1
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

(Mark one)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 2000
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period for __________ to __________
Commission file number 1-11588

                            SAGA COMMUNICATIONS, INC.
             (Exact name of registrant as specified in its charter)

                                                                           
                         Delaware                                                       38-3042953
     (State or other jurisdiction of incorporation or                         (I.R.S. Employer Identification
                      organization)                                                        No.)

                   73 Kercheval Avenue
              Grosse Pointe Farms, Michigan                                                48236
         (Address of principal executive offices)                                       (Zip Code)

Registrant's telephone number, including area code: (313) 886-7070

Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of each exchange on which
Title of each class                                        registered

Class A Common Stock, $.01 par value                 American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No   .
                                          -----  ----
    Indicate by check mark if disclosure of delinquent filers pursuant to Rule
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ ]

    Aggregate market value of the Class A Common Stock and the Class B Common
Stock (assuming conversion thereof into Class A Common Stock) held by
nonaffiliates of the registrant, computed on the basis of $17.10 per share (the
closing price of the Class A Common Stock on March 15, 2001 on the American
Stock Exchange): $249,208,098.

    The number of shares of the registrant's Class A Common Stock, $.01 par
value, and Class B Common Stock, $.01 par value, outstanding as of March 15,
2001 was 14,590,241 and 1,888,296, respectively.

                       DOCUMENTS INCORPORATED BY REFERENCE

1. Proxy Statement for the 2001 Annual Meeting of Stockholders (to be filed with
the Securities and Exchange Commission on or before April 30, 2001) is
incorporated by reference in Part III hereof.

                                      -1-
   2
                                     PART I

ITEM 1. BUSINESS

      We are a broadcast company primarily engaged in acquiring, developing and
operating radio and television stations.

RECENT DEVELOPMENTS

      Since January 1, 2000, we have acquired the following stations serving the
markets indicated:

- -        January 1, 2000: two FM and one AM radio stations (KICD-AM/FM and
         KLLT-FM), serving the Spencer, Iowa market for approximately
         $6,400,000.

- -        July 17, 2000: an FM radio station (WKIO-FM) serving the
         Champaign-Urbana, Illinois market for approximately $6,800,000.

- -        August 30, 2000: an AM and FM radio station (WHMP-AM and WLZX-FM)
         serving the Northhampton, Massachusetts market for approximately
         $12,000,000.

- -        February 1, 2001: two FM and two AM radio stations (WCVQ-FM, WZZP-FM,
         WABD-AM, and WJMR-AM) serving the Clarksville, Tennessee /
         Hopkinsville, Kentucky market for approximately $6,700,000.

- -        February 1, 2001: one FM radio station (WVVR-FM) serving the
         Clarksville, Tennessee / Hopkinsville, Kentucky market for
         approximately $7,000,000, including approximately $1,000,000 of the
         Company's Class A Common Stock.

      In addition, in December 2000 we entered into agreements to acquire the
following stations serving the markets indicated:

- -        An AM and FM radio station (WHAI-AM/FM) serving the Greenfield,
         Massachusetts market for approximately $2,200,000.

- -        Two FM radio stations (KMIT-FM and KGGK-FM) serving the Mitchell, South
         Dakota market for approximately $4,050,000.

      Both of these acquisitions are subject to the approval of the Federal
Communications Commission and are expected to close during the second quarter of
2001.

      For additional information with respect to these acquisitions, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.

                                      -2-
   3
BUSINESS

      As of March 15, 2001 we owned and/or operated four television stations and
two low-power television stations serving three markets; three state radio
networks; and thirty-three FM and twenty AM radio stations serving fourteen
markets, including Columbus, Ohio; Norfolk, Virginia; and Milwaukee, Wisconsin.

The following table sets forth information about our television stations and the
markets they serve as of February 28, 2001:

                                                       2000
                                                       Market                                       Fall 2000
                                                       Ranking by                                   Station Ranking
                                                       Number of TV                                 (by
Station         Market (a)                             Households (b)         Station Affiliate     # of viewers) (b)
- -------         ----------                             --------------         -----------------     -----------------

KOAM            Joplin, MO - Pittsburg, KS               145                  CBS                   1
WXVT            Greenwood - Greenville, MS               182                  CBS                   2
KAVU            Victoria, TX                             204                  ABC                   1
KVCT (c)        Victoria, TX                             204                  FOX                   2
KUNU-LP (d)     Victoria, TX                             204                  Univision             3
KVTX-LP (d)     Victoria, TX                             204                  N/A                   N/R

(a)      Actual city of license may differ from metro market actually served.

(b)      Derived from Investing in Television Market Report 2000, based on A.C.
         Nielson ratings and data.

(c)      Station operated under the terms of a local marketing agreement
         ("LMA").

(d)      Since stations are simulcast, ranking information pertains to the
         combined stations.

N/R      Station does not appear in Investing in Television Market Report 2000.

                                      -3-
   4
The following table sets forth information about our radio stations and the
markets they serve as of February 28, 2001:

                                     2000                                         Fall 2000
                                     Market                                       Target
                                     Ranking                                      Demographics
                                     by Radio                                     Ranking (by     Target
Station        Market (a)            Revenue (b)    Station Format                listeners) (c)  Demographics
- -------        ----------            -----------    --------------                --------------  ------------
                                                                                   
