Document:

<PAGE>   1
                                                                    EXHIBIT 10.8

                                 FIRST AMENDMENT

                                       TO

                                CREDIT AGREEMENT

            This FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment")
is dated as of May 20, 1999 and is by and among LIBERTY GROUP OPERATING, INC.,
as Borrower, LIBERTY GROUP PUBLISHING, INC. ("Holdings"), the LENDERS (as
defined in the Credit Agreement referred to below) party hereto, CITIBANK, N.A.,
as Issuing Bank, and CITICORP USA, INC., as Administrative Agent and as
Swingline Lender.

                                    RECITALS

         1. The Borrower and Holdings have previously entered into that certain
Credit Agreement dated as of January 27, 1998 (as amended to date, the "Credit
Agreement") with the Lenders from time to time party thereto, CITICORP USA,
INC., as Administrative Agent and Swingline Lender, CITIBANK, N.A., as Issuing
Bank, BT ALEX BROWN INCORPORATED, as Syndication Agent, WELLS FARGO BANK, N.A.,
as Documentation Agent, and BANK OF AMERICA NT&SA, as Co-Agent.

         2. The Borrower has requested that the Lenders consent to an increase
in the aggregate amount of the Revolving Commitments available under the Credit
Agreement from $125,000,000 to $175,000,000, and the Lenders are willing to
grant such consent on the terms and conditions set forth herein.

         3. Certain of the Lenders and certain additional lenders party hereto
(such additional lenders being referred to herein as the "New Lenders") are
willing to provide $50,000,000 in additional Revolving Commitments under the
Credit Agreement and such New Lenders shall become Lenders under and parties to
the Credit Agreement pursuant to this Agreement.

                                    AGREEMENT

                                       I.
                                   DEFINITIONS

         1.1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Credit
Agreement.

                                       II.
                                   AMENDMENTS

         2.1. Amendments to Credit Agreement; Schedules; Exhibits. As of the
First Amendment Effective Date, the Credit Agreement shall be amended as
follows:

<PAGE>   2

             2.1.1. Section 1.1. Section 1.1 of the Credit Agreement is hereby
amended by:

                    (a) adding thereto in appropriate alphabetical order the
following definitions:

                        "'FIRST AMENDMENT' means the First Amendment to Credit
             Agreement dated as of May 20, 1999 among the Borrower, Holdings,
             the Lenders and the Administrative Agent.

                        'FIRST AMENDMENT EFFECTIVE DATE' has the meaning set
             forth in the First Amendment."

                    (b) deleting the pricing grid set forth in the definition of
"Applicable ABR Margin" and "Applicable Eurodollar Margin" and replacing such
pricing grid with the following:

<TABLE>
<CAPTION>

                 TOTAL LEVERAGE RATIO:                          ABR SPREAD                  EURODOLLAR SPREAD
                                                                  (p.a.)                          (p.a.)
<S>                                                            <C>                          <C>
                     CATEGORY 1
              Greater than 6.75 to 1.00                            1.75%                            3.00%

                     CATEGORY 2
  Greater than 6.25 to 1.00 but less than or equal                 1.50%                            2.75%
                   to 6.75 to 1.00

                     CATEGORY 3
  Greater than 5.50 to 1.00 but less than or equal                 1.25%                            2.50%
                   to 6.25 to 1.00

                     CATEGORY 4
  Greater than 4.50 to 1.00 but less than or equal                1.125%                           2.375%
                   to 5.50 to 1.00

                     CATEGORY 5
         Less than or equal to 4.50 to 1.00                        1.00%                            2.25%
</TABLE>

                    (c) adding the words "the First Amendment or" immediately
after the words "become a party hereto pursuant to" appearing in the second line
of the definition of "LENDERS";

                    (d) deleting the final sentence of the definition of
"REVOLVING COMMITMENT" and substituting the following therefor:

                  "The initial amount of each Lender's Revolving Commitment
                  (after giving effect to the First Amendment) is set forth on
                  Schedule 2.1, or in the Assignment and Acceptance pursuant to
                  which such Lender shall have assumed its Revolving Commitment,
                  as applicable (and the initial aggregate amount of the
                  Lenders' Revolving Commitments (after giving effect to the
                  First Amendment) is $175,000,000)."

