. Any Change in Control shall occur.

7.15 Any Guarantor shall fail to observe any term or condition contained
in its Credit Guaranty or Guarantor Subordination Agreement or shall attempt to
rescind or revoke its obligations thereunder, with respect to future
transactions or otherwise.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

8.1. Acceleration. If any Default described in Section 7.6 or 7.7 occurs
with respect to the Borrower, the obligations of the Lenders to make Loans
hereunder shall automatically terminate and the Obligations shall immediately
become due and payable without any election or action on the part of the
Administrative Agent or any Lender. If any other Default occurs, the Required
Lenders (or the Administrative Agent with the consent of the Required Lenders)
may terminate or suspend the obligations of the Lenders to make Loans hereunder,
or declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.

If, within 30 days after acceleration of the maturity of the Obligations
or termination of the obligations of the Lenders to make Loans hereunder as a
result of any Default (other than any Default as described in Section 7.6 or 7.7
with respect to the Borrower) and before any judgment or decree for the payment
of the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Administrative Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.

8.2. Amendments. Subject to the provisions of this Article VIII, the
Required Lenders (or the Administrative Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of each Lender affected thereby:

(i) Extend the final maturity of any Loan or forgive all or any
portion of the principal amount thereof or reduce the rate or extend the
time of payment of interest or fees thereon.

(ii) Reduce the percentage specified in the definition of Required
Lenders.

(iii) Extend the Multi-Year Facility Termination Date or the Short
Term Facility Termination Date, or reduce the amount or extend the payment
date for the payments required under Section 2.7.2(ii) or increase the
amount of the Multi-Year Facility Commitment or Short Term Facility
Commitment of any Lender hereunder, or permit the Borrower to assign its
rights under this Agreement.

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(iv) Release any Guarantor from its obligations under its Credit
Guaranty or Guarantor Subordination Agreement.

(v) Amend this Section 8.2.

No amendment of any provision of this Agreement relating to the Administrative
Agent shall be effective without the written consent of the Administrative
Agent. The Administrative Agent may waive payment of the fee required under
Section 12.3.2 without obtaining the consent of any other party to this
Agreement.

8.3. Preservation of Rights. No delay or omission of the Lenders or the
Administrative Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of a Loan notwithstanding the existence of a Default or
the inability of the Borrower to satisfy the conditions precedent to such Loan
shall not constitute any waiver or acquiescence. Any single or partial exercise
of any such right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatsoever shall be valid
unless in writing signed by the Lenders required pursuant to Section 8.2, and
then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Administrative Agent and the Lenders until the
Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

9.1. Survival of Representations. All representations and warranties of
the Borrower contained in this Agreement shall survive the making of the Loans
herein contemplated.

9.2. Governmental Regulation. Anything contained in this Agreement to the
contrary notwithstanding, no Lender shall be obligated to extend credit to the
Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

9.3. Headings. Section headings in the Loan Documents are for
convenience of reference only, and shall not govern the interpretation of any
of the provisions of the Loan Documents.

9.4. Entire Agreement. The Loan Documents embody the entire agreement and
understanding among the Borrower, the Administrative Agent and the Lenders and
supersede all prior agreements and understandings among the Borrower, the
Administrative Agent and the Lenders relating to the subject matter thereof
other than the Fee Letter.

9.5. Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner or agent of any other (except to the extent to which the
Administrative Agent is authorized to act as such). The failure of any Lender to
perform any of its obligations hereunder shall not relieve any other Lender from
any of its obligations hereunder. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided, however, that
the parties hereto expressly agree that the Arranger shall enjoy the benefits of
the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set
forth therein and shall have

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the right to enforce such provisions on its own behalf and in its own name to
the same extent as if it were a party to this Agreement.