FM:
WSNY           Columbus, OH             30          Adult Contemporary            1               Women 25-54
WKLH           Milwaukee, WI            32          Classic Hits                  1               Men 35-49
WLZR           Milwaukee, WI            32          Album Oriented Rock           1               Men 18-34
WJMR           Milwaukee, WI            32          R&B Oldies                    12              Adults 35-49
WFMR           Milwaukee, WI            32          Classical                     8               Adults 45+
WNOR           Norfolk, VA              45          Album Oriented Rock           2               Men 18-34
WAFX           Norfolk, VA              45          Classic Hits                  1               Men 35-49
KSTZ           Des Moines, IA           75          Hot Adult Contemporary        2               Women 18-34
KIOA           Des Moines, IA           75          Oldies                        1               Adults 35-54
KAZR           Des Moines, IA           75          Album Oriented Rock           1               Men 18-34
KLTI           Des Moines, IA           75          Soft Adult Contemporary       3               Women 35-54
WMGX           Portland, ME             98          Hot Adult Contemporary        1               Women 25-54
WYNZ           Portland, ME             98          Oldies                        4               Adults 35-54
WPOR           Portland, ME             98          Country                       1               Adults 35+
WAQY           Springfield, MA         105          Album Oriented Rock           1               Men 18-49
WLZX           Springfield, MA         105          Active Rock                   6               Men 18-34
WZID           Manchester, NH          113          Adult Contemporary            1               Adults 25-54
WQLL           Manchester, NH          113          Oldies                        3               Adults 35-54
WLRW           Champaign, IL           153          Hot Adult Contemporary        1               Women 18-49
WIXY           Champaign, IL           153          Country                       1               Adults 25-54
WKIO           Champaign, IL           153          Oldies                        5               Adults 35-54
WYMG           Springfield, IL         165          Classic Hits                  1               Men 25-54
WQQL           Springfield, IL         165          Oldies                        4               Adults 35-54
WDBR           Springfield, IL         165          Contemporary Hits             1               Women 18-34
WMHX           Springfield, IL         165          Hot Adult Contemporary        8               Women 18-49
WNAX           Sioux City IA           210          Full Service/Country          3(d)            Adults 35+
KISM           Bellingham, WA          N/A          Rock                          1(e)            Men 25-49
KAFE           Bellingham, WA          N/A          Adult Contemporary            1(e)            Women 25-54
KICD           Spencer, IA             N/A          Country                       N/R             Adults 35+
KLLT           Spencer, IA             N/A          Soft Adult Contemporary       N/R             Adults 25-54
WCVQ           Clarksville, TN /       N/A          Hot Adult Contemporary        2(e)            Women 18-49
               Hopkinsville, KY
WVVR           Clarksville, TN /       N/A          Country                       3(e)            Adults 25-54
               Hopkinsville, KY
WZZP           Clarksville, TN /       N/A          Classic Hits                  N/R             Men 35-49
               Hopkinsville, KY

(footnotes on next page)

                                      -4-
   5

                                     2000                                         Fall 2000
                                     Market                                       Target
                                     Ranking                                      Demographics
                                     by Radio                                     Ranking (by     Target
Station        Market (a)            Revenue (b)    Station Format                listeners) (c)  Demographics
- -------        ----------            -----------    --------------                --------------  ------------
                                                                                   
AM:
WVKO           Columbus, OH             30          Gospel                        N/A             Adults 35+
WJYI           Milwaukee, WI            32          Contemporary Christian        N/A             Adults 18+
WJOI           Norfolk, VA              45          Nostalgia                     N/A             Adults 35+
KRNT           Des Moines, IA           75          Nostalgia/Sports              7               Adults 35+
KXTK           Des Moines, IA           75          Talk/Sports                   N/A             Adults 35+
WGAN           Portland, ME             98          News/Talk                     2               Adults 35+
WZAN           Portland, ME             98          News/Talk                     6(e)            Men 35-54
WBAE           Portland, ME             98          Nostalgia                     N/A             Adults 35+
WHMP           Springfield, MA         105          News/Talk                     13(d)(e)        Adults 35+
WHNP           Springfield, MA         105          News/Talk                     13(d)(e)        Adults 35+
WFEA           Manchester, NH          113          Nostalgia                     4               Adults 35+
WTAX           Springfield, IL         165          News/Talk                     7               Adults 35+
WLLM           Springfield, IL         165          Adult Standards               N/R             Adults 35+
WNAX           Yankton, SD             210          Full Service/Country          3(d)            Adults 35+
KGMI           Bellingham, WA          N/A          News/Talk                     1               Adults 35+
KPUG           Bellingham, WA          N/A          News/Talk                     5               Adults 35+
KIXT           Bellingham, WA          N/A          Country                       9(e)            Adults 35+
KICD           Spencer, IA             N/A          News/Talk/Nostalgia           N/R             Adults 35+
WDXN           Clarksville, TN /       N/A          Urban Adult Contemporary      5(e)            Adults 25-54
               Hopkinsville, KY
WJMR           Clarksville, TN /       N/A          R&B Oldies                    N/R             Adults 35-49
               Hopkinsville, KY

(a)      Actual city of license may differ from metro market actually served.

(b)      Derived from Investing in Radio 2000 Market Report.

(c)      Information derived from most recent available Arbitron Radio Market
         Report.

(d)      Since stations are simulcast, ranking information pertains to the
         combined stations.

(e)      Tied for position.

N/A      Information currently not available.

N/R      Station does not appear in Arbitron Radio Market Report.

                                      -5-
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STRATEGY

      Our strategy is to operate top billing radio and television stations in
mid-sized markets. We prefer to operate in mid-sized markets, which we define as
markets ranked from 20 to 200 out of the markets summarized by Investing in
Radio Market Report and Investing in Television Market Report. As of March 15,
2001, we owned and/or operated at least one of the top three billing stations in
each of our radio and television markets for which independent data exists.

      Based on the most recent information available, 16 of our 33 FM radio
stations and 1 of our 20 AM radio stations we own and/or operate were ranked
number one (by number of listeners), and 2 of the 6 television stations we own
and/or operate were ranked number one (by number of viewers), in their target
demographic markets. Programming and marketing are key components in our
strategy to achieve top ratings in both our radio and television operations. In
many of our markets, the three or four most highly rated stations (radio and/or
television) receive a disproportionately high share of the market's advertising
revenues. As a result, a station's revenue is dependent upon its ability to
maximize its number of listeners/viewers within an advertiser's given
demographic parameters. In certain cases we use attributes other than specific
market listener data for sales activities. In those markets where sufficient
alternative data is available, we do not subscribe to an independent listener
rating service.

