Document:

Exhibit 4.1

                               Journal Employees'

                                   Stock Trust

                                    Agreement

                             As amended June 5, 2001

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                               Journal Employees'

                              Stock Trust Agreement

                               Dated May 15, 1937

                   (As amended May 5, 1954; December 23, 1964;
         July 31, 1968; March 26, 1973; January 16, 1975; June 1, 1979;
                April 1, 1982l January 1, 1986; February 1, 1990;
                       October 30, 1996 and June 5, 2001)

AGREEMENT, dated May 15, 1937, by and between HARRY J. GRANT, FAYE McBEATH,
WILMINGTON TRUST COMPANY, as Trustee under Agreement dated November 12, 1931,
with Katharine Boyd Morehead, WILMINGTON TRUST COMPANY, as Trustee under
Agreement dated November 12, 1931, with Mary Boyd Evans, SUSAN A. BOYD,
KATHARINE BOYD MOREHEAD and MARY BOYD EVANS, first parties; HARRY J. GRANT,
LESLIE A. WEBSTER, JOHN DONALD FERGUSON, LEONARD L. BOWYER and MARVIN H.
CREAGER, called "the trustees," second parties; and JOURNAL COMMUNICATIONS, a
Wisconsin corporation, called "the Company," third party:

1: General Definitions.
     (a)  This Agreement shall be known as "Journal Employees' Stock Trust
          Agreement," except where referred to herein as "this Agreement."
     (b)  "Section" shall mean a division of this Agreement designated by arabic
          numerals.
     (c)  The word "called" shall indicate the adoption for purposes of
          simplification and convenience of certain terms and expressions which
          will thereafter sometimes be used in this Agreement.
     (d)  "Persons" shall include corporations, trusts, associations and
          partnerships, as well as natural persons.
     (e)  "Journal stock" shall mean the capital stock of the Company and in the
          event of the reorganization or recapitalization of the Company,
          whatever voting stock shall most nearly correspond to the present
          capital stock of the Company.
     (f)  "Stockholder-Eligible" shall mean each of the persons named as First
          Parties in the preamble of this Agreement so long as such persons
          shall hold any shares of Journal stock and shall include the successor
          or successors of each such person in the ownership of Journal stock.
     (g)  "Employee" shall mean every person now or at any time hereafter
          employed in the service of one or more of the Employers, including the
          officers of any of the Employers, so long as they shall be so employed
          or on leave of absence duly granted. A director as such
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          shall not be deemed an employee or an officer for the purposes of this
          Agreement.
     (gg) "Employers" shall mean the Company and all corporations of which the
          Company owns directly or indirectly 80% or more of the voting capital
          stock.
     (h)  "Employee-Eligibles" shall mean employees during the continuance of
          their employment.
     (hh) An "Employee-Eligible-Transferee" means a person to whom units are
          assigned by an employee-eligible upon the conditions defined in
          Section 12 of this agreement.
     (i)  "Ex-Employee-Eligibles" shall mean persons who have ceased to be
          employee-eligibles and those succeeding to their rights as owners of
          units so long as such persons shall own any units as hereinafter
          defined.
     (ii) An "Employee Benefit Trust" shall mean a pension, profit sharing,
          stock bonus or other similar trust established by an employer to
          provide retirement benefits to employees and a trust established by an
          employee-eligible to provide retirement benefits.
     (j)  "President" shall mean the person from time to time occupying the
          office of President of the Company, in his individual and not in his
          official capacity.
     (k)  "Board of Directors" shall mean a majority of the persons from time to
          time constituting the Board of Directors of the Company, in their
          individual and not in their official capacities.
     (l)  Unless otherwise indicated by the context, the singular shall include
          the plural and the plural the singular, and the masculine shall
          include the feminine and neuter.
     (m)  "Month" shall mean calendar month.
     (mm) "Accounting Period" shall mean one of the 13 periods into which the
          Company divides the calendar year for accounting purposes. Each such
          period is composed of 4 calendar weeks, except that the first and
          thirteenth periods may be longer or shorter to the extent necessary to
          make each accounting year end on December 31.
     (n)  "Assign" shall mean bargain, sell, assign, convey and deliver.
     (o)  "Retirement" shall mean the separation of an employee from the
          employment of the Employers (i) for an employee participating in the
          Journal Communications, Inc. Employees' Pension Plan as in effect from
          time to time, herein called the "JCI Plan," when eligible for Normal
          Retirement, Early Retirement, or Disability Retirement under Section
          4.1 of the JCI Plan; (ii) for an employee not eligible to participate
          in the JCI Plan, when the employee would have been eligible for Normal
          Retirement, Early Retirement, or Disability Retirement under Section
          4.1 of the JCI Plan if such employee's Employer had been an "Employer"
          under the JCI Plan but ignoring, for purposes of the determination
          under this clause (ii), (A) the age 55 and ten (10) years of Credited
          Service rule in Section 4.1(b) of the JCI Plan and (B) any

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          employment with such Employer prior to the date the Employer became a
          "Related Employer" as defined in Section 14.1 of the JCI Plan; or
          (iii) for a person participating in the JCI Plan who is not otherwise
          eligible under (i), when eligible for any Early Retirement Window
          Benefit under Article 4 of the JCI Plan
     (p)  "Qualified Termination" shall mean the separation of an employee from
          the employment of the Employers as a result of (i) a downsizing of an
          Employer, (ii) the elimination of employee positions, (iii) the sale
          by any of the Employers of the stock of an Employer after which the
          corporation the stock of which was sold no longer qualifies as an
          Employer, (iv) the sale of substantially all of the assets of an
          Employer, (v) a restructuring or reorganization of an Employer, (vi)
          the outsourcing of a material amount of work or (vii) another similar
          transaction or event as to which, in any case of (i)-(vii), the
          trustees determine that there is a termination of a sufficient number
          of employees and that the provisions of Section 9(h) should apply.

2: Purpose. The provisions of this Agreement are intended to promote and
facilitate the acquisition and ownership of a beneficial interest in Journal
stock by employee-eligibles and to promote stability and continuity of
management and control of the Company in the interest of the Company, the
stockholder-eligibles and the employee-eligibles through the instrumentality of
the trust hereinafter created.

3: Conveyance to the Trustees. First parties do hereby severally assign to the
trustees, in trust, for the uses and purposes hereinafter defined, the number of
shares of Journal stock set opposite their respective names below, viz.:

Harry J. Grant......................    10,000 shares
Faye McBeath........................    10,000 shares
Wilmington Trust Company,
as Trustee under Agreement
dated November 12, 1931,
with Katharine Boyd
Morehead............................    3,300 shares
Wilmington Trust Company,
as Trustee under Agreement
dated November 12, 1931,
with Mary Boyd Evans................    3,300 shares
Susan A. Boyd, Katharine
Boyd Morehead and Mary
Boyd Evans..........................    3,400 shares
Total...............................    30,000 shares

The said 30,000 shares of Journal stock, together with such other shares of
Journal stock as may hereafter be held by the trustees hereunder, are called the
"Capital Stock Fund."

                        I. CAPITAL STOCK FUND, UNITS OF
                          BENEFICIAL INTEREST THEREIN,
                               TRUST CERTIFICATES

4: Units of Beneficial Interest, Trust Certificates. The beneficial interests in
the Capital Stock Fund shall be divided into 30,000 equal parts called "units."
The trustees shall from time to time increase or decrease the number of units
into which the Capital Stock Fund shall be divided, to accord in so far as may
be practicable with the number of shares of Journal stock held by them
hereunder. Units shall be evidenced

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by certificates, called "trust certificates," issued by the trustees.
     Every such trust certificate shall be deemed to represent the number of
units specified therein, unless the trustees shall have increased or decreased
the number of units, in which case they shall call in all trust certificates
then outstanding and shall issue in lieu thereof new trust certificates
specifying the proper increased or decreased number of units represented
thereby. From and after any such call, each outstanding trust certificate
affected thereby shall represent not the number of units specified therein but
the number of units for which a new certificate is required, as aforesaid, to be
issued in lieu thereof. Trust certificates shall be in substantially the
following form:

This is to Certify That ___________ is the owner of _____ units of beneficial
interest in the trust under Journal Employees' Stock Trust Agreement dated May
15, 1937, to which reference is made for the terms and conditions of said trust,
including the rights and obligations of the holder of this certificate. By
acceptance of this certificate the holder consents to be bound by all of the
terms and conditions of said Agreement, an original of which is on file for
inspection at the office of the undersigned trustees at 333 West State Street,
Milwaukee, Wisconsin. The persons eligible to acquire any right or interest in
this certificate or in the units of beneficial interest represented hereby are
limited and this certificate is transferable only as provided in said Journal
Employees' Stock Trust Agreement. Dated
__________________________________
Trustees under Journal Employees' Stock
 Trust Agreement dated May 15, 1937.

5: Units Vested in First Parties, Disposition by Them. Ownership of said 30,000
units shall forthwith be vested in first parties severally in proportion to the
number of shares of Journal stock hereinbefore assigned by them respectively to
the trustees, and first parties reserve to each of their number the right to
assign said units so vested in them, but only to eligibles as hereinafter
defined, in accordance with the terms of an agreement of even date herewith
between first parties and Journal Shares Corporation, a Wisconsin corporation.

6: Classes of Persons Eligible to Hold Trust Certificates. Except as otherwise
provided in Section 15, units and trust certificates evidencing units may be
owned and held only by persons included in one of the following classes, which
persons are called "eligibles":
     (a)  Stockholder-eligibles.
     (b)  Employee-eligibles.
     (c)  Ex-employee-eligibles, but only with respect to units and trust
          certificates evidencing units acquired by them or their predecessors
          in interest as employee-eligibles and only on condition that the
          options provided for in Section 10 shall not have been exercised,
          subject, however, to the limitations set forth in Section 13.
     (d)  The Company.
     (e)  Journal Shares Corporation.
     (f)  Employee-eligible-transferees.
     (g)  Employee Benefit Trusts

7: Recordation of Trust Certificates and Transfers Thereof. The trustees shall
keep a record of each trust certificate issued showing the date of issue, the
number of units represented thereby, the certificate number and the name and
address of the
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person to whom issued. The trustees shall also keep a record of
each transfer of a trust certificate showing the date of transfer, the name and
address of the person or persons to whom transferred, together with the number
of units represented thereby and the number or numbers of the new trust
certificate or certificates issued. If any trust certificate shall be canceled,
the trustees shall note upon their record the certificate number, date of
cancellation and the number of units canceled. The trustees shall record the
transfer of a trust certificate only upon the production of proof satisfactory
to them that the transfer of the units represented thereby is in accordance with
the terms of this Agreement, and, except in the case of a sale of units owned by
employee-eligibles, ex-employee-eligibles, employee-eligible-transferees and
employee benefit trusts under the options provided for in Section 10, only upon
the surrender of such trust certificate properly endorsed. No transfer of any
unit or of any trust certificate shall be valid or effective for any purpose
unless made in accordance with the terms and conditions of this Agreement, nor
unless such transfer shall have been entered on the trustees' record. The
trustees shall not recognize any transfer of a fractional unit. The acceptance
of a trust certificate by the person to whom issued or the assertion of any
right or interest in units shall constitute an acceptance of and an agreement to
be bound by all of the terms and conditions of this Agreement.