                  2.1.2. Section 2.1(b). The text (including the Section
heading) of Section 2.1(b) of the Credit Agreement is hereby deleted in its
entirety and the following substituted therefor:

                                       2
<PAGE>   3

                                  "[reserved]"

                  2.1.3. New Section 4.16. Article IV of the Credit Agreement is
hereby amended by adding thereto a new Section 4.16 to read as follows:

                                 "SECTION 4.16 YEAR 2000. Any reprogramming
                  required to permit the proper functioning, in and following
                  the year 2000, of (i) each Loan Party's computer systems and
                  (ii) equipment containing embedded microchips (including
                  systems and equipment supplied by others or with which any
                  Loan Party's systems interface) and the testing of all such
                  systems and equipment (except systems and equipment acquired
                  in Acquisitions consummated after the date of the First
                  Amendment), as so reprogrammed, will be completed by August
                  31, 1999. The cost to the Loan Parties of such reprogramming
                  and testing (including with respect to systems and equipment
                  acquired in Acquisitions consummated after the date of the
                  First Amendment) of the reasonably foreseeable consequences of
                  year 2000 to the Loan Parties (including, without limitation,
                  reprogramming errors and the failure of others' systems or
                  equipment) will not result in a Default or a Material Adverse
                  Effect. Except for such of the reprogramming referred to in
                  the preceding sentence as may be necessary, each Loan Party's
                  computer and management information systems are sufficient to
                  permit such Loan Party to conduct its business as presently
                  conducted without Material Adverse Effect. Each Loan Party
                  represents and warrants that it has a reasonable basis to
                  believe that no year 2000 problem will cause a Material
                  Adverse Effect.

                  2.1.4. New Section 5.15. Article V of the Credit Agreement is
hereby amended by adding thereto a new Section 5.15 to read as follows:

                                 "SECTION 5.15 YEAR 2000 MATTERS. Each of
                  Holdings, the Borrower and each of its Subsidiaries shall take
                  all action necessary and commit adequate resources to assure
                  that their respective computer-based and other systems are
                  able to effectively process data including dates before, on
                  and after January 1, 2000 without experiencing any year 2000
                  problem that could cause a Material Adverse Effect. At the
                  request of the Administrative Agent or any Lender, the
                  Borrower shall use commercially reasonable efforts to provide
                  or cause to be provided to the Administrative Agent or such
                  Lender, as the case may be, with assurance and substantiation
                  (including, but not limited to, the results of internal or
                  external audit reports prepared in the ordinary course of
                  business) reasonably acceptable to the Administrative Agent or
                  such Lender, as the case may be, as to the year 2000
                  capability of Holdings, the Borrower and its Subsidiaries and
                  their respective abilities to conduct their respective
                  businesses and operations before, on and after January 1, 2000
                  without experiencing a year 2000 problem causing a Material
                  Adverse Effect.

                                       3
<PAGE>   4

                  2.1.5. Schedule 2.1. Schedule 2.1 to the Credit Agreement is
hereby deleted in its entirety and replaced for all purposes of the Credit
Agreement and the other Loan Documents with Schedule 2.1 attached hereto.

                                      III.
                         REPRESENTATIONS AND WARRANTIES

             3.1. Representations and Warranties. Each of the Borrower and
Holdings hereby represents and warrants to each Agent, each Lender (including,
without limitation, each New Lender) and the Issuing Bank as follows:

                  3.1.1. Such party is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, with all
requisite power and authority to carry on its business as now conducted and to
enter into and perform its obligations under this First Amendment (and the
Credit Agreement as amended hereby) and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

                  3.1.2. Such party has taken all necessary corporate action to
authorize the execution, delivery and performance of this First Amendment (and
the Credit Agreement as amended hereby).

                  3.1.3. The execution, delivery and performance of this First
Amendment and the performance of each of the Loan Documents as amended hereby
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of any member of the Holdings Group or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument governing Material Indebtedness of, or any other
material agreement binding upon, any member of the Holdings Group or its assets,
or give rise to a right thereunder to require any payment to be made by any
member of the Holdings Group, and (d) will not result in the creation or
imposition of any Lien on any asset of any member of the Holdings Group, except
Liens created under the Loan Documents.

                  3.1.4. This First Amendment has been duly executed and
delivered by such party and each of this First Amendment and the Credit
Agreement as amended hereby constitutes the legal, valid and binding obligation
of such party, enforceable against such party in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (regardless of whether enforcement
is sought in a proceeding at law or in equity).

                                       4
<PAGE>   5

                  3.1.5. Before and after giving effect to this First Amendment,
no event has occurred and is continuing, or would result from the execution and
delivery of this First Amendment that would constitute a Default.

                  3.1.6. Each of the representations and warranties contained in
this First Amendment and the Credit Agreement as amended hereby and in each of
the other Loan Documents is true, correct and complete in all material respects
as if set forth in full herein and made on the date this First Amendment becomes
effective, except to the extent that any such representation and warranty
specifically relates to an earlier date, in which case it was true, correct and
complete as of such earlier date.