9.6. Expenses; Indemnification.

(i) The Borrower shall reimburse the Administrative Agent and the
Arranger for any reasonable costs, internal charges and out-of-pocket
expenses (including attorneys' fees and time charges of attorneys for the
Administrative Agent, which attorneys may be employees of the
Administrative Agent) paid or incurred by the Administrative Agent or the
Arranger in connection with the preparation, negotiation, execution,
delivery, syndication, review, amendment, modification, and administration
of the Loan Documents. The Borrower also agrees to reimburse the
Administrative Agent, the Arranger and the Lenders for any costs, internal
charges and out-of-pocket expenses (including attorneys' fees and time
charges of attorneys for the Administrative Agent, the Arranger and the
Lenders, which attorneys may be employees of the Administrative Agent, the
Arranger or the Lenders) paid or incurred by the Administrative Agent, the
Arranger or any Lender in connection with the collection and enforcement
of the Loan Documents. Expenses being reimbursed by the Borrower under
this Section include, without limitation, costs and expenses incurred in
connection with the Reports described in the following sentence; provided,
however, that unless there shall have occurred and be continuing a Default
or Unmatured Default, the obligation of the Borrower to reimburse any
Person for costs and expenses in connection with the preparation of such
Reports shall be limited to not more than two such Reports in any
consecutive 12-month period. The Borrower acknowledges that from time to
time First Chicago may prepare and may distribute to the Lenders (but
shall have no obligation or duty to prepare or to distribute to the
Lenders) certain audit reports (the "Reports") pertaining to the
Borrower's assets for internal use by First Chicago from information
furnished to it by or on behalf of the Borrower, after First Chicago has
exercised its rights of inspection pursuant to this Agreement.

(ii) The Borrower hereby further agrees to indemnify the
Administrative Agent, the Arranger and each Lender, its directors,
officers and employees against all losses, claims, damages, penalties,
judgments, liabilities and expenses (including, without limitation, all
expenses of litigation or preparation therefor whether or not the
Administrative Agent, the Arranger or any Lender is a party thereto) which
any of them may pay or incur arising out of or relating to this Agreement,
the other Loan Documents, the transactions contemplated hereby or the
direct or indirect application or proposed application of the proceeds of
any Loan hereunder except to the extent that they directly result from the
gross negligence or willful misconduct of the party seeking
indemnification. The obligations of the Borrower under this Section 9.6
shall survive the termination of this Agreement.

9.7. Numbers of Documents. All statements, notices, closing documents, and
requests hereunder shall be furnished to the Administrative Agent with
sufficient counterparts so that the Administrative Agent may furnish one to each
of the Lenders.

9.8. Accounting. Except as provided to the contrary herein, all accounting
terms used herein shall be interpreted and all accounting determinations
hereunder shall be made in accordance with Agreement Accounting Principles,
except that any calculation or determination which is to be made on a
consolidated basis shall be made for the Borrower and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Borrower's
audited financial statements.

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9.9. Severability of Provisions. Any provision in any Loan Document that
is held to be inoperative, unenforceable, or invalid in any jurisdiction shall,
as to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of all Loan Documents are declared to be severable.

9.10. Nonliability of Lenders. The relationship between the Borrower on
the one hand and the Lenders and the Administrative Agent on the other hand
shall be solely that of borrower and lender. Neither the Administrative Agent,
the Arranger nor any Lender shall have any fiduciary responsibilities to the
Borrower. Neither the Administrative Agent, the Arranger nor any Lender
undertakes any responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's business or
operations. The Borrower agrees that neither the Administrative Agent, the
Arranger nor any Lender shall have liability to the Borrower (whether sounding
in tort, contract or otherwise) for losses suffered by the Borrower in
connection with, arising out of, or in any way related to, the transactions
contemplated and the relationship established by the Loan Documents, or any act,
omission or event occurring in connection therewith, unless such losses directly
result from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Administrative Agent, the Arranger nor any
Lender shall have any liability with respect to, and the Borrower hereby waives,
releases and agrees not to sue for, any special, indirect or consequential
damages suffered by the Borrower in connection with, arising out of, or in any
way related to the Loan Documents or the transactions contemplated thereby.