8: Rights of Stockholder-Eligibles to Exchange Journal Stock for Trust
Certificates and Trust Certificates for Journal Stock. Any stockholder eligible
but no other person may at any time and from time to time assign shares of
Journal stock to the trustees and receive an exchange therefor trust
certificates evidencing units, or may surrender trust certificates representing
units acquired by them as stockholder-eligibles and subject to the terms and
conditions of this Agreement, receive in exchange therefor shares of Journal
stock; provided, however, that the ratio between the number of units and the
number of shares of Journal stock thus exchanged shall equal the ratio between
the number of units outstanding and the number of shares of Journal stock held
by the trustees immediately prior to such exchange.

9: Option Events With Respect to Units Owned by Employee-Eligibles. All units
owned by employee-eligibles employee benefit trusts,
employee-eligible-transferees or ex-employee-eligibles shall be subject to
purchase under the options defined in section 10, subject to the conditions
hereinafter stated, upon the happening of the option events hereinafter defined:
     (a)  A written offer to sell a specified number of units signed by any
          unitholder and delivered to the President shall constitute an option
          event in respect of the number of units specified in the offer.
     (b)  Termination of the employer-employee relationship between any
          employee-eligible and the Employers by reason of any cause other than
          retirement or qualified termination shall constitute an option event
          in respect of all units then owned by such employee-eligible and in
          respect of all units then held by an employee-eligible-transferee
          pursuant to prior transfer by such employee-eligible under the
          provisions of Section 12 and in respect of all units held by an
          Employee Benefit Trust established by an employee-eligible.
     (c)  In the event of termination of the employer-employee relationship
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          between any employee-eligible and the Employers by reason of
          retirement, the first anniversary of such retirement shall be an
          option event in respect of all units then owned by such individual in
          excess of 9/10 of the number of units owned at the time of retirement;
          the second anniversary of such retirement shall be an option event in
          respect of all units then owned by such individual in excess of 8/10
          of the number of units owned at the time of retirement; the third
          anniversary of such retirement shall be an option event in respect of
          all units then owned by such individual in excess of 7/10 of the
          number of units owned at the time of retirement; the fourth
          anniversary of such retirement shall be an option event in respect of
          all units then owned by such individual in excess of 6/10 of the
          number of units owned at the time of retirement; the fifth anniversary
          of such retirement shall be an option event in respect of all units
          then owned by such individual in excess of 5/10 of the number of units
          owned at the time of retirement; the sixth anniversary of such
          retirement shall be an option event in respect of all units then owned
          by such individual in excess of 4/10 of the number of units owned at
          the time of retirement; the seventh anniversary of such retirement
          shall be an option event in respect of all units then owned by such
          individual in excess of 3/10 of the number of units owned at the time
          of retirement; the eighth anniversary of such retirement shall be an
          option event in respect of all units then owned by such individual in
          excess of 2/10 of the number of units owned at the time of retirement;
          the ninth anniversary of such retirement shall be an option event in
          respect of all units then owned by such individual in excess of 1/10
          of the number of units owned at the time of retirement; the tenth
          anniversary of such retirement shall be an option event in respect of
          all units then owned by such retired ex-employee-eligible. Provided
          further that the death of any retired ex-employee-eligible prior to
          the tenth anniversary of his retirement shall be an option event in
          respect of all units owned by such retired ex-employee-eligible at the
          time of death. The above reference to "units owned" and "units then
          owned" refers to units registered in the name of the retired employee
          and includes any marital or community property interest of the retired
          employee's spouse.
     (cc) In the case of any retired ex-employee-eligible who retired on or
          before December 31, 1974, each anniversary of such retirement after
          that date shall, at the written election of such retired
          ex-employee-eligible, be an option event in respect of a number of
          units equal to one-seventh of the units owned by him at the time of
          retirement, or such lesser number of units as may constitute all units
          owned by him on any such anniversary date. If any such
          ex-employee-eligible fails to file such written election with the
          trustees
<PAGE>

          before the first anniversary of his retirement after December 31,
          1974, option events with respect to units owned by him shall occur on
          the dates and in the amounts provided by this agreement as in effect
          on the date of his retirement. This paragraph (cc) shall cease to be a
          part of this agreement on the date on which the last unit owned by a
          retired ex-employee-eligible who retired on or before December 31,
          1974, is sold.
    (ccc) In the case of any retired ex-employee-eligible who retired on or
          before June 1, 1979, each anniversary of such retirement after that
          date shall, at the written election of such retired
          ex-employee-eligible, be an option event in respect of a number of
          units equal to one-tenth of the units owned by him at the time of
          retirement, or such lesser number of units as may constitute all units
          owned by him on any such anniversary date. If any such
          ex-employee-eligible fails to file such written election with the
          trustees before the first anniversary of his retirement after June 1,
          1979, option events with respect to units owned by him shall occur on
          the dates and in the amounts provided by this agreement as in effect
          on the date of his retirement or as elected under Section 9 (cc) as
          the case may be. This paragraph (ccc) shall cease to be a part of this
          agreement on the date on which the last unit owned by a retired
          ex-employee-eligible who retired on or before June 1, 1979, is sold.
          The above reference to "units owned" and "units then owned" refers to
          units registered in the name of the retired employee and includes any
          marital or community property interest of the retired employee's
          spouse.
     (d)  For purposes of the option events described in Sections 9(c), (cc),
          (ccc) and (h),
          (i)  units held by an employee-eligible-transferee or an Employee
               Benefit Trust established by an employee-eligible shall be
               treated as owned by the ex-employee-eligible who assigned such
               units to the employee-eligible-transferee or established the
               Employee Benefit Trust; and
          (ii) such option events shall be applied to such units held by
               employee-eligible-transferees and such Employee Benefit Trusts in
               the chronological order of the issuance of the certificates
               evidencing such units after first being applied to units held by
               the ex-employee-eligible. The death of the ex-employee-eligible
               shall be an option event in respect of all units then held by the
               employee-eligible-transferees and such Employee Benefit Trusts as
               well as all units then owned by the ex-employee-eligible.
     (e)  Termination as referred to in this Section 9 shall be deemed to have
          occurred when an employee has ceased to be employed by any of the
          Employers.
     (f)  A sale, transfer or other disposition of a unit or the trust
          certificate
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          evidencing a unit, which is invalid and ineffective under the
          provisions of Section 12, shall constitute an option event with
          respect to such unit at the time of such attempted sale, transfer or
          other disposition.
     (g)  An option event with respect to a unit owned by an employee-eligible,
          an ex-employee-eligible or an employee-eligible-transferee shall
          constitute an option event with respect to any marital or community
          property interest of the spouse of the employee-eligible, the
          ex-employee-eligible, or the employee-eligible or ex-employee-eligible
          who transferred the unit to the employee-eligible-transferee.
     (h)  In the event of termination of the employer-employee relationship
          between any employee-eligible and the Employers by reason of qualified
          termination, where the termination does not qualify as a retirement
          under Section 1(o) hereof :
          (i)  where the individual has continuously held all or part of his
               units for twenty or more years at the time of termination, the
               first anniversary of such termination shall be an option event in
               respect of all units then owned by such individual in excess of
               4/5 of the number of units owned at the time of termination; the
               second anniversary of such termination shall be an option event
               in respect of all units then owned by such individual in excess
               of 3/5 of the number of units owned at the time of termination;
               the third anniversary of such termination shall be an option
               event in respect of all units then owned by such individual in
               excess of 2/5 of the number of units owned at the time of
               termination; the fourth anniversary of such termination shall be
               an option event in respect of all units then owned by such
               individual in excess of 1/5 of the number of units owned at the
               time of termination; the fifth anniversary of such termination
               shall be an option event in respect of all units then owned by
               such individual;
          (ii) where the individual has continuously held all or part of his
               units for fifteen or more years (but less than twenty years) at
               the time of termination, the first anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual in excess of 3/4 of the number of units
               owned at the time of termination; the second anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual in excess of 2/4 of the number of units
               owned at the time of termination; the third anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual in excess of 1/4 of the number of units
<PAGE>
               owned at the time of termination; the fourth anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual;
         (iii) where the individual has continuously held all or part of his
               units for ten or more years (but less than fifteen years) at the
               time of termination, the first anniversary of such termination
               shall be an option event in respect of all units then owned by
               such individual in excess of 2/3 of the number of units owned at
               the time of termination; the second anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual in excess of 1/3 of the number of units
               owned at the time of termination; the third anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual;
          (iv) where the individual has continuously held all or part of his
               units for five or more years (but less than ten years) at the
               time of termination, the first anniversary of such termination
               shall be an option event in respect of all units then owned by
               such individual in excess of 1/2 of the number of units owned at
               the time of termination; the second anniversary of such
               termination shall be an option event in respect of all units then
               owned by such individual;
          (v)  where the individual has continuously held all or part of his
               units for two or more years (but less than five years) at the
               time of termination, the first anniversary of such termination
               shall be an option event in respect of all units then owned by
               such individual; and
          (vi) where the individual has not held any of his units for two or
               more years at the time of termination, the time of such
               termination shall be an option event in respect of all units then
               owned by such individual.
     Provided further that the death of any ex-employee-eligible who was
     terminated pursuant to a qualified termination shall be an option event in
     respect of all units owned at the time of death. The above reference to
     "units owned" and "units then owned" refers to units registered in the name
     of the terminated employee and includes any marital or community property
     interest of the terminated employee's spouse.