      Our radio stations employ a variety of programming formats, including
Classic Hits, Adult Contemporary, Album Oriented Rock, News/Talk, Country and
Classical. We regularly perform extensive market research, including music
evaluations, focus groups and strategic vulnerability studies. Our stations also
employ audience promotions to further develop and secure a loyal following.

      We own and/or operate two television stations that are CBS affiliates, one
television station that is an ABC affiliate, one television station that is a
Fox affiliate and one television station that is a Univision affiliate (with an
additional low power television station currently simulcasting this affiliate).
In addition to securing network programming, we also carefully select available
syndicated programming to maximize viewership. We also develop local
programming, including a strong local news franchise.

      In operating our stations, we concentrate on the development of strong
decentralized local management, which is responsible for the day-to-day
operations of the station. We compensate local management based on the station's
financial performance, as well as other performance factors that are deemed to
effect the long-term ability of the stations to achieve financial performance
objectives. Corporate management is responsible for long-range planning,
establishing policies and procedures, resource allocation and monitoring the
activities of the stations.

                                      -6-
   7
      We actively seek and explore opportunities for expansion through the
acquisition of additional broadcast properties. Under the Telecommunications Act
of 1996 (the "Telecommunications Act"), a company is now permitted to own as
many as 8 radio stations in a single market. See "Federal Regulation of Radio
and Television Broadcasting". The Telecommunications Act also eliminated the
limitations on the number of radio stations one organization can own in total.
We seek to acquire reasonably priced broadcast properties with significant
growth potential that are located in markets with well-established and
relatively stable economies. We often focus on local economies supported by a
strong presence of state or federal government or one or more major
universities. Future acquisitions will be subject to the availability of
financing and compliance with the Communications Act of 1934 (the
"Communications Act") and Federal Communications Commission ("FCC") rules.
Although we review acquisition opportunities on an ongoing basis, we have no
other present understandings, agreements or arrangements to acquire or sell any
radio or television stations, other than those discussed.

ADVERTISING SALES

      Virtually all of our revenue is generated from the sale of advertising for
broadcast on our stations. Depending on the format of a particular radio
station, there are a predetermined number of advertisements broadcast each hour.
The number of advertisements broadcast on our television stations may be limited
by certain network affiliation and syndication agreements and, with respect to
children's programs, federal regulation. We determine the number of
advertisements broadcast hourly that can maximize a station's available revenue
dollars without jeopardizing listening/viewing levels. While there may be shifts
from time to time in the number of advertisements broadcast during a particular
time of the day, the total number of advertisements broadcast on a particular
station generally does not vary significantly from year to year. Any change in
our revenue, with the exception of those instances where stations are acquired
or sold, is generally the result of pricing adjustments which are made to ensure
that the station efficiently utilizes available inventory.

      Advertising rates charged by radio and television stations are based
primarily on a station's ability to attract audiences in the demographic groups
targeted by advertisers; the number of stations in the market competing for the
same demographic group; the supply of and demand for radio advertising time; and
other qualitative factors, including rates charged by competing radio stations
within a given market. Radio rates are generally highest during morning and
afternoon drive-time hours, while television advertising rates are generally
higher during prime time evening viewing periods. Most advertising contracts are
short-term, generally running for only a few weeks. This allows broadcasters the
ability to modify advertising rates as dictated by changes in station ownership
within a market, changes in listener/viewer ratings and changes in the business
climate within a particular market.

      Approximately 80% of our gross revenue in fiscal 2000 (82% in fiscal 1999)
was generated from the sale of local advertising. Additional revenue is
generated from the sale of national advertising, network compensation payments,
barter and other miscellaneous transactions. In all our markets, we attempt to
maintain a local sales force that is generally larger than our competitors. The
principal goal in our sales efforts is to develop long-standing customer
relationships through frequent direct contacts, which we believe represents a
competitive advantage. We also typically provide incentives to our sales staff
to seek out new opportunities resulting in the establishment of new client
relationships, as well as new sources of revenue, not directly associated with
the sale of broadcast time.

                                      -7-
   8
      Each of the our stations also engage national independent sales
representatives to assist us in obtaining national advertising revenues. These
representatives obtain advertising through national advertising agencies and
receive a commission from us based on our net revenue from the advertising
obtained. Total gross revenue resulting from national advertising in fiscal 2000
was approximately $20,993,000 or 18.4% of our gross revenue (approximately
$18,475,000 or 18% in fiscal 1999).

COMPETITION

      Both radio and television broadcasting are highly competitive businesses.
Our stations compete for listeners/viewers and advertising revenues directly
with other radio and/or television stations, as well as other media, within
their markets. Our radio and television stations compete for listeners/viewers
primarily on the basis of program content and by employing on-air talent which
appeals to a particular demographic group. By building a strong listener/viewer
base comprised of a specific demographic group in each of its markets, we are
able to attract advertisers seeking to reach these listeners/viewers.

      Other media, including broadcast television and/or radio (as applicable),
cable television, newspapers, magazines, direct mail, the internet, coupons and
billboard advertising, also compete with us for advertising revenues.

      The radio and television broadcasting industries are also subject to
competition from new media technologies that may be developed or introduced,
such as the delivery of audio programming by cable television systems, direct
reception from satellites, and streaming of audio on the internet. We cannot
predict what effect, if any, that any of these new technologies may have on us
or the broadcasting industry.

EMPLOYEES

      As of December 31, 2000, we had approximately 669 full-time employees and
303 part-time employees, none of whom are represented by unions. We believe that
our relations with our employees are good.

      We employ several high-profile personalities with large loyal audiences in
their respective markets. We have entered into employment and non-competition
agreements with our President and with most of our on-air personalities, as well
as non-competition agreements with our commissioned sales representatives.

