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EXHIBIT 10.9

 

EXECUTION VERSION

 

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PULITZER INC.

 

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GUARANTY AGREEMENT

 

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DATED AS OF MAY 1, 2000

 

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1.      DEFINED TERMS; ACCOUNTING MATTERS

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1.1.            Defined Terms

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1.2.            Accounting and Legal Principles, Terms and Determinations

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2.      GUARANTY

   6

2.1.            Guaranty

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2.2.            Guaranty of Payment and Performance

   6

2.3.            General Provisions Relating to the Guaranty

   7

3.      REPRESENTATIONS AND WARRANTIES

   11

3.1.            Organization and Qualification; Due Authorization

   11

3.2.            Financial Statements

   12

3.3.            Actions Pending

   12

3.4.            Outstanding Debt

   12

3.5.            Title to Properties

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3.6.            Taxes

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3.7.            Conflicting Agreements and Other Matters

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3.8.            ERISA

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3.9.            Governmental Consent

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3.10.          Disclosure

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3.11.          Formation/Contribution Documents

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3.12.          Solvency

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3.13.          Representations and Warranties in Formation/Contribution
Documents

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4.      AFFIRMATIVE COVENANTS

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4.1.            Financial Statements

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4.2.            Inspection of Properties

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4.3.            Covenant to Secure Notes Equally

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4.4.            Business

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4.5.            Compliance with Laws and Regulations

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4.6.            Patents, Trade Marks and Trade Names

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4.7.            Payment of Taxes and Other Claims

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4.8.            ERISA Compliance

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5.      NEGATIVE COVENANTS

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5.1.            Consolidated Debt to EBITDA and Consolidated Net Worth
Requirements.

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5.2.            Liens

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5.3.            Priority Debt

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5.4.            Loans, Advances and Investments

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5.5.            Sale or Disposition of Capital Assets

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5.6.            Sale and Lease-Back

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5.7.            Merger

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5.8.            Transactions With Affiliates

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5.9.            Sale of Stock and Debt of Subsidiaries

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5.10.          Issuance of Stock by Subsidiaries

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5.11.          Limitation on Certain Restrictive Agreements

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5.12.          Conforming Debt Agreement Changes

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6.      EVENTS OF DEFAULT; REMEDIES

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6.1.            Events of Default

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6.2.            Remedies

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7.      MISCELLANEOUS

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7.1.            Survival of Representations and Warranties; Entire Agreement

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7.2.            Consents to Amendments

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7.3.            Binding Effect, etc

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7.4.            Notices

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7.5.            Severability

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7.6.            Successors and Assigns

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7.7.            Independence of Covenants

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7.8.            Satisfaction Requirement

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7.9.            Counterparts

   29

7.10.          Governing Law

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7.11.          Consent to Jurisdiction; Waiver of Immunities

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7.12.          WAIVER OF JURY TRIAL

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SCHEDULE 5.4 - EXISTING INVESTMENTS

    

EXHIBIT A - FORM OF COMPLIANCE CERTIFICATE

    

 

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GUARANTY AGREEMENT

 

THIS GUARANTY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “GUARANTY”) is made as of May 1, 2000 by
PULITZER INC., a Delaware corporation (the “GUARANTOR”), in favor of the holders
from time to time of the Notes issued under the below-described Note Agreement.

 

RECITALS

 

A. St. Louis Post-Dispatch LLC, a Delaware limited liability company (the
“COMPANY”), has entered into that certain Note Agreement dated as of even date
herewith (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “NOTE AGREEMENT”) with the several Purchasers
listed in the Purchaser Schedule attached thereto, pursuant to which the Company
has agreed to sell and such Purchasers have agreed to purchase $306,000,000
aggregate principal amount of the Company’s 8.05% Senior Notes due April 28,
2009 (together with any other notes issued in substitution or exchange therefor
pursuant to the terms of the Note Agreement, the “NOTES”).

 

B. Upon consummation of the Formation/Contribution Transactions (as defined in
the Note Agreement), the Company will be a Subsidiary of the Guarantor.

 

C. It is a condition precedent to the obligation of each Purchaser to purchase
the Notes to be purchased by it under the Note Agreement that this Guaranty
shall have been executed and delivered by the Guarantor and shall be in full
force and effect.

 

D. The Board of Directors of the Guarantor has determined that the Guarantor’s
execution, delivery and performance of this Guaranty may reasonably be expected
to benefit the Guarantor, directly or indirectly, and to be in the best
interests of the Guarantor.

 

NOW THEREFORE, in order to induce, and in consideration of, the purchase of the
Notes pursuant to the Note Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the
Guarantor hereby covenants and agrees with, and represents and warrants to each
holder of Notes, as follows:

 

1. DEFINED TERMS; ACCOUNTING MATTERS

 

1.1. DEFINED TERMS. All capitalized terms used herein, unless specifically
otherwise defined, shall have the meanings ascribed to them in the Note
Agreement. In addition, the following terms shall have the meanings specified
with respect thereto below (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):

 

“AFFILIATE” shall mean any Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, the Guarantor, except a
Subsidiary. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.

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“BANKRUPTCY LAW” shall have the meaning specified in clause (vi) of Section 6.

 

“CAPITALIZATION” shall mean Consolidated Net Worth plus Consolidated Debt.

 

“CAPITALIZED LEASE OBLIGATION” shall mean any rental obligation which, under
generally accepted accounting principles, is or will be required to be
capitalized on the books of the Guarantor or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.

 

“CLAIMS” shall have the meaning specified in Section 4.7 of this Guaranty.

 

“COMPANY” shall have the meaning specified in Recital A of this Guaranty.

 

“CONSOLIDATED DEBT” shall mean, with respect to the Guarantor and its
Subsidiaries on any date of determination, total Debt of the Guarantor and its
Subsidiaries, determined on a consolidated basis in accordance with generally
accepted accounting principles.

 

“CONSOLIDATED INTEREST EXPENSE” shall mean, with respect to any period, the sum
(without duplication) of the following (in each case, eliminating all offsetting
debits and credits between the Guarantor and its Subsidiaries and all other
items required to be eliminated in the course of the preparation of consolidated
financial statements of the Guarantor and its Subsidiaries in accordance with
generally accepted accounting principles): (i) all interest and prepayment
charges in respect of Debt of the Guarantor and its Subsidiaries (including
imputed interest in respect of Capitalized Lease obligations and net costs of
any interest rate or currency hedging or similar arrangements) deducted in
determining consolidated net income for such period, together with all interest
capitalized or deferred during such period and not deducted in determining
consolidated net income for such period, and (ii) all debt discount and expense
amortized or required to be amortized in the determination of consolidated net
income for such period.

 

“CONSOLIDATED NET EARNINGS” shall mean, with respect to any period, consolidated
gross revenues of the Guarantor and its Subsidiaries less all operating and
non-operating expenses of the Guarantor and its Subsidiaries including all
charges of a property character (including current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are included in gross
revenues, and current additions to reserves), but not including in gross
revenues any gains (net of expenses and taxes applicable thereto) in excess of
losses resulting from the sale, conversion or other disposition of capital
assets (i.e., assets other than current assets) in excess of an aggregate amount
of $5,000,000 in any one year, any gains resulting from the write-up of assets,
any equity of the Guarantor or any Subsidiary in the unremitted earnings of any
corporation which is not a Subsidiary or any earnings of any Person

 

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acquired by the Guarantor or any Subsidiary through purchase, merger or
consolidation or otherwise for any year prior to the year of acquisition, or any
deferred credit representing the excess of equity in any Subsidiary at the date
of acquisition over the cost of investment in such Subsidiary; all determined in
accordance with generally accepted accounting principles.

 

“CONSOLIDATED NET WORTH” shall mean, at any time, the total amount of total
assets of the Guarantor and its Subsidiaries over total liabilities of the
Guarantor and its Subsidiaries as of the last day of the fiscal quarter most
recently then ended, determined on a consolidated basis in accordance with
generally accepted accounting principles.

 

“CONSOLIDATED TOTAL ASSETS” shall mean, on any date of determination, the total
assets of the Guarantor and its Subsidiaries, all consolidated in accordance
with generally accepted accounting principles.

 

“DEBT” shall mean and include without duplication:

 

(i) all obligations for borrowed money or obligations represented by notes
payable and drafts accepted representing extensions of credit, all obligations
evidenced by bonds, debentures, notes or other similar instruments and all
obligations upon which interest charges are customarily paid;

 

(ii) Capitalized Lease Obligations;

 

(iii) indebtedness secured by any Lien existing on property owned by the
Guarantor or any Subsidiary subject to such Lien, whether or not the
indebtedness secured thereby shall have been assumed by the Guarantor or any
Subsidiary;

 

(iv) guarantees, endorsements (other than endorsements of negotiable instruments
for collection in the ordinary course of business) and other contingent
liabilities (whether direct or indirect) in connection with the obligations,
stock or dividends of any Person;

 

(v) obligations under any contract providing for the making of loans, advances
or capital contributions to any Person, or for the purchase of any property from
any Person, in each case in order to enable such Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay debt,
dividends or expenses;

 

(vi) obligations under any contract for the purchase of materials, supplies or
other property from any Person if such contract (or any related document)
requires that payment for such materials, supplies or other property shall be
made regardless of whether or not delivery of such materials, supplies or other
property is ever made or tendered;

 

(vii) obligations under any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation

 

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to make payments thereunder is absolute and unconditional under conditions not
customarily found in commercial leases then in general use or requires that the
lessee purchase or otherwise acquire securities or obligations of the lessor;

 

(viii) obligations under any contract for the sale or use of materials, supplies
or other property, or the rendering of services, if such contract (or any
related document) requires that payment for such materials, supplies or other
property, or the use thereof, or payment for such services, shall be
subordinated to any indebtedness (of the purchaser or user of such materials,
supplies or other property or the Person entitled to the benefit of such
services) owed or to be owed to any Person; and

 

(ix) obligations under any other contract which, in economic effect, is
substantially equivalent to a guarantee; provided, however, that Debt shall not
include (a) loans, advances and capital contributions by the Guarantor to any
Subsidiary or by any Subsidiary to the Guarantor or another Subsidiary or a
guarantee of the obligations of a Subsidiary under an executory contract to
purchase or sell a business or (b) any amounts which may be due in connection
with the “Gross-Up Transactions” described in Note 15 of the audited
consolidated financial statements of the Guarantor and its Subsidiaries for the
fiscal year ended December 31, 1999, as incorporated in the Guarantor’s annual
report on Form 10-K filed with the Securities and Exchange Commission.

 

“DEFAULT” shall mean any of the events specified in Section 6.1, whether or not
any requirement for such event to become an Event of Default has been satisfied.

 

“EBITDA” means, with respect to the Guarantor and its Subsidiaries for any
period, the sum of (i) Consolidated Net Earnings plus (ii) to the extent
deducted in the determination of Consolidated Net Earnings, (a) all provisions
for federal, state and other income tax, (b) Consolidated Interest Expense and
(c) provisions for depreciation and amortization, provided however, that any
acquisition or disposition by the Guarantor or any Subsidiary during any period
of all of the capital stock of (or other equity interests in) any Person, or of
all or substantially all of the assets of any Person, shall in each case be
reflected and given effect in EBITDA as if such acquisition or disposition
occurred on the first day of such period, so long as, in the case of any such
acquisition, the Guarantor shall have delivered or caused to be delivered to
each holder of Notes financial information, set forth within audited financial
statements regarding such Person, disclosing the prior operating results of such
Person, and provided further, that, for purposes of calculating EBITDA, the
consummation of the Formation/Contribution Transactions will be taken into
account by including, on a pro forma basis, Herald’s share of EBITDA for periods
prior to the Date of Closing, as derived from the “St. Louis Agency adjustment”
reflected in the consolidated financial statements of the Guarantor and its
Subsidiaries incorporated in annual reports of the Guarantor on Form 10-K or
quarterly reports of the Guarantor on Form 10-Q, as the case may be, for the
applicable periods, filed with the Securities and Exchange Commission.

 

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“ERISA AFFILIATE” shall mean any Person which is a member of the same controlled
group of Persons as the Guarantor within the meaning of section 414(b) of the
Code, or any trade or business which is under common control with the Guarantor
within the meaning of section 414(c) of the Code.

 

“EVENT OF DEFAULT” shall mean any of the events specified in Section 6.1,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act.

 

“GUARANTEED OBLIGATIONS” shall have the meaning specified in Section 2.1 of this
Guaranty.

 

“GUARANTOR” shall have the meaning specified in the introductory paragraph of
this Guaranty.

 

“GUARANTY” shall have the meaning specified in the introductory paragraph
hereof.

 

“NOTE AGREEMENT” shall have the meaning specified in Recital A of this Guaranty.

 

“NOTES” shall have the meaning specified in Recital A of this Guaranty.

 

“PRIORITY DEBT” shall mean, with respect to the Guarantor and its Subsidiaries
on any date of determination, the aggregate amount of all Debt of the Guarantor
secured by a Lien plus all secured and unsecured Debt of all Subsidiaries
(excluding Debt represented by the Notes).

 

“SUBSIDIARY” shall mean, as to the Guarantor, the Company and any other
corporation, limited liability company, association or other business entity
organized under the laws of any state of the United States of America, Canada or
any province of Canada which conducts the major portion of its business in and
makes the major portion of its sales to Persons located in the United States of
America or Canada, and all of the stock of every class of which (except
directors’ qualifying shares) or other equity interests in which shall, at the
time as of which any determination is being made, be owned by the Guarantor
either directly or through Subsidiaries.

 

1.2. ACCOUNTING AND LEGAL PRINCIPLES, TERMS AND DETERMINATIONS. All references
in this Guaranty to “GENERALLY ACCEPTED ACCOUNTING PRINCIPLES” shall mean
generally accepted accounting principles, as in effect in the United States from
time to time. Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all unaudited financial statements and
certificates and reports as to financial matters required to be furnished
hereunder shall be prepared, in accordance with generally accepted accounting
principles applied on a basis consistent with the most recent audited
consolidated financial statements of the Guarantor and its Subsidiaries
delivered pursuant to clause (i) or (ii) of Section 4.1 or, if no such
statements have been so delivered, the most recent audited financial statements
referred to in Section 3.2. Any reference herein to any specific citation,
section or

 

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form of law, statute, rule or regulation shall refer to such new, replacement or
analogous citation, section or form should citation, section or form be
modified, amended or replaced.

 

2. GUARANTY

 

2.1. GUARANTY. The Guarantor hereby irrevocably, absolutely and unconditionally
guarantees unto each holder of Notes (i) the full and prompt payment of the
principal of, Yield-Maintenance Amount, if any, interest and all other amounts
due with respect to the Notes from time to time outstanding, as and when such
amounts shall become due and payable, whether by lapse of time, upon redemption,
prepayment or purchase, by extension or by acceleration or declaration or
otherwise (including (to the extent legally enforceable) interest due on overdue
payments of principal, Yield-Maintenance Amount, if any, or interest at the rate
set forth in the Notes or any other amounts due thereunder) in coin or currency
of the United States of America which at the time of payment or demand therefor
shall be legal tender for the payment of public and private debts, (ii) the full
and prompt payment, performance and observance by the Company of all other
obligations, covenants, conditions and agreements contained in the Note
Agreement or any other instrument or agreement entered into in connection
therewith or otherwise relating thereto, and (iii) the full and prompt payment,
upon demand by any holder of Notes of all costs and expenses (including
reasonable attorneys’ fees), if any, as shall have been expended or incurred in
the protection or enforcement of any right or privilege under the Notes, the
Note Agreement or any other instrument or agreement entered into in connection
therewith or relating thereto or in the protection or enforcement of any rights,
privileges or liabilities under this Guaranty or in any consultation or action
in connection therewith or herewith (all such obligations, covenants, conditions
and agreements described in the foregoing clauses (i), (ii) and (iii) being
hereinafter collectively referred to as the “GUARANTEED OBLIGATIONS”).