9.11. Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Borrower pursuant to this Agreement in
confidence, except for disclosure (i) to its Affiliates and to other Lenders and
their respective Affiliates, (ii) to legal counsel, accountants, and other
professional advisors to that Lender or to a Transferee, (iii) to regulatory
officials, (iv) to any Person as requested pursuant to or as required by law,
regulation, or legal process, (v) to any Person in connection with any legal
proceeding to which that Lender is a party, and (vi) permitted by Section 12.4.

9.12. Nonreliance. Each Lender hereby represents that it is not relying on
or looking to any margin stock (as defined in Regulation U of the Board of
Governors of the Federal Reserve System) for the repayment of the Loans provided
for herein.

ARTICLE X

THE AGENTS

10.1. Appointment; Nature of Relationship. Each of the Lenders hereby
appoints The First National Bank of Chicago as its contractual representative to
act in the capacity of Administrative Agent, the Bank of Montreal as its
contractual representative to act in the capacity of Syndication Agent and
Norwest Bank Minnesota, National Association as its contractual representative
to act in the capacity of Documentation Agent hereunder and under each other
Loan Document, and each of the Lenders irrevocably authorizes each such Agent to
act as the contractual representative of such Lender with the rights and duties
expressly set forth herein and in the other Loan Documents. The Administrative
Agent agrees to act as such contractual representative upon the express
conditions contained in this Article X. Notwithstanding the use of the defined
term "Agent," it is expressly understood and agreed that the Agents shall not
have any fiduciary responsibilities to any Lender by reason of this Agreement or
any other Loan Document and that each Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set forth
in this Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative (i) no Agent does hereby assume any fiduciary duties
to any of the Lenders, (ii) no Agent is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code

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and (iii) each Agent is acting as an independent contractor, the rights and
duties of which are limited to those expressly set forth in this Agreement and
the other Loan Documents. Each of the Lenders hereby agrees to assert no claim
against any Agent on any agency theory or any other theory of liability for
breach of fiduciary duty, all of which claims each Lender hereby waives.

10.2. Powers. Each Agent shall have and may exercise such powers under the
Loan Documents as are specifically delegated to such Agent by the terms of each
thereof, together with such powers as are reasonably incidental thereto. No
Agent shall have any implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by such Agent.

10.3. General Immunity. No Agent nor any of its directors, officers,
agents or employees shall be liable to the Borrower, the Lenders or any Lender
for any action taken or omitted to be taken by it or them hereunder or under any
other Loan Document or in connection herewith or therewith except to the extent
such action or inaction constitutes the gross negligence or willful misconduct
of such Person.

10.4. No Responsibility for Loans, Recitals, etc. No Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into, or verify (a) any statement, warranty or
representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV, except
receipt of items required to be delivered solely to such Agent, if any; (d) the
existence or possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
guarantor of any of the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. No Agent shall have any duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
such Agent at such time, but is voluntarily furnished by the Borrower to such
Agent (either in its capacity as an Agent or in its individual capacity).

10.5. Action on Instructions of Lenders. Each Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder and under any
other Loan Document in accordance with written instructions signed by the
Required Lenders, and such instructions and any action taken or failure to act
pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that no Agent shall be under any duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. Each Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any an
all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.

10.6. Employment of any Agents and Counsel. Each Agent may execute any of
its duties as any Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by it or its authorized
agents, for the default or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Each Agent shall be entitled to advice of
counsel concerning the contractual arrangement between such Agent and the
Lenders and all matters pertaining to such Agent's duties hereunder and under
any other Loan Document.

10.7. Reliance on Documents; Counsel. Each Agent shall be entitled to rely
upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper or document believed by it to be

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genuine and correct and to have been signed or sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel selected
by such Agent, which counsel may be employees of such Agent.