                                      -8-
   9
FEDERAL REGULATION OF RADIO AND TELEVISION BROADCASTING

      INTRODUCTION. The ownership, operation and sale of radio and television
stations, including those licensed to the Company, are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licenses; regulates equipment used by stations; adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of stations; and has the power to impose
penalties for violations of its rules or the Communications Act.

      The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Reference
should be made to the Communications Act, FCC rules and the public notices and
rulings of the FCC for further information concerning the nature and extent of
federal regulation of broadcast stations.

      LICENSE RENEWAL. Radio and television broadcasting licenses are granted
for maximum terms of eight years, and are subject to renewal upon application to
the FCC. Under its "two-step" renewal process, the FCC must grant a renewal
application if it finds that during the preceding term the licensee has served
the public interest, convenience and necessity, and there have been no serious
violations of the Communications Act or the FCC's rules which, taken together,
would constitute a pattern of abuse. If a renewal applicant fails to meet these
standards, the FCC may either deny its application or grant the application on
such terms and conditions as are appropriate, including renewal for less than
the full 8-year term. In making the determination of whether to renew the
license, the FCC may not consider whether the public interest would be served by
the grant of a license to a person other than the renewal applicant. If the FCC,
after notice and opportunity for a hearing, finds that the licensee has failed
to meet the requirements for renewal and no mitigating factors justify the
imposition of lesser sanctions, the FCC may issue an order denying the renewal
application, and only thereafter may the FCC accept applications for a
construction permit specifying the broadcasting facilities of the former
licensee. Petitions may be filed to deny the renewal applications of any of the
Company's stations, but any such petitions must raise issues that would cause
the FCC to deny a renewal application under the standards adopted in the
"two-step" renewal process. Under the Communications Act, if a broadcast station
fails to transmit signals for any consecutive 12-month period, the FCC license
expires at the end of that period.

                                      -9-
   10
The following table sets forth the market and broadcast power of each of the
Company's broadcast stations and the date on which each such station's FCC
license expires:

                                                                                 Expiration Date of
Station                 Market(1)                  Power (Watts)(2)              FCC  Authorization
- -------                 ---------                  ----------------              ------------------
                                                                        
FM:
WSNY                    Columbus, OH                  50,000                     October 1, 2004
WKLH                    Milwaukee, WI                 50,000                     December 1, 2004
WLZR                    Milwaukee, WI                 50,000                     December 1, 2004
WFMR                    Milwaukee, WI                  6,000                     December 1, 2004
WJMR                    Milwaukee, WI                  6,000                     December 1, 2004
WNOR                    Norfolk, VA                   50,000                     October 1, 2003
WAFX                    Norfolk, VA                  100,000                     October 1, 2003
KSTZ                    Des Moines,   IA             100,000                     February 1, 2005
KIOA                    Des Moines,   IA             100,000                     February 1, 2005
KAZR                    Des Moines,   IA             100,000                     February 1, 2005
KLTI                    Des Moines,   IA             100,000                     February 1, 2005
WMGX                    Portland, ME                  50,000                     April 1, 2006
WYNZ                    Portland, ME                  25,000                     April 1, 2006
WPOR                    Portland, ME                  50,000                     April 1, 2006
WLZX                    Northampton, MA                6,000                     April 1, 2006
WAQY                    Springfield, MA               50,000                     April 1, 2006
WZID                    Manchester, NH                50,000                     April 1, 2006
WQLL                    Manchester, NH                 6,000                     April 1, 2006
WYMG                    Springfield,  IL              50,000                     December 1, 2004
WQQL                    Springfield,  IL              50,000                     December 1, 2004
WDBR                    Springfield,  IL              50,000                     December 1, 2004
WYXY                    Lincoln, IL                   25,000                     December 1, 2004
WLRW                    Champaign, IL                 50,000                     December 1, 2004
WIXY                    Champaign, IL                 25,000                     December 1, 2004
WKIO                    Urbana, IL                    25,000                     December 1, 2004
WNAX                    Yankton, SD                  100,000                     April 1, 2005
KISM                    Bellingham, WA               100,000                     February 1, 2006
KAFE                    Bellingham, WA               100,000                     February 1, 2006
KICD                    Spencer, IA                  100,000                     February 1, 2005
KLLT                    Spencer, IA                   25,000                     February 1, 2005
WCVQ                    Fort Campbell, KY            100,000                     August 1, 2004
WZZP                    Hopkinsville,KY                6,000                     August 1, 2004
WVVR                    Hopkinsville, KY             100,000                     August 1, 2004
KMIT(6)                 Mitchell, SD                 100,000                     April 1, 2005
KGGK(6)                 Wessington Springs, SD       100,000                     April 1, 2005
WHAI(6)                 Greenfield, MA                 6,000                     April 1, 2006

(footnotes on next page)

                                      -10-
   11

                                                                                 Expiration Date of
Station                 Market(1)                  Power (Watts)(2)              FCC  Authorization
- -------                 ---------                  ----------------              ------------------
                                                                        
AM:
WVKO                    Columbus, OH                   1,000                     October 1, 2004
WJYI                    Milwaukee, WI                  1,000                     December 1, 2004
WJOI                    Norfolk, VA                    1,000                     October 1, 2003
KRNT                    Des Moines, IA                 5,000                     February 1, 2005
KXTK                    Des Moines, IA                10,000                     February 1, 2005
WGAN                    Portland, ME                   5,000                     April 1, 2006
WZAN                    Portland, ME                   5,000                     April 1, 2006
WBAE                    Portland, ME                   1,000                     April 1, 2006
WHNP                    Springfield, MA                2,500(5)                  April 1, 2006
WHMP                    Northampton, MA                1,000                     April 1, 2006
WFEA                    Manchester, NH                 5,000                     April 1, 2006
WTAX                    Springfield, IL                1,000                     December 1, 2004
WLLM                    Lincoln, IL                    1,000(5)                  December 1, 2004
WNAX                    Yankton, SD                    5,000                     April 1, 2005
KGMI                    Bellingham, WA                 5,000                     February 1, 2006
KPUG                    Bellingham, WA                10,000                     February 1, 2006
KIXT                    Bellingham, WA                 1,000(5)                  February 1, 2006
KICD                    Spencer, IA                    1,000                     February 1, 2005
WJMR                    Fort Campbell, KY              1,000(5)                  August 1, 2004
WDXN                    Clarksville, TN                1,000(5)                  August 1, 2004
WHAI(6)                 Greenfield, MA                 1,000                     April 1, 2006