 

2.2. GUARANTY OF PAYMENT AND PERFORMANCE. This is a guaranty of payment and
performance and not a guaranty of collection, and the Guarantor hereby waives
any right to require that any action on or in respect of any Note, the Note
Agreement or any instrument or agreement relating to the Guaranteed Obligations
be brought against the Company or any other Person or that resort be had to any
direct or indirect security for the Notes or for this Guaranty or any other
remedy. Any holder of Notes may, at its option, proceed hereunder against the
Guarantor in the first instance to collect monies when due, the payment of which
is guaranteed hereby, without first proceeding against the Company or any other
Person and without first resorting to any direct or indirect security for the
Notes, or for this Guaranty or any other remedy. The liability of the Guarantor
hereunder shall in no way be affected or impaired by any acceptance by any
holder of Notes of any direct or indirect security for, or other guaranties of,
the Guaranteed Obligations or by any failure, delay, neglect or omission by any
holder of Notes to realize upon or protect any of the Guaranteed Obligations or
any Notes or other instruments evidencing the same or any direct or indirect
security therefor or by any approval, consent, waiver, or other action taken or
omitted to be taken by any such holder. The Guarantor (i) acknowledges that
certain obligations of the Company under the Note Agreement will survive the
payment or transfer of any Note and the termination of the Note Agreement, and
(ii) agrees that the obligations of the Guarantor hereunder with respect to such
surviving obligations shall also survive the payment or transfer of any Note and
the termination of the Note Agreement.

 

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2.3. GENERAL PROVISIONS RELATING TO THE GUARANTY.

 

(i) The Guarantor hereby consents and agrees that any holder or holders of Notes
from time to time, with or without any further notice to or assent from the
Guarantor may, without in any manner affecting the liability of the Guarantor
under this Guaranty, and upon such terms and conditions as any such holder or
holders may deem advisable:

 

(a) extend in whole or in part (by renewal or otherwise), modify, change,
compromise, release or extend the duration of the time for the payment or
performance of any of the Guaranteed Obligations, or waive any default with
respect thereto, or waive, modify, amend or change any provision of the Note
Agreement, the Notes or any other instrument or agreement entered into in
connection therewith or otherwise relating thereto;

 

(b) sell, release, surrender, modify, impair, exchange or substitute any and all
property, of any nature and from whomsoever received, held by, or for the
benefit of, any such holder as direct or indirect security for the payment or
performance of any of the Guaranteed Obligations; or

 

(c) settle, adjust or compromise any claim of the Company against any other
Person secondarily or otherwise liable for any of the Guaranteed Obligations.

 

The Guarantor hereby ratifies and confirms any such extension, renewal, change,
sale, release, waiver, surrender, exchange, modification, amendment, impairment,
substitution, settlement, adjustment or compromise and that the same shall be
binding upon it, and hereby waives any and all defenses, counterclaims or
offsets which it might or could have by reason thereof, it being understood that
the Guarantor shall at all times be bound by this Guaranty and remain liable
hereunder.

 

(ii) The Guarantor hereby waives: (a) notice of acceptance of this Guaranty by
the holders of Notes or of the creation, renewal or accrual of any liability of
the Company, present or future, or of the reliance of such holders upon this
Guaranty (it being understood that all Guaranteed Obligations shall conclusively
be presumed to have been created, contracted or incurred in reliance upon the
execution of this Guaranty); (b) demand of payment by any holder of Notes from
the Company or any other Person indebted in any manner on or for any of the
Guaranteed Obligations hereby guaranteed; and (c) presentment for the payment by
any holder of Notes or any other Person of the Notes or any other instrument,
protest thereof and notice of its dishonor to any party thereto and to the
Guarantor. The obligations of the Guarantor under this Guaranty and the rights
of any holder of Notes to enforce such obligations by any proceedings, whether
by action at law, suit in equity or otherwise, shall not be subject to any
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any claim of any character whatsoever or otherwise and shall not be subject to
any defense, setoff, counterclaim, recoupment or termination whatsoever.

 

(iii) The obligations of the Guarantor hereunder shall be binding upon the
Guarantor and its successors and assigns, and shall remain in full force and
effect irrespective of:

 

(a) the genuineness, validity, regularity or enforceability of the Notes, the
Note Agreement, this Guaranty or any Notes or any other instrument or agreement
entered into in connection therewith or otherwise relating thereto, or any of
the terms of any thereof, the continuance of any obligation on the part of the
Company or any other Person on the Notes or under the Note Agreement or any such
other instrument or agreement, or the power or authority or the lack of power or
authority of the Company to execute and deliver the Note Agreement, the Notes or
any such other instrument or agreement, or to perform any of its obligations
thereunder or the existence or continuance of the Company or any other Person as
a legal entity;

 

(b) any default, failure or delay, willful or otherwise, in the performance by
the Company or any other Person of any obligations of any kind or character
whatsoever of the Company or any other Person (including, without limitation,
the Guaranteed Obligations);

 

(c) any creditors’ rights, bankruptcy, receivership or other insolvency
proceeding of the Company or any other Person or in respect of the property of
the Company or any other Person or any merger, consolidation, reorganization,
dissolution, liquidation, the sale of all or substantially all of the assets of
or winding up of the Company or any other Person;

 

(d) impossibility or illegality of performance on the part of the Company or any
other Person of its obligations under the Notes, the Note Agreement, this
Guaranty or any other Notes or any other instrument or agreement entered into in
connection therewith or otherwise relating thereto;

 

(e) in respect of the Company or any other Person, any change of circumstances,
whether or not foreseen or foreseeable, whether or not imputable to the Company
or any other Person, or other impossibility of performance through fire,
explosion, accident, labor disturbance, floods, droughts, embargoes, wars
(whether or not declared), civil commotion, acts of God or the public enemy,
delays or failure of suppliers or carriers, inability to obtain materials,
action of any Federal or state regulatory body or agency, change of law or any
other causes affecting performance, or any other force majeure, whether or not
beyond the control of the Company or any other Person and whether or not of the
kind hereinbefore specified;

 

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(f) any attachment, claim, demand, charge, lien, order, process, encumbrance or
any other happening or event or reason, similar or dissimilar to the foregoing,
or any withholding or diminution at the source, by reason of any taxes,
assessments, expenses, indebtedness, obligations or liabilities of any
character, foreseen or unforeseen, and whether or not valid, incurred by or
against any Person, or any claims, demands, charges or liens of any nature,
foreseen or unforeseen, incurred by any Person, or against any sums payable
under this Guaranty, so that such sums would be rendered inadequate or would be
unavailable to make the payments herein provided;

 

(g) any order, judgment, decree, ruling or regulation (whether or not valid) of
any court of any nation or of any political subdivision thereof or any body,
agency, department, official or administrative or regulatory agency of any
thereof or any other action, happening, event or reason whatsoever which shall
delay, interfere with, hinder or prevent, or in any way adversely affect, the
payment or performance by any party of any of the Guaranteed Obligations;

 

(h) any failure or lack of diligence in collection or protection, failure in
presentment or demand for payment, protest, notice of protest, notice of default
and of nonpayment, any failure to give notice to the Guarantor of failure of
Company or any other Person to keep and perform any of the Guaranteed
Obligations, or failure to resort for payment to the Company or to any other
Person or to any other guaranty or to any property, security, Liens or other
rights or remedies;

 

(i) the acceptance of any additional security or other guaranty, the advance of
additional money to the Company or any other Person, the renewal or extension of
the Notes or amendments, modifications, consents or waivers with respect to the
Notes, the Note Agreement or any other instrument or agreement entered into in
connection therewith or otherwise relating thereto, or the sale, release,
substitution or exchange of any security for the Notes;

 

(j) any defense whatsoever that the Company or any other Person might have to
the payment of the Notes (principal, Yield-Maintenance Amount, if any, or
interest or any other amounts due thereunder), other than payment in cash
thereof, or to the payment, performance or observance of any of the other
Guaranteed Obligations, whether through the satisfaction or purported
satisfaction by the Company or any other Person of its debts due to any cause
such as bankruptcy, insolvency, receivership, merger, consolidation,
reorganization, dissolution, liquidation, winding up or otherwise;

 

(k) any act or failure to act with regard to the Notes, the Note Agreement, this
Guaranty or any other instrument or agreement entered into in connection
therewith or otherwise relating thereto, or anything which might vary the risk
of the Guarantor; or

 

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(l) any other circumstance (other than payment and performance in full of the
Guaranteed Obligations) which might otherwise constitute a defense available to,
or a discharge of, the Guarantor in respect of its obligations under this
Guaranty;

 

provided, that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Guaranty that the obligations of the Guarantor shall be absolute and
unconditional and shall not be discharged, impaired or varied except by the full
and prompt payment and performance of all of the Guaranteed Obligations. Without
limiting the foregoing, it is understood that repeated and successive demands
may be made and recoveries may be had hereunder as and when, from time to time,
the Company or any other Person shall default under the terms of the Notes, the
Note Agreement or Notes or any other instrument or agreement entered into in
connection therewith or otherwise relating thereto and that notwithstanding
recovery hereunder for or in respect of any given default or defaults by the
Company or any other Person under the Notes, the Note Agreement or any such
other instrument or agreement, this Guaranty shall remain in full force and
effect and shall apply to each and every subsequent default.

 

(iv) All rights of any holder of Notes may be transferred or assigned at any
time and shall be considered to be transferred or assigned at any time or from
time to time upon the transfer of such Note whether with or without the consent
of or notice to the Guarantor under this Guaranty or to the Company.

 

(v) The Guarantor hereby subordinates to the rights of the holders of Notes
under the Note Agreement, the Notes or any other instrument or agreement entered
into in connection therewith or otherwise relating thereto, and agrees to defer
any assertion, until such time as the Guaranteed Obligations have been
indefeasibly paid and performed in full, of any claim or other rights that it
may now or hereafter acquire against the Company or any other Person that arise
from the existence, payment, performance or enforcement of the Guarantor’s
obligations under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of any holder or holders of Notes
against the Company or any other Person, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company or any other
Person, directly or indirectly, in cash or other property or by setoff or in any
other manner, payment or security on account of such claim, remedy or right. If
any amount shall be paid to the Guarantor in violation of the preceding sentence
at any time prior to the payment and performance in full of all the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the holders
of Notes and shall forthwith be paid to such holders to be credited and applied
to the Guaranteed Obligations, whether matured or unmatured.

 

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(vi) The Guarantor agrees that to the extent the Company or any other Person
makes any payment on any Note or in respect of any of the other Guaranteed
Obligations, which payment or any part thereof is subsequently invalidated,
voided, declared to be fraudulent or preferential, set aside, recovered,
rescinded or is required to be retained by or repaid to a trustee, receiver, or
any other Person under any bankruptcy code, common law, or equitable cause, then
and to the extent of such payment, the obligation or the part thereof intended
to be satisfied shall be revived and continued in full force and effect with
respect to the Guarantor’s obligations hereunder, as if said payment had not
been made. The liability of the Guarantor hereunder shall not be reduced or
discharged, in whole or in part, by any payment to any holder of Notes from any
source that is thereafter paid, returned or refunded in whole or in part by
reason of the assertion of a claim of any kind relating thereto, including, but
not limited to, any claim for breach of contract, breach of warranty,
preference, illegality, invalidity, or fraud asserted by any account debtor or
by any other Person.

 

(vii) The holders of Notes shall have no obligation to (a) to marshal any assets
in favor of the Guarantor or in payment of any or all of the Guaranteed
Obligations or (b) pursue any other remedy that the Guarantor may or may not be
able to pursue itself and that may lighten the Guarantor’s burden, any right to
which the Guarantor hereby expressly waives.

 

3. REPRESENTATIONS AND WARRANTIES

 

The Guarantor represents, covenants and warrants as follows:

 

3.1. ORGANIZATION AND QUALIFICATION; DUE AUTHORIZATION. The Guarantor is a
corporation duly organized and existing in good standing under the laws of the
State of Delaware. The Company and each other Subsidiary (other than a
Subsidiary of the Company that is not a Material Subsidiary) is duly organized
and existing in good standing under the laws of the jurisdiction in which it is
incorporated or otherwise organized. The Guarantor, the Company and each other
Subsidiary (other than a Subsidiary of the Company that is not a Material
Subsidiary) has the corporate or limited liability company power, as applicable,
to own its respective property and to carry on its respective business as now
being conducted, and the Guarantor, the Company and each other Subsidiary (other
than a Subsidiary of the Company that is not a Material Subsidiary) is duly
qualified as a foreign corporation or limited liability company, as applicable,
to do business and in good standing in every jurisdiction in which the nature of
the respective business conducted or property owned by it makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the Guarantor and its Subsidiaries taken as a whole.
The Guarantor has the corporate power and authority to execute and deliver this
Guaranty and to perform the provisions hereof. The execution, delivery and
performance by the Guarantor of this Guaranty has been duly authorized by all
necessary corporate action.

 

3.2. FINANCIAL STATEMENTS. The Guarantor has furnished each Purchaser with the
following financial statements, identified by a principal financial officer of
the Guarantor: a consolidated balance sheet of the Guarantor (or its
predecessor, Pulitzer Publishing Company)

 

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and its Subsidiaries as at December 31 in each of the years 1997 to 1999,
inclusive, and statements of consolidated income, financial position and cash
flows of the Guarantor (or its predecessor, Pulitzer Publishing Company) and its
Subsidiaries for each such year, all audited by Deloitte & Touche L.L.P. Such
financial statements (including any related schedules and/or notes) are true and
correct in all material respects, have been prepared in accordance with
generally accepted accounting principles consistently followed throughout the
periods involved and show all liabilities, direct and contingent, of the
Guarantor (or its predecessor, Pulitzer Publishing Company) and its Subsidiaries
required to be shown in accordance with such principles. The balance sheets
fairly present the condition of the Guarantor (or its predecessor, Pulitzer
Publishing Company) and its Subsidiaries as at the dates thereof, and the
statements of income and statements of financial position and cash flows fairly
present the results of the operations of the Guarantor (or its predecessor,
Pulitzer Publishing Company) and its Subsidiaries for the periods indicated.
There has been no material adverse change in the business, condition or
operations (financial or otherwise) of the Guarantor and its Subsidiaries taken
as a whole since December 31, 1999.

 

3.3. ACTIONS PENDING. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Guarantor, threatened against the Guarantor
or any of its Subsidiaries, or any properties or rights of the Guarantor or any
of its Subsidiaries, by or before any court, arbitrator or administrative or
governmental body which might result in any material adverse change in the
business, condition or operations of the Guarantor and its Subsidiaries taken as
a whole. There is no action, suit, investigation or proceeding pending or
threatened against the Guarantor or any of its Subsidiaries which purports to
affect the validity or enforceability of this Guaranty, the Note Agreement or
any Note.

 

3.4. OUTSTANDING DEBT. Neither the Guarantor nor any of its Subsidiaries has
outstanding any Debt except as permitted by Section 5.1 and Section 5.3 and as
set forth in the Guarantor’s consolidated financial statements for the year
ended December 31, 1999. There exists no default under the provisions of any
instrument evidencing such Debt or of any agreement relating thereto.