                  3.1.7. Attached hereto as Exhibit A are true and correct
copies of (i) Schedules 4.5(b), 4.5(c), 4.14(b) and 4.14(c) to the Credit
Agreement, (ii) Schedules 3.1(b), 3.1(c), 3.1(e), 3.1(g), 3.1(h) and 3.1(i) to
the Guarantor Pledge and Security Agreement, (iii) Schedules 3.1(b), 3.1(c),
3.1(e) and 3.1(h) to the Borrower Pledge and Security Agreement, (iv) Schedule
I(b) to the Trademark Collateral Assignment, and (v) Schedule I to the Copyright
Security Agreement, in each case as revised as of April 2, 1999 and as in effect
as of the date of this First Amendment.

                                       IV.
                           CONDITIONS TO EFFECTIVENESS

         4.1. Conditions to Effectiveness. The amendments effected by this First
Amendment shall not become effective until the date (the "First Amendment
Effective Date"), not later than May 31, 1999 on which the following conditions
precedent are satisfied or waived in writing by the Lenders (including, without
limitation, each New Lender):

                  4.1.1. Execution of this Agreement; Revolving Notes. Holdings,
the Borrower, the Administrative Agent, the Issuing Bank and each Lender
(including, without limitation, each New Lender) shall have executed and
delivered this First Amendment to the Administrative Agent and each other
Guarantor shall have executed and delivered the Consent attached hereto to the
Administrative Agent. The Borrower shall have executed and delivered to the
Administrative Agent a new Revolving Note in favor of any Lender with an
increased Revolving Commitment and any New Lender, in each case to the extent
such Lender or New Lender has requested the same, and each such Lender (other
than a New Lender) shall have delivered to the Administrative Agent for
cancellation and return to the Borrower the outstanding Revolving Notes, if any,
being replaced thereby.

                  4.1.2. Opinions of Counsel. The Administrative Agent shall
have received favorable written opinions (addressed to the Administrative Agent,
the Issuing Bank and the Lenders) of (i) Katten Muchin & Zavis, counsel for the
Loan Parties, covering such matters relating to the Loan Parties and the First
Amendment as the Administrative Agent or the Required Lenders shall

                                       5
<PAGE>   6

reasonably request (and the Borrower hereby requests such counsel to deliver
such opinions), and (ii) Latham & Watkins, counsel to the Administrative Agent,
in form and substance satisfactory to the Administrative Agent.

                  4.1.3. Organizational Documents. The Administrative Agent
shall have received certified copies of resolutions of the Borrower's board of
directors authorizing this First Amendment and such other documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of each Loan Party,
the authorization of this First Amendment and any other legal matters relating
to the Loan Parties and this First Amendment, all in form and substance
satisfactory to the Administrative Agent and its counsel.

                         4.1.3.1. The Administrative Agent shall have received a
certificate of the Borrower, certifying as to (A) the names and true signatures
of the officers of the Borrower and each other Loan Party authorized to sign
this First Amendment or the Consent, (B) the truth in all material respects of
the representations and warranties contained in the Loan Documents as though
made on and as of the First Amendment Effective Date, other than any such
representations or warranties that by their terms refer to a date other than the
First Amendment Effective Date, in which case such representations and
warranties shall be true and correct as of such other date, and (C) the absence
of any event occurring and continuing that constitutes a Default.

                  4.1.4. Payment of Interest, Fees, Etc. The Administrative
Agent shall have received payment of (a) all accrued interest, commitment fees
and breakage costs, if any, in connection with the reallocation of the Revolving
Commitments of the Lenders as set forth in Article V of this First Amendment,
and (b) all fees and other amounts due and payable on or prior to the date
hereof, including, to the extent invoiced, reimbursement or payment of all
expenses required to be reimbursed or paid by any Loan Party hereunder or under
the Credit Agreement.

                                       V.
                  NEW LENDERS; REALLOCATION OF PRO RATA SHARES

         5.1. New Lenders. Each New Lender (a) confirms that it has received a
copy of the Credit Agreement, together with copies of the financial statements
referred to in Section 5.1 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this First Amendment and become a Lender under the Credit Agreement; (b)
agrees that it will, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (c) appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under the Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers and discretion as are reasonably incidental thereto; and (d) agrees that
it will be bound by the Credit Agreement, as amended hereby, as a "Lender"
thereunder and will perform in accordance with their terms all of

                                       6
<PAGE>   7

the obligations that by the terms of the Credit Agreement are required to be
performed by it as a Lender. As of the First Amendment Effective Date, each New
Lender shall be a party to the Credit Agreement and shall have the rights and
obligations of a Lender thereunder.

         5.2. Realignment of the Loans. In order to effect a realignment of each
Lender's pro rata share of the aggregate principal amount of all outstanding
Loans after giving effect to the increased Revolving Commitments of certain
Lenders as reflected in Schedule 2.1 hereto, the Borrower and each Lender
(including, without limitation, each New Lender) agree as follows
notwithstanding any contrary provision of any Loan Document:

              (a) Simultaneously with the effectiveness of this First Amendment,
each outstanding Eurodollar Borrowing owing to each Lender shall be converted to
an ABR Borrowing and the Borrower agrees to pay to each Lender any amount that
may be owing to such Lender pursuant to Section 2.14(e) of the Credit Agreement
as a result of such conversion. All accrued and unpaid interest in respect of
all Eurodollar Borrowings so converted shall be due and payable by the Borrower
on the First Amendment Effective Date.