TV/CHANNEL:
KOAM (Ch 7)             Joplin, MO/Pittsburg, KS   316,000 (vis), 61,600 (aur)   June 1, 2006
KAVU (Ch 25)            Victoria, TX               2,140,000(vis), 214,000(aur)  August 1, 2006
KVCT(3) (Ch 19)         Victoria, TX               155,000(vis), 15,500(aur)     August 1, 2006
KUNU-LP(4) (Ch 21)      Victoria, TX               1,000 (vis)                   August 1, 2006
KVTX-LP(4) (Ch 45)      Victoria, TX               1,000 (vis)                   August 1, 2006
KXTS-LP(4) (Ch 41)      Victoria, TX               1,000 (vis)                   May 21, 2001
WXVT (Ch 15)            Greenville, MS             2,746,000(vis), 549,000(aur)  June 1, 2005

(1)      Some stations are licensed to a different community located within the
         market that they serve.

(2)      Some stations are licensed to operate with a combination of effective
         radiated power ("ERP") and antenna height which may be different from,
         but provide equivalent coverage to, the power shown. The ERP of
         television stations is expressed in terms of visual ("vis") and aural
         ("aur") components. WVKO(AM), KXTK(AM), KPUG(AM), KGMI(AM), and
         KIXT(AM) operate with lower power at night than the power shown.

(3)      The Company programs this station pursuant to a local marketing
         agreement with the licensee of KVCT, Surtsey Productions, Inc.

(4)      KUNU-LP, KXTS-LP and KVTX-LP are "low power" television stations that
         operate as "secondary" stations (i.e., if they conflict with the
         operations of a "full power" television station, the low power station
         must change their facilities or terminate operations).

(5)      Operates daytime only or with greatly reduced power at night.

(6)      Pending Acquisition.

                                      -11-
   12
      OWNERSHIP MATTERS. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast licensee without the
prior approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with the Communications Act's limitations on alien
ownership; compliance with various rules limiting common ownership of broadcast,
cable and newspaper properties; and the "character" and other qualifications of
the licensee and those persons holding "attributable or cognizable" interests
therein.

      Under the Communications Act, broadcast licenses may not be granted to any
corporation having more than one-fifth of its issued and outstanding capital
stock owned or voted by aliens (including non-U.S. corporations), foreign
governments or their representatives (collectively, "Aliens"). The
Communications Act also prohibits a corporation, without FCC waiver, from
holding a broadcast license if that corporation is controlled, directly or
indirectly, by another corporation in which more than 25% of the issued and
outstanding capital stock is owned or voted by Aliens. The FCC has issued
interpretations of existing law under which these restrictions in modified form
apply to other forms of business organizations, including partnerships. As a
result, the Company, which serves as a holding company for its various radio
station subsidiaries, cannot have more than 25% of its stock owned or voted by
Aliens.

      The Communications Act and FCC rules also generally prohibit or restrict
the common ownership, operation or control of a radio broadcast station and a
television broadcast station serving the same geographic market, and of a radio
broadcast station and a daily newspaper serving the same geographic market.
Additionally, the Communications Act and FCC rules also generally prohibit or
restrict the common ownership, operation or control of a television broadcast
station and a daily newspaper serving the same geographic market, and of a
television broadcast station and a cable television system serving the same
geographic market. The FCC's rules permit the ownership of up to two television
stations by the same entity if (a) at least eight independently owned and
operated full-power commercial and noncommercial TV stations would remain
post-merger in the Designated Market Area ("DMA") in which the communities of
license of the TV stations in question are located, and (b) the two merging
stations are not both among the top four-ranked stations in the market as
measured by audience share. In counting the number of independently owned
stations in the market, the FCC counts only those stations whose Grade B signal
contour overlaps with the Grade B contour of at least one of the stations in the
proposed combination. The FCC also will permit the combined ownership of two
broadcast TV stations if they are located in different DMAs without regard to
contour overlap. The FCC established criteria for obtaining a waiver of the
rules to permit the ownership of two television stations in the same DMA that
would not otherwise comply with the FCC's rules. Under certain circumstances, a
television station may merge with a "failed" or "failing" station or an
"unbuilt" station if strict criteria are satisfied. Additionally, the FCC now
permits a party to own up to two television stations (if permitted under the
modified TV duopoly rule) and up to six radio stations (if permitted under the
local radio ownership rules), or one television station and up to seven radio
stations, in any market where at least 20 independently owned media voices
remain in the market after the combination is effected ("Qualifying Market").
The FCC will permit the common ownership of up to two television stations and
four radio stations in any market where at least 10 independently owned media
voices remain after the combination is effected. The FCC will permit the common
ownership of up to two television stations and one radio station notwithstanding
the number of voices in the market. The FCC also adopted rules that make
television time brokerage agreements or LMA's count as if the brokered station
were owned by the brokering station in making a determination of compliance with
the FCC's multiple ownership rules. LMA's entered into before November 5, 1996,
are grandfathered until 2004. LMA's entered into on or after November 5, 1996,
must be terminated by August 6, 2001. Under the FCC's rules, as recently
revised, absent waivers, the Company would not be permitted to acquire any
newspaper in a geographic market in which it now owns any radio broadcast
properties, or to acquire any newspaper or cable television system in a
geographic market

                                      -12-
   13
in which it now owns any television broadcast station. The Company would not be
permitted to acquire a television broadcast station (other than low power
television) in a non-Qualifying Market in which it now owns any television
properties. The FCC revised its rules to permit a television station to
affiliate with two or more major networks of television broadcast stations under
certain conditions. (Major existing networks are still subject to the FCC's dual
network ban).