10.8. Administrative Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Administrative Agent ratably in
accordance with their respective Percentage Shares (i) for any amounts not
reimbursed by the Borrower for which the Administrative Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for any other
expenses incurred by the Administrative Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any
expenses incurred by the Administrative Agent in connection with any dispute
between the Administrative Agent and any Lender or between two or more of the
Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan Documents
or any other document delivered in connection therewith or the transactions
contemplated thereby (including, without limitation, for any such amounts
incurred by or asserted against the Administrative Agent in connection with any
dispute between the Administrative Agent and any Lender or between two or more
of the Lenders), or the enforcement of any of the terms of the Loan Documents or
of any such other documents, provided that no Lender shall be liable for any of
the foregoing to the extent any of the foregoing is found in a final
non-appealable judgment by a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of the Administrative Agent. The
obligations of the Lenders under this Section 10.8 shall survive payment of the
Obligations and termination of this Agreement.

10.9. Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Unmatured Default hereunder unless
such Agent has received written notice from a Lender or the Borrower referring
to this Agreement describing such Default or Unmatured Default and stating that
such notice is a "notice of default". In the event that any Agent receives such
a notice, such Agent shall give prompt notice thereof to the Lenders and the
other Agents.

10.10. Rights as a Lender. In the event any Agent is a Lender, such Agent
shall have the same rights and powers hereunder and under any other Loan
Document as any Lender and may exercise the same as though it were not an Agent,
and the term "Lender" or "Lenders" shall, at any time when any Agent is a
Lender, unless the context otherwise indicates, include such Agent in its
individual capacity. Each Agent and its Affiliates may accept deposits from,
lend money to, and generally engage in any kind of trust, debt, equity or other
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrower or any of its Subsidiaries in which the
Borrower or such Subsidiary is not restricted hereby from engaging with any
other Person. No Agent, in its individual capacity, is obligated to remain a
Lender.

10.11. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon any Agent, the Arranger or any other
Lender and based on the financial statements prepared by the Borrower and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent, the Arranger 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 and the other Loan Documents.

10.12. Successor Agents. Any Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, forty-five days after the retiring Agent gives notice

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of its intention to resign. Any Agent may be removed at any time with or without
cause by written notice received by such Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Agent. Notwithstanding the previous sentence, any Agent may
at any time without the consent of the Borrower or any Lender, appoint any of
its Affiliates which is a commercial bank as a successor Agent hereunder. If any
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of such Agent hereunder and the Borrower
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any successor Administrative Agent shall be a
commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as an Agent hereunder by a successor
Agent, such successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the resigning or removed Agent.
Upon the effectiveness of the resignation or removal of any Agent, the resigning
or removed Agent shall be discharged from its duties and obligations hereunder
and under the Loan Documents. After the effectiveness of the resignation or
removal of an any Agent, the provisions of this Article X shall continue in
effect for the benefit of such Agent in respect of any actions taken or omitted
to be taken by it while it was acting as an Agent hereunder and under the other
Loan Documents. In the event that there is a successor to the Administrative
Agent by merger, or the Administrative Agent assigns its duties and obligations
to an Affiliate pursuant to this Section 10.12, then the term "Corporate Base
Rate" as used in this Agreement shall mean the prime rate, base rate or other
analogous rate of the new Administrative Agent.

10.13. Administrative Agent's Fee. The Borrower agrees to pay to the
Administrative Agent and the Arranger, for their own respective accounts, the
fees agreed to by the Borrower, the Administrative Agent and the Arranger
pursuant to the Fee Letter, or as otherwise agreed upon from time to time.

10.14. Delegation to Affiliates. The Borrower and the Lenders agree that
the Administrative Agent may delegate any of its duties under this Agreement to
any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Administrative Agent is entitled
under Articles IX and X.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

11.1. Setoff. In addition to, and without limitation of, any rights of the
Lenders under applicable law, if the Borrower becomes insolvent, however
evidenced, or any Default occurs, any and all deposits (including all account
balances, whether provisional or final and whether or not collected or
available) and any other Indebtedness at any time held or owing by any Lender or
any Affiliate of any Lender to or for the credit or account of the Borrower may
be offset and applied toward the payment of the Obligations owing to such
Lender, whether or not the Obligations, or any part hereof, shall then be due.