              (b) Upon satisfaction of each of the conditions to the
effectiveness of this First Amendment as set forth in Article IV, each New
Lender and each other Lender listed on Schedule I hereto under the heading
"Increased Share Lenders" (such New Lenders and other Lenders, each an
"Increased Share Lender") shall pay to the Administrative Agent for the account
of the Lenders listed on Schedule I hereto under the heading "Reduced Share
Lenders" (each, a "Reduced Share Lender"), by depositing same day funds to the
account of the Administrative Agent specified by the Administrative Agent, an
amount (such Lender's "Increased Share Amount") equal to the product of (i) such
Increased Share Lender's Increased Share Percentage (as set forth opposite such
Increased Share Lender's name on Schedule I hereto), and (ii) the aggregate
principal amount of all outstanding Revolving Loans.

              (c) Upon receipt of all payments due under Section 5.2.(b) hereof,
the Administrative Agent shall promptly (and if practicable on the same Business
Day as such payments are received) distribute such payments as appropriate to
each Reduced Share Lender so that each Reduced Share Lender receives an amount
(such Lender's "Reduced Share Amount") equal to the product of (i) such Reduced
Share Lender's Reduced Share Percentage (as set forth opposite such Reduced
Share Lender's name on Schedule I hereto), and (ii) the aggregate principal
amount of all outstanding Revolving Loans.

                                       7
<PAGE>   8

                  (d) Upon receipt by the Administrative Agent of all payments
required under Section 5.2.(b) hereof and the distribution of such payments to
the Lenders as provided in Section 5.2.(c) hereof, each outstanding Revolving
Borrowing shall be a Revolving Borrowing outstanding under the Credit Agreement
as amended by this First Amendment and shall be comprised of Revolving Loans
made by each Lender in an amount equal to such Lender's Applicable Percentage
(after giving effect to this First Amendment) of the aggregate principal amount
outstanding of all such Revolving Borrowings.

                                       VI.
                                  MISCELLANEOUS

         6.1. Effect of Amendment; No Waiver.

              (a) Upon and after the effectiveness of this First Amendment, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement as modified hereby.

              (b) Except as specifically modified above, the Credit Agreement
and the other Loan Documents are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed. Without limiting
the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
Secured Obligations under and as defined therein, in each case as amended
hereby.

              (c) The execution, delivery and effectiveness of this First
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Issuing Bank or any Agent under
any of the Loan Documents, nor constitute a waiver or amendment of any provision
of any of the Loan Documents.

         6.2. Expenses. Without limiting any provision of the First Amendment or
Section 9.3 of the Credit Agreement, each of the Borrower and Holdings jointly
and severally agrees to pay promptly all reasonable and documented out-of-pocket
costs and expenses of the Administrative Agent and the reasonable and documented
costs and expenses of the Administrative Agent's legal counsel in connection
with the preparation, negotiation, execution, delivery and administration of
this First Amendment and the transactions contemplated hereby.

         6.3. Governing Law. This First Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles. The provisions of Sections 9.9(b)-(d) and 9.10
of the Credit Agreement shall apply hereto.

                                       8
<PAGE>   9

         6.4. Severability. The illegality or unenforceability of any provision
of this First Amendment, the Credit Agreement (including as amended hereby) or
any other document or any other instrument or agreement required hereunder or
thereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this First Amendment, the Credit Agreement
(including as amended hereby) or such other document or any other instrument or
agreement required hereunder or thereunder.

         6.5. Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this First Amendment and shall
not affect the construction of, or be taken into consideration in interpreting,
this First Amendment (or the Credit Agreement as amended hereby).

         6.6. Counterparts. This First Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, each of which,
when so executed shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>   10

         IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Credit Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.