10: Options With Respect to Units. Options to purchase all or any of the units
made available through the happening of an option event, by depositing at the
office of the trustees in cash the option price determined according to the
formula set forth in Section 11, together with interest thereon as provided in
Section 13, within the period of time limited below, shall be vested in each of
the following classes of optionees successively:
     Class A Optionees. For a period of six months after the happening of an
option event, such employee-eligible or eligibles, excluding the President,
either concurrently or successively, for such number of units and
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for such period or periods not exceeding six months, as may be designated in
writing by the President to the Trustees.
     Class B Optionees. For a period of two months after the expiration of the
time limited to Class A Optionees, such employee-eligible or eligibles,
including the President, and such employee benefit trusts, either concurrently
or successively, for such number of units and for such period or periods not
exceeding two months, as may be designated in writing by the Board of Directors
to the trustees.
     Class C Optionees. For a period of four months after the expiration of the
time limited to Class B Optionees, stockholder-eligibles, with the right as
among themselves to purchase the units available to them in proportion to the
number of shares of Journal stock owned by them respectively, together with
their respective proportions of such units not purchased by any of their number.
     Class D Optionees. For a period of five years after the expiration of the
time limited to Class C Optionees, the Company.
     The options of each class of optionees shall apply only to units not
purchased by optionees in a prior class or classes.
     The options arising upon the occurrence of any option event described in
Section 9 (a) or in Section 9 (b) shall terminate and supersede options then
pending, if any.
     Any cash deposited with the trustees under the provisions of this section,
less taxes and expenses, if any, incident to the purchase of a unit or units,
shall be paid over promptly by the trustees to the seller of such unit or units,
subject, however, to the provisions of Sections 16 and 17.
     Any of the aforesaid classes of optionees may waive their options by
delivering written notice thereof to the trustees. The President shall have the
power at any time to waive the options of Class A Optionees and the Board of
Directors shall have the power at any time to waive the options of Class B
Optionees. In the event the option of any class of optionees shall have been
waived, as hereinbefore provided, the options of the next succeeding class of
optionees shall commence on the date of such waiver.

11: Formula for Option Price of a Unit. The price, called "option price," at
which any unit subject to the foregoing options may be purchased by any optionee
shall be determined as follows:
     The option price of a share of Journal stock shall be calculated according
to the formula set forth in Section 25, except that in lieu of the words "the
date of the trustees' offer" wherever occurring in Section 25, there shall be
substituted (a) with respect to optionees in Classes A, B or C, the words "the
date of the option event" and (b) with respect to the optionee in Class D, the
words "the date of purchase." This amount shall then be multiplied by the number
of shares of Journal stock held by the trustees on the date of the option event,
in the case of optionees of Class A, B or C, or on the date of purchase, in the
case of Class D Optionee, and the result thus obtained shall be divided by the
number of units outstanding on such date. The quotient thus obtained shall be
the option price of such unit. The trustees shall make a tentative determination
of such option price and the payment to the trustees of the sum so determined
shall be a sufficient exercise of the option, subject to such adjustment of such
tentative option price as may subsequently be requisite.

12: Restrictions on Transfer of Units. Every employee-eligible and
ex-employee-eligible shall have the right to assign any or all units owned by
him, by way of gift without considerations to a trustee, herein called an
"employee-eligible-transferee," in trust, for
<PAGE>

the benefit of (i) individual beneficiaries or (ii) corporations, associations
or foundations organized for charitable, educational or religious purposes,
subject to the following conditions.
     (a)  Nothing in this section shall be deemed to authorize the sale of units
          for a valuable consideration.
     (b)  No assignment of units to an employee-eligible-transferee shall revoke
          or detract from the purchase option rights to which such units were
          subject prior to transfer thereof to the trustee.
     (c)  A certified copy of the trust instrument evidencing any assignment of
          units by an employee-eligible to an employee-eligible-transferee shall
          be filed with the trustees under JESTA at the time of transfer.
     Unless and until units owned by an employee-eligible or by an
ex-employee-eligible or by an employee-eligible-transferee or by an employee
benefit trust shall have become subject to purchase under the options specified
in Section 10 and said options shall have been exercised, or shall have expired
without having been exercised, no sale, transfer or other disposition of such
units or the trust certificates evidencing the same shall be valid or effective
for any purpose whatsoever except as provided in Section 12 above and in
Sections 15 and 16. The classification of a unit as marital property or
community property under applicable state laws shall not be deemed a sale,
transfer or other disposition for purposes of this paragraph so long as the
transferor unitholder in whose name the unit is recorded on the records of the
trustees (the "transferor unitholder") retains sole and exclusive rights of
management and control over the unit; nor shall a subsequent reassignment of the
transferee spouse's marital or community interest back to the transferor
unitholder be deemed a sale, transfer or other disposition for purposes of this
paragraph. The term "management and control" shall include, among other rights,
the right to vote, encumber, sell or otherwise dispose of the unit during the
lifetime of the transferor unitholder. Any sale, transfer, or other disposition
of a unit or the trust certificate evidencing the same which is not valid or
effective under this paragraph shall constitute an option event under Section 9
at the time of such attempted sale, transfer or other disposition.
     Nothing in this agreement shall be deemed to prohibit an eligible, other
than an employee-eligible, employee benefit trust, ex-employee-eligible or
employee-eligible-transferee, from assigning to any other eligible any units
owned by him.

13: Rights of Unitholders to Participate in Dividends While Options to Class A,
B and C Optionees are pending. From the occurrence of an option event with
respect to any unit, and so long as such unit shall be subject to purchase by
optionees of Class A, B or C, the trustees shall withhold and accumulate all
payments out of dividends on Journal stock which otherwise would be made on
account of such unit and shall pay over such accumulations, if any, to the
purchaser of such unit, if an optionee of Class A, B or C, and such purchaser
shall pay to the trustees, and they in turn shall pay to the owner of such unit,
interest on the option price of such unit, computed from the date of the
happening of the option event to the date of purchase at the rate per annum to
be established by the trustees from time to time as necessary in their sole
discretion to reasonably reflect prevailing interest rates; but if such unit be
not purchased by an optionee of Class A, B or C, then upon the
<PAGE>

expiration of the option to Class C Optionees, the trustees shall pay over such
accumulations unto the owner of such unit.

14: Rights of Unitholder to Participate in Dividends After the Expiration of the
Options to Class C Optionees. After the expiration of the option to Class C
Optionees, all further payments out of dividends received on Journal Stock on
account of any unit which shall not have been purchased by an optionee of Class
A, B or C, shall be paid by the trustees to the owner of such unit.

15: Right to Transfer Units Not Purchased by Optionees of Class A, B or C. If
any unit shall not have been purchased by an optionee of Class A, B or C, then
upon the expiration of the time limited to Class C Optionees, such unit shall be
transferable (and the trustees on demand shall then make the appropriate
notation of such fact on the trust certificate evidencing such unit) by such
person as may from time to time be the owner thereof, subject to the provisions
of Section 7, to anyone even though not an eligible, provided, however, that
such unit shall be subject to the option to the Class D Optionee until such
option shall have expired and provided further that if the Class D Optionee
shall purchase such unit at any time, then the unit shall thereafter again be
subject to the restrictions on transfer set forth in this Agreement.

16: Right of Eligibles to Pledge Units Subject to Options. Any trust certificate
owned by an eligible may be pledged to secure the payment of a loan or for any
other purpose provided, however, unless and until such eligible shall have
notified the trustees in writing of such pledge, the trustees shall not be bound
to recognize the interest of any pledgee in such trust certificate or in any
unit evidenced thereby, and provided further that the pledgee shall acquire no
rights in such unit greater than the rights of the pledgor therein. No sale or
other transfer of a unit pledged by an employee-eligible or an
ex-employee-eligible, upon foreclosure or other enforcement of such pledge,
shall be valid or effective unless at least five days' notice of such sale or
other transfer shall have been given in writing to the trustees. The occurrence
of such foreclosure sale or other transfer pursuant to due notice to the
trustees, shall be deemed an option event with respect to any unit affected
thereby and shall have the same effect as an option event specified in Section 9
(a) and shall terminate and supersede options then pending, if any; and
thereupon such unit shall be subject to purchase under the options provided in
Section 10. If such unit shall be purchased by an optionee of Class A, B, C or
D, the option price, together with interest or payments on account of dividends
as provided in Section 13, shall be paid over by the trustees to their pledgor,
the pledgee and/or the foreclosure purchaser as their respective interests may
appear. Any pledgee, by accepting any unit or the trust certificate evidencing
the same in pledge, shall be deemed to have accepted and to have agreed to be
bound by all the terms and conditions of this Agreement.

17: Obligation to Surrender Trust Certificates Upon the Happening of an Option
Event; Remedies. Forthwith upon the occurrence of an option event with respect
to any unit, it shall be the duty of whatever person shall have possession of
the trust certificate evidencing such unit, to deliver the same to the trustees
properly endorsed for transfer to the purchaser, and the trustees shall be
entitled to the remedy of specific performance to enforce such duty,
irrespective of whether or not they have or
<PAGE>

could have resorted to other remedies. In the event that any unit shall have
been purchased by an optionee of any class and the trust certificate evidencing
such unit properly endorsed for transfer to the purchaser shall not have been
delivered to the trustees at the time of such purchase, such trust certificate
shall thereupon become void and of no effect except as evidence of the right to
receive the option price, which may be deposited without interest in any bank
which the trustees may select; and the trustees shall record the transfer of
such unit and shall issue to the optionee purchasing the same a new trust
certificate therefor.

18: Lost, Stolen or Destroyed Trust Certificates. The trustees, if satisfied
that any trust certificate has been lost, stolen or destroyed, may issue in lieu
thereof a new trust certificate, whereupon the old trust certificate, whether or
not in fact lost, stolen or destroyed, shall become void and of no effect
whatsoever and the trustees may impose such conditions upon and exact such
indemnity for the issuance of such new trust certificate as they may deem
necessary or desirable.