11.2. Ratable Payments. If any Lender, whether by setoff or otherwise, has
payment made to it upon its Loans (other than payments received pursuant to
Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any
other Lender, such Lender agrees, promptly upon demand, to purchase a portion of
the Loans held by the other Lenders so that after such purchase each Lender will
hold its ratable proportion of Loans. If any Lender, whether in connection with
setoff or amounts

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which might be subject to setoff or otherwise, receives collateral or other
protection for its Obligations or such amounts which may be subject to setoff,
such Lender agrees, promptly upon demand, to take such action necessary such
that all Lenders share in the benefits of such collateral ratably in proportion
to their Loans. In case any such payment is disturbed by legal process, or
otherwise, appropriate further adjustments shall be made.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

12.1. Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Borrower and the
Lenders and their respective successors and assigns, except that (i) the
Borrower shall not have the right to assign its rights or obligations under the
Loan Documents and (ii) any assignment by any Lender must be made in compliance
with Section 12.3. Notwithstanding clause (ii) of this Section, any Lender may
at any time, without the consent of the Borrower or the Administrative Agent,
assign all or any portion of its rights under this Agreement and any Note to a
Federal Reserve Bank; provided, however, that no such assignment to a Federal
Reserve Bank shall release the transferor Lender from its obligations hereunder.
The Administrative Agent may treat the Person which made any Loan or which holds
any Note as the owner thereof for all purposes hereof unless and until such
Person complies with Section 12.3 in the case of an assignment thereof or, in
the case of any other transfer, a written notice of the transfer is filed with
the Administrative Agent. Any assignee or transferee of the rights to any Loan
or any Note agrees by acceptance of such transfer or assignment to be bound by
all the terms and provisions of the Loan Documents. Any request, authority or
consent of any Person, who at the time of making such request or giving such
authority or consent is the owner of the rights to any Loan (whether or not a
Note has been issued in evidence thereof), shall be conclusive and binding on
any subsequent holder, transferee or assignee of the rights to such Loan.

12.2. Participations.

12.2.1. Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable law, at any
time sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to such Lender, any Note held by such Lender, any
Commitment of such Lender or any other interest of such Lender under the Loan
Documents. In the event of any such sale by a Lender of participating interests
to a Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall remain
the owner of its Loans and the holder of any Note issued to it in evidence
thereof for all purposes under the Loan Documents, all amounts payable by the
Borrower under this Agreement shall be determined as if such Lender had not sold
such participating interests, and the Borrower and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under the Loan Documents.

12.2.2. Voting Rights. Each Lender shall retain the sole right to
approve, without the consent of any Participant, any amendment, modification or
waiver of any provision of the Loan Documents other than any amendment,
modification or waiver with respect to any Loan or Commitment in which such
Participant has an interest which forgives principal, interest or fees or
reduces the interest rate or fees payable with respect to any such Loan or
Commitment, extends the Facility Termination Date, postpones any date fixed for
any regularly-scheduled payment of principal of, or interest or fees on, any
such Loan or Commitment, releases any guarantor of any such Loan or releases all
or substantially all of the collateral, if any, securing any such Loan.

12.2.3. Benefit of Setoff. The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 11. 1 in respect
of its participating interest in amounts

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owing under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of setoff provided
in Section 11. 1 with respect to the amount of participating interests sold to
each Participant. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 11. 1, agrees
to share with each Lender, any amount received pursuant to the exercise of its
right of setoff, such amounts to be shared in accordance with Section 11.2 as if
each Participant were a Lender.