      The Company is permitted to own an unlimited number of radio stations on a
nationwide basis (subject to local ownership restrictions described below). The
Company is permitted to own an unlimited number of television stations on a
nationwide basis so long as the ownership of the stations would not result in an
aggregate national audience reach (i.e., the total number of television
households in the Arbitron Area of Dominant Influence ("ADI") markets in which
the relevant stations are located divided by the total national television
households as measured by ADI data at the time of a grant, transfer or
assignment of a license) of 35%.

      Under the Communications Act, the Company is permitted to own radio
stations (without regard to the audience shares of the stations) based upon the
number of radio stations in the relevant radio market as follows:

Number of Stations              Number of Stations
In Radio Market                 Company Can Own
- ------------------              ------------------
                             
14 or Fewer                     Total of 5 stations, not more than 3 in the same service (AM or FM) except the
                                Company cannot own more than 50% of the stations in the market.

15-29                           Total of 6 stations, not more than 4 in the same service (AM or FM).

30-44                           Total of 7 stations, not more than 4 in the same service (AM or FM).

45 or More                      Total of 8 stations, not more than 5 in the same service (AM or FM).

      Notwithstanding these limitations, new rules to be promulgated under the
Communications Act also may permit the Company to own, operate, control or have
a cognizable interest in additional radio broadcast stations if the FCC
determines that such ownership, operation, control or cognizable interest will
result in an increase in the number of radio stations in operation. No firm date
has been established for initiation of this proceeding.

      The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding broadcast licenses, the interests of officers,
directors and those who, directly or indirectly, have the right to vote 5% or
more of the corporation's stock (or 20% or more of such stock in the case of
certain passive investors that are holding stock for investment purposes only)
are generally attributable, as are positions of an officer or director of a
corporate parent of a broadcast licensee. In new rules adopted in August 1999
the FCC increased the benchmark for passive investors from 10% to 20%.
Currently, three of the Company's officers and directors have an attributable
interest in any company applying for or licensed to operate broadcast stations
other than the Company.

                                      -13-
   14
      On January 19, 2001, the FCC concluded a proceeding initiated March 12,
1992, in which it revised its ownership attribution rules. In its "Memorandum
Opinion and Order on Reconsideration", the FCC generally affirmed its August
1999 Report and Order that (a) declined to raise the basic benchmark for
attributing ownership in a corporate licensee from 5% to 10% of the licensee's
voting stock; (b) increased the attribution benchmark for "passive investors" in
corporate licensees from 10% to 20% of the licensee's voting stock; (c) declined
to broaden the class of investors eligible for "passive investor" status to
include Small Business and Minority Enterprise Small Business Investment
Companies; and (d) declined to exempt certain widely-held limited partnership
interests from attribution where each individual interest represents an
insignificant percentage of total partnership equity; (e) decided to apply to
limited liability companies and registered limited liability partnerships the
same attribution rules that the FCC applies to limited partnerships; (f)
declined to change its attribution rules as applied to other communications
services (such as cable, multi-point distribution systems, personal
communications services, and specialized mobile radio); (g) declined to apply
other agencies' attribution benchmarks; (h) created a new equity/debt plus
("EDP") rule that attributes the other media interests of an otherwise passive
investor if the investor is (1) a "major-market program supplier" that supplies
over 15% of a station's total weekly broadcast programming hours, or (2) a
same-market media entity subject to the FCC's multiple ownership rules
(including broadcasters, cable operators and newspapers) so that its interest in
a licensee or other media entity in that market will be attributed if that
interest, aggregating both debt and equity holdings, exceeds 33% of the total
asset value (equity plus debt) of the licensee or media entity; and (i)
eliminated those components of the cross interest policy not specifically dealt
with in the EDP rule. However, In reconsidering its rules, the FCC eliminated
the "single majority shareholder exemption" which provides that minority voting
shares in a corporation where one shareholder controls a majority of the voting
stock are not attributable. Minority interests acquired before the date of
adoption of the reconsideration decision were grandfathered. As a result, the
broadcast interests of purchasers of 5% or more of the Company's voting stock
acquired after the date of the FCC's decision would be attributed to the
Company, and vice versa. Additionally, in its reconsideration order, the FCC
clarified certain aspects of its equity/debt plus ("EDP") attribution rule,
under which the FCC will attribute financial interests amounting to over 33% of
the total assets of a mass media entity where the interest holder is either a
major program supplier to the entity or a same-market media entity. The Company
could be prohibited from acquiring a financial interest in stations in markets
where application of the EDP rule would result in the Company having an
attributable interest in the stations.

      Notwithstanding the FCC's multiple ownership rules, the Antitrust Division
of the United States Department of Justice and the Federal Trade Commission have
the authority to examine proposed transactions for compliance with antitrust
statutes and guidelines. The Antitrust Division has become more active recently
in reviewing proposed acquisitions, has issued "civil investigative demands" and
has obtained consent decrees requiring the divestiture of stations in a
particular market based on antitrust concerns. The FCC has also increased its
scrutiny of some proposed acquisitions and mergers on antitrust grounds and has
initiated a policy of placing a "note" soliciting public comment on
concentration of control issues based on advertising revenue shares or other
criteria, on the public notice announcing the acceptance of assignment and
transfer applications. On December 13, 2000, the FCC released a Notice of
Proposed Rule Making seeking comment on whether and how the FCC should modify
the way in which it determines the dimensions of radio markets and counts the
number of stations in them, and whether and how it should amend the method by
which the FCC determines the number of radio stations owned by a party in a
radio market for the purpose of applying its multiple ownership rules. The FCC
is considering using data gleaned from audience rating services to count the
radio stations in a market. The Company cannot predict whether the FCC will
adopt the proposed rules or whether such rules would restrict the Company's
ability to acquire additional stations.