19: Information and Records Concerning Option Events. The trustees shall furnish
to the Company a list of all owners of units and shall thereafter notify the
Company currently of all persons becoming owners or ceasing to be owners of
units. The Company shall promptly notify the trustees of the occurrence of any
option event specified in Section 9 (a) and (b) and the President shall promptly
notify the trustees of the occurrence of an option event specified in Section 9
(c). Upon receipt of information to the effect that an option event has
occurred, the trustees shall make a record of the name of the owner and the
number of units with respect to which such option event shall have occurred, and
the date of the occurrence of such option event, which record shall be open to
inspection by all interested persons under such conditions as the trustees in
their discretion shall prescribe. If any unit or units, with respect to which an
option event shall have occurred, shall not have been purchased by optionees of
Class A or Class B as provided in Section 10, the trustees, promptly upon the
expiration of the time limited to Class B Optionees, or waiver of option, shall
notify each Class C Optionee in writing of his option, specifying the number of
units subject to option, and if any such unit or units shall not have been
purchased by Class C Optionees the trustees shall promptly upon the expiration

                           II. PROVISIONS RELATING TO
                                  JOURNAL STOCK

20: Disposition of Income. The trustees shall pay over, as soon as practicable
after receipt, all income from the Capital Stock Fund, including such bonds or
notes of the Company, if any, as may be received in lieu of current income, less
such sums as they may deem necessary to provide for the payment of taxes and
expenses of administering the Capital Stock Fund, to owners of units in
proportion to the number of units owned by them respectively. The trustees may
instruct the Company to pay directly to the owners of units any sums out of the
dividends on Journal stock which otherwise would be payable to the trustees, and
the receipt of any such instructions by the Company shall discharge the trustees
from any and all further liability on account of any such payment. If any units
shall have been pledged as provided in Section 16 and the pledgor shall
<PAGE>

have given written directions to the trustees for payment to the pledgee
of the whole or any part of the income to which such pledgor would otherwise be
entitled, the trustees shall comply with such directions or cause the same to be
complied with, so long as they shall remain unrevoked.

21: Voting Rights. The trustees, as soon as they shall receive notice of any
meeting of the owners of Journal stock, shall issue to each owner of units,
except ex-employee-eligibles, employee benefit trusts and
employee-eligible-transferees, a proxy authorizing him or such other person or
persons as he may substitute for him to vote at such meeting the number of
shares of Journal stock represented by the units owned by him, provided,
however, and each such proxy shall so state, that neither the owner of such
units nor his substitute or substitutes shall have the power or authority to
vote (a) to sell or lease all or substantially all of the assets of the Company,
or (b) to dissolve the Company, or (c) to merge or consolidate the Company with
any other corporation or corporations in which the Company and/or the
stockholders of the Company upon completion of such consolidation or merger do
not control directly or indirectly a majority of the voting stock, unless the
employee owners of at least two-thirds of the outstanding units owned by
employee-eligibles shall have authorized the trustees to offer all shares held
by the trustees for sale in accordance with the provisions of Section 24 to the
classes of optionees therein defined and such options shall have expired within
three months prior to such vote. The trustees may authorize the affixing of a
facsimile of their signatures to any proxy with the same effect as though such
proxy were signed by them personally.
     The trustees shall have exclusive authority to vote all shares of Journal
stock represented by units owned by ex-employee-eligibles, employee benefit
trusts and employee-eligible-transferees.

22: Stock Dividends. All dividends paid to and received by the trustees in
shares of Journal stock shall be added to and become a part of the Capital Stock
Fund.

23: Subscription Rights. In the event that the trustees shall become entitled to
subscribe to additional shares of Journal stock, they shall, as soon as
practicable thereafter, notify in writing each owner of a unit then outstanding,
other than an ex-employee-eligible, of such fact and shall make an offer to each
such owner to subscribe on his behalf to such part of such shares of Journal
stock as shall be proportional to the number of units owned by him or any
portion of such part, on condition that he shall accept such offer and pay to
the trustees the subscription price before a specified date, sufficiently prior
to the date when the trustees' right to subscribe shall expire to enable them to
exercise such right; and on the further condition that the trustees shall not be
obliged to subscribe to any fractional share of Journal stock on behalf of any
such owner, and in every case they shall have authority to reduce the number of
shares subscribed for so far as may be requisite to avoid the creation of a
fractional unit. Any owner of a unit who shall receive such an offer from the
trustees may, subject to his obtaining the prior written consent of the
President, transfer to any eligible, other than an ex-employee-eligible, his
right to have the trustee subscribe to additional shares of Journal stock on his
behalf.
     The trustees shall subscribe to so many shares of Journal stock as can be
paid for with the funds supplied to them by the owners of units accepting the
trustees' offer and shall permit their right, with respect to
<PAGE>

the remaining shares of Journal stock to which they shall be entitled to
subscribe, to lapse. Upon receipt of any shares of Journal stock thus subscribed
for, the trustees shall forthwith issue to each owner of a unit or units who
shall have accepted the trustees' offer, a trust certificate for so many units
as shall be necessary to represent the number of shares of Journal stock paid
for by him, at the ratio obtaining immediately prior to such subscription
between the number of units outstanding and the number of shares of Journal
stock held by the trustees. Rights to subscribe to bonds or notes of any
corporation, if any shall be required by the trustees, shall be distributed pro
rata among the owners of units.

24: Sale of Journal Stock. None of the shares of Journal stock held by the
trustees shall be sold or otherwise permanently disposed of except in exchange
for its equivalent in the recapitalization or reorganization of the Company
unless and until (a) written authorization thereto signed by the
employee-eligible and employee benefit trust owners of at least two-thirds of
the units then outstanding owned by employee-eligibles and employee benefit
trusts shall have been filed with the trustees within eighteen months prior to
such sale or other permanent disposition, and (b) the trustees shall have first
granted to the following classes of optionees, successively, options in writing
for the periods of time limited below, to purchase all or any part of such
Journal stock, not purchased by prior optionees, by depositing at the office of
the trustees the option price in cash determined according to the formula set
forth in Section 25.
     Class One Optionees. Beginning with the date of the first granting of the
options by the trustees, called "date of trustees' offer," and ending at the
expiration of six months thereafter:
     (a)  Each employee-eligible and employee benefit trust owner of units who
          did not consent to such proposed sale or other permanent disposition,
          called "non-consenting eligibles," as to such proportion of the shares
          of Journal stock offered by the trustees as the number of units owned
          by him bears to the total number of units then outstanding.
     (b)  Stockholder-eligibles as to the remainder of the shares of Journal
          stock offered by the trustees, with the right as among themselves to
          purchase such remainder, in proportion to the number of shares of
          Journal stock owned by them respectively, together with their
          respective proportion of such remainder, if any, not purchased by any
          of their number.
     Class Two Optionees. For a period of three months after the expiration of
the time limited to Class One Optionees.
     (a)  The non-consenting eligibles as to so many of the shares of Journal
          stock offered to stockholder-eligibles as Class One optionees at shall
          not have been purchased by said stockholder-eligibles, with the right
          in such non-consenting eligibles as among themselves to purchase such
          shares of Journal stock, in proportion to the number of units owned by
          them respectively, together with their respective proportion of such
          shares, if any, not purchased by any of their number.
     (b)  Stockholder-eligibles as to so many of the shares of Journal stock
          offered to non-consenting eligibles as Class One optionees as shall
          not
<PAGE>

          have been purchased by said non-consenting eligibles, with the right
          in said stockholder-eligibles as among themselves to purchase such
          shares of Journal stock, in proportion to the number of units owned by
          them respectively, together with their respective proportions of such
          shares, if any, not purchased by any of their number.
     Class Three Optionees. For a period of three months after the expiration of
the time limited to Class Two optionees, the Company.
     All of the optionees within any of the aforesaid classes may waive their
options by delivering joint written notice thereof to the trustees, in which
event the options of the next succeeding class of optionees shall be deemed to
begin to run on the date of such waiver.
     The trustees shall not sell or otherwise permanently dispose of (except in
exchange for its equivalent on recapitalization or reorganization of the
Company) any of the shares of Journal stock held by them hereunder to any person
other than a Class One, Two or Three optionee except under the express condition
that the person so purchasing or otherwise acquiring such shares of Journal
stock shall agree also to purchase or take over from each Class One optionee,
within three months after the date of such purchase or other acquisition, for
the same price or other consideration and upon the same terms and conditions, so
many shares of Journal stock as may be offered to such purchaser by such Class
One optionee; provided, however, that if the trustees shall hold less than a
majority of the total number of shares of Journal stock outstanding such
purchaser shall not be obligated so to purchase or take over from any Class One
optionee any greater proportion of the shares of Journal stock owned by such
Class One optionee than the ratio between the number of shares so sold or
otherwise permanently disposed of by the trustees and the total number of shares
of Journal stock held by the trustees.

25: Formula for Option Price of Journal Stock. The price, called "option price,"
at which any share of Journal stock shall be subject to purchase pursuant to the
options provided in Section 24 shall be determined on a consolidated basis in
accordance with generally accepted accounting principles practiced by the
Company as shown by the books and records of the Company and its subsidiaries,
as follows:
     The book value of all outstanding Journal stock as of the close of the
fiscal year next preceding the date of the trustees' offer shall first be
determined. This figure shall be increased by the net income or decreased by the
net loss, as the case may be, realized between the close of such fiscal year and
the close of the accounting period next preceding the date of the trustees'
offer, and from the amount thus obtained shall be subtracted the amount of
dividends, if any, paid on such Journal stock after the close of such fiscal
year. To this result there shall be added an amount equal to 39 times the
average accounting period net income of the Company available for dividends on
Journal stock during the 65 accounting periods next preceding the date of the
trustees' offer; but in computing such net income there shall be deducted
dividends, if any, paid or payable on any stock having priority over Journal
stock, and the trustees shall exclude from the net income calculation those
particular items of income or expense that the trustees determine to be large
and unusual. However, from and after such time as a large and unusual item has
an effect on net income of
<PAGE>

the Company that exceeds three percent (3%) of the book value of all outstanding
Journal stock as of close of the last accounting period preceding the date of
the trustees' offer, the trustees may exclude the item from the net income
calculation only if the Board of Directors also consents to the action. For
transactions initiated after December 31, 1996, the sum thus obtained shall be
multiplied by a figure, called the "multiplier," which is shown below. The
product thus obtained shall be divided by the number of shares of Journal stock
outstanding as of the date of the trustees' offer and the quotient shall be the
option price of each share of Journal stock. In the event that there shall have
been any change in the capitalization of the Company between the end of the
fiscal year next preceding the date of the trustees' offer and the date of the
trustees' offer, the trustees shall make such adjustment in the option price as
may be necessary fairly to reflect such change. The trustees shall make a
tentative determination of such option price and payment to the trustees of the
sum so determined shall be sufficient exercise of the option, subject to such
adjustment of such tentative option price as may subsequently be requisite. The
multiplier shall be as follows:

                   1997         1998           1999          2000         2001
                   ----         ----           ----          ----         ----
Period 1      1.0076923     1.1076923     1.2076923      1.3076923    1.4076923
Period 2      1.0153846     1.1153846     1.2153846      1.3153846    1.4153846
Period 3      1.0230769     1.1230769     1.2230769      1.3230769    1.4230769
Period 4      1.0307692     1.1307692     1.2307692      1.3307692    1.4307692
Period 5      1.0384615     1.1384615     1.2384615      1.3384615    1.4384615
Period 6      1.0461538     1.1461538     1.2461538      1.3461538    1.4461538
Period 7      1.0538462     1.1538462     1.2538462      1.3538462    1.4538462
Period 8      1.0615385     1.1615385     1.2615385      1.3615385    1.4615385
Period 9      1.0692308     1.1692308     1.2692308      1.3692308    1.4692308
Period 10     1.0769231     1.1769231     1.2769231      1.3769231    1.4769231
Period 11     1.0846154     1.1846154     1.2846154      1.3846154    1.4846154
Period 12     1.0923077     1.1923077     1.2923077      1.3932077    1.4923077
Period 13     1.1           1.2           1.3            1.4          1.5

For every period in 2002 and thereafter, the multiplier shall be 1.5.