 

3.5. TITLE TO PROPERTIES. The Guarantor has and each of its Subsidiaries has
good and marketable title to its respective real properties (other than
properties which it leases) and good title to all of its other respective
properties and assets, including the properties and assets reflected in the
consolidated balance sheet of the Guarantor as at December 31, 1999 referred to
in Section 3.2 (other than properties and assets disposed of in the ordinary
course of business), including all properties and assets of the Guarantor to be
contributed to the Company in the Formation/Contribution Transactions, subject
to no Lien of any kind except Liens permitted by Section 5.2. All leases
necessary in any material respect for the conduct of the respective businesses
of the Guarantor and its Subsidiaries are valid and subsisting and are in full
force and effect, subject to Liens permitted by Section 5.2.

 

3.6. TAXES. The Guarantor has and each of its Subsidiaries has filed all
Federal, state and other income tax returns which, to the best knowledge of the
officers of the Guarantor, are required to be filed and each has paid all taxes
as shown on such returns and on all assessments received by it to the extent
that such taxes have become due, except such taxes as are being

 

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contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with generally accepted accounting
principles. Federal income tax returns of the Guarantor and its Subsidiaries
have been examined and reported on by the taxing authorities or closed by
applicable statutes and satisfied for all fiscal years prior to and including
the fiscal year ended December 31, 1995.

 

3.7. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the Guarantor nor any of
its Subsidiaries is a party to any contract or agreement or subject to any
charter or other limited liability company or corporate restriction which
materially and adversely affects the business, property or assets, or financial
condition of the Guarantor and its Subsidiaries, taken as a whole. Neither the
execution nor delivery of this Guaranty, the Note Agreement, the Notes or the
Formation/Contribution Documents, nor the offering, issuance and sale of the
Notes, nor fulfillment of nor compliance with the terms and provisions hereof
and of the Note Agreement, the Notes and the Formation/Contribution Documents
will conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, or result in
the creation of any Lien upon any of the properties or assets of the Guarantor
or any of its Subsidiaries pursuant to, the charter, by-laws, limited liability
company agreement or other organizational documents of the Guarantor or any of
its Subsidiaries, any award of any arbitrator or any agreement (including any
agreement with members or stockholders), instrument, order, judgment, decree,
statute, law, rule or regulation to which the Guarantor or any of its
Subsidiaries is subject, except to the extent any such conflict, breach,
defaults, violation or creation of a Lien could not reasonably be expected to
have a material adverse effect on the business, operations, property or
financial or other condition of the Guarantor and its Subsidiaries, taken as a
whole, or the ability of the Guarantor to perform its obligations hereunder.
Except as set forth in the Limited Liability Company Agreement (as in effect on
the date hereof), neither the Guarantor nor any of its Subsidiaries is a party
to, or otherwise subject to any provision contained in, any instrument
evidencing indebtedness of the Guarantor or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its limited
liability company agreement, charter or other organizational documents) which
limits the amount of, or otherwise imposes restrictions on the incurring of,
Debt of the Guarantor represented by this Guaranty or Debt of the Company of the
type to be evidenced by the Notes.

 

3.8. ERISA. No accumulated funding deficiency (as defined in section 302 of
ERISA and section 412 of the code), whether or not waived, exists with respect
to any Plan. No liability to the PBGC has been or is expected by the Guarantor,
any Subsidiary or any ERISA Affiliate to be incurred with respect to any Plan by
the Guarantor, any Subsidiary or any ERISA Affiliate which is or would be
materially adverse to the Guarantor and its Subsidiaries taken as a whole.
Neither the Guarantor, any Subsidiary nor any ERISA Affiliate has incurred or
presently expects to incur any withdrawal liability under Title IV of ERISA with
respect to any Multiemployer Plan which is or would be materially adverse to the
Guarantor and its Subsidiaries taken as a whole. The execution and delivery of
this Guaranty and the Note Agreement and the issuance and sale of the Notes will
not involve any transaction which is subject to the prohibitions of section 406
of ERISA or in connection with which a tax could be imposed pursuant to section
4975 of the Code. The representation by the Guarantor in the preceding sentence
is made in reliance upon and subject to the accuracy of the representation of
each Purchaser in paragraph 9B of the Note Agreement.

 

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3.9. GOVERNMENTAL CONSENT. Neither the nature of the Guarantor or of any
Subsidiary, nor any of their respective businesses or properties, nor any
relationship between the Guarantor or any Subsidiary and any other Person, nor
any circumstance in connection with the execution and delivery of this Guaranty
and the Note Agreement and the offering, issuance, sale or delivery of the Notes
is such as to require any authorization, consent, approval, exemption or other
action by or notice to or filing with any court or administrative or
governmental body (other than routine filings after the date of closing with the
Securities and Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Guaranty and the Note
Agreement, the offering, issuance, sale or delivery of the Notes or fulfillment
of or compliance with the terms and provisions hereof or of the Note Agreement
or the Notes.

 

3.10. DISCLOSURE. Neither this Guaranty nor any other document, certificate or
statement furnished to any holder of Notes by or on behalf of the Guarantor in
connection herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
and therein not misleading. There is no fact peculiar to the Guarantor or any of
its Subsidiaries which materially adversely affects or in the future may (so far
as the Guarantor can now foresee) materially adversely affect the business,
property or assets, or financial condition of the Guarantor and its Subsidiaries
taken as a whole and which has not been set forth in this Guaranty or in the
other documents, certificates and statements furnished to the holders of Notes
by or on behalf of the Guarantor prior to the date hereof in connection with the
transactions contemplated hereby.

 

3.11. FORMATION/CONTRIBUTION DOCUMENTS. Each of the Formation/Contribution
Documents has been duly executed and delivered by the Guarantor and any of its
Subsidiaries parties thereto and constitutes the valid and binding agreement of
such parties, enforceable against each in accordance with its terms except as
enforceability may be limited by bankruptcy, insolvency, moratorium or other
laws relating to or affecting creditors’ rights generally and the exercise of
judicial discretion in accordance with general equitable principles. There
exists no material default by the Guarantor or any of its Subsidiaries (or, to
the knowledge of the Guarantor, by Herald) under any Formation/Contribution
Document.

 

3.12. SOLVENCY. The Guarantor and the Company, individually, and the Guarantor
and its Subsidiaries, on a consolidated basis, are Solvent, both before and
after giving effect to this Guaranty, the Note Agreement, the
Formation/Contribution Documents and the transactions contemplated hereby and
thereby.

 

3.13. REPRESENTATIONS AND WARRANTIES IN FORMATION/CONTRIBUTION DOCUMENTS. To
induce the Purchasers to enter into the Note Agreement and to purchase the Notes
to be purchased by them thereunder, the Guarantor agrees that each Purchaser
shall be entitled to rely upon each of the representations and warranties of the
Guarantor or any of its Subsidiaries set forth in any of the
Formation/Contribution Documents as fully as if set forth in this Guaranty.

 

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4. AFFIRMATIVE COVENANTS

 

So long as any Note shall remain unpaid, the Guarantor covenants as follows:

 

4.1. FINANCIAL STATEMENTS. The Guarantor will deliver to each holder of Notes in
duplicate (it being understood that the Guarantor need not duplicate delivery by
the Company of the financial statements or other items required to be delivered
under paragraph 5A of the Note Agreement):

 

(i) as soon as practicable and in any event within 45 days after the end of each
quarterly period (other than the last quarterly period) in each fiscal year, a
consolidating and consolidated statement of income and a consolidated statement
of cash flows of the Guarantor and its Subsidiaries for the period from the
beginning of the current fiscal year to the end of such quarterly period, and a
consolidating and consolidated balance sheet of the Guarantor and its
Subsidiaries as at the end of such quarterly period, setting forth in each case
in comparative form figures for the corresponding period in the preceding fiscal
year (if applicable, in the case of the Company and its Subsidiaries), all in
reasonable detail and certified by an authorized financial officer of the
Guarantor, subject to changes resulting from year-end adjustments; to the extent
they include the types of statements described above and otherwise comply with
the requirements of this clause (i), such unaudited consolidated financial
statements may be in the form incorporated in the Guarantor’s reports on Form
10-Q or in other filings with the Securities and Exchange Commission;

 

(ii) as soon as practicable and in any event within 90 days after the end of
each fiscal year, a consolidating and consolidated statement of income and a
consolidating and consolidated balance sheet of the Guarantor and its
Subsidiaries as at the end of such year and consolidated statements of cash
flows and stockholders’ equity of the Guarantor and its Subsidiaries for such
year, setting forth in each case in comparative form corresponding consolidated
figures from the preceding annual audit, all in reasonable detail and
satisfactory in scope to the Required Holder(s) and, as to the consolidated
statements, audited by independent public accountants of recognized standing
selected by the Guarantor whose opinion shall be in scope and substance
satisfactory to the Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer of the Guarantor; to the extent
they include the types of statements described above and otherwise comply with
the requirements of this clause (ii), such audited consolidated financial
statements may be in the form incorporated in the Guarantor’s annual report on
Form 10-K or in other filings with the Securities and Exchange Commission;

 

(iii) promptly upon transmission thereof, copies of all such financial
statements, proxy statements, notices and reports as the Guarantor shall send to
its stockholders and copies of all registration statements (without exhibits)
and all reports (other than reports as to which the Guarantor shall receive
confidential treatment) which the Guarantor or any Subsidiary (including the
Company) files with the Securities and

 

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Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);

 

(iv) promptly upon receipt thereof, a copy of each other report submitted to the
Guarantor or any Subsidiary by independent accountants in connection with any
annual, interim or special audit made by them of the books of the Guarantor or
any Subsidiary; and

 

(v) with reasonable promptness, such other information and documents as any
holder of Notes may reasonably request.

 

Together with each delivery of financial statements required by clauses (i) and
(ii) above, the Guarantor will deliver to each holder of Notes an Officer’s
Certificate, substantially in the form of Exhibit A attached hereto, executed on
behalf of the Guarantor and demonstrating (with computations in reasonable
detail) compliance by the Guarantor and its Subsidiaries (including the Company)
with the provisions of Sections 5.1, 5.2(x), 5.3, 5.4, 5.5, 5.6, 5.9 and 5.10 of
this Guaranty and stating that there exists no Event of Default or Default, or,
if any Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Guarantor proposes to take with respect
thereto. Together with each delivery of financial statements required by clause
(ii) above, the Guarantor will deliver or cause to be delivered to each holder a
certificate of such accountants stating that, in making the audit necessary for
their report on such financial statements, they have obtained no knowledge of
any Event of Default or Default or, if they have obtained knowledge of any Event
of Default or Default, specifying the nature and period of existence thereof.
Such accountants, however, shall not be liable to anyone by reason of their
failure to obtain knowledge of any Event of Default or Default which would not
be disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards. The Guarantor also covenants that immediately after
any Responsible Officer obtains knowledge of an Event of Default or Default, it
will deliver to each holder an Officer’s Certificate specifying the nature and
period of existence thereof and what action the Guarantor has taken, is taking
or proposes to take with respect thereto. Each holder of Notes is hereby
authorized to deliver a copy of any financial statement delivered to such holder
pursuant to this Section 4.1 to any regulatory body having jurisdiction over
such holder.

 

4.2. INSPECTION OF PROPERTIES. The Guarantor will permit any Person designated
by any holder in writing, at such holder’s expense if no Event of Default then
exists and at the Company’s expense if an Event of Default then exists, to visit
and inspect any of the properties of the Guarantor and its Subsidiaries, to
examine the corporate or limited liability company books and financial records
of the Guarantor and its Subsidiaries and make copies thereof or extracts
therefrom and to discuss the affairs, finances and accounts of any of such
limited liability companies or corporations with the principal officers of the
Guarantor and its independent public accountants, all at such reasonable times
and as often as such holder may reasonably request.

 

4.3. COVENANT TO SECURE NOTES EQUALLY. The Guarantor will, if it or any
Subsidiary shall create or assume any Lien upon any of its property or assets,
whether now owned or

 

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hereafter acquired, other than Liens permitted by the provisions of Section 5.2
(unless prior written consent to the creation or assumption thereof shall have
been obtained pursuant to Section 7.2), make or cause to be made effective
provision whereby the Guaranteed Obligations will be secured by such Lien
equally and ratably with any and all other Debt thereby secured, so long as any
such other Debt shall be so secured; provided that the creation and maintenance
of such equal and ratable Lien shall not in any way limit or modify the right of
the holders of the Notes to enforce the provisions of Section 5.2.

 

4.4. BUSINESS. Except as otherwise provided in Section 5.4, the Guarantor and
its Subsidiaries taken as a whole will continue to engage in business in
substantially the same fields of enterprise as conducted on the date hereof.

 

4.5. COMPLIANCE WITH LAWS AND REGULATIONS. The Guarantor will and will cause
each Subsidiary to be in material compliance with all laws and regulations
(including, but not limited to, those relating to equal employment opportunity
and employee health and safety) which are now in effect or may be legally
imposed in the future in any jurisdiction in which the Guarantor and any
Subsidiary is doing business other than those laws and regulations which the
Guarantor or such Subsidiary is contesting in good faith by appropriate
proceedings; provided, however, (i) the Guarantor or such Subsidiary continues
to operate any affected business free of any requirement to escrow or sequester
any material amount of such business’ profits or revenues pending resolution of
such proceedings, or (ii) any non-compliance with any law or regulation could
not reasonably be expected to have a material adverse effect on the business,
operations, property or financial or other condition of the Guarantor and the
Subsidiaries, taken as a whole, or the ability of the Guarantor to perform its
obligations hereunder.

 

4.6. PATENTS, TRADE MARKS AND TRADE NAMES. The Guarantor will and will cause
each Subsidiary to continue to own, or hold licenses for the use of, all
copyrights, franchises, licenses, marketing rights, patents, service marks,
trade marks, trade names, and rights in any of the foregoing, as in the
aggregate are necessary for the conduct of its business in the manner in which
such business is being conducted as of the date hereof except where failure to
continue to own or hold such licenses could not reasonably be expected to have a
material adverse effect on the business, operations, property or financial or
other condition of the Guarantor and the Subsidiaries, taken as a whole, or the
ability of the Guarantor to perform its obligations hereunder.

 

4.7. PAYMENT OF TAXES AND OTHER CLAIMS. The Guarantor will and will cause each
of its Subsidiaries to file all income tax or similar tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
levies, trade accounts payable and claims for work, labor or materials (all the
foregoing being referred to collectively as “CLAIMS”) payable by any of them, to
the extent such Claims have become due and payable and before they have become
delinquent; provided, that neither the Guarantor nor any Subsidiary need pay any
Claim if (i) the amount, applicability or validity thereof is contested by the
Guarantor or such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Guarantor or such Subsidiary has established adequate
reserves therefor in accordance with generally accepted accounting principles on
its books or (ii) the nonpayment of all such Claims

 

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in the aggregate could not reasonably be expected to have a material adverse
effect on the business, operations, property or financial or other condition of
the Guarantor and its Subsidiaries, taken as a whole, or the ability of the
Guarantor to perform its obligations hereunder.