                                      -14-
   15
      PROGRAMMING AND OPERATION. The Communications Act requires broadcasters to
serve the "public interest". Licensees are required to present programming that
is responsive to community problems, needs and interests and to maintain certain
records demonstrating such responsiveness. Complaints from listeners concerning
a station's programming often will be considered by the FCC when it evaluates
renewal applications of a licensee, although such complaints may be filed at any
time and generally may be considered by the FCC at any time. Stations also must
follow various rules promulgated under the Communications Act that regulate,
among other things, political advertising, sponsorship identification, the
advertisement of contests and lotteries, obscene and indecent broadcasts, and
technical operations, including limits on radio frequency radiation. The FCC now
requires the owners of antenna supporting structures (towers) to register them
with the FCC. The Company owns such towers that are subject to the registration
requirements. The Children's Television Act of 1990 and the FCC's rules
promulgated there under require television broadcasters to limit the amount of
commercial matter which may be aired in children's programming to 10.5 minutes
per hour on weekends and 12 minutes per hour on weekdays. The Children's
Television Act and the FCC's rules also require each television licensee to
serve, over the term of its license, the educational and informational needs of
children through the licensee's programming (and to present at least three hours
per week of "core" educational programming specifically designed to serve such
needs). Licensees are required to publicize the availability of this programming
and to file annually a report with the FCC on these programs and related
matters. On January 1, 1998, a new FCC rule became effective which requires
television stations to provide closed captioning for certain video programming
according to a schedule that gradually increases the amount of video programming
that must be provided with captions.

      Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full eight-year) renewal terms or, for particularly
egregious violations, the denial of a license renewal application or the
revocation of a license.

      LOCAL MARKETING AGREEMENTS. A number of radio and television stations,
including the Company's stations, have entered into what have commonly been
referred to as "Local Marketing Agreements", or "LMA's". While these agreements
may take varying forms, under a typical LMA, separately owned and licensed radio
or television stations agree to enter into cooperative arrangements of varying
sorts, subject to compliance with the requirements of antitrust laws and with
the FCC's rules and policies. Under these types of arrangements,
separately-owned stations agree to function cooperatively in terms of
programming, advertising sales, and other matters, subject to the licensee of
each station maintaining independent control over the programming and station
operations of its own station. One typical type of LMA is a programming
agreement between two separately-owned radio or television stations serving a
common service area, whereby the licensee of one station purchases substantial
portions of the broadcast day on the other licensee's station, subject to
ultimate editorial and other controls being exercised by the latter licensee,
and sells advertising time during such program segments. Such arrangements are
an extension of the concept of "time brokerage" agreements, under which a
licensee of a station sells blocks of time on its station to an entity or
entities which purchase the blocks of time and which sell their own commercial
advertising announcements during the time periods in question.

                                      -15-
   16
      In the past, the FCC has determined that issues of joint advertising sales
should be left to antitrust enforcement. Furthermore, the staff of the FCC's
Mass Media Bureau has held that such agreements are not contrary to the
Communications Act provided that the licensee of the station from which time is
being purchased by another entity maintains complete responsibility for and
control over operations of its station and assures compliance with applicable
FCC rules and policies. As described above, the FCC conducted a review of its
rules, and as a result, adopted rules that permit, under certain circumstances,
the ownership of two or more television stations in a Qualifying Market, and
requires the termination of certain non-complying existing television LMA's. The
Company currently has a television LMA in the Victoria, Texas, market. Even
though the Victoria market is not a Qualifying Market such that the duopoly
would otherwise be permissible, the Company believes that the LMA is
"grandfathered" under the FCC's rules and need not be terminated earlier than
2004. However, if the FCC should review the LMA and come to a different
conclusion, the Company could be required to terminate the LMA with the other
television station by August 6, 2001. See "Ownership Matters" above.

      The FCC's rules provide that a station purchasing (brokering) time on
another station serving the same market will be considered to have an
attributable ownership interest in the brokered station for purposes of the
FCC's multiple ownership rules. As a result, under the rules, a broadcast
station will not be permitted to enter into a time brokerage agreement giving it
the right to purchase more than 15% of the broadcast time, on a weekly basis, of
another local station that it could not own under the local ownership rules of
the FCC's multiple ownership rules. The FCC's rules also prohibit a broadcast
licensee from simulcasting more than 25% of its programming on another station
in the same broadcast service (i.e., AM-AM or FM-FM) whether it owns the
stations or through a time brokerage or LMA arrangement, where the brokered and
brokering stations serve substantially the same geographic area.

OTHER FCC REQUIREMENTS

      The FCC adopted methodology that will be used to send program ratings
information to consumer TV receivers (implementation of "V-Chip" legislation
contained in the Communications Act). The FCC also adopted the TV Parental
Guidelines, developed by the Industry Ratings Implementation Group, which apply
to all broadcast television programming except for news and sports. As a part of
the legislation, television station licensees are required to attach as an
exhibit to their applications for license renewal a summary of written comments
and suggestions received from the public and maintained by the licensee that
comment on the licensee's programming characterized as violent.