                      III. GENERAL ADMINISTRATIVE CLAUSES

26: General Powers of the Trustees. The trustees are authorized and empowered:
     (a)  To cause to be transferred into their names as trustees hereunder and
          to retain any and all shares of Journal stock now or hereafter
          acquired by them under this Agreement, without liability on the part
          of the trustees for any decrease in value thereof.
     (b)  Subject to the provisions and limitations herein expressly set forth,
          to sell at public or private sale, exchange for like or unlike
          property, and otherwise dispose off any or all shares of Journal stock
          held by them hereunder, at such
<PAGE>

          price and upon such terms and credits as the trustees may deem proper.
     (c)  Subject to the provisions and limitations herein expressly set forth,
          to participate in any plan or proceeding for reorganizing,
          consolidating, merging or adjusting the finances of the Company, to
          pay any assessment or any expense incident thereto and to do any other
          act or thing that the trustees may deem necessary or advisable in
          connection therewith.
     (d)  To employ counsel and pay them reasonable compensation and the
          trustees shall be fully protected in any action under this Agreement
          taken by them in good faith in accordance with the opinion of such
          counsel.
     (e)  To select and employ suitable agents and to pay them reasonable
          compensation.
     (f)  To compromise or submit to arbitration any claim in favor of or
          against the trust estate or any controversy as to the option price of
          Journal stock.
     (g)  To transfer so many shares of Journal stock held by them hereunder
          into the name of each person elected a Director of the Company who may
          have been so elected by the vote of the owners of units as shall be
          necessary to enable such person to qualify as such Director.
     (h)  In every case of controversy between buyer and seller respecting the
          option price of any unit, to employ at the expense of the Capital
          Stock Fund a certified public accountant or a firm of certified public
          accountants approved by the Company, to determine the amount of such
          option price, and every determination so made shall be binding and
          conclusive upon all parties to the transaction.
     (i)  To borrow any sum or sums of money from time to time from any person,
          including the Company, for the purpose of paying taxes and, as
          security for the payment of any sums so borrowed, together with
          interest thereon, to charge, by pledge, mortgage or otherwise, the
          Capital Stock Fund or any other assets in the hands of the trustees
          and to execute such evidences of indebtedness as the lenders may from
          time to time require.
     (j)  To institute or cause to be taken or instituted or to intervene in or
          become a party to or exercise control over such actions, suits or
          proceedings as the trustees shall deem judicious or proper in order to
          protect the Capital Stock Fund or any other assets held by the
          trustees and to defend or settle, in whole or in part, any litigation
          which may at any time be threatened or instituted.

27: Notices. It shall be the duty of each party in interest hereunder, including
each owner of trust certificates, to keep the trustees informed of his proper
post office address, and any notice, communication, payment or distribution
under this Agreement may be given or made by mailing such notice, communication,
payment or distribution to such address with the same force and effect as if
personally delivered.

<PAGE>

28: Meetings of Owners of Trust Certificates. Meetings of owners of trust
certificates or of any class of such owners may be called by the trustees in
their discretion and held at such time and place as shall be designated by the
trustees, upon five days' notice in writing, from the trustees to the class of
owners of trust certificates for which such meeting is held and at any such
meeting a trustee designated by the trustees shall act as chairman and each unit
shall be entitled to one vote in determining any matter presented to such
meeting. In case there shall be no trustees such meeting may be called by any
five owners of units.

                                IV. THE TRUSTEES

29: Right to Resign; Selection of Successor Trustees. The office of any trustee
hereunder shall be vacated and any and all right, title and interest of such
trustee in the Capital Stock Fund and other assets in the hands of the trustees,
if any, shall be divested without formal conveyance by (a) death, (b) mental or
physical incapacity certified to the remaining trustees by two physicians of
good standing retained by the trustees, (c) absence from the United States for a
period of more than one year, (d) resignation evidenced by written instrument
delivered to the remaining trustees, (e) termination of employment in the
service of the Employers, or (f) ceasing to be an owner of one or more units.
     Any vacancy occurring in the office of any trustee shall be filled from
among the employee-eligible owners of units by the written appointment of Harry
J. Grant, so long as he shall be one of the trustees hereof, and by the written
acceptance of such appointee. Thereafter every such vacancy shall be filled from
among the employee-eligible owners of units by the written appointment of the
remaining trustees or trustee and the written acceptance of the appointee, but
if such remaining trustees or trustee shall not have filled such vacancy within
one month after such vacancy shall have occurred, or if there shall be no
remaining trustee, then by the affirmative vote of the employee-eligibles and
employee benefit trusts owning at least a majority of the units then outstanding
owned by employee-eligibles and employee benefit trusts.
     A certificate executed by any three trustees in the same manner as a deed
to be recorded shall for all purposes of this Agreement be evidence of the
identity of the trustees acting under this Agreement at the time specified in
such certificate.
     All persons appointed or elected to the office of trustee, as aforesaid,
shall be vested with all the same estates, powers, rights, duties, privileges,
immunities and discretions as if originally named herein.

30: Majority Rule; Action by Trustees. Except only as provided in Section 38, a
majority of the number of the trustees from time to time acting hereunder, even
though less than five, may do any act which might be performed by all of their
number, and such action may be at a meeting of the trustees or without a meeting
by an instrument or separate concurrent instruments in writing signed by the
requisite number of trustees and filed at the office of the trustees. If less
than all of the trustees shall perform any act they shall give prompt notice of
such action to the trustees who did not participate therein, but failure to give
such notice shall not invalidate such act. No trustee shall be answerable or
accountable for any act of any other trustee in which he shall not have
participated, nor for the custody of any property except such as shall come into
his own possession or personal control.
<PAGE>

     The trustees may appoint a secretary who shall keep and maintain a record
of their proceedings and action in such form as the trustees shall determine and
meetings of the trustees shall be held at such times and places and upon such
notice as they may from time to time determine and establish by agreement or
resolution.

31: Eligibility of Trustees as Officers and Directors. No person holding office
as trustee hereunder shall on that account be ineligible to serve as an officer
or member of the Board of Directors of any of the Employers, nor to receive
compensation for services rendered to any of the Employers, nor to acquire or
hold for his personal account shares of Journal stock, units or trust
certificates evidencing units.

32: No Bond Required of Trustees. No bond or other security shall be required of
any trustee for the due performance of his duties hereunder unless a majority of
the trustees shall from time to time determine otherwise.

33: Limitation on Liability of Trustees for Losses. No trustee shall incur any
liability or have any responsibility for any error of judgment or mistake of
law, or for any action or omission in the administration of this trust, except
only for his individual willful misconduct.

34: Compensation of Trustees; Exoneration From Liability. The trustees shall be
entitled to no compensation for their services hereunder, but shall be entitled
to exoneration from any and all liabilities which may be incurred by them in the
bona fide discharge of their duties hereunder and shall be entitled to
reimbursement for taxes and expenses paid in administering this trust, and shall
have a lien upon all trust assets in their hands to secure such exoneration and
reimbursement.

35: Audit of the Trustees' Accounts. The trustees shall, at least once in every
year, cause to be prepared a comprehensive report setting forth their assets and
liabilities, receipts and disbursements, and shall cause such report to be
audited by a certified public accountant or a firm of certified public
accountants selected by the trustees and copies thereof shall be filed in the
office of the trustees and shall there be open for the inspection of
stockholder-eligibles and the owners of units.

                   V. TERMINATION, AMENDMENT AND DISTRIBUTION

36: Termination by Sale of Journal Stock. In the event that the trustees shall
have sold, in compliance with the provisions of Section 24, any or all of the
shares of Journal stock held by them hereunder, this trust, with respect to the
shares of Journal stock so sold, shall terminate.

37: Duration of Trust. Unless terminated in the manner provided in Section 36 or
in Section 38, the duration of this trust shall be perpetual.

38: Amendment and Termination by Consent. This Agreement may be amended, or the
trust hereby created may be terminated at any time by the written consent of all
of the trustees then acting hereunder and the written consent of such of the
stockholder-eligibles as shall own at least 80 percent of the shares of Journal
stock then owned by stockholder-eligibles, and the affirmative vote of
employee-eligible and employee
<PAGE>

benefit trust owners of at least two-thirds of the units then outstanding owned
by employee-eligibles and employee benefit trusts.

39: Distribution Upon Termination. In the event that this trust shall be
terminated by sale of Journal stock as provided in Section 36 the trustees shall
distribute the proceeds of such sale, or in the event this trust shall be
terminated in the manner provided in Section 38, the trustees shall distribute
the Capital Stock Fund as it may then be constituted, including principal and
undistributed income thereof, if any, less such sums as the trustees shall deem
necessary to reserve for taxes, expenses and other charges which may be incurred
by the trustees in making such sale and/or distribution, unto the owners of
units then outstanding, in proportion to the number of such units owned by them
respectively.

                         VI. SUPPLEMENTARY TRUST FUNDS

40: Composition of a Supplementary Trust Fund. If the trustees shall acquire,
either through the receipt of dividends, the exercise of subscription rights, an
exchange upon recapitalization or reorganization, or by any other means, stock
of the Company of a kind or class other than Journal stock is defined in Section
1, each such kind or class of stock, called "supplementary stock," shall be
segregated and held by the trustees in a separate trust fund, called
"supplementary trust fund," the beneficial interest in which shall be divided
into as many equal parts, called "supplementary units," as the trustees shall
deem necessary or convenient, and ownership of such supplementary units shall be
vested in the owners of units or supplementary units on account of which the
same shall have been acquired pro rata and shall be evidenced by trust
certificates, called "supplementary trust certificates," which shall be issued
in substantially the form set forth in Section 4.