 

4.8. ERISA COMPLIANCE. The Guarantor will, and will cause each ERISA Affiliate
to, at all times:

 

(i) with respect to each Plan, make timely payments of contributions required to
meet the minimum funding standard set forth in ERISA or the Code with respect
thereto and, with respect to any Multiemployer Plan, make timely payment of
contributions required to be paid thereto as provided by Section 515 of ERISA,
and

 

(ii) comply with all other provisions of ERISA,

 

except for such failures to make contributions and failures to comply as could
not reasonably be expected to have a material adverse effect on the business,
operations, property or financial or other condition of the Guarantor and the
Subsidiaries, taken as a whole, or the ability of the Guarantor to perform its
obligations hereunder.

 

5. NEGATIVE COVENANTS

 

So long as any Note shall remain unpaid, the Guarantor covenants as follows:

 

5.1. CONSOLIDATED DEBT TO EBITDA AND CONSOLIDATED NET WORTH REQUIREMENTS. The
Guarantor will not at any time permit:

 

(i) the ratio of (a) Consolidated Debt as of the last day of each fiscal quarter
to (b) EBITDA for the four fiscal quarters most recently ended to be greater
than 4.25 to 1.00; or

 

(ii) Consolidated Net Worth as of the last day of any fiscal quarter, commencing
with the fiscal quarter ending June 30, 2000, to be less than the sum of (a)
$650,000,000 plus (b) the product of (x) $3,750,000 multiplied by (y) the number
of fiscal quarters that have ended since the Date of Closing, to and including
the fiscal quarter ended on such measurement date.

 

5.2. LIENS. The Guarantor will not, and will not permit any Subsidiary to,
create, assume or suffer to exist any Lien upon any of its property or assets,
whether now owned or hereafter acquired (whether or not provision is made for
the equal and ratable securing of the Guaranteed Obligations in accordance with
the provisions of Section 4.3), except:

 

(i) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other like
Liens arising or incurred in the ordinary course of business for amounts which
are not delinquent or are being actively contested in good faith by appropriate
proceedings;

 

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(ii) with respect to real property, (a) easements, quasi-easements, licenses,
covenants, rights-of-way and other similar restrictions, including any other
agreements, conditions, restrictions or other matters which would be shown by a
current title report or other similar report or listing, (b) any conditions that
would be shown by a current survey or physical inspection and (c) zoning,
building and other similar restrictions;

 

(iii) Liens for taxes or assessments or other governmental charges or levies not
yet due or which are being actively contested in good faith by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Guarantor or its Subsidiaries, as the case may be, in accordance
with generally accepted accounting principles;

 

(iv) other Liens which were not incurred in connection with the borrowing of
money or the obtaining of advances or credit, and which do not in the aggregate
materially impair the use of such property and assets in the operation of the
business of the Guarantor and its Subsidiaries, or materially detract from the
value of such property or assets for the purpose of the business of the
Guarantor and its Subsidiaries, taken as a whole;

 

(v) Liens on property or assets of a Subsidiary other than the Company to secure
obligations of such Subsidiary other than the Company to the Guarantor or
another Subsidiary;

 

(vi) any Lien existing on any property of any Person at the time it becomes a
Subsidiary, or existing prior to the time of acquisition upon any property
acquired by the Guarantor or any Subsidiary through purchase, merger, or
consolidation or otherwise, whether or not assumed by the Guarantor or such
Subsidiary, or placed upon property at the time of acquisition, construction or
improvement by the Guarantor or any Subsidiary to secure all or a portion of (or
to secure Debt incurred to pay all or a portion of) the purchase price or cost
thereof or placed after acquisition upon property acquired, constructed or
improved by the Guarantor or any Subsidiary after the date of closing, provided
that any such Lien shall not encumber any other property of the Guarantor or
such Subsidiary;

 

(vii) Liens on property owned or leased by the Guarantor or a Subsidiary (other
than the Company) in favor of the United States of America or any state thereof,
or any department, agency or instrumentality or political subdivision of the
United States of America or any state thereof, or any political subdivision
thereof, or in favor of holders of securities issued by any such entity,
pursuant to any contract or statute (including, without limitation, mortgages to
secure pollution control or industrial revenue bonds) to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such Liens;

 

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(viii) any Liens renewing, extending or refunding any Lien permitted by clauses
(vi) and (vii) above, provided that the principal amount secured is not
increased and the Lien is not extended to other property;

 

(x) any Liens permitted under paragraph 6C(1) of the Note Agreement; and

 

(xi) any other Lien which secures any Debt, provided that the aggregate
principal amount of such Debt together with all other Debt of the Guarantor and
its Subsidiaries secured by all Liens which would be permitted under the
foregoing provisions (including, any such Debt permitted to be secured under
clauses (i) through (ix) above), together with all other Priority Debt, does not
exceed 15% of Capitalization and does not exceed the limitation imposed in
clause (i) of Section 5.1.

 

5.3. PRIORITY DEBT. The Guarantor will not at any time permit Priority Debt to
exceed 15% of Capitalization as of the then most recently ended fiscal quarter
of the Guarantor.

 

5.4. LOANS, ADVANCES AND INVESTMENTS. The Guarantor will not, and will not
permit any Subsidiary to, make or permit to remain outstanding any loan or
advance to, or own, purchase or acquire any stock, obligations or securities of,
or any interest in, or make any capital contribution to, any Person, except that
the Guarantor or any Subsidiary may:

 

(i) make or permit to remain outstanding loans, advances or capital
contributions to any Subsidiary;

 

(ii) make or permit to remain outstanding any loans, advances or capital
contributions from (a) any Subsidiary other than the Company to the Guarantor or
any other Subsidiary and (b) the Company to any Subsidiary of the Company;

 

(iii) own, purchase or acquire stock, obligations or securities of or other
equity interests in a Subsidiary or a Person which immediately after such
purchase or acquisition will be a Subsidiary;

 

(iv) make and permit to remain outstanding investments in notes receivable which
are received pursuant to (a) the sale of all or substantially all of a business
or operations or (b) the sale of used equipment in the ordinary course of
business, but in each case only to the extent that the aggregate uncollected
amount of all such notes receivable does not exceed $500,000;

 

(v) make and permit to remain outstanding loans, advances and other investments
in any business principally engaged in publishing (print or electronic) or
related media activity, provided that all such loans, advances and other
investments to or in entities which are not Subsidiaries do not in the aggregate
exceed 10% of Capitalization;

 

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(vi) make and permit to remain outstanding loans, advances and other investments
received in settlement of debts (created in the ordinary course of business)
owing to the Guarantor or any Subsidiary,

 

(vii) own, purchase or acquire commercial paper issued by any corporation or
bankers’ acceptances issued by any member bank of the Federal Reserve System, in
either case, maturing within one year of the date of purchase and rated, by at
least two of Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc.
and Fitch Investors Service, Inc., “A-1”, “P-1” and “F-1”, respectively, and
payable in the United States in United States dollars;

 

(viii) own, purchase or acquire certificates of deposit in member banks of the
Federal Reserve System (each having capital resources in excess of $75,000,000)
or certificates of deposit in an aggregate amount not to exceed $2,000,000 in
banks having capital resources of less than $75,000,000), all due within one
year from the date of original issue thereof and payable in the United States in
United States dollars;

 

(ix) own, purchase or acquire repurchase agreements of member banks of the
Federal Reserve System (each having capital resources in excess of $75,000,000)
for terms of less than one year in respect of the foregoing certificates and
obligations;

 

(x) own, purchase or acquire obligations of the United States government or any
agency thereof;

 

(xi) own, purchase or acquire obligations guaranteed by the United States
government or any agency thereof;

 

(xii) investments in stocks of investment companies registered under the
Investment Company Act of 1940 which invest primarily in obligations of the type
described in clauses (vii), (viii), (ix), (x) or (xi) above, provided that any
such investment company shall have an aggregate net asset value of not less than
$500,000,000;

 

(xiii) own, purchase or acquire investments in money market mutual funds that
are classified as current assets in accordance with generally accepted
accounting principles, that are rated “AAAm” by Standard & Poor’s Ratings Group
and that invest solely in investments described in clauses (vii), (viii), (ix),
(x) or (xi) above, which funds are managed by Persons having capital and surplus
in excess of $500,000,000;

 

(xiv) endorse negotiable instruments for collection in the ordinary course of
business;

 

(xv) make or permit to remain outstanding travel and other like advances to
officers and employees in the ordinary course of business;

 

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(xvi) make or permit to remain outstanding investments in demand deposit
accounts maintained by the Guarantor or any Subsidiary in the ordinary course of
its business;

 

(xvii) make or permit to remain outstanding investments consisting of Eurodollar
time deposits, maturing within 90 days after the making thereof, with any branch
of a United States commercial bank having capital and surplus of not less than
$1 billion in the aggregate;

 

(xviii) make or permit to remain outstanding investments in municipal
obligations having a rating of “Aaa” by Moody’s Investors Service, Inc., or
“AAA” by Standard & Poor’s Ratings Group;

 

(xix) permit to remain outstanding investments of the Guarantor and its
Subsidiaries set forth on Schedule 5.4;

 

(xx) own, purchase or acquire (a) asset-backed securities, mortgage-backed
securities and collateralized mortgage obligations issued by any entity and
rated at least Aa3 by Moody’s Investors Service, Inc. or AA- by Standard &
Poor’s Ratings Group and (b) notes and bonds issued by any domestic corporate
issuer and rated at least A3 by Moody’s Investors Service, Inc. or A- by
Standard & Poor’s Ratings Group; and

 

(xxi) make or permit to remain outstanding any other loan or advance to, or own,
purchase or acquire any other stock, obligations or securities of, or any other
interest in, or make any other capital contribution to any Person, provided that
the aggregate amount thereof does not exceed 6% of Consolidated Net Worth at any
time.

 

5.5. SALE OR DISPOSITION OF CAPITAL ASSETS. The Guarantor will not, and will not
permit any Subsidiary to, sell or dispose of capital assets (including capital
stock or other equity interests) outside the ordinary course of business if the
aggregate of capital assets so sold or disposed of in any fiscal year involves
assets totaling 10% or more of Consolidated Total Assets at the beginning of
such fiscal year or has contributed 10% or more of EBITDA for any of the three
fiscal years then most recently ended (or such shorter period during which such
assets were owned by the Guarantor or a Subsidiary), unless either (i) the net
proceeds (including the cash value of any securities received but deducting all
expenses of sale and sales and transfer taxes and applicable Federal and state
income taxes) from such sale or disposition are within 12 months from receipt
invested in businesses substantially similar to any line of business in which
the Guarantor or any Subsidiary has been continuously engaged since the date of
issuance of the Notes or (ii) within 12 months after receipt of such net
proceeds, an amount equal to such net proceeds is applied to the pro rata
prepayment (based on outstanding principal amounts) of (a) the principal of the
Notes then outstanding (in accordance with paragraph 4A of the Note Agreement,
and together with all accrued interest on, and Yield-Maintenance Amount, if any,
payable with respect to, the Notes) and (b) all other Debt of the Guarantor and
its Subsidiaries consisting of obligations for borrowed money.

 

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5.6. SALE AND LEASE-BACK. The Guarantor will not, and will not permit any
Subsidiary to, enter into any arrangement with any lender or investor or under
which such lender or investor is a party, providing for the leasing or other
similar arrangement by the Guarantor or any Subsidiary of real or personal
property used by the Guarantor or any Subsidiary in the operations of the
Guarantor or any Subsidiary, which has been or is sold or transferred by the
Guarantor or any Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on the security
of such rental obligations of the Guarantor or such Subsidiary, except that the
Guarantor or any Subsidiary (other than the Company) may enter into sale and
lease-back transactions involving newspaper equipment or facilities acquired
after the issuance of the Notes if (i) such arrangement shall be for a period of
less than three years by the end of which the use of such property by the lessee
will be discontinued, (ii) the net proceeds of such sale are applied to the
retirement of Debt, (iii) the net proceeds of the sale are used to purchase
other property having a value at least equal to such net proceeds, (iv) the
property immediately prior to such sale could have been subjected to a Lien
securing Debt in an amount equal to such net proceeds and which Lien would be
permitted by clause (x) of Section 5.2, or (v) the transaction represents a sale
by a Subsidiary (other than the Company) to the Guarantor or another Subsidiary
or by the Guarantor to a Subsidiary.

 

5.7. MERGER. The Guarantor will not, and will not permit any Subsidiary to,
merge or consolidate with any other Person except that:

 

(i) any Subsidiary may merge or consolidate with the Guarantor (provided that
the Guarantor shall be the continuing or surviving Person) or any one or more
other Subsidiaries; and

 

(ii) the Guarantor may merge or consolidate with any other corporation, provided
that upon such merger or consolidation the continuing or surviving corporation
(a) shall be in compliance with all the terms and provisions of this Guaranty,
and if the Guarantor is not the survivor, the continuing or surviving
corporation shall have unconditionally and irrevocably assumed all of the
Guarantor’s obligations under this Guaranty (with such assumption accompanied by
a legal opinion satisfactory in form and substance to the Required Holder(s)
from Fulbright & Jaworski L.L.P., or other counsel reasonably satisfactory to
the Required Holder(s)), and (b) after giving pro forma effect to such merger or
consolidation, could have incurred at least one dollar of additional Debt on the
last day of the fiscal quarter most recently ended without violating clause (i)
of Section 5.1 or Section 5.3.

 

5.8. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the audited
consolidated financial statements of the Guarantor and its Subsidiaries for the
fiscal year ended December 31, 1999, as incorporated in the Guarantor’s annual
report on Form 10-K filed with the Securities and Exchange Commission, the
Guarantor will not, and will not permit any Subsidiary to, directly or
indirectly enter, into or be a party to any transaction or arrangement,
including, without limitation, the purchase, sale, exchange or use of any
property or asset, or any interest therein, whether real, personal or mixed, or
tangible or intangible, or the rendering of any service, with any Affiliate,
except transactions in the ordinary course of and pursuant to

 

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the reasonable requirements of the Guarantor’s and each Subsidiary’s business,
as the case may be, upon fair and reasonable terms that are no less favorable to
the Guarantor and the Subsidiaries, as the case may be, than those which might
be obtained in an arm’s length transaction with a Person not an Affiliate. For
avoidance of doubt, the reference in this Section 5.8 to transactions with “any
Affiliate” shall be understood to exclude both (i) transactions between the
Guarantor and any Subsidiary and (ii) transactions between a Subsidiary of the
Guarantor and any other Subsidiary of the Guarantor.

 

5.9. SALE OF STOCK AND DEBT OF SUBSIDIARIES. The Guarantor will not, and will
not permit any Subsidiary to, sell or otherwise dispose of, or part with control
of, any shares of stock of (or other equity interests in) or Debt of any
Subsidiary, except that shares of stock of (or other equity interests in) or
Debt of any Subsidiary (other than the Company) may be sold or otherwise
disposed of to the Guarantor or another Subsidiary, and except that all shares
of stock of (or other equity interests in) and Debt of any Subsidiary (other
than the Company) at the time owned by or owed to the Guarantor or any
Subsidiary may be sold as an entirety for a cash consideration which represents
the fair market value (as determined in good faith by the Board of Directors of
the Guarantor) at the time of sale of the shares of stock or other equity
interests and Debt so sold, provided that the assets of such Subsidiary do not
constitute more than 10% of Consolidated Total Assets at the beginning of the
fiscal year in which such sale or disposition is to occur and that such
Subsidiary shall not have contributed more than 10% of EBITDA for any of the
three fiscal years then most recently ended, unless such transaction shall be
subject to, and in compliance with, Section 5.5, and further provided that, in
any event, at the time of sale, such Subsidiary shall not own, directly or
indirectly, any shares of stock of (or other equity interests in) or Debt of any
other Subsidiary (unless all of the shares of stock of (or other equity
interests in) and Debt of such other Subsidiary are owned, directly or
indirectly, by the Guarantor and all Subsidiaries are simultaneously being sold
as permitted by this Section 5.9).