                                        LIBERTY GROUP OPERATING, INC., as
                                        Borrower

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        LIBERTY GROUP PUBLISHING, INC., as a
                                        Guarantor

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        CITICORP USA, INC., as Administrative
                                        Agent, Lender and Swingline Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        CITIBANK, N.A., as Issuing Bank

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        BT ALEX. BROWN INCORPORATED, as
                                        Syndication Agent

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      S-1
<PAGE>   11

                                        BANKERS TRUST COMPANY, as a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        WELLS FARGO BANK, N.A., as Documentation
                                        Agent and as a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        BANK OF AMERICA NT & SA, as Co-Agent and
                                        as a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        THE CHASE MANHATTAN BANK, as a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        U.S. BANK NATIONAL ASSOCIATION, as a
                                        Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                        THE PROVIDENT BANK, as a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      S-2

<PAGE>   12

                                        SUNTRUST BANK, CENTRAL FLORIDA, N.A., as
                                        a Lender

                                        By:
                                           -------------------------------------
                                           Name:
                                                --------------------------------
                                           Title:
                                                 -------------------------------

                                      S-3
<PAGE>   13

                                     CONSENT
                            DATED AS OF MAY 20, 1999

         The undersigned, as Subsidiary Guarantors under the "Guaranty
Agreement" and as Subsidiary Grantors under the "Guarantor Pledge and Security
Agreement" (as such terms are defined in and under the Credit Agreement referred
to in the foregoing First Amendment to Credit Agreement), each hereby consents
and agrees to the foregoing First Amendment to Credit Agreement and hereby
confirms and agrees that (i) the Guaranty Agreement and the Guarantor Pledge and
Security Agreement are, and shall continue to be, in full force and effect and
are hereby ratified and confirmed in all respects except that, upon the
effectiveness of, and on and after the date of, said First Amendment, each
reference in the Guaranty Agreement and the Guarantor Pledge and Security
Agreement to the "Credit Agreement," "thereunder," "thereof" and words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended by said First Amendment, and (ii) the Guarantor
Pledge and Security Agreement and all of the Collateral described therein do,
and shall continue to, secure the payment of all of the Secured Obligations as
defined in the Guarantor Pledge and Security Agreement.

                                       LIBERTY GROUP ARIZONA HOLDINGS, INC.
                                       LIBERTY GROUP ARKANSAS HOLDINGS, INC.
                                       LIBERTY GROUP CALIFORNIA HOLDINGS, INC.
                                       LIBERTY GROUP IDAHO HOLDINGS, INC.
                                       LIBERTY GROUP ILLINOIS HOLDINGS, INC.
                                       LIBERTY GROUP IOWA HOLDINGS, INC.
                                       LIBERTY GROUP KANSAS HOLDINGS, INC.
                                       LIBERTY GROUP LOUISIANA HOLDINGS, INC.
                                       LIBERTY GROUP MICHIGAN HOLDINGS, INC.
                                       LIBERTY GROUP MINNESOTA HOLDINGS, INC.
                                       LIBERTY GROUP MISSOURI HOLDINGS, INC.
                                       LIBERTY GROUP NEW YORK HOLDINGS, INC.
                                       LIBERTY GROUP NORTH DAKOTA HOLDINGS, INC.
                                       LIBERTY GROUP PENNSYLVANIA HOLDINGS, INC.
                                       LIBERTY GROUP MANAGEMENT SERVICES, INC.
                                       MITCHELL PUBLICATIONS, INC.
                                       NEW LEADER, INC.
                                       THE SCHUELER GROUP, INC.
                                       PRESS PUBLICATIONS, INC.
                                       ASCENSION CITIZEN, INC.
                                       MINERAL DAILY NEW TRIBUNE, INC.
                                       LIFE PRINTING AND PUBLISHING CO., INC.
                                       DIVERSIFIED PRINTERS OF HALSTAD, INC.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title:
                                        Acting for and on behalf of each of the
                                        entities named above

<PAGE>   14

                                   SCHEDULE I

INCREASED SHARE LENDERS                            INCREASED SHARE PERCENTAGE

U.S. Bank National Association                                    2.28571429%
The Provident Bank                                                5.71428571%
Suntrust Bank, Central Florida, N.A.                              5.71428571%

REDUCED SHARE LENDERS                                REDUCED SHARE PERCENTAGE

Citicorp USA, Inc.                                                4.22857143%
Bankers Trust Company                                             2.97142857%
Wells Fargo Bank, N.A.                                            2.97142857%
Bank of America NT & SA                                           2.97142857%
Chase Securities Inc.                                             0.57142857%

                                      -2-

<PAGE>   15

                                  SCHEDULE 2.1
                              REVOLVING COMMITMENTS

<TABLE>
<CAPTION>
                                                            Revolving
Lender                                                      Commitment                    % of Total Commitments
------                                                      ----------                    ----------------------

<S>                                                         <C>                           <C>
Citicorp USA, Inc.                                         $ 29,000,000                       16.57142857%
Bank of America NT & SA                                    $ 27,000,000                       15.42857143%
Wells Fargo Bank, N.A.                                     $ 27,000,000                       15.42857143%
Bankers Trust Company                                      $ 27,000,000                       15.42857143%
Chase Securities Inc.                                      $ 20,000,000                       11.42857143%
U.S. Bank National Association                             $ 25,000,000                       14.28571429%
The Provident Bank                                         $ 10,000,000                        5.71428571%
Suntrust Bank, Central Florida, N.A.                       $ 10,000,000                        5.71428571%
                                                           ------------                     -------------
         TOTAL:                                            $175,000,000                             100.0%
</TABLE><PAGE>   1
                                                                    EXHIBIT 10.9