41: Terms and Conditions Governing Supplementary Trust Funds, Units Therein and
Supplementary Trust Certificates. Except as to the formula for determining
option price, as provided in Section 42 and 43, respectively, each supplementary
unit and each kind or class of supplementary stock represented thereby shall be
subject to all the terms and conditions of this Agreement which are applicable
to units and Journal stock respectively, to the same extent as though the words
"supplementary unit" were substituted whenever the word "unit" appears, and the
words "supplementary stock" were substituted wherever the words "Journal stock"
appear, and each supplementary trust certificate and each supplementary trust
fund shall be subject to all the terms and conditions of this Agreement which
are applicable to trust certificates and the Capital Stock Fund, respectively,
to the same extent as though the words "supplementary trust certificate" were
substituted wherever the words "trust certificate" appear, and the words
"supplementary trust fund" were substituted wherever the words "Capital Stock
Fund" appear. Supplementary units subject to the terms and conditions of this
Agreement may be dealt with by the owners thereof independently of the units or
other supplementary units on account of which they may be acquired.

42: Formula for Option Price of a Supplementary Unit. In the event that any
supplementary unit shall be subject to purchase under the options as provided in
Section 9 and 10, the price, called "option price," at which such supplementary
unit
<PAGE>

may be purchased by any optionee shall be determined as follows:
     The option price of a share of the supplementary stock represented by such
unit shall be calculated according to the formula set forth in Section 43,
except that in lieu of the words "date of the trustees' offer" wherever
occurring in Section 43, there shall be substituted (a) with respect to
optionees of Class A, B or C the words "date of the option event," and (b) with
respect to Class D optionee the words "date of purchase." This amount shall then
be multiplied by the number of shares of such supplementary stock held by the
trustees on the date of the option event in the case of optionees of Class A, B
or C or on the date of purchase in the case of Class D optionee, and the result
thus obtained shall be divided by the number of such supplementary units
outstanding on such date. The quotient thus obtained shall be the option price
of such supplementary unit, which shall be tentatively determined with the same
effect as provided in Section 11.

43: Formula for Option Price of Supplementary Stock. In the event that any share
of supplementary stock shall become subject to purchase under the options
provided in Section 24, the price, called "option price," at which such
supplementary stock may be purchased by any optionee described in said Section
24 shall be determined on a consolidated basis in accordance with generally
accepted accounting principles practiced by the Company as shown by the books
and records of the Company and its subsidiaries, as follows:
     The book value of all such outstanding supplementary stock as of the close
of the fiscal year next preceding the date of the trustees' offer shall first be
determined. Insofar as applicable to such supplementary stock, this figure shall
be increased by the net income or decreased by the net loss, as the case may be,
realized between the close of such fiscal year and the close of the accounting
period next preceding the date of the trustees' offer, and from the amount thus
obtained shall be subtracted the amount of dividends, if any, paid on such
supplementary stock since the close of such fiscal year. To this result there
shall be added, if such supplementary stock shall be the terms of its issue be
entitled to participate without limit in the net income of the Company available
for dividends, an amount equal to 39 times the proportionate interest of such
supplementary stock in the average accounting period net income of the Company
available for dividends during as many accounting periods not exceeding 65 next
preceding the date of the trustees' offer as such supplementary stock shall have
been outstanding. The sum thus obtained shall be divided by the number of shares
of such supplementary stock outstanding as of the date of the trustees' offer,
and the quotient shall be the option price for each share of such supplementary
stock which shall be tentatively determined with the same effect as provided in
Section 25. Provided however, that the option price of any share of
supplementary stock which by the terms of its issue is entitled to participate
in net earnings of the Company in a limited amount or percentage, shall not in
any event exceed the price at which it is callable or redeemable under the terms
of its issue, or the stated amount at which it is entitled by the terms of its
issue to participate in the assets of the Company in the event of liquidation,
whichever is higher. In the event that there shall have been any change in the
capitalization of the Company between the end of the fiscal year next preceding
the date of the
<PAGE>

trustees' offer and the date of the trustees' offer, the trustees shall make
such adjustment in the option price as may be necessary fairly to reflect such
change.

                  VII. DIVISION OF TRUST INTO SEPARATE TRUSTS

44: Circumstances Under Which Trust is Divisible. If the trustees shall acquire,
either through the receipt of dividends, the exercise of subscriptionrights, an
exchange upon reorganization or by any other means, stock of any corporation
other than the Company, which corporation and in that event the Company also are
called `'separate corporations," and any owner of units shall cease to be
employed by any separate corporation but shall be employed by any other separate
corporation, the trustees shall divide this trust into separate and distinct
trusts, called `'separate trusts," so that the stock of each separate
corporation employing the same owners of units shall be held in the same
separate trust but that the stock of each separate corporation employing
different owners of units shall be in different separate trusts, but, subject to
such limitation, the trustees may make any allocation among such separate trust,
of supplementary stock, if any, held in this trust before its division as
aforesaid which they may deem appropriate, having regard to the nature of the
business conducted by the separate corporations whose stock shall be held in the
several separate trusts.
     If, however, the trustees shall acquire, through any of the means described
in the preceding sentence, stock of any corporation other than the Company and
none of the owners of units shall cease to be employed by the Company by reason
of being transferred to such corporation other than the Company, the stock of
such other corporation shall be called, and treated in all respects as,
supplementary stock, as provided in Sections 40, 41, 42 and 43.

45: Exchange of Trust Certificates and Supplementary Trust Certificates, Terms
Governing Separate Trusts. Upon the division of this trust into separate trusts
as provided in Section 44, the trustees shall call in all of the outstanding
trust certificates and supplementary trust certificates, if any, and shall issue
in exchange therefor to the owners thereof appropriate trust certificates and,
if issuable, supplementary trust certificates for their proper number of units
of beneficial interest in each separate trust respectively. Upon receipt of
trust certificates and supplementary trust certificates, if any, in each
separate trust each employee-eligible or employee benefit trust owner thereof
shall offer such of them as represent units of supplementary units in shares of
stock of a separate corporation by which such owner is not employed or was not
created for sale to optionees in the manner set forth in Sections 9, 10, 41 and
42, provided, however, that Class A and B optionees shall be employee-eligibles
and employee benefit trusts of such separate corporation and Class D optionee
such separate corporation.
     Thereafter each separate trust shall be administered independently of each
other separate trust and shall be subject to all the terms and conditions of
this Agreement as though the stock of each separate corporation held in such
separate trust were Journal stock or supplementary stock, as the case may be,
and each such separate corporation were the Company, provided, however, that if
any of the trustees of this trust shall become disqualified to act as trustees
of any separate trust by reason of their not owning any units in such separate
trust, the remaining trustees who are not so disqualified shall constitute
<PAGE>

the trustees for such separate trust and they, or if all of the trustees shall
be so disqualified, then all of such disqualified trustees shall fill the
vacancy of any disqualified trustee or trustees in the manner herein provided
with respect to this trust, and thereafter the several separate trusts shall be
administered by separate trustees.

46: Subdivision of Separate Trusts. If after a separation of this trust into
separate trusts, as provided in Section 44, any owner of a separate unit or
units shall cease to be employed by any separate corporation but shall be
employed by any other separate corporation whose stock shall be held in any
separate trust, or if the trustees shall acquire in any separate trust, stock of
a corporation other than that whose stock shall be held in such separate trust
and any of the owners of units in such separate trust shall cease to be employed
by any such separate corporation but shall be employed by any other such
separate corporation whosestock shall be held in such separate trust, the
trustees shall subdivide such separate trust into further separate trusts, and
the same procedure shall be followed with the same effect as described in
Sections 44 and 45.

                           VIII. SITUS; INSPECTION OF
                          AGREEMENTS; AND SEVERABILITY
                                  OF PROVISIONS

47: Situs. The trustees may, in their discretion, from time to time, change the
situs of the Capital Stock Fund or other assets held by the trustees to any
place within the United States, which situs may be at a place other than the
residence of the respective trustees, or any of them.

48: Inspection of This Agreement. A copy of this Agreement shall be filed in the
principal office of the Company and in the office of the trustees, and shall be
open to inspection by all interested persons, under such conditions as the
trustees in their discretion shall prescribe.

49: Severability of Provisions. If for any reason any provisions of this
Agreement shall become or be held inoperative or illegal, the validity and
effect of the other provisions hereof shall not thereby be affected.

     This Agreement is executed in fourteen counterparts, each of which will be
deemed to be an original.

     IN WITNESS WHEREOF, first parties, HARRY J. GRANT, FAYE McBEATH, SUSAN A.
BOYD, KATHARINE BOYD MOREHEAD and MARY BOYD EVANS, have hereunto set their hands
and seals, and WILMINGTON TRUST COMPANY, as Trustee under Agreement dated
November 12, 1931, with Katharine Boyd Morehead, and WILMINGTON TRUST COMPANY,
as Trustee under Agreement dated November 12, 1931, with Mary Boyd Evans, has
caused this Agreement to be signed in its name by one of its Vice Presidents and
to be attested and its corporate seal to be hereunto affixed by one of its
Assistant Secretaries; and the trustees, HARRY J. GRANT, LESLIE A. WEBSTER, JOHN
DONALD FERGUSON, LEONARD L. BOWYER and MARVIN H. CREAGER, have hereunto set
their hands and seals; and the third party, JOURNAL COMMUNICATIONS, has caused
this Agreement to be signed in its name by its President and to be attested and
its corporate seal to be hereunto affixed by its Secretary, done as of May 15,
1937.<PAGE>

                                                                     EXHIBIT 4.2
                                                                     -----------

================================================================================

                         REGISTRATION RIGHTS AGREEMENT

                                by and between

                   CardioDynamics International Corporation,
                           a California corporation

                                      and

              The Holders Identified on the Signature Page hereof

                        _______________________________
                           Dated as of July 19, 2001

================================================================================
<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS

                                                                         Page
<S>      <C>                                                             <C>
1. Registration Rights..................................................   1

   1.1   Definitions....................................................   1
   1.2   Shelf Registration.............................................   2
   1.3   Obligations of the Company.....................................   2
   1.4   Furnish Information............................................   4
   1.5   Representations and Warranties of the Company..................   4
   1.6   Indemnification................................................   6
   1.7   Rule 144 Reporting.............................................   9
   1.8   Notice of Intent to Sell.......................................   9
   1.9   Holder Information.............................................   9

2. Miscellaneous........................................................  10

   2.1   Termination of the Company's Obligations.......................  10
   2.2   Successors and Assigns.........................................  10
   2.3   Amendment and Waivers..........................................  10
   2.4   Notices........................................................  10
   2.5   Headings.......................................................  11
   2.6   Construction...................................................  11
   2.7   Entire Agreement...............................................  11
   2.8   Governing Law..................................................  11
   2.9   Counterparts...................................................  12
   2.10  No Piggyback on Registrations..................................  12
   2.11  Compliance.....................................................  13
</TABLE>

                                      (i)
<PAGE>

                      CARDIODYNAMICS INTERNATIONAL CORP.