 

5.10. ISSUANCE OF STOCK BY SUBSIDIARIES. The Guarantor will not permit any
Subsidiary, the assets of which constitute more than 10% of Consolidated Total
Assets at the beginning of the fiscal year in which such issuance, sale or
disposition is to occur or which has contributed more than 10% of EBITDA for any
of the three fiscal years most recently ended, to issue, sell or dispose of any
shares of its stock (of any class) or any other equity interests except to the
Guarantor or another Subsidiary.

 

5.11. LIMITATION ON CERTAIN RESTRICTIVE AGREEMENTS. Except as set forth in the
Limited Liability Company Agreement (as in effect on the date hereof), the
Guarantor will not permit any Subsidiary to enter into or suffer to exist any
contractual obligation which in any way restricts the ability of such Subsidiary
to (i) make any dividends, other distributions or advances to the Guarantor or
any other Subsidiary or (ii) transfer any of its property or assets to the
Guarantor or any other Subsidiary.

 

5.12. CONFORMING DEBT AGREEMENT CHANGES. The Guarantor will not, and will not
permit any Subsidiary to, become or be a party to any agreement relating to any
Debt greater than $10,000,000 entered into after the date of this Guaranty, or
to any amendment of or supplement to any agreement relating to any Debt greater
than $10,000,000, if, in any such

 

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case, the Guarantor or any Subsidiary is agreeing therein to any financial
covenants of a type specified in this Guaranty, which are more restrictive than
the covenants set forth herein, or to other financial covenants expressly
requiring the Guarantor or any Subsidiary to comply with similar computable
standards of financial condition or performance, unless the Guarantor offers to
amend this Guaranty so as to provide the benefit of similar covenants for the
benefit of the holders of the Notes for so long as such covenants are in full
force under such agreement, amendment or supplement. Any such offer shall be
made in writing to the holders of the Notes prior to being effected in any such
agreement, amendment or supplement and, absent such offer, shall be deemed to be
incorporated herein mutatis mutandis for the benefit of the holders of the Notes
for so long as such covenants are in full force under such agreement, amendment
or supplement unless and until the Required Holder(s) shall otherwise consent
thereto.

 

6. EVENTS OF DEFAULT; REMEDIES

 

6.1. EVENTS OF DEFAULT. The occurrence of any of the following events shall
constitute an “EVENT OF DEFAULT” under this Guaranty:

 

(i) the Guarantor or any Subsidiary defaults in any payment of principal of or
interest on any obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto (excluding, however, such a
default by the Company in respect of the Notes), or the Guarantor or any
Subsidiary fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due prior to its stated
maturity (excluding, however, such a failure or other event under the Note
Agreement) or any such obligation shall mature and remain unpaid, provided, that
the aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing or permitting
acceleration shall occur and be continuing exceeds $10,000,000; or

 

(ii) any representation or warranty made (a) by the Guarantor herein or in any
writing furnished in connection with or pursuant to this Guaranty, the Note
Agreement or the transactions contemplated thereby, or (b) by Herald to or in
favor of the holders, or upon which the holders have been authorized by Herald
to rely, shall be false in any material respect on the date as of which made; or

 

(iii) the Guarantor fails to perform or observe any term, covenant or agreement
contained in Sections 2 or 5 of this Guaranty; or

 

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(iv) the Guarantor fails to perform or observe any other agreement, term or
condition contained herein and such failure shall not be remedied within 30 days
after any Responsible Officer of the Guarantor obtains actual knowledge thereof;
or

 

(v) the Guarantor or any Subsidiary (other than a Subsidiary of the Company that
is not a Material Subsidiary) makes an assignment for the benefit of creditors
or is generally not able to pay its debts as such debts become due; or

 

(vi) any decree, judgment, or order for relief in respect of the Guarantor or
any Subsidiary (other than a Subsidiary of the Company that is not a Material
Subsidiary) is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the “BANKRUPTCY
LAW”), of any jurisdiction; or

 

(vii) the Guarantor or any Subsidiary (other than a Subsidiary of the Company
that is not a Material Subsidiary) petitions or applies to any tribunal for, or
consents to, the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Guarantor or any such
Subsidiary, or of any substantial part of the assets of the Guarantor or any
such Subsidiary, or commences a voluntary case under the Bankruptcy Law of the
United States or any proceedings (other than proceedings for the voluntary
liquidation and dissolution of any such Subsidiary) relating to the Guarantor or
any such Subsidiary under the Bankruptcy Law of any other jurisdiction; or

 

(viii) any such petition or application is filed, or any such proceedings are
commenced, against the Guarantor or any Subsidiary (other than a Subsidiary of
the Company that is not a Material Subsidiary) and the Guarantor or such
Subsidiary by any act indicates its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree is entered appointing any
such trustee, receiver, custodian, liquidator or similar official, or approving
the petition in any such proceedings, and such order, judgment or decree remains
unstayed and in effect for more than 60 days; or

 

(ix) any order, judgment or decree is entered in any proceedings against the
Guarantor or any Subsidiary (other than a Subsidiary of the Company that is not
a Material Subsidiary) decreeing the dissolution of the Guarantor or such
Subsidiary and such order, judgment or decree remains unstayed and in effect for
more than 60 days; or

 

(x) one or more final judgments in an aggregate amount in excess of $10,000,000
is rendered against the Guarantor or any of its Subsidiaries and, within 60 days
after entry thereof, any such judgment is not discharged or execution thereof
stayed pending appeal, or within 60 days after the expiration of any such stay,
such judgment is not discharged; or

 

(xi) (a) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the

 

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Code, (b) a notice of intent to terminate any Plan in a distress termination
(within the meaning of ERISA section 4041(c)) shall have been or is reasonably
expected to be filed with the PBGC or the PBGC shall have instituted proceedings
under ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Guarantor or any ERISA Affiliate that a
Plan may become a subject of such proceedings, (c) the aggregate “amount of
unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of
ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall
exceed $5,000,000, (d) the Guarantor or any ERISA Affiliate shall have incurred
or is reasonably expected to incur any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, (e) the Guarantor or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (f) the Guarantor or any Subsidiary establishes or amends
any employee welfare benefit plan that provides post-employment welfare benefits
in a manner that would increase the liability of the Guarantor or any Subsidiary
thereunder; and any such event or events described in clauses (a) through (f)
above, either individually or together with any other such event or events,
could reasonably be expected to have a material adverse effect on the business,
operations, property or financial or other condition of the Guarantor and its
Subsidiaries, taken as a whole, or the ability of the Guarantor to perform its
obligations hereunder.

 

6.2. REMEDIES. Upon the occurrence of an Event of Default under this Guaranty,
the Required Holder(s) may, at its or their option, exercise any and all
remedies available to it or them, whether under the Note Agreement or any other
instrument or agreement entered into in connection therewith or relating thereto
or otherwise at law or in equity.

 

7. MISCELLANEOUS

 

7.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT. All
representations and warranties contained herein or made in writing by or on
behalf of the Guarantor in connection herewith shall survive the execution and
delivery of this Guaranty, the purchase or transfer of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any subsequent holder of Notes, regardless of any investigation made at any
time by or on behalf of any other holder of Notes. All statements contained in
any certificate or other instrument delivered by or on behalf of the Guarantor
pursuant to or in connection with this Guaranty shall be deemed representations
and warranties of the Guarantor under this Guaranty. Subject to the preceding
sentence, this Guaranty embodies the entire agreement and understanding between
the Guarantor and the holders of the Notes and supersedes all prior agreements
and understandings relating to the subject matter hereof.

 

7.2. CONSENT TO AMENDMENTS. This Guaranty may be amended, and the Guarantor may
take any action herein prohibited, or omit to perform any act herein required to
be performed by it, if the Guarantor shall obtain the written consent to such
amendment, action or omission to act, of the Required Holder(s), except that (i)
no amendment or waiver of any of the provisions of Section 2 hereof or any
defined term (as it is used therein) and (ii) no termination of this Guaranty in
its entirety or release of the Guarantor herefrom will be

 

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effective unless consented to in writing by the holder or holders of all Notes
at the time outstanding. The Guarantor will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by any holder of
Notes or any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.

 

7.3. BINDING EFFECT, ETC. Any amendment or waiver consented to as provided in
Section 7.2 hereof applies equally to all holders of Notes and is binding upon
them and upon each future holder of any Note and the Guarantor without regard to
whether such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant, agreement
or Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Guarantor and any holder of
Notes nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note.

 

7.4. NOTICES. All written communications provided for hereunder shall be sent by
first class mail or nationwide overnight delivery service (with charges prepaid)
and (i) if to a Purchaser, addressed to it at the address specified for such
communications in the Purchaser Schedule attached to the Note Agreement, or at
such other address as such Purchaser shall have specified to the Guarantor or
the Company in writing, (ii) if to any other holder of any Note, addressed to
such other holder at such address as such other holder shall have specified to
the Guarantor or the Company in writing or, if any such other holder shall not
have so specified an address to the Guarantor or the Company, then addressed to
such other holder in care of the last holder of such Note which shall have so
specified an address to the Guarantor or the Company, and (iii) if to the
Guarantor, addressed to it at 900 North Tucker Boulevard, St. Louis, Missouri
63101, Attention: Senior Vice President-Finance, or at such other address as the
Guarantor shall have specified to the holder of each Note in writing.

 

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

 

7.6. SUCCESSORS AND ASSIGNS. All covenants and other agreements in this Guaranty
shall bind the successors and assigns of the Guarantor and shall inure to the
benefit of the successors and assigns of the holders of Notes (including,
without limitation, any Transferee) whether so expressed or not.

 

7.7. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is prohibited by
any one of such covenants, the fact that it would be permitted by an exception
to, or otherwise be in compliance within the limitations of, another covenant
shall not (i) avoid the occurrence of an Event of

 

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Default or Default if such action is taken or such condition exists or (ii) in
any way prejudice an attempt by the holders of Notes to prohibit (through
equitable action or otherwise) the taking of any action by the Guarantor or a
Subsidiary which would result in an Event of Default or Default.

 

7.8. SATISFACTION REQUIREMENT. If any agreement, certificate or other writing,
or any action taken or to be taken, is by the terms of this Guaranty required to
be satisfactory to any holder of Notes or to the Required Holder(s), the
determination of such satisfaction shall be made by such holder or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.

 

7.9. COUNTERPARTS. This Guaranty may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument.

 

7.10. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.

 

7.11. CONSENT TO JURISDICTION; WAIVER OF IMMUNITIES. The Guarantor hereby
irrevocably submits to the jurisdiction of any New York state or Federal court
sitting in New York in any action or proceeding arising out of or relating to
this Guaranty, and the Guarantor hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in New York
state or Federal court. The Guarantor hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Guarantor agrees and irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing, by registered or certified U.S. mail, or by any other means or
mail that requires a signed receipt, of copies of such process to the Guarantor
at its address set forth in section 7.4. The Guarantor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 7.10 shall affect the right of any
holder of the Notes to serve legal process in any other manner permitted by law
or affect the right of any holder of the Notes to bring any action or proceeding
against the Guarantor or its property in the courts of any other jurisdiction.
To the extent that the Guarantor has or hereafter may acquire immunity from
jurisdiction of any court or from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, the Guarantor hereby
irrevocably waives such immunity in respect of its obligations under this
Guaranty.

 

7.12. WAIVER OF JURY TRIAL. THE GUARANTOR AND THE HOLDERS OF THE NOTES AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS GUARANTY, THE NOTE AGREEMENT, THE NOTES, OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND
THE LENDER/GUARANTOR RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE HOLDERS OF THE NOTES
AND THE GUARANTOR EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO THIS BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE
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AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE HOLDERS OF THE NOTES AND THE GUARANTOR FURTHER WARRANT AND
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be executed and
delivered by its duly authorized officer as of the date first above written to
become effective as of such date.

 

PULITZER INC.

By:   /s/    RONALD H. RIDGWAY        

Name:

      Ronald H. Ridgway

Title:

      Senior Vice President - Finance

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SCHEDULE 5.4

 

LOANS, ADVANCES AND INVESTMENTS

 

     Par Value

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   Cost
As of 3/26/00

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Corporate Notes & Bonds:

             

Comdisco Inc. Note

   $ 750,000    $ 749,947

Kroger Co. Seni

     1,755,000      1,754,857

Capital One Bank Medium Term Senior Notes

     1,500,000      1,501,282

Golden State Escrow Corp. Floating Rate Note

     2,000,000      1,973,016

Jones Intercable Inc. (Comcast Corp.)

     2,000,000      2,111,858

Korean Development Bank Bond

     1,250,000      1,272,402

Niagara Mohawk Power Corp. Senior Disc Note

     1,575,000      1,222,601

Pohang Iron & Steel Note

     800,000      793,339

Rite Aid Corp. Note

     2,000,000      1,935,859

Sovereign Bancorp Inc. Note

     2,300,000      2,292,714

Municipal Bonds:

             

Austin Texas Utilities

     2,360,000      2,458,700

Columbus Ohio Water Systems

     3,295,000      3,323,300

 

     Approximate
Cost Basis
As of 4/30/00

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Employee Loans

   70,000

St. Louis EquityFund

   477,564

Split Dollar Life Insurance Policies

   2,410,538

Sandler 21st Century Communications Partners, L.P.

   3,078,859

Sandler Capital Partners IV, L.P.(a)

   10,293,784

Ad One LLC

   2,542,353

I Own Holdings, Inc.

   2,009,781

Next Generation Network

   1,999,998

Hire.com, Inc.

   1,010,878

Koz.com, Inc.

   1,001,026

Entry Point Incorporated

   200,000

 

(a) Amount includes the remaining commitment of $910,779 due under the
investment agreement.

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EXHIBIT A

 

[FORM OF COMPLIANCE CERTIFICATE]

 

COMPLIANCE CERTIFICATE

 

(PULITZER INC.)

 

[FOR THE FISCAL QUARTER ENDING                     ]

 

[FOR THE FISCAL YEAR ENDING                     ]

 

To: Each holder of those certain 8.05% Senior Notes due April 28, 2009 issued by
St. Louis Post-Dispatch LLC, a Delaware limited liability company (the
“COMPANY”), pursuant to that certain Note Agreement dated as of May 1, 2000 (as
amended, restated, supplemented or otherwise modified from time to time, the
“NOTE AGREEMENT”) among the Company and the Purchasers listed on the Purchaser
Schedule thereto.

 

As required by Section 4.1 of that certain Guaranty Agreement dated as of even
date with the Note Agreement (as amended, restated, supplemented or otherwise
modified from time to time, the “GUARANTY AGREEMENT”), executed by Pulitzer
Inc., a Delaware corporation and the sole managing member of the Company (the
“GUARANTOR”), for the benefit of the holders of the Notes (all capitalized terms
used and not otherwise defined in this Compliance Certificate have the
respective meanings ascribed to them in the Guaranty Agreement), the undersigned
certifies as follows:

 

(1) The undersigned is the duly elected, qualified and acting [PRESIDENT][VICE
PRESIDENT][TREASURER] of the Guarantor.