                                SECOND AMENDMENT

                                       TO

                                CREDIT AGREEMENT

             This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second Amendment")
is dated as of September 30, 1999 and is by and among LIBERTY GROUP OPERATING,
INC., as Borrower, LIBERTY GROUP PUBLISHING, INC. ("Holdings"), the LENDERS (as
defined in the Credit Agreement referred to below) party hereto, CITIBANK, N.A.,
as Issuing Bank, and CITICORP USA, INC., as Administrative Agent and as
Swingline Lender.

                                    RECITALS

         1. The Borrower and Holdings have previously entered into that certain
Credit Agreement dated as of January 27, 1998 with the Lenders from time to time
party thereto, CITICORP USA, INC., as Administrative Agent and Swingline Lender,
CITIBANK, N.A., as Issuing Bank, BT ALEX BROWN INCORPORATED, as Syndication
Agent, WELLS FARGO BANK, N.A., as Documentation Agent, and BANK OF AMERICA, N.A.
(formerly known as Bank of America, NT&SA), as Co-Agent, as amended by that
certain First Amendment to Credit Agreement dated as of May 20, 1999 (as so
amended, the "Credit Agreement").

         2. The Borrower has requested that the Lenders (i) amend the definition
of Capital Expenditures to exclude certain expenditures made with the proceeds
of certain asset sales and certain other specified capital expenditures and (ii)
consent to certain specified asset sales.

         3. The Lenders are willing to agree to such amendment and grant such
consent on the terms and conditions set forth herein.

                                    AGREEMENT

                                       I.
                                   DEFINITIONS

         1.1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Credit
Agreement.

                                       II.
                             AMENDMENTS AND CONSENT

         2.1. Amendments to Credit Agreement. As of the Second Amendment
Effective Date, the Credit Agreement shall be amended as follows:

<PAGE>   2

              2.1.1. Section 1.1. Section 1.1 of the Credit Agreement is hereby
amended by:

                     (a) adding thereto in appropriate alphabetical order the
following definitions:

                         "'SECOND AMENDMENT' means the Second Amendment to
              Credit Agreement dated as of September 30, 1999 among the
              Borrower, Holdings, the Lenders and the Administrative Agent.

                         'SECOND AMENDMENT EFFECTIVE DATE' has the meaning set
              forth in the Second Amendment.

                         'SPECIFIED CHICAGO ASSETS' means the assets described
              on Schedule I to the Second Amendment. For purposes of determining
              compliance with Section 6.6 hereof, the sale of the Specified
              Chicago Assets shall be excluded.

                         'SPECIFIED CHICAGO CAPITAL EXPENDITURES' means Capital
              Expenditures, to the extent actually made and in any event not
              exceeding $5,000,000, consisting of the purchase and improvement
              of a building and related real property located at 7545 Santa Fe
              Drive, Hodgkins, Illinois and the purchase of a printing press and
              other equipment to be located therein and other Capital
              Expenditures necessary to prepare such building, printing press
              and other equipment for use by Borrower or its Subsidiaries."

                     (b) amending the definition of "CAPITAL EXPENDITURES" by
adding thereto, immediately prior to the period at the end of such definition,
the following:

                  "and except any such expenditure made with (or in the amount
                  of) the proceeds of disposition of real property, printing
                  presses or other assets (other than the Specified Chicago
                  Assets) otherwise permitted hereunder (but in each case only
                  if such disposition results in receipt by the Borrower or a
                  Wholly-Owned Subsidiary of Borrower of gross cash proceeds of
                  at least $250,000) so long as such expenditures are made
                  within 18 months of such disposition and except that, for
                  purposes of determining compliance with Section 6.12 hereof,
                  the amount of any Specified Chicago Capital Expenditures shall
                  be excluded"

         2.2. Consent. Notwithstanding the provisions of Section 6.6 of the
Credit Agreement, as of the Second Amendment Effective Date, the Required
Lenders hereby consent to the sale by the Borrower and its subsidiaries of the
Specified Chicago Assets at fair value for cash consideration.

                                       2
<PAGE>   3

                                      III.
                         REPRESENTATIONS AND WARRANTIES

         3.1. Representations and Warranties. Each of the Borrower and Holdings
hereby represents and warrants to each Agent, each Lender and the Issuing Bank
as follows:

              3.1.1. Such party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with all
requisite power and authority to carry on its business as now conducted and to
enter into and perform its obligations under this Second Amendment (and the
Credit Agreement as amended hereby) and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.