                         REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of July 19,
2001, is entered into by and between CardioDynamics International Corp., a
California corporation (the "Company"), and the shareholders of the Company
listed on the signature page hereof, (each a "Shareholder" and collectively the
"Shareholders")..

                                   Recitals
                                   --------

     WHEREAS, Shareholders and the Allen E. Paulson Living Trust (the "Trust")
have entered into a certain stock purchase agreement, dated as of July 19, 2001
(the "Purchase Agreement"), pursuant to which the Trust shall sell to
Shareholders, and Shareholders shall purchase from the Trust, up to 1,500,000
shares of common stock of the Company (the "Shares"); and

     WHEREAS, Shareholders desire to obtain certain registration rights
associated with such Shares, and the Company, as an inducement to Shareholder to
enter into the Purchase Agreement, desires to grant Shareholder such
registration rights, as more fully set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual promises made in this
Agreement, the parties, intending to become legally bound, hereby agree as
follows:

                                   Agreement
                                   ---------

1.         Registration Rights.
           -------------------
           1.1   Definitions.
                 -----------
                 (a)  "Best Efforts" shall mean the efforts that a prudent
Person desirous of achieving a result would use under similar circumstances as
the Company to attempt to cause such result to be achieved as expeditiously as
possible.

                 (b)  "Business Day" means any day except Saturday, Sunday
and any day which shall be a legal holiday or a day on which banking
institutions in the State of New York or California are authorized or required
by law or other government actions to close.

                 (c)  "Holder" means any person owning of record
Registrable Securities that have not been sold to the public, or any assignee of
record of such Registrable Securities to whom rights under this Section 1 have
                                                                ---------
been assigned in accordance with this Agreement.

                 (d)  "Person" means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

                                       1
<PAGE>

                 (e)  "Proceeding" means an action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or
partial proceeding, such as a deposition), whether commenced or threatened.

                 (f)  "Register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement.

                 (g)  "Registrable Securities" means the Shares, excluding
in all cases, however, all Registrable Securities sold pursuant to Rule 144.

           1.2   Shelf Registration.
                 ------------------

                 (a)  The Company will file as soon as practicable, and in
no event later than thirty (30) days after the Closing Date (as such term as
defined in the Purchase Agreement), a registration statement with the Securities
and Exchange Commission ("SEC") under the Securities Act of 1933, as amended
("Securities Act") for the sale and distribution of all of the Holders'
Registrable Securities and thereafter shall use its Best Efforts to secure the
effectiveness of such registration statement as soon as practicable thereafter,
but in any event prior to the ninetieth (90th) day after the Closing Date,
including but not limited to, responding to comments, if any, from the SEC
within ten (10) days of receipt of such comments.

                 (b)  The Company will pay all of its expenses incurred in
connection with any registration, qualification and compliance requested
hereunder (excluding Holders' or brokers' discounts and commissions), including
without limitation all filing, registration and qualification, and accounting
fees and the fees and disbursements of counsel for the Company.

                 (c)  The Company will use its Best Efforts to cause the
registration statement to remain effective until the earliest of (a) the date
ending two (2) years after the Closing Date, (b) the date on which all the
Registrable Securities have been resold in accordance with the Securities Act or
(c) the date on which each Holder of Registrable Securities is able to sell all
of such Holder's Registrable Securities in a single three (3) month period
without registration under the Securities Act pursuant to Rule 144.

           1.3   Obligations of the Company. In order to effect the
                 --------------------------
registration of any Registrable Securities under Section 1.2 of this Agreement,
                                                 -----------
the Company will, as expeditiously as reasonably possible (and, in no event
later than 30 days after the Closing Date with respect to the registration
statement described in subclause (a) of this Section 1.3 :
                                             -----------

                 (a)  Prepare and file with the SEC a registration
statement with respect to such Registrable Securities, including a Plan of
Distribution in form attached hereto as Annex A, and use its Best Efforts to
cause such registration statement to become effective in accordance with Section
1.2(a) above, and deliver such registration statement to each Holder five days
prior to the filing of such registration statement.

                 (b)  Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement, within ten (10) days of receipt of such
comments, as may be necessary to comply with

                                       2
<PAGE>

the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

                 (c)  Furnish to the Holders such number of copies of a
prospectus in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are included in
such registration statement.

                 (d)  Use its Best Efforts to register and qualify the
securities covered by such registration statement under such other securities or
"blue sky" laws of such jurisdictions as will be reasonably requested by the
Holders, provided that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.

                 (e)  Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, and upon such notice the Company shall use its Best Efforts to
promptly correct such misstatement or omission and deliver to each Holder copies
of such corrected prospectus. The Company shall have the right, upon such
notice, to suspend the delivery of prospectuses included in such registration
statement from the date of notice until the date of such correction, subject to
the limitations set forth in Section 1.8. The period during which the Company is
                             -----------
required to keep any registration statement filed pursuant to Section 1.2
                                                              -----------
effective shall be extended for the amount of time required to amend such
registration statement and deliver such prospectus relating thereto.

                 (f)  The Company shall use its Best Efforts to maintain
designation and quotation of all the Registrable Securities covered by the
registration statement on the Nasdaq National Market System or the Nasdaq
SmallCap Market for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. as such with
respect to such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 1.3(f).
                                                                 --------------

                 (g)  The certificates representing the Shares shall bear
the legend set forth in the Transfer Agent Instruction of even date herewith
(the "Transfer Agent Instruction"). The Company shall use its Best Efforts to
cause its counsel to issue the letter attached as Exhibit I to the Transfer
Agent Instruction to transfer agent within three (3) Business Days of the date
that the registration statement is declared effective by the SEC (such date, the
"Effective Date"). The Company agrees that following the Effective Date, it
will, no later than three (3) Business Days following the delivery by a Holder
to the Company's transfer agent of a certificate or certificates representing
the Shares sold with restrictive legends and such undertakings as are called for
by the Transfer Agent Instruction, cause its transfer agent to

                                       3
<PAGE>

deliver to such Holder, certificates representing such Shares which shall be
free from all restrictive and other legends.

                 (h)  The Company shall notify the Holders of Registrable
Securities to be sold as promptly as reasonably possible (A) when the SEC
notifies the Company whether there will be a "review" of the registration
statement and whenever the SEC comments in writing on such registration
statement (the Company shall provide true and complete copies thereof and all
written responses thereto to each of the Holders); and (B) with respect to the
registration statement or any post-effective amendment, when the same has become
effective; (i) of any request by the SEC or any other federal or state
governmental authority for amendments or supplements to the registration
statement or any prospectus constituting a portion thereof or for additional
information; (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iii) if at any time any of the representations and warranties of the Company
contained in this Agreement ceases to be true and correct in all material
respects; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
registration statement or any prospectus constituting a portion thereof
ineligible for inclusion therein or any statement made in the Registration
Statement or prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the registration statement or prospectus or other
documents so that, in the case of the registration statement and prospectus, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

           1.4   Furnish Information. It will be a condition precedent to
                 -------------------
the obligations of the Company to take any action pursuant to Section 1.2 hereof
                                                              -----------
that the selling Holders will furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as will be required to effect the registration of
their Registrable Securities.

           1.5   Representations and Warranties of the Company. The Company
                 ---------------------------------------------
hereby makes the following representations and warranties to the Shareholders:

                 (a)  Organization and Qualification. The Company is a
                      ------------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California, with the requisite corporate power and
authority to own and use its properties and assets and to carry on its business
as currently conducted, except, however, where the failure to remain in good
standing or to carry on its business as currently conducted, as the case may be,
could not, individually or in the aggregate, (x) adversely affect the legality,
validity or enforceability of this Agreement or (y) adversely impair the
Company's ability to perform fully on a timely basis its obligations under this
Agreement (any of (x) or (y), a "Material Adverse Effect").

                                       4
<PAGE>

                 (b)  Authorization; Enforcement. The Company has the
                      --------------------------
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations thereunder. The execution and delivery of this Agreement by the
Company and the consummation by it of the transactions contemplated thereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company. This Agreement has been duly executed
by the Company and, when delivered in accordance with the terms of the Purchase
Agreement, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms.

                 (c)  No Conflicts. The execution, delivery and performance
                      ------------
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any subsidiary's certificate or
articles of incorporation, bylaws or other charter documents (each as amended
through the date hereof), or (ii) subject to obtaining the Required Approvals
(as defined below), conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or subsidiary debt or otherwise)
or other understandings to which the Company or any subsidiary is a party or by
which any property or asset of the Company or any subsidiary is bound and
affected, or (iii) result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), as could not, individually or in the aggregate, have or
result in a Material Adverse Effect. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could
not have or result in a Material Adverse Effect.

                 (d)  Filings, Consents and Approvals. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of this Agreement, other
than (i) the filing with the Commission of a registration statement covering the
resale of the Shares by the Purchasers and (ii) in all other cases where the
failure to obtain such consent, waiver, authorization or order, or to give such
notice or make such filing or registration could not have or result in,
individually or in the aggregate, a Material Adverse Effect (collectively, the
"Required Approvals").

                 (e)  Form S-3 Eligibility. The Company is eligible to
                      --------------------
register the Shares for resale under Form S-3 promulgated under the Securities
Act.

                 (f)  Listing and Maintenance Requirements. The Company has
                      ------------------------------------
not, in the last six months preceding the date hereof received notice (written
or oral) from the Nasdaq, any stock exchange, market or trading facility on
which the Shares are or have been listed (or on which the Shares have been
quoted) to the effect that the Company is not in compliance with the

                                       5
<PAGE>

listing or maintenance requirements of such exchange, market or trading
facility. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

                 (g)  Registration Rights; Rights of Participation. Except
                      --------------------------------------------
as set forth on Schedule 1.5(g) to this Agreement, the Company has not granted
or agreed to grant to any Person any rights (including `piggy-back" registration
rights) to have any securities of the Company registered with the Commission or
any other governmental authority which has not been satisfied.