 

(2) In the undersigned’s capacity as an officer of the Guarantor, the
undersigned has made, or caused to be made under his supervision, a review in
reasonable detail of the transactions and the financial condition of the
Guarantor and its Subsidiaries and has determined that the Guarantor has
observed or performed in all material respects all of its covenants and other
agreements, and satisfied every condition, contained in the Guaranty Agreement
to be observed, performed or satisfied by it on or before the date hereof, and
as of the date hereof, no Default or Event of Default has occurred and is
continuing[, EXCEPT AS SET FORTH IN PARAGRAPH (3) BELOW].

 

[(3) BELOW (OR IN A SEPARATE SCHEDULE TO THIS COMPLIANCE CERTIFICATE) ARE THE
EXCEPTIONS, IF ANY, TO PARAGRAPH (2), LISTING, IN DETAIL, THE NATURE OF EACH
CONDITION OR EVENT WHICH CONSTITUTES A DEFAULT OR EVENT OF DEFAULT, THE PERIOD
DURING WHICH SUCH EVENT OR CONDITION HAS EXISTED AND THE ACTION WHICH THE
GUARANTOR HAS TAKEN, IS TAKING, OR PROPOSES TO TAKE WITH RESPECT TO EACH SUCH
CONDITION OR EVENT.]

 

[([3] [4]) WITH RESPECT TO THE FINANCIAL STATEMENTS REFERRED TO IN CLAUSE (I) OF
SECTION 4.1 OF THE GUARANTY AGREEMENT, WHICH ARE DELIVERED CONCURRENTLY WITH THE

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DELIVERY OF THIS COMPLIANCE CERTIFICATE, THE UNDERSIGNED HEREBY CONFIRMS THAT
SUCH FINANCIAL STATEMENTS OF THE GUARANTOR AND ITS SUBSIDIARIES HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP APPLIED CONSISTENTLY THROUGHOUT THE PERIOD
INVOLVED, AND THE COVENANTS FROM THE GUARANTY AGREEMENT LISTED AND CALCULATED ON
ANNEX A ATTACHED HERETO ARE BASED ON SUCH FINANCIAL STATEMENTS.]

 

[([3] [4]) WITH RESPECT TO THE FINANCIAL STATEMENTS REFERRED TO IN CLAUSE (II)
OF SECTION 4.1 OF THE GUARANTY AGREEMENT, WHICH ARE DELIVERED CONCURRENTLY WITH
THE DELIVERY OF THIS COMPLIANCE CERTIFICATE, THE UNDERSIGNED HEREBY CONFIRMS
THAT SUCH FINANCIAL STATEMENTS OF THE GUARANTOR AND ITS SUBSIDIARIES, INCLUDING
THE RELATED NOTES AND SCHEDULES THERETO, HAVE BEEN PREPARED IN ACCORDANCE WITH
GAAP APPLIED CONSISTENTLY THROUGHOUT THE PERIODS INVOLVED, AND THE COVENANTS
FROM THE GUARANTY AGREEMENT LISTED AND CALCULATED ON ANNEX A ATTACHED HERETO ARE
BASED ON SUCH FINANCIAL STATEMENTS.]

 

([4] [5]) The undersigned hereby certifies that described below in reasonable
detail are the adjustments, if any, necessary to derive the information set
forth in Annex A from the financial statements referred to in paragraph ([3][4])
above.

 

 

[NAME], [TITLE]

 

2

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ANNEX A

 

COVENANT

 

COVENANTS
Compliance

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

           

[Indicate Yes/No]

        

1.

  

Consolidated Debt to EBITDA Ratio (Section 5.1(i))

              The ratio of              

(i) Consolidated Debt(1) as of the last day of the fiscal quarter most recently
ended to

   $                    

(ii) EBITDA(2) for the four fiscal quarters most recently ended
must not be greater than 4.25 to 1.00 to 1.00

   $               

2.

   Consolidated Net Worth (Section 5.1(ii))               Commencing with the
fiscal quarter ending June 30, 2000, Consolidated Net Worth(3) as of the last
day of the fiscal quarter most recently ended    $                     must not
be less than (a) $650,000,000 plus (b) the product of    $                    
(x) $3,750,000 multiplied by (y) the number of fiscal quarters that have ended
since the Date of Closing, to and including the fiscal quarter ended on such
measurement date         

3.

   Limitation on Priority Debt (Section 5.3)               Priority Debt(4)
(including Debt secured by Liens permitted by Section 5.2)    $                 
   Capitalization(5) as of the last day of the fiscal quarter most recently
ended    $                     Percentage of Capitalization as of the last day
of the fiscal quarter most recently ended                   %      must not
exceed 15% of Capitalization as of the last day of the fiscal quarter most
recently ended         

4.

   Loans, Advances and Investments (Section 5.4)               The Guarantor
will not, and will not permit any Subsidiary to, make or permit to remain
outstanding any loan or advance to, or own, purchase or acquire any stock,
obligations or securities of, or any interest in, or make any capital
contribution         

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(1) See Schedule 1, Item 1.

 

(2) See Schedule 1, Item 2.

 

(3) See Schedule 1, Item 3.

 

(4) See Schedule 1, Item 4.

 

(5) See Schedule 1, Item 5

 

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to, any Person, except that the Guarantor or any Subsidiary may:

 

(i) make or permit to remain outstanding loans, advances or capital
contributions to any Subsidiary;

 

(ii) make or permit to remain outstanding any loans, advances or capital
contributions from (a) any Subsidiary other than the Company to the Guarantor or
any other Subsidiary and (b) the Company to any Subsidiary of the Company;

 

(iii) own, purchase or acquire stock, obligations or securities of or other
equity interests in a Subsidiary or a Person which immediately after such
purchase or acquisition will be a Subsidiary;

 

(iv) make and permit to remain outstanding investments in notes receivable which
are received pursuant to (a) the sale of all or substantially all of a business
or operations or (b) the sale of used equipment in the ordinary course of
business, but in each case only to the extent that the aggregate uncollected
amount of all such notes receivable does not exceed $500,000;

 

(v) make and permit to remain outstanding loans, advances and other investments
in any business principally engaged in publishing (print or electronic),
provided that all such loans, advances and other investments to or in entities
which are not Subsidiaries do not in the aggregate exceed 10% of Capitalization;

 

(vi) make and permit to remain outstanding loans, advances and other investments
received in settlement of debts (created in the ordinary course of business)
owing to the Guarantor or any Subsidiary,

 

(vii) own, purchase or acquire commercial paper issued by any corporation or
bankers’ acceptances issued by any member bank of the Federal Reserve System, in
either case, maturing within one year of the date of purchase and rated, by at
least two of Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc.
and Fitch Investors Service, Inc., “A-1”, “P-1” and “F-1”, respectively, and
payable in the United States in United States dollars;

 

(viii) own, purchase or acquire certificates of deposit in member banks of the
Federal Reserve System (each having capital resources in excess of $75,000,000)
or certificates of deposit in an aggregate amount not to exceed $2,000,000 in
banks having capital resources of less than $75,000,000), all due within one
year from the date of original issue thereof and payable in the United States in
United States dollars;

 

(ix) own, purchase or acquire repurchase agreements of member banks of the
Federal Reserve System (each having capital resources in excess of $75,000,000)
for terms of less than one year in respect of the foregoing certificates and
obligations;

 

(x) own, purchase or acquire obligations of the

 

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United States government or any agency thereof;

 

(xi) own, purchase or acquire obligations guaranteed by the United States
government or any agency thereof;

 

(xii) investments in stocks of investment companies registered under the
Investment Company Act of 1940 which invest primarily in obligations of the type
described in clauses (vii), (viii), (ix), (x) or (xi) above, provided that any
such investment company shall have an aggregate net asset value of not less than
$500,000,000;

 

(xiii) own, purchase or acquire investments in money market mutual funds that
are classified as current assets in accordance with generally accepted
accounting principles, that are rated “AAAm” by Standard & Poor’s Ratings Group
and that invest solely in investments described in clauses (vii), (viii), (ix),
(x) or (xi) above, which funds are managed by Persons having capital and surplus
in excess of $500,000,000;

 

(xiv) endorse negotiable instruments for collection in the ordinary course of
business;

 

(xv) make or permit to remain outstanding travel and other like advances to
officers and employees in the ordinary course of business;

 

(xvi) make or permit to remain outstanding investments in demand deposit
accounts maintained by the Guarantor or any Subsidiary in the ordinary course of
its business;

 

(xvii) make or permit to remain outstanding investments consisting of Eurodollar
time deposits, maturing within 90 days after the making thereof, with any branch
of a United States commercial bank having capital and surplus of not less than
$1 billion in the aggregate;

 

(xviii) make or permit to remain outstanding investments in municipal
obligations having a rating of “Aaa” by Moody’s Investors Service, Inc., or
“AAA” by Standard & Poor’s Ratings Group;

 

(xix) permit to remain outstanding investments of the Guarantor and its
Subsidiaries set forth on Schedule 5.4;

 

(xx) own, purchase or acquire (a) asset-backed securities, mortgage-backed
securities and collateralized mortgage obligations issued by any entity and
rated at least AA3 by Moody’s Investors Service, Inc. or Aa- by Standard &
Poor’s Ratings Group and (b) notes and bonds issued by any domestic corporate
issuer and rated at least A3 by Moody’s Investors Service, Inc. or A- by
Standard & Poor’s Ratings Group; and

 

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(xxi) make or permit to remain outstanding any other loan or advance to, or own,
purchase or acquire any other stock, obligations or securities of, or any other
interest in, or make any other capital contribution to any Person, provided that
the aggregate amount thereof does not at any time exceed 6% of Consolidated Net
Worth as of the last day of then most recently ended fiscal quarter.

 

          $                    

Consolidated Net Worth

   $                    

Percentage of Consolidated Net Worth

                  %     

(xxi) must not exceed 6% of Consolidated Net Worth

        

5.

  

Limitation on Sale or Disposition of Capital Assets (Section 5.5) The Guarantor
will not, and will not permit any Subsidiary to, sell or dispose of capital
assets (including capital stock or other equity interests) outside the ordinary
course of business if the aggregate of capital assets so sold or disposed of in
any fiscal year involves assets totaling 10% or more of Consolidated Total
Assets at the beginning of such fiscal year or has contributed 10% or more of
EBITDA for any of the three fiscal years then most recently ended (or such
shorter period during which such assets were owned by the Guarantor or a
Subsidiary), unless either (i) the net proceeds (including the cash value of any
securities received but deducting all expenses of sale and sales and transfer
taxes and applicable Federal and state income taxes) from such sale or
disposition are within 12 months from receipt invested in businesses
substantially similar to any line of business in which the Guarantor or any
Subsidiary has been continuously engaged since the date of issuance of the Notes
or (ii) within 12 months after receipt of such net proceeds, an amount equal to
such net proceeds is applied to the pro rata prepayment (based on outstanding
principal amounts) of (a) the principal of the Notes then outstanding (in
accordance with paragraph 4A of the Note Agreement, and together with all
accrued interest on, and Yield-Maintenance Amount, if any, payable with respect
to, the Notes) and (b) all other Debt of the Guarantor and its Subsidiaries
consisting of obligations for borrowed money.

 

Aggregate of capital assets sold or disposed of outside of the ordinary course
of business during the fiscal year in which the period covered by this
Compliance Certificate occurs

              

 

         $                    Consolidated Total Assets at beginning of such
fiscal year    $                    Percentage of Consolidated Total Assets at
the beginning of such fiscal year                   %     EBITDA for each of the
three fiscal years then most recently ended    $                         $
                        $               

 

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     Percentage of EBITDA for each such year contributed by assets sold or
disposed of                %                       %                       %  
   must not involve assets totaling 10% or more of Consolidated Total Assets at
the beginning of such fiscal year or contributing 10% or more of EBITDA for any
of the three fiscal years then most recently ended (or such shorter period
during which such assets were owned by the Guarantor or a Subsidiary) UNLESS,
(i) the net proceeds (including the cash value of any securities received but
deducting all expenses of sale and sales and transfer taxes and applicable
Federal and state income taxes) from such sale or disposition are within 12
months from receipt invested in businesses substantially similar to any line of
business in which the Guarantor or any Subsidiary has been continuously engaged
since the date of issuance of the Notes or (ii) within 12 months after receipt
of such net proceeds, an amount equal to such net proceeds is applied to the pro
rata prepayment (based on outstanding principal amounts) of (a) the principal of
the Notes then outstanding (in accordance with paragraph 4A of the Note
Agreement, and together with all accrued interest on, and Yield-Maintenance
Amount, if any, payable with respect to, the Notes) and (b) all other Debt of
the Guarantor and its Subsidiaries consisting of obligations for borrowed money.
   __________

6.

   Limitations on Sale and Leaseback (Section 5.6)           The Guarantor will
not, and will not permit any Subsidiary to, enter into any arrangement with any
lender or investor or under which such lender or investor is a party, providing
for the leasing or other similar arrangement by the Guarantor or any Subsidiary
of real or personal property used by the Guarantor or any Subsidiary in the
operations of the Guarantor or any Subsidiary, which has been or is sold or
transferred by the Guarantor or any Subsidiary to such lender or investor or to
any Person to whom funds have been or are to be advanced by such lender or
investor on the security of such rental obligations of the Guarantor or such
Subsidiary, EXCEPT that the Guarantor or any Subsidiary (other than the Company)
may enter into sale and lease-back transactions involving newspaper equipment or
facilities acquired after the issuance of the Notes if (i) such arrangement is
for a period of less than three years by the end of which the use of such
property by the lessee will be discontinued, (ii) the net proceeds of such sale
are applied to the retirement of Debt, (iii) the net proceeds of the sale are
used to purchase other property having a value at least equal to such net
proceeds, (iv) the property immediately prior to such sale could have been
subjected to a Lien securing Debt in an amount equal to such net proceeds and
which Lien would have been permitted by clause (xi) of Section 5.2, or (v) the
transaction represents a sale by a Subsidiary (other than the Company) to the
Guarantor or another Subsidiary or by the Guarantor to a Subsidiary.   
___________

 

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7.

   Limitation on Sale of Stock and Debt of Subsidiaries (Section 5.9)           
   The Guarantor will not, and will not permit any Subsidiary to, sell or
otherwise dispose of, or part with control of, any shares of stock of (or other
equity interests in) or Debt of any Subsidiary, except that shares of stock of
(or other equity interests in) or Debt of any Subsidiary (other than the
Company) may be sold or otherwise disposed of to the Guarantor or another
Subsidiary, and except that all shares of stock of (or other equity interests
in) and Debt of any Subsidiary (other than the Company) at the time owned by or
owed to the Guarantor or any Subsidiary may be sold as an entirety for a cash
consideration which represents the fair market value (as determined in good
faith by the Board of Directors of the Guarantor) at the time of sale of the
shares of stock or other equity interests and Debt so sold, provided that the
assets of such Subsidiary do not constitute more than 10% of Consolidated Total
Assets at the beginning of the fiscal year in which such sale or disposition is
to occur and that such Subsidiary shall not have contributed more than 10% of
EBITDA for any of the three fiscal years then most recently ended, unless such
transaction shall be subject to, and in compliance with, Section 5.5, and
further provided that, in any event, at the time of sale, such Subsidiary shall
not own, directly or indirectly, any shares of stock of (or other equity
interests in) or Debt of any other Subsidiary (unless all of the shares of stock
of (or other equity interests in) and Debt of such other Subsidiary are owned,
directly or indirectly, by the Guarantor and all Subsidiaries are simultaneously
being sold as permitted by Section 5.9 of the Guaranty).              
Consolidated Total Assets at beginning of such fiscal year    $                 
   Consolidated Total Assets represented by assets of Subsidiary    $
                    Percentage of Consolidated Total Assets represented by
assets of Subsidiary                   %      EBITDA for each of the three
fiscal years then most recently ended    $                          $
                         $                     Percentage of EBITDA for each
such year contributed by                   %      Subsidiary                   %
                         %      the assets of such Subsidiary must not
constitute more than 10% of Consolidated Total Assets at the beginning of the
fiscal year in which such sale or disposition is to occur and such Subsidiary
must not have contributed more than 10% of EBITDA for any of the three fiscal
years then most recently ended, unless such transaction was subject to, and in
compliance with, Section 5.5.      _____  

8.