              3.1.2. Such party has taken all necessary corporate action to
authorize the execution, delivery and performance of this Second Amendment (and
the Credit Agreement as amended hereby).

              3.1.3. The execution, delivery and performance of this Second
Amendment and the performance of each of the Loan Documents as amended hereby
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of any member of the Holdings Group or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument governing Material Indebtedness of, or any other
material agreement binding upon, any member of the Holdings Group or its assets,
or give rise to a right thereunder to require any payment to be made by any
member of the Holdings Group, and (d) will not result in the creation or
imposition of any Lien on any asset of any member of the Holdings Group, except
Liens created under the Loan Documents.

              3.1.4. This Second Amendment has been duly executed and delivered
by such party and each of this Second Amendment and the Credit Agreement as
amended hereby constitutes the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).

              3.1.5. Before and after giving effect to this Second Amendment, no
event has occurred and is continuing, or would result from the execution and
delivery of this Second Amendments that would constitute a Default.

              3.1.6. Each of the representations and warranties contained in
this Second Amendment and the Credit Agreement as amended hereby and in each of
the other Loan Documents is true, correct and complete in all material respects
as if set forth in full herein and made on the date this Second Amendment
becomes effective, except to the extent that any such representation and
warranty specifically relates to an earlier date, in which case it was true,
correct and complete as of such earlier date.

                                       3
<PAGE>   4

                                       IV.
                           CONDITIONS TO EFFECTIVENESS

         4.1. Conditions to Effectiveness. The amendments effected by this
Second Amendment shall not become effective until the date (the "Second
Amendment Effective Date") on which the following conditions precedent are
satisfied or waived in writing by the Required Lenders:

              4.1.1. Execution of this Agreement. Holdings, the Borrower, the
Administrative Agent and the Required Lenders shall have executed and delivered
this Second Amendment to the Administrative Agent and each other Guarantor shall
have executed and delivered the Consent attached hereto to the Administrative
Agent.

              4.1.2. Officer's Certificate. The Administrative Agent shall have
received a certificate of the Borrower, certifying as to (A) the names and true
signatures of the officers of the Borrower and each other Loan Party authorized
to sign this Second Amendment or the Consent, (B) the truth in all material
respects of the representations and warranties contained in the Loan Documents
as though made on and as of the Second Amendment Effective Date, other than any
such representations or warranties that by their terms refer to a date other
than the Second Amendment Effective Date, in which case such representations and
warranties shall be true and correct as of such other date, and (C) the absence
of any event occurring and continuing that constitutes a Default.

                                       V.
                                  MISCELLANEOUS

         5.1. Effect of Amendment; No Waiver.

              (a) Upon and after the effectiveness of this Second Amendment,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified hereby.

              (b) Except as specifically modified above, the Credit Agreement
and the other Loan Documents are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed. Without limiting
the generality of the foregoing, the Security Documents and all of the
Collateral described therein do and shall continue to secure the payment of all
Secured Obligations under and as defined therein, in each case as amended
hereby.

              (c) The execution, delivery and effectiveness of this Second
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender, the Issuing Bank or any Agent under
any of the Loan Documents, nor constitute a waiver or amendment of any provision
of any of the Loan Documents.

                                       4
<PAGE>   5

         5.2. Expenses. Without limiting any provision of the Second Amendment
or Section 9.3 of the Credit Agreement, each of the Borrower and Holdings
jointly and severally agrees to pay promptly all reasonable and documented
out-of-pocket costs and expenses of the Administrative Agent and the reasonable
and documented costs and expenses of the Administrative Agent's legal counsel in
connection with the preparation, negotiation, execution, delivery and
administration of this Second Amendment and the transactions contemplated
hereby.

         5.3. Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles. The provisions of Sections 9.9(b)-(d) and 9.10
of the Credit Agreement shall apply hereto.

         5.4. Severability. The illegality or unenforceability of any provision
of this Second Amendment, the Credit Agreement (including as amended hereby) or
any other document or any other instrument or agreement required hereunder or
thereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Second Amendment, the Credit Agreement
(including as amended hereby) or such other document or any other instrument or
agreement required hereunder or thereunder.

         5.5. Headings. Article and Section headings used herein are for
convenience of reference only, are not part of this Second Amendment and shall
not affect the construction of, or be taken into consideration in interpreting,
this Second Amendment (or the Credit Agreement as amended hereby).

         5.6. Counterparts. This Second Amendment may be executed by one or more
of the parties hereto in any number of separate counterparts, each of which,
when so executed shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument. Delivery
of an executed counterpart of a signature page to this Second Amendment by
telecopier shall be effective as delivery of a manually executed counterpart of
this Second Amendment.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       5
<PAGE>   6

         IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to Credit Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first above
written.