12.3. Assignments.

12.3.1. Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at any time assign
to one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations under the Loan Documents, provided that such assignment
may, but need not, include the rights of such transferor Lender in respect of
its outstanding Competitive Bid Loans. Such assignment shall be substantially in
the form of Exhibit L or in such other form as may be agreed to by the parties
thereto. The consent of the Borrower and the Administrative Agent shall be
required prior to an assignment becoming effective with respect to a Purchaser
which is not a Lender or an Affiliate thereof; provided, however, that if a
Default has occurred and is continuing, the consent of the Borrower shall not be
required. Such consent shall not be unreasonably withheld or delayed. Each such
assignment shall (unless each of the Borrower and the Administrative Agent
otherwise consents) be in an amount not less than the lesser of (i) $10,000,000
or (ii) the remaining amount of the assigning Lender's Commitment (calculated as
at the date of such assignment).

12.3.2. Effect; Effective Date. Upon (i) delivery to the
Administrative Agent of a notice of assignment, substantially in the form
attached as "Exhibit I" to Exhibit L (a "Notice of Assignment"), together with
any consents required by Section 12.3. 1, and (ii) payment of a $3,000 fee to
the Administrative Agent for processing such assignment, such assignment shall
become effective on the effective date specified in such Notice of Assignment.
The Notice of Assignment shall contain a representation by the Purchaser to the
effect that none of the consideration used to make the purchase of the
Commitment and Loans under the applicable assignment agreement are "plan assets"
as defined under ERISA and that the rights and interests of the Purchaser in and
under the Loan Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Document executed by or on
behalf of the Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with
respect to the percentage of the Aggregate Combined Commitment and Loans
assigned to such Purchaser. Upon the consummation of any assignment to a
Purchaser pursuant to this Section 12.3.2, the transferor Lender, the
Administrative Agent and the Borrower shall, if the transferor Lender or the
Purchaser desires that its Loans be evidenced by Notes, make appropriate
arrangements so that new Notes or, as appropriate, replacement Notes are issued
to such transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting their
respective Commitments, as adjusted pursuant to such assignment.

12.4. Dissemination of Information. The Borrower authorizes each Lender to
disclose to any Participant or Purchaser or any other Person acquiring an
interest in the Loan Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's possession
concerning the creditworthiness of the Borrower and its Subsidiaries, including
without limitation any information contained in any Reports; provided that each
Transferee and prospective Transferee agrees to be bound by Section 9. 11 of
this Agreement.

12.5. Tax Treatment. If any interest in any Loan Document is transferred
to any Transferee which is organized under the laws of any jurisdiction other
than the United States or any State thereof,

45
<PAGE> 46
the transferor Lender shall cause such Transferee, concurrently with the
effectiveness of such transfer, to comply with the provisions of Section
3.5(iv).

ARTICLE XIII

NOTICES

13.1. Notices. Except as otherwise permitted by Section 2.11 with respect
to borrowing notices, all notices, requests and other communications to any
party hereunder shall be in writing (including electronic transmission,
facsimile transmission or similar writing) and shall be given to such party: at
its address or facsimile number set forth on Schedule VIII hereto or at such
other address or facsimile number as such party may hereafter specify for the
purpose by notice to the Administrative Agent and the Borrower in accordance
with the provisions of this Section 13.1. Each such notice, request or other
communication shall be effective (i) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered (or, in the case
of electronic transmission, received) at the address specified in this Section;
provided that notices to the Administrative Agent under Article 11 shall not be
effective until received.

13.2. Change of Address. The Borrower, the Administrative Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS

This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart. This Agreement shall be
effective when it has been executed by the Borrower, the Administrative Agent
and the Lenders and each party has notified the Administrative Agent by
facsimile transmission or telephone that it has taken such action.

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

15.1. CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A
CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF CALIFORNIA, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

15.2. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR CALIFORNIA STATE
COURT SITTING IN LOS ANGELES, CALIFORNIA IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO ANY LOAN DOCUMENTS AND THE BORROWER HEREBY IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE

46
<PAGE> 47
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOS
ANGELES, CALIFORNIA.

15.3. WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND EACH LENDER HEREBY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.