  

Issuance of Stock by Subsidiaries (Section 5.10)

The Guarantor will not permit any Subsidiary, the assets of which constitute
more than 10% of Consolidated Total Assets at the beginning of the fiscal year
in which such issuance, sale or disposition is to occur or which has contributed
more than 10% of

        

 

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     EBITDA for any of the three fiscal years most recently ended, to issue,
sell or dispose of any shares of its stock (of any class) or any other equity
interests except to the Guarantor or another Subsidiary.              
Consolidated Total Assets at beginning of such fiscal year    $                 
   Consolidated Total Assets represented by assets of Subsidiary    $
                    Percentage of Consolidated Total Assets represented by
assets of Subsidiary                   %      EBITDA for each of the three
fiscal years then most recently ended    $                          $
                         $                     Percentage of EBITDA for each
such year contributed by Subsidiary                   %                         
%                          %      the assets of such Subsidiary must not
constitute more than 10% of Consolidated Total Assets at the beginning of the
fiscal year in which such issuance, sale or disposition is to occur and the
Subsidiary must not have contributed more than 10% of EBITDA for any of the
three fiscal years most recently ended.         

 

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SCHEDULE 1 TO ANNEX A TO COMPLIANCE CERTIFICATE

 

1.

   Consolidated Debt            

(i) all obligations for borrowed money or obligations represented by notes
payable and drafts accepted representing extensions of credit, all obligations
evidenced by bonds, debentures, notes or other similar instruments and all
obligations upon which interest charges are customarily paid;

   $                  

(ii) Capitalized Lease Obligations;

   $                  

(iii) indebtedness secured by any Lien existing on property owned by the
Guarantor or any Subsidiary subject to such Lien, whether or not the
indebtedness secured thereby shall have been assumed by the Guarantor or any
Subsidiary;

   $                  

(iv) guarantees, endorsements (other than endorsements of negotiable instruments
for collection in the ordinary course of business) and other contingent
liabilities (whether direct or indirect) in connection with the obligations,
stock or dividends of any Person;

   $                  

(v) obligations under any contract providing for the making of loans, advances
or capital contributions to any Person, or for the purchase of any property from
any Person, in each case in order to enable such Person primarily to maintain
working capital, net worth or any other balance sheet condition or to pay debt,
dividends or expenses;

   $                  

(vi) obligations under any contract for the purchase of materials, supplies or
other property from any Person if such contract (or any related document)
requires that payment for such materials, supplies or other property shall be
made regardless of whether or not delivery of such materials, supplies or other
property is ever made or tendered;

   $                  

(vii) obligations under any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or obligations
of the lessor;

   $                  

(viii) obligations under any contract for the sale or use of materials, supplies
or other property, or the rendering of services, if such contract (or any
related document) requires that payment for such materials, supplies or other
property, or the use thereof, or payment for such services, shall be
subordinated to any indebtedness (of the purchaser or user of such materials,
supplies or other property or the Person entitled to the benefit of such
services) owed or to be owed to any Person;

   $                  

(ix) obligations under any other contract which, in economic effect, is
substantially equivalent to a guarantee;

   $                   SUBTOTAL [(i)+(ii)+(iii)+(iv)+(v)+(vi)+(vii)+(viii)+(ix)]
   $                  

(x) But excluding (a) loans, advances and capital contributions by the Guarantor
to any Subsidiary or by any Subsidiary to the Guarantor or another Subsidiary or
a guarantee of the obligations of a Subsidiary under an executory contract to
purchase or sell a business and (b) any amounts which may be due in connection
with the “Gross-Up Transactions” described in Note 15 of the audited
consolidated financial statements of the Guarantor and its Subsidiaries for the
fiscal year ended December 31, 1999, as incorporated in the Guarantor’s annual
report on Form 10-K filed with the Securities and Exchange Commission

            CONSOLIDATED DEBT [SUBTOTAL above - (x)]    $            

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2.

   EBITDA            

(i) Consolidated Net Earnings (determined as set forth in Item 2.1 below),

   $             

 

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(ii) plus, to the extent deducted in the determination of Consolidated Net
Earnings,

           

(a) all provisions for federal, state and other income tax

   $                  

(b) Consolidated Interest Expense (determined as set forth in Item 2.2 below)
and

   $                  

(c) provisions for depreciation and amortization

   $                  

Subtotal of (a), (b) and (c)

   $                  

EBITDA [(i) + (ii)]

   $            

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     Note: Any acquisition or disposition by the Guarantor or any Subsidiary
during any period of all of the capital stock of (or other equity interests in)
any Person, or of all or substantially all of the assets of any Person, shall in
each case be reflected and given effect in EBITDA as if such acquisition or
disposition occurred on the first day of such period, so long as, in the case of
any such acquisition, the Guarantor shall have delivered or caused to be
delivered to each holder of Notes financial information, set forth within
audited financial statements regarding such Person, disclosing the prior
operating results of such Person, and provided further, that for purposes of
calculating EBITDA, the consummation of the Formation/Consummation Transactions
will be taken into account by including, on a pro forma basis, Herald’s share of
EBITDA for periods prior to the Date of Closing, as derived from the “St. Louis
Agency adjustment” reflected in prior consolidated financial statements.       

2.1

   Consolidated Net Earnings            

(i) Consolidated gross revenues of the Guarantor and its Subsidiaries determined
in accordance with generally accepted accounting principles

   $                  

(ii) less all operating and non-operating expenses of the Guarantor and its
Subsidiaries determined in accordance with generally accepted less accounting
principles

   $                   CONSOLIDATED NET EARNINGS [(i) - (ii)]    $            

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     Note: The above include all charges of a property character (including
current and deferred taxes on income, provision for taxes on unremitted foreign
earnings which are included in gross revenues, and current additions to
reserves), but do not include in gross revenues any gains —  —  (net of expenses
and taxes applicable thereto) in excess of losses resulting from the sale,
conversion or other disposition of capital assets (i.e., assets other than
current assets) in excess of an aggregate amount of $5,000,000 in any one year,
any gains resulting from the write-up of assets, any equity of the Guarantor or
any Subsidiary in the unremitted earnings of any corporation which is not a
Subsidiary or any earnings of any Person acquired by the Guarantor or any
Subsidiary through purchase, merger or consolidation or otherwise for any year
prior to the year of acquisition, or any deferred credit representing the excess
of equity in any Subsidiary at the date of acquisition over the cost of
investment in such Subsidiary.       

2.2

   Consolidated Interest Expense             The sum (without duplication) of
the following (in each case, eliminating all offsetting debits and credits
between the Guarantor and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial statements
of the Guarantor and its Subsidiaries in accordance with generally accepted
accounting principles) for the period covered by this Compliance Certificate for
the Guarantor and its Subsidiaries:            

(i) all interest and prepayment charges in respect of Debt of the Guarantor and
its Subsidiaries (including imputed interest in respect of Capitalized Lease
obligations and net costs of any interest rate or currency hedging or similar
arrangements) deducted in determining consolidated net income for such period,
together with all interest capitalized or deferred during

      

 

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     such period and not deducted in determining consolidated net income for
such period plus    $                  

(ii) all debt discount and expense amortized or required to be amortized in the
determination of consolidated net income for such period

   $                   CONSOLIDATED INTEREST EXPENSE [(i) + (ii)]    $         
  

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3.

   CONSOLIDATED NET WORTH            

(i) Total amount of total assets of the Guarantor and its Subsidiaries as of the
last day of the fiscal quarter most recently then ended, determined on a
consolidated basis in accordance with generally accepted accounting principles
less

   $                  

(ii) Total liabilities of the Guarantor and its Subsidiaries as of the last day
of the fiscal quarter most recently then ended, determined on a consolidated
basis in accordance with generally accepted accounting principles.

   $                   CONSOLIDATED NET WORTH [(i) - (ii)]    $            

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4.

   PRIORITY DEBT    $            

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(i) Aggregate amount of all Debt of the Guarantor secured by a Lien plus

   $                  

(ii) All secured and unsecured Debt of all Subsidiaries (excluding Debt
represented by the Notes)

   $                       

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     PRIORITY DEBT [(i) + (ii)]    $             

5.

   CAPITALIZATION            

(i) Consolidated Net Worth plus

   $                  

(ii) Consolidated Debt

   $                   CAPITALIZATION [(i) + (ii)]    $                       

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AMENDMENT NO. 1 TO GUARANTY AGREEMENT

 

THIS AMENDMENT NO. 1 TO GUARANTY AGREEMENT, dated as of August 7, 2000 (this
“Amendment”), is entered into by PULITZER INC., a Delaware corporation (the
“Guarantor”), in favor of the holders from time to time of the Notes issued
under the below-described Note Agreement.

 

Recitals

 

A. St. Louis Post-Dispatch LLC, a Delaware limited liability company (the
“Company”), entered into that certain Note Agreement dated as of May 1, 2000 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Note Agreement”) with the several Purchasers listed in the
Purchaser Schedule attached thereto, pursuant to which the Company issued and
sold to such Purchasers $306,000,000 aggregate principal amount of the Company’s
8.05% Senior Notes due April 28, 2009 (together with any other notes issued in
substitution or exchange therefor pursuant to the terms of the Note Agreement,
the “Notes”).

 

B. In connection with the Note Agreement, the Guarantor executed and delivered
that certain Guaranty Agreement dated as of May 1, 2000 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty”).

 

C. The Guarantor desires to make certain amendments and modifications to the
Guaranty, as set forth in this Amendment, and the undersigned holders of Notes
desire to consent to such amendments and modifications.

 

NOW, THEREFORE, in order to accomplish the matters contemplated by the preceding
Recitals and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Guaranty is hereby amended as follows:

 

1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Guaranty.

 

2. Amendments.

 

(a) Amendment to Definitions. Section 1.1 of the Guaranty is amended by adding
the following definition in the appropriate alphabetical location:

 

“ “Stock Repurchase Plan” shall mean any plan announced from time to time by the
Guarantor to repurchase its own capital stock, including from Affiliates, in
either open market or privately negotiated transactions.”

 

(b) Amendment to Loans, Advances and Investments Covenant. Section 5.4 of the
Guaranty is amended by inserting the word “other” immediately prior to the word
“Person” in the fourth line thereof.

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(c) Amendment to Transactions With Affiliates Covenant. Section 5.8 of the
Guaranty is amended by deleting therefrom the clause beginning “except
transactions in the ordinary course of ...” and inserting in place thereof the
following:

 

“except (i) transactions in the ordinary course of and pursuant to the
reasonable requirements of the Guarantor’s and each Subsidiary’s business, as
the case may be, and (ii) in the case of the Guarantor, transactions with
Affiliates consisting of the repurchase of capital stock of the Guarantor from
such Affiliates pursuant to any Stock Repurchase Plan; provided that, in the
case of any transaction described in either clause (i) or (ii) above, such
transaction is upon fair and reasonable terms that are no less favorable to the
Guarantor and/or any of its Subsidiaries, as the case may be, than those which
might be obtained in an arm’s length transaction with a Person not an Affiliate;
and provided further that, in the case of any transaction described in clause
(ii) above, any such repurchase of capital stock of the Guarantor from an
Affiliate may be made only if no Default or Event of Default exists, either
before or immediately after giving effect to such repurchase.”

 

3. Representations and Warranties. The Guarantor represents and warrants as
follows:

 

(a) Organization; Power and Authority; Enforceability. The Guarantor is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware, and has all requisite corporate power to execute and
deliver this Amendment and to perform its obligations under the Guaranty as
amended hereby. The execution and delivery by the Guarantor of this Amendment
and the performance by the Guarantor of its obligations under the Guaranty as
amended hereby have been duly authorized by all requisite corporate action on
the part of the Guarantor. The Guarantor has duly executed and delivered this
Amendment, and the Guaranty as amended hereby constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms.

 

(b) No Default or Event of Default. No Default or Event of Default exists,
either before or immediately after giving effect to this Amendment.

 

(c) No Material Adverse Change. Since May 1, 2000, there has been no material
adverse change in (i) the business, condition or operations (financial or
otherwise) of the Guarantor and its Subsidiaries, (ii) the ability of the
Guarantor to perform its obligations under the Guaranty as amended hereby or the
ability of the Company to perform its obligations under the Note Agreement or
the Notes or (iii) the validity or enforceability of this Guaranty, the Note
Agreement or the Notes.

 

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The effectiveness of this Amendment is conditioned upon (i) the written consent
of the Required Holder(s) (as defined in the Note Agreement), as evidenced by
such holder(s)’ execution of this Amendment where indicated below, and (ii) the
accuracy of each of the foregoing representations and warranties of the
Guarantor.

 

Section 4. Miscellaneous.

 

(a) References to Guaranty. Upon and after the date of this Amendment, each
reference to the Guaranty in the Guaranty, the Note Agreement or any other
instrument or agreement entered into in connection therewith or otherwise
related thereto shall mean and be a reference to the Guaranty as amended by this
Amendment.

 

(b) Ratification and Confirmation. Except as specifically amended herein, the
Guaranty shall remain in full force and effect, and is hereby ratified and
confirmed.

 

(c) No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any holder of Notes,
nor constitute a waiver of any provision of the Guaranty, the Note Agreement or
any other instrument or agreement entered into in connection therewith or
otherwise related thereto.

 

(d) Expenses. The Guarantor agrees to pay promptly, or to cause the Company to
pay promptly, all expenses of the holders of Notes related to this Amendment and
all matters contemplated hereby, including, without limitation, all fees and
expenses of the holders’ special counsel.

 

(e) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.

 

(f) Counterparts. This Amendment may be executed in counterparts (including
those transmitted by facsimile), each of which shall be deemed an original and
all of which taken together shall constitute one and the same document. Delivery
of this Amendment may be made by facsimile transmission of a duly executed
counterpart copy hereof.

 

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first above
written to become effective (subject to the last sentence of Section 3 hereof)
as of such date.

 

GUARANTOR:

PULITZER INC.

By:   /s/    JON H. HOLT        

Name:

  Jon H. Holt

Title:

  Treasurer

 

NOTE HOLDERS (To evidence consent to the

amendment hereby of the Guaranty):

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By:   /s/    RIC E. ABEL        

Name:

  Ric E. Abel

Title:

  Vice President

 

AMERICAN GENERAL ANNUITY INSURANCE COMPANY AMERICAN GENERAL LIFE INSURANCE
COMPANY By:    

Name:

   

Title:

   

 

GE EDISON LIFE INSURANCE COMPANY

By:

   

Name:

   

Title:

   

 

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FIRST COLONY LIFE INSURANCE COMPANY

By:    

Name:

   

Title:

   

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By:   /S/    A. KIPP KOESTER        

Name:

  A. Kipp Koester

Its

  Authorized Representative

 

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
for its Group Annuity Separate Account

By:   Northwestern Investment Management Company    

By:

  /s/    A. KIPP KOESTER            

Name:

  A. Kipp Koester

Its

  Managing Director

 

PACIFIC LIFE INSURANCE COMPANY

By:   /S/    DIANE W. DALES        

Name:

  Diane W. Dales

Title:

  Assistant Vice President

 

By:   /S/    PETER S. FIEK        

Name:

  Peter S. Fiek

Title:

  Assistant Secretary

 

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EXECUTION VERSION

 

AMENDMENT NO. 2 TO GUARANTY AGREEMENT

 

THIS AMENDMENT NO. 2 TO GUARANTY AGREEMENT, dated as of November 23, 2004 (this
“Amendment”), is entered into by PULITZER INC., a Delaware corporation (the
“Guarantor”), in favor of the holders from time to time of the Notes issued
under the below-described Note Agreement.