                                         LIBERTY GROUP OPERATING, INC., as
                                         Borrower

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                         LIBERTY GROUP PUBLISHING, INC., as a
                                         Guarantor

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                         CITICORP USA, INC., as Administrative
                                         Agent, Lender and Swingline Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                         CITIBANK, N.A., as Issuing Bank

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-1
<PAGE>   7

                                         BT ALEX. BROWN INCORPORATED, as
                                         Syndication Agent

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-2
<PAGE>   8

                                         BANKERS TRUST COMPANY, as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-3
<PAGE>   9

                                         WELLS FARGO BANK, N.A., as
                                         Documentation Agent and as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-4
<PAGE>   10

                                         BANK OF AMERICA, N.A., as Co-Agent and
                                         as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-5
<PAGE>   11

                                         THE CHASE MANHATTAN BANK, as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-6
<PAGE>   12

                                         U.S. BANK NATIONAL ASSOCIATION, as a
                                         Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-7
<PAGE>   13

                                         THE PROVIDENT BANK, as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-8
<PAGE>   14

                                         SUNTRUST BANK, CENTRAL FLORIDA, N.A.,
                                         as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-9
<PAGE>   15

                                         NATIONAL CITY BANK OF
                                         MICHIGAN/ILLINOIS, as a Lender

                                         By:
                                            ------------------------------------
                                            Name:
                                                 -------------------------------
                                            Title:
                                                  ------------------------------

                                      S-10
<PAGE>   16

                                     CONSENT
                         DATED AS OF SEPTEMBER 30, 1999

         The undersigned, as Subsidiary Guarantors under the "Guaranty
Agreement" and as Subsidiary Grantors under the "Guarantor Pledge and Security
Agreement" (as such terms are defined in and under the Credit Agreement referred
to in the foregoing Second Amendment to Credit Agreement), each hereby consents
and agrees to the foregoing Second Amendment to Credit Agreement and hereby
confirms and agrees that (i) the Guaranty Agreement and the Guarantor Pledge and
Security Agreement are, and shall continue to be, in full force and effect and
are hereby ratified and confirmed in all respects except that, upon the
effectiveness of, and on and after the date of, said Second Amendment, each
reference in the Guaranty Agreement and the Guarantor Pledge and Security
Agreement to the "Credit Agreement," "thereunder," "thereof" and words of like
import referring to the Credit Agreement, shall mean and be a reference to the
Credit Agreement as amended by said Second Amendment, and (ii) the Guarantor
Pledge and Security Agreement and all of the Collateral described therein do,
and shall continue to, secure the payment of all of the Secured Obligations as
defined in the Guarantor Pledge and Security Agreement.

                                       LIBERTY GROUP ARIZONA HOLDINGS, INC.
                                       LIBERTY GROUP ARKANSAS HOLDINGS, INC.
                                       LIBERTY GROUP CALIFORNIA HOLDINGS, INC.
                                       LIBERTY GROUP IDAHO HOLDINGS, INC.
                                       LIBERTY GROUP ILLINOIS HOLDINGS, INC.
                                       LIBERTY GROUP IOWA HOLDINGS, INC.
                                       LIBERTY GROUP KANSAS HOLDINGS, INC.
                                       LIBERTY GROUP LOUISIANA HOLDINGS, INC.
                                       LIBERTY GROUP MICHIGAN HOLDINGS, INC.
                                       LIBERTY GROUP MINNESOTA HOLDINGS, INC.
                                       LIBERTY GROUP MISSOURI HOLDINGS, INC.
                                       LIBERTY GROUP NEW YORK HOLDINGS, INC.
                                       LIBERTY GROUP NORTH DAKOTA HOLDINGS, INC.
                                       LIBERTY GROUP PENNSYLVANIA HOLDINGS, INC.
                                       LIBERTY GROUP MANAGEMENT SERVICES, INC.
                                       NEW LEADER, INC.
                                       THE SCHUELER GROUP, INC.
                                       PRESS PUBLICATIONS, INC.
                                       ASCENSION CITIZEN, INC.
                                       MINERAL DAILY NEW TRIBUNE, INC.
                                       LIFE PRINTING AND PUBLISHING CO., INC.
                                       DIVERSIFIED PRINTERS OF HALSTAD, INC.
                                       LIBERTY GROUP NEBRASKA HOLDINGS, INC.
                                       LIBERTY SUBURBAN NEWSPAPERS, INC.
                                       PRESS-REPUBLICAN NEWSPAPERS, INC.
                                       GLEN NEWS PRINTING COMPANY

                                       By:
                                          ------------------------------------
                                       Name:
                                       Title:
                                       Acting for and on behalf of each of the
                                       entities named above

<PAGE>   17

                                   SCHEDULE I

    1)   Real Property located at 112 South York, Emhurst, Illinois 60126.

    2)   Real Property located at 2601 South Haelem Avenue, Berwyn, Illinois.

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