IN WITNESS WHEREOF, the Borrower, the Lenders and the Administrative Agent
have executed this Agreement as of the date first above written.

CENTRAL NEWSPAPERS, INC.,
an Indiana corporation

By: _________________________
Names: ______________________
Title: ________________________

THE FIRST NATIONAL BANK OF
CHICAGO, as the Administrative Agent and
a Lender

By: _________________________
Names: ______________________
Title: ________________________

BANK OF MONTREAL, as Syndication Agent
and a Lender

By: _________________________
Names: ______________________
Title: ________________________

47
<PAGE> 48
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Documentation Agent and a
Lender

By: _________________________
Names: ______________________
Title: ________________________

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender

By: _________________________
Names: ______________________
Title: ________________________

THE NORTHERN TRUST COMPANY, as a Lender

By: _________________________
Names: ______________________
Title: ________________________

NATIONAL CITY BANK OF INDIANA, as a Lender

By: _________________________
Names: ______________________
Title: ________________________

FIFTH THIRD BANK INDIANA, as a Lender

By: _________________________
Names: ______________________
Title: ________________________

<PAGE> 1
Exhibit 10.5

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is made and
dated as of the 16th day of November, 1998, by and among CENTRAL NEWSPAPERS,
INC., an Indiana corporation (the "Company"), the Lenders under the Credit
Agreement referred to below (as the term "Lenders" and capitalized terms not
otherwise defined herein are defined in the Credit Agreement), and THE FIRST
NATIONAL BANK OF CHICAGO, in its capacity as Administrative Agent for the
Lenders.

RECITALS

A. Pursuant to that certain Credit Agreement dated as of November 10,
1998, by and among the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Lenders and the Company (as amended from time to time,
the "Credit Agreement"), the Lenders agreed to extend credit to the Company on
the terms and subject to the conditions set forth therein.

B. The Company has requested the Administrative Agent and the Lenders,
and the Administrative Agent and the Lenders have agreed, to amend the Credit
Agreement as more particularly described below.

NOW, THEREFORE, in consideration of the foregoing Recitals and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agrees as follows:

AGREEMENT

1. Modification of Financial Covenant. To reflect the agreement of the
Administrative Agent and the Lenders to modify the minimum consolidated net
worth requirement contained in the Credit Agreement, Paragraph 6.18.1 of the
Credit Agreement is hereby amended to read in its entirety as follows:

"6.18.1. Minimum Consolidated Net Worth. The Borrower will maintain,
as at the last day of each fiscal quarter, a minimum Consolidated Net
Worth equal to: (i) $140,000,000, plus (ii) the sum of: (a) commencing
with the fiscal quarter ending March 31, 1999 and without deduction for
the loss in any fiscal quarter, 50% of Consolidated Net Income for such
fiscal quarter (if positive), plus (b) 80% of the proceeds (net of
customary and reasonable transaction costs) of all equity issuances of the
Borrower and its consolidated Subsidiaries occurring after June 28, 1998."

2. Reaffirmation by Guarantors. By executing this Amendment each of the
Guarantors hereby affirms and agrees that (a) the execution and delivery by the
Company of and the performance of its obligations under this Amendment shall not
in any way amend, impair, invalidate or otherwise affect any of the obligations
of such Guarantor or the rights of the Administrative Agent and the Lenders
under the Credit Guaranty and Guarantor Subordination Agreement executed by such
Guarantor or any other document or instrument made or given by such Guarantor in
connection therewith, (b) the term "Guaranteed Obligations" as used in each
Credit Agreement and the term "Senior Obligations" as used in the Guarantor
Subordination

<PAGE> 2

Agreement includes, without limitation, the Obligations of the Company under the
Credit Agreement as amended hereby and (c) each Credit Guaranty and Guarantor
Subordination Agreement remains in full force and effect.

3. Effective Date. This Amendment shall be effective as of the date that
the Administrative Agent receives:

(a) Duly executed signature pages for this Amendment from each party
hereto, including, without limitation, the Guarantors; and

(b) Such corporate resolutions, incumbency certificates and other
authorizing documentation as the Administrative Agent or any Lender may require.