                 (h)  No Restrictions on Sale of Shares by Trust. Except as
                      ------------------------------------------
set forth on Schedule 1.5(h) to this Agreement there are no agreements,
covenants or understandings between the Company and the Trust which prohibits,
restricts or affects the Trust's right or ability to sell or otherwise dispose
of the Shares pursuant to the terms of the Purchase Agreement. In the event that
the Trust is required to seek the Company's consent in connection with the sale
of Shares under the Purchase Agreement, the Company agrees to consent in a
timely manner to any such request by the Trust for the Company's consent.

                 (i)  Accuracy of SEC Documents. The Company has timely
                      -------------------------
filed, with the SEC under Sections 13 or 14(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), since November 30, 1998 (such filed
documents being referred to collectively as the "SEC Documents"). As of their
respective filing dates, or such later date on which such reports were amended,
the SEC Documents complied in all material respects with the requirements of the
Exchange Act. The SEC Documents as of their respective dates, or such later date
on which such reports were amended, did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements included in
the SEC Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. Except as may be indicated in
the notes to the Financial Statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, the Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
the Company and any subsidiaries at the dates thereof and the consolidated
results of their operations and consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring
adjustments).

           1.6   Indemnification. In the event any Registrable Securities
                 ---------------
are included in a registration statement under Section 1.2 hereof:
                                               -----------

                 (a)  To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, stockholders, officers
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages, or liabilities to which they may become jointly or severally
liable under the Securities Act, the Exchange Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out

                                       6
<PAGE>

of or are based upon any of the following statements, omissions or violations
(collectively, a "Violation"):

                 (1)  any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;

                 (2)  the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or

                 (3)  any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
registration statement; and the Company will reimburse each such Holder,
partner, stockholder, officer or director, underwriter or controlling person for
any legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 1.6(a) will not apply to amounts paid in settlement of any such
     --------------
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent will not be unreasonably withheld),
nor will the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, stockholder, officer, director, underwriter or controlling
person of such Holder (including, without limitation, Annex A).

                 (b)  To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such registration statement or any
of such other Holder's partners, directors or officers or stockholders or any
person who controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer, stockholder or
controlling person of such other Holder may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation that arises solely as a result of written
information furnished by such Holder expressly for use in connection with such
registration (including, without limitation, Annex A); and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or any
such director, officer, controlling person, underwriter or other Holder,
partner, officer, director, stockholder or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 1.6(b) will not apply to amounts paid in settlement of
                  --------------
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent will not be unreasonably
withheld; and provided further, that the total amounts payable in indemnity by a
Holder under this

                                       7
<PAGE>

Section 1.6(b) in respect of any Violation will not exceed the aggregate
--------------
proceeds (net of discounts) received by such Holder upon the sale of the Shares.

                 (c)  Promptly after receipt by an indemnified party under this
Section 1.6 of notice of the commencement of any action (including any
-----------
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.6, deliver to
                                                        -----------
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party will
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if the indemnifying party is materially prejudiced thereby,
will relieve such indemnifying party of liability, but only to the extent that
such indemnifying party is prejudiced with respect to a specific claim.

                 (d)  The foregoing indemnity agreement with respect to any
prospectus shall not inure to the benefit of any Holder or underwriter, or any
person controlling such Holder or underwriter, from whom the person asserting
any losses, claims, damages or liabilities purchased Registrable Securities, if
a copy of the prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) provided by the Company
was not sent or given by or on behalf of such Holder or underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Registrable Securities to such person, and if
the prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.

                 (e)  If the indemnification provided for in Section 1.6(a) or
                                                             --------------
1.6(b) hereof shall be unavailable to hold harmless an indemnified party in
------
respect of any liability under the Securities Act, then, and in each such case,
the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statement or omissions that resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided that in
no event shall any contribution under this subsection (e) by any Holder exceed
the gross proceeds from the sale of Registrable Securities received by such
indemnifying party. No person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.

                                       8
<PAGE>

                 (f)  The obligations of the Company and Holders under this
Section 1.6 will survive the completion of any offering of Registrable
-----------
Securities in a registration statement, and otherwise.

           1.7   Rule 144 Reporting. With a view to making available the
                 ------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, while a public market exists for the Common Stock of the Company,
the Company will:

                 (a)  Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
while the Company is reporting under the Exchange Act;

                 (b)  Use its Best Efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time it is subject to such reporting
requirements); and

                 (c)  So long as a Holder owns any Registrable Securities,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act (at any time it is subject to the reporting
requirements of the Exchange Act), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing a Holder to sell any such securities without registration (at
any time the Company is subject to the reporting requirements of the Exchange
Act).

           1.8   Blocking Notice. For a period not exceeding either (i) five (5)
                 ---------------
consecutive Business Days or (ii) an aggregate of twenty (20) Business Days in
any twelve (12) month period, the Company may suspend the ability of the Holders
to make dispositions under the registration statement or prospectus by providing
the Holders with written notice (a "Blocking Notice") if the Company's Board of
Directors determines in its good faith judgment that the Company's obligation to
ensure that such registration statement and prospectus contain current and
complete information would require the Company to make a public disclosure
regarding a material non-public transaction, provided, that the Company shall
not be entitled to deliver a Blocking Notice within ten (10) Business Days of
the expiration of any Blocking Notice previously delivered. Each Blocking Notice
shall contain a general statement of the reasons for such postponement and an
approximation of the anticipated delay. Notwithstanding anything to the contrary
herein, in the event of a merger of the Company with or into another entity that
is not wholly-owned by the Company and is reportable, if consummated, under Item
2 of Form 8-K under the Exchange Act, the Company may deliver a Blocking Notice
for a period of up to twenty (20) consecutive Business Days in any twelve (12)
month period, in which case, the number of consecutive Business Days available
to the Company pursuant to clause (ii) of this Section shall be reduced by such
number of Business Days. Each Holder agrees by acquisition of the Registrable
Securities that, upon receipt of a Blocking Notice from the Company, such Holder
shall not dispose of, sell or offer for sale the Registrable Securities pursuant
to the registration statement until such Holder receives (i) copies of the
supplemented or amended prospectus, or until counsel for the Company shall have
determined that such disclosure is not

                                       9
<PAGE>

required due to subsequent events, (ii) notice in writing from the Company that
the use of the prospectus may be resumed and (iii) copies of any additional or
supplemental filings that are incorporated by reference to in the prospectus. In
the event the Company shall provide any Blocking Notice pursuant to this
Section, the period during which the Company is required to keep the
registration statement (filed pursuant to Section 1.2) effective shall be
extended for the amount of time equal to the number of days during which such
Blocking Notice is in effect.

           1.9   Holder Information. Each Holder covenants that it will promptly
                 ------------------
notify the Company of any changes in the information set forth in the
registration statement regarding such Holder or the information contained on
Annex A.

     2.    Miscellaneous.
           -------------

           2.1   Termination of the Company's Obligations. The Company shall
                 ----------------------------------------
have no obligations to register or maintain any registration statement governing
Registrable Shares and no penalties or damages will accrue or be payable as a
result of such failure to register or maintain any registration statement, (a)
if all Registrable Shares have been registered and sold pursuant to a
registration statement effected pursuant to this Agreement, or (b) at such time
as all Registrable Shares held by Shareholders may be sold under Rule 144(k), as
it may be amended from time to time, including but not limited to amendments
that reduce that period of time that securities must be held before such
securities may be sold pursuant to such Rule.

           2.2   Successors and Assigns. This Agreement shall inure to the
                 ----------------------
benefit of and be binding upon the successors and assigns of each of the parties
hereto including any person to whom Registrable Shares are transferred in
accordance with the provisions of the Purchase Agreement.

           2.3   Amendment and Waivers. Except as otherwise provided herein, the
                 ---------------------
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departure from the provisions hereof may not be given
unless agreed upon in writing by the Company and the holders of a majority of
the Registrable Shares.

           2.4   Notices. Any and all notices or other communications or
                 -------
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 6:30 p.m. (New
York City time) on a Business Day (with confirmation of transmission), (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier than
11:59 p.m. (New York City time) on such date (with confirmation of
transmission), (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

                 (a)  If to the Company:

                                       10
<PAGE>

                    CardioDynamics International Corp.
                    6175 Nancy Ridge Drive, Suite 300
                    San Diego, CA  92121
                    Attention: Chief Financial Officer
                    ---------
                    Telecopy: (858) 623-8415
                    --------

                    with a copy to:

                    Pillsbury Winthrop LLP
                    101 West Broadway, Suite 1800
                    San Diego, CA  92101
                    Attention: David R. Snyder, Esq.
                    ---------
                    Telecopy: (619) 236-1995
                    --------

                 (b)  If to a Shareholder, at the address set forth below such
Shareholder's name on the signature page hereof.

           2.5   Headings. The table of contents and section headings contained
                 --------
in this Agreement are for reference purposes only and shall not be deemed a part
of this Agreement or affect in any way the meaning or interpretation of this
Agreement.

           2.6   Construction. The parties have participated jointly in the
                 ------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement.

           2.7   Entire Agreement. This Agreement constitutes the entire
                 ----------------
agreement among the parties with respect to the subject matter hereof and
supersede all prior negotiations, agreements and understandings of the parties
of any nature, whether oral or written, relating thereto.

           2.8   Governing Law. All questions concerning the construction,
                 -------------
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "New
York Courts"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of this
Agreement), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or that such New York Courts are inconvenient or will be an improper form for
such proceeding. Each party hereto (including its affiliates, agents, officers,
directors and employees) hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto (including its affiliates, agents,

                                       11
<PAGE>

officers, directors and employees) hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence an action or
proceeding to enforce any provisions of this Agreement, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

           2.9   Counterparts. This Agreement may be executed in any number of
                 ------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

           2.10  No Piggyback on Registrations. Neither the Company nor any of
                 -----------------------------
its security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the registration statement filed
pursuant to this Agreement other than the Registrable Securities, and the
Company shall not after the date hereof enter into any agreement providing any
such right to any of its security holders.

                                       12
<PAGE>

           2.11  Compliance. Each Holder covenants and agrees that it will
                 ----------
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities pursuant to
the registration statement

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

THE COMPANY:                          CardioDynamics International Corporation,
                                      a California corporation

                                      By:    /s/  Michael K. Perry
                                         --------------------------------------
                                      Name:  Michael K. Perry
                                             ----------------------------------
                                      Title: Chief Executive Officer
                                             ----------------------------------

SHAREHOLDERS:                         Pine Ridge Financial, Inc.

                                      By: /s/
                                         __________________________________
                                      Name:   _____________________________
                                      Title:  _____________________________

                                       13

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