 

Recitals

 

A. St. Louis Post-Dispatch LLC, a Delaware limited liability company (the
“Company”), entered into that certain Note Agreement dated as of May 1, 2000 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Note Agreement”) with the several Purchasers listed in the
Purchaser Schedule attached thereto, pursuant to which the Company issued and
sold to such Purchasers $306,000,000 aggregate principal amount of the Company’s
8.05% Senior Notes due April 28, 2009 (together with any other notes issued in
substitution or exchange therefor pursuant to the terms of the Note Agreement,
the “Notes”).

 

B. In connection with the Note Agreement, the Guarantor executed and delivered
that certain Guaranty Agreement dated as of May 1, 2000, as amended by Amendment
No. 1 to Guaranty Agreement, dated as of August 7, 2000 (as so amended and as
the same may be further amended, restated, supplemented or otherwise modified
from time to time, the “Guaranty”).

 

C. As of the date first above written, the undersigned holders of Notes together
hold at least 51% of the aggregate outstanding principal amount of the Notes,
and therefore constitute the Required Holder(s) (as defined in the Note
Agreement) for purposes of this Amendment.

 

D. The Guarantor desires to make certain amendments and modifications to the
Guaranty, as set forth in this Amendment, and the undersigned holders of Notes,
subject to the terms and conditions set forth herein, are willing to agree to
such amendments and modifications.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Guaranty.

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2. Amendments to Section 5.4 (Loans, Advances and Investments).

 

(a) Section 5.4 of the Guaranty is amended by deleting clause (xiii) thereof in
its entirety and replacing it with the following:

 

“(xiii) own, purchase or acquire investments in money market funds that are
classified as current assets in accordance with generally accepted accounting
principles, and that are rated “AAAm” or the equivalent by Standard & Poor’s
Ratings Group, or Moody’s Investors Service, Inc. or Fitch Investors Service,
Inc., which funds are managed by either (a) Persons having capital and surplus,
or net worth, in excess of $500,000,000 or (b) any Person that is a direct or
indirect subsidiary of a Person described in the foregoing clause (a);”

 

(b) Section 5.4 of the Guaranty is further amended by (i) deleting the word
“and” from the end of clause (xx) thereof, (ii) renumbering clause (xxi) thereof
as clause (xxii) and (iii) adding a new clause (xxi) thereto, such new clause
(xxi) to read as follows:

 

“(xxi) own, purchase or acquire investments in commingled funds/portfolios that
invest primarily in U.S. dollar denominated obligations, with a weighted average
portfolio maturity of 120 days or less, and rated “AAA” or the equivalent, by at
least two of Standard & Poor’s Ratings Group, Moody’s Investors Service, Inc.
and Fitch Investors Service, Inc., which funds are managed by either (a) Persons
having capital and surplus, or net worth, in excess of $500,000,000 or (b) any
Person that is a direct or indirect subsidiary of a Person described in the
foregoing clause (a); and”

 

3. Representations and Warranties. The Guarantor represents and warrants as
follows:

 

(a) Organization; Power and Authority; Enforceability. The Guarantor is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware, and has all requisite corporate power to execute and
deliver this Amendment and to perform its obligations under this Amendment and
the Guaranty as amended hereby. The execution and delivery by the Guarantor of
this Amendment and the performance by the Guarantor of its obligations under
this Amendment and the Guaranty as amended hereby have been duly authorized by
all requisite corporate action on the part of the Guarantor. The Guarantor has
duly executed and delivered this Amendment, and this Amendment and the Guaranty
as amended hereby constitute the legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with their terms.

 

(b) No Default or Event of Default. No Default or Event of Default exists,
either before or immediately after giving effect to this Amendment.

 

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(c) No Material Adverse Change. Since December 31, 2003, there has been no
material adverse change in (i) the business, condition or operations (financial
or otherwise) of the Guarantor and its Subsidiaries, (ii) the ability of the
Guarantor to perform its obligations under the Guaranty as amended hereby or the
ability of the Company to perform its obligations under the Note Agreement or
the Notes or (iii) the validity or enforceability of the Guaranty, the Note
Agreement or the Notes.

 

The effectiveness of this Amendment is conditioned upon (i) the written consent
of the Required Holder(s), as evidenced by such holders’ execution of this
Amendment where indicated below, and (ii) the accuracy of each of the foregoing
representations and warranties of the Guarantor.

 

Section 4. Miscellaneous.

 

(a) References to Guaranty. Upon and after the date of this Amendment, each
reference to the Guaranty in the Guaranty, the Note Agreement, the Notes or any
other instrument or agreement entered into in connection therewith or otherwise
related thereto shall mean and be a reference to the Guaranty as amended by this
Amendment.

 

(b) Ratification and Confirmation. Except as specifically amended herein, the
Guaranty shall remain in full force and effect, and is hereby ratified and
confirmed.

 

(c) No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any holder of Notes,
nor constitute a waiver of any provision of the Guaranty, the Note Agreement,
any Note or any other instrument or agreement entered into in connection
therewith or otherwise related thereto.

 

(d) Expenses. The Guarantor agrees to pay promptly, or to cause the Company to
pay promptly, all expenses of the holders of Notes related to this Amendment and
all matters contemplated hereby, including, without limitation, all fees and
expenses of the holders’ special counsel.

 

(e) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.

 

(f) Counterparts. This Amendment may be executed in counterparts (including
those transmitted by facsimile), each of which shall be deemed an original and
all of which taken together shall constitute one and the same document. Delivery
of this Amendment may be made by facsimile transmission of a duly executed
counterpart copy hereof.

 

[Remainder of page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first above
written to become effective (subject to the last sentence of Section 3 hereof)
as of such date.

 

GUARANTOR:

PULITZER INC.

By:   /s/    JON H. HOLT        

Name: 

  Jon H. Holt

Title:

  Treasurer

 

NOTE HOLDERS (To evidence consent to the amendment hereby of the Guaranty):

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:    /s/    BRIAN LEMONS             Vice-President

AMERICAN GENERAL LIFE INSURANCE COMPANY

AIG ANNUITY INSURANCE COMPANY

AIG EDISON LIFE INSURANCE COMPANY

By:  

AIG Global Investment Corp., investment advisor

    By:   /s/    PETER DEFAZIO            

Name: 

  Peter DeFazio    

Title:

  Vice President

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FIRST COLONY LIFE INSURANCE COMPANY

By:   /s/    JOHN R. ENDRES        

Name:

  John R. Endres

Title:

  Investment Officer

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By:   /s/    MARK E. KISHLER        

Name:

  Mark E. Kishler     Its Authorized Representative

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
for its Group Annuity Separate Account

By:

 

Northwestern Investment Management Company

    By:   /s/    MARK E. KISHLER          

Name: 

  Mark E. Kishler    

Its

  Managing Director

PACIFIC LIFE INSURANCE COMPANY

By:   /s/    DIANE W. DALES        

Name: 

  Diane W. Dales

Title:

  Assistant Vice President By:   /s/    DAVID C. PATCH        

Name:

  David C. Patch

Title:

  Assistant Secretary

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AMENDMENT NO. 3 TO GUARANTY AGREEMENT

 

THIS AMENDMENT NO. 3 TO GUARANTY AGREEMENT, dated as of June 3, 2005 (this
“Amendment”), is entered into by PULITZER INC., a Delaware corporation (the
“Guarantor”), in favor of the holders from time to time of the Notes issued
under the below-described Note Agreement.

 

Recitals

 

A. St. Louis Post-Dispatch LLC, a Delaware limited liability company (the
“Company”), entered into that certain Note Agreement dated as of May 1, 2000 (as
the same may be amended, restated, supplemented or otherwise modified from time
to time, the “Note Agreement”) with the several Purchasers listed in the
Purchaser Schedule attached thereto, pursuant to which the Company issued and
sold to such Purchasers $306,000,000 aggregate principal amount of the Company’s
8.05% Senior Notes due April 28, 2009 (together with any other notes issued in
substitution or exchange therefor pursuant to the terms of the Note Agreement,
the “Notes”).

 

B. In connection with the Note Agreement, the Guarantor executed and delivered
that certain Guaranty Agreement dated as of May 1, 2000, as amended by Amendment
No. 1 to Guaranty Agreement dated as of August 7, 2000 and Amendment No. 2 to
Guaranty Agreement dated as of November 23, 2004 (as so amended and as the same
may be further amended, restated, supplemented or otherwise modified from time
to time, the “Guaranty”).

 

C. As of the date first above written, the undersigned holders of Notes together
hold at least 51% of the aggregate outstanding principal amount of the Notes,
and therefore constitute the Required Holder(s) (as defined in the Note
Agreement) for purposes of this Amendment.

 

D. The Guarantor desires to make certain amendments and modifications to the
Guaranty, as set forth in this Amendment, and the undersigned holders of Notes,
subject to the terms and conditions set forth herein, are willing to agree to
such amendments and modifications.

 

NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Definitions. Capitalized terms used and not otherwise defined herein shall
have the respective meanings ascribed to them in the Guaranty.

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2. Amendments to Section 1.1 (Defined Terms).

 

(a) Section 1.1 of the Guaranty is amended by adding the following new
definition in the appropriate alphabetical position:

 

“Lee Transaction” means the merger of LP Acquisition Corp., an indirect
wholly-owned subsidiary of Lee Enterprises, Incorporated, with and into the
Guarantor, with the Guarantor as the surviving corporation, pursuant to the
terms and conditions of an Agreement and Plan of Merger dated as of January 29,
2005 by and among the Guarantor, Lee Enterprises, Incorporated and LP
Acquisition Corp.

 

(b) Section 1.1 of the Guaranty is further amended by adding the following
immediately before the period at the end of the definition of “EBITDA” set forth
therein:

 

“, and provided, further, that solely for purposes of clause (i) of Section 5.1
hereof, extraordinary and nonrecurring expenses incurred by the Guarantor
directly in connection with the Lee Transaction (including, without limitation,
fees of advisors, attorneys, success bonuses and out-of-pocket expenses), in an
aggregate amount not to exceed $40,000,000, shall, to the extent deducted in the
determination of Consolidated Net Earnings, be added to EBITDA”

 

3. Representations and Warranties. The Guarantor represents and warrants as
follows:

 

(a) Organization; Power and Authority; Enforceability. The Guarantor is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware, and has all requisite corporate power to execute and
deliver this Amendment and to perform its obligations under this Amendment and
the Guaranty as amended hereby. The execution and delivery by the Guarantor of
this Amendment and the performance by the Guarantor of its obligations under
this Amendment and the Guaranty as amended hereby have been duly authorized by
all requisite corporate action on the part of the Guarantor. The Guarantor has
duly executed and delivered this Amendment, and this Amendment and the Guaranty
as amended hereby constitute the legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with their terms.

 

(b) No Default or Event of Default. No Default or Event of Default exists,
either before or immediately after giving effect to this Amendment.

 

(c) No Material Adverse Change. Since December 26, 2004, there has been no
material adverse change in (i) the business, condition or operations (financial
or otherwise) of the Guarantor and its Subsidiaries, (ii) the ability of the
Guarantor to perform its obligations under the Guaranty as amended hereby or the
ability of the Company to perform its obligations under the Note Agreement or
the Notes or (iii) the validity or enforceability of the Guaranty, the Note
Agreement or the Notes.

 

The effectiveness of this Amendment is conditioned upon (i) the written consent
of the Required Holder(s), as evidenced by such holders’ execution of this
Amendment where indicated below, and (ii) the accuracy of each of the foregoing
representations and warranties of the Guarantor.

 

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Section 4. Miscellaneous.

 

(a) References to Guaranty. Upon and after the date of this Amendment, each
reference to the Guaranty in the Guaranty, the Note Agreement, the Notes or any
other instrument or agreement entered into in connection therewith or otherwise
related thereto shall mean and be a reference to the Guaranty as amended by this
Amendment.

 

(b) Ratification and Confirmation. Except as specifically amended herein, the
Guaranty shall remain in full force and effect, and is hereby ratified and
confirmed.

 

(c) No Waiver. The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any holder of Notes,
nor constitute a waiver of any provision of the Guaranty, the Note Agreement,
any Note or any other instrument or agreement entered into in connection
therewith or otherwise related thereto.

 

(d) Expenses. The Guarantor agrees to pay promptly, or to cause the Company to
pay promptly, all expenses of the holders of Notes related to this Amendment and
all matters contemplated hereby, including, without limitation, all fees and
expenses of the holders’ special counsel.

 

(e) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE
OF NEW YORK.

 

(f) Counterparts. This Amendment may be executed in counterparts (including
those transmitted by facsimile), each of which shall be deemed an original and
all of which taken together shall constitute one and the same document. Delivery
of this Amendment may be made by telecopy or electronic transmission of a duly
executed counterpart copy hereof; provided that any such delivery by electronic
transmission shall be effective only if transmitted in .pdf format, .tif format
or other format in which the text is not readily modifiable by any recipient
thereof.

 

[Remainder of page intentionally left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed
and delivered by their duly authorized officers as of the date first above
written to become effective (subject to the last sentence of Section 3 hereof)
as of such date.

 

GUARANTOR:

PULITZER INC.

By:   /s/    ROBERT C. WOODWORTH        

Name: 

  Robert C. Woodworth

Title:

  President and Chief Executive Officer

 

NOTE HOLDERS (To evidence consent to the amendment hereby of the Guaranty):

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:    /s/    BRIAN LEMONS             Vice President

AMERICAN GENERAL LIFE INSURANCE COMPANY

AIG ANNUITY INSURANCE COMPANY

By:  

AIG Global Investment Corp., investment advisor

    By:   /s/    PETER DEFAZIO            

Name: 

  Peter DeFazio    

Title:

  Vice President

AIG EDISON LIFE INSURANCE COMPANY

By:  

AIG Global Investment Corp., investment sub-advisor

    By:   /s/    PETER DEFAZIO            

Name: 

  Peter DeFazio    

Title:

  Vice President

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FIRST COLONY LIFE INSURANCE COMPANY

By:   /s/    JOHN R. ENDRES        

Name:

  John R. Endres

Title:

  Investment Officer

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By:   /s/    MARK E. KISHLER        

Name:

  Mark E. Kishler     Its Authorized Representative

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
for its Group Annuity Separate Account

By:

 

Northwestern Investment Management Company

    By:   /s/    MARK E. KISHLER          

Name: 

  Mark E. Kishler         Its Managing Director

PACIFIC LIFE INSURANCE COMPANY

By:   /s/    DIANE W. DALES        

Name: 

  Diane W. Dales

Title:

  Assistant Vice President By:   /s/    PETER S. FIEK        

Name:

  Peter S. Fiek

Title:

  Assistant Secretary