4. Representations and Warranties. The Company and each Guarantor hereby
represents and warrants to the Administrative Agent and the Lenders as follows:

(a) Such Person has the corporate power and authority and the legal
right to execute, deliver and perform this Amendment and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Amendment. This Amendment has been duly executed and delivered on behalf of such
Person and constitutes the legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with its terms.

(b) At and as of the date of execution hereof and at and as of the
effective date of this Amendment and both prior to and after giving effect
hereto: (1) the representations and warranties of such Person contained in the
Loan Documents are accurate and complete in all respects, and (2) there has not
occurred an Event of Default or Potential Default.

5. No Other Amendment or Waiver. Except as expressly set forth herein,
the Loan Documents shall remain in full force and effect as written and amended
to date.

6. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.

CENTRAL NEWSPAPERS, INC.,
as Indiana corporation

By: /s/ Thomas K. MacGillivray
------------------------------------
Names: Thomas K. MacGillivray
Title: Vice President and Chief
Financial Officer

2
<PAGE> 3

THE FIRST NATIONAL BANK OF CHICAGO,
as the Administrative Agent and a Lender

By: /s/ Mark A. Isley
--------------------------------------
Names: Mark A. Isley
-------------------------------
Title: First Vice President
-------------------------------

BANK OF MONTREAL, as a Lender

By: /s/ W. T. Calder
--------------------------------------
Names: W. T. Calder
-------------------------------
Title: Managing Director
-------------------------------

NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as a Lender

By: /s/ Mary D. Falck
--------------------------------------
Names: Mary D. Falck
-------------------------------
Title: Vice President
-------------------------------

BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender

By: /s/ George V. Hausler
--------------------------------------
Names: George V. Hausler
-------------------------------
Title: Vice President
-------------------------------

THE NORTHERN TRUST COMPANY, as a Lender

By: /s/ Candelario Martinez
--------------------------------------
Names: Candelario Martinez
-------------------------------
Title: Vice President
-------------------------------

<PAGE> 4

NATIONAL CITY BANK OF INDIANA,
as a Lender

By: /s/ Wm. E. Kennedy
--------------------------------------
Names: William E. Kennedy
-------------------------------
Title: Vice President
-------------------------------

FIFTH THIRD BANK, INDIANA, as a Lender

By: /s/ J. Daniel Philpott
--------------------------------------
Names: J. Daniel Philpott
-------------------------------
Title: Vice President
-------------------------------

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of Amendment No. 1 to this Registration Statement on Form S-3
of our report dated February 2, 1998, which appears on page 23 of the 1997
Annual Report to Shareholders of Central Newspapers, Inc. ("the Company") which
is incorporated by reference in the Company's Annual Report on Form 10-K for the
year ended December 28, 1997. We also consent to the incorporation by reference
of our report on the Financial Statement Schedule, which appears on page 17 of
such Annual Report on Form 10-K. We also consent to the references to us under
the headings "Experts" and "Selected Consolidated Financial Data" in such
Prospectus. However, it should be noted that PricewaterhouseCoopers LLP has not
prepared or certified such "Selected Consolidated Financial Data."

PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Phoenix, Arizona

December 7, 1998

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the use of our report dated February 3, 1997 on the
consolidated financial statements of Central Newspapers, Inc. and to the
reference to our Firm under the captions "Experts" and "Selected Consolidated
Financial Data" in this Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-67077) and to the incorporation by reference therein of our report
dated February 3, 1997, with respect to the consolidated financial statements of
Central Newspapers, Inc. as of December 29, 1996 and for each of the two fiscal
years in the period ended December 29, 1996, included in its Annual Report on
Form 10-K for the fiscal year ended December 28, 1997.

/s/ Olive LLP

- ------------------------------

Olive LLP

Indianapolis, Indiana

December 7, 1998