      The FCC has promulgated digital television ("DTV") (formerly advanced
television or "ATV") standards. The FCC's rules provide for the conversion by
all U.S. broadcasters to DTV, including build-out construction schedules, NTSC
(current system) and DTV channel simulcasting, and the return of analog (NTSC)
channels to the government by 2006. The FCC has attempted to provide DTV
coverage areas that are comparable to the NTSC service areas. DTV licensees may
use their DTV channels for a multiplicity of services such as high-definition
television broadcasts, multiple standard definition television broadcasts, data,
audio, and other services so long as the licensee provides at least one free
video channel equal in quality to the current NTSC technical standard. As a
general principal, the Company's television stations are required to convert
their operations to DTV by May 1, 2002, and to cease broadcasting on the NTSC
channels by December 31, 2006, and return the NTSC channels to the government.
On January 19, 2001, the FCC released a Report and Order and Further Notice of
Proposed Rule Making that, inter alia, (a) affirmed the so-called "8-VSB"
modulation system of the DTV transmission standard, (b) established December 31,
2003, as the date on which stations must elect which channel (of their two) they
will use for their post-transition DTV channel, (c) determined that broadcasters
need not replicate with their DTV signal

                                      -16-
   17
the service area of their analog station, but stated that stations will lose
interference protection to those portions of the analog areas that they do not
replicate with a DTV signal by December 31, 2004, and (d) ordered that by
December 31, 2004, DTV stations must provide a stronger signal to their
communities of license than previously required. Under the Balanced Budget Act,
the FCC is authorized to extend the December 31, 2006, deadline if, (1) one or
more television stations affiliated with ABC, CBS, NBC, or Fox in a market are
not broadcasting in DTV, and the FCC determines that such stations have
"exercised due diligence" in attempting to convert to DTV; or (2) less than 85%
of the television households in the station's market subscribe to a multichannel
video service that carries at least one DTV channel from each of the local
stations in that market, and less than 85% of the television households in the
market can receive DTV signals off the air using either set-top converters for
NTSC broadcasts or a new DTV set. KOAM-TV will convert its NTSC operations on
Channel 7 to DTV Channel 30, but has requested the FCC to permit it to utilize
Channel 9. KAVU-TV will convert its NTSC operations on Channel 25 to DTV Channel
15. WXVT will convert its NTSC operations on Channel 15 to DTV Channel 17. The
FCC has affirmed the FCC's DTV channel assignments and other technical rules and
policies. On January 22, 2001, the FCC adopted rules on how the law requiring
the carriage of television signals on local cable television systems should
apply to DTV signals. The FCC decided that a DTV-only station can immediately
assert its right to carriage on a local cable television system, however, the
FCC decided that a television station may not assert a right to carriage of both
its analog and DTV channels. The FCC requested further information from the
public on this issue. On November 19, 1998 the FCC decided to charge television
licensees a fee of 5% of gross revenue derived from the offering of ancillary or
supplementary services on DTV spectrum for which a subscription fee is charged.

      LOW POWER AND CLASS A TELEVISION STATIONS. Congress, in the Community
Broadcasters Protection Act of 1999, authorized the FCC to create a new class of
commercial television station. Currently, the service areas of low power
television ("LPTV") stations are not protected. LPTV stations can be required to
terminate their operations if they cause interference to full power stations.
LPTV stations meeting certain criteria were permitted to certify to the FCC
their eligibility to be reclassified as "Class A Television Stations" whose
signal contours would be protected against interference from other stations.
Stations deemed "Class A Stations" by the FCC would thus be protected from
interference. The Company owns two operating LPTV stations, KUNU-LP and KVTX-LP,
Victoria, Texas, and holds a permit to construct a third, KXTS-LP, Victoria,
Texas. Neither KUNU-LP nor KVTX-LP automatically qualify under the FCC's
established criteria for Class A Status. However, the Company requested the FCC
to confer such status upon KUNU-LP on the rounds that KUNU-LP offers a unique
foreign-language television service to its viewing area. The FCC denied the
Company's request.

      The Cable Television Consumer Protection and Competition Act of 1992,
among other matters, requires cable television system operators to carry the
signals of local commercial and non-commercial television stations and certain
low power television stations. Cable television operators and other
multi-channel video programming distributors may not carry broadcast signals
without, in certain circumstances, obtaining the transmitting station's consent.
A local television broadcaster must make a choice every three years whether to
proceed under the "must-carry" rules or waive the right to
mandatory-uncompensated coverage and negotiate a grant of retransmission consent
in exchange for consideration from the cable system operator. As noted above,
such must-carry rights will extend to the new DTV signal to be broadcast by the
Company's stations, but will not extend simultaneously to the analog signal.

                                      -17-
   18
      In April 1988, the U. S. Court of Appeals for the D. C. Circuit
invalidated on constitutional grounds the FCC's Equal Employment Opportunity
("EEO") regulations. In February 2000, the FCC adopted revised EEO rules that
require broadcast licensees and cable entities, including multi-channel video
programming distributors, to widely disseminate information about job openings
to ensure that all qualified applicants, including minorities and women, are
able to compete for job openings in the broadcast and cable industries. The
rules prescribe specific tasks that must be performed by the FCC's regulatees
and require the maintenance of records. The rules require the filing of annual
employment reports describing the racial and gender characteristics of the
Company's employees at each of its stations. Periodically, broadcasters and
cable entities must certify their compliance with the EEO regulations. All
broadcasters must annually place in their public files an EEO report detailing
their outreach efforts during the preceding year and the results of those
efforts. Television stations and every radio station with more than ten
full-time employees must file a copy of their EEO reports with the FCC midway
through their license terms. Stations are required to file a copy of their EEO
public file reports with their applications for renewal of license. On January
16, 2001, the U. S. Court of Appeals for the D. C. Circuit again vacated the
rules on constitutional grounds. In light of the Court's action, on January 30,
2001, the FCC suspended the requirement that licensees comply with the rules.
However, the FCC has sought rehearing by the full panel of the Court. The
Company cannot predict whether the rules will be ultimately upheld, and if so,
the impact of the rules on the Company.

      LOW POWER FM RADIO. In January 2000 the FCC adopted new rules that create
a new "low power radio service" ("LPFM"). The FCC will authorize the
construction and operation of two new classes of noncommercial educational FM
stations, LP100 (up to 100 watts effective radiated power ("ERP") with antenna
height above average terrain ("HAAT") at up to 30 meters (100 feet) which is
calculated to produce a service area radius of approximately 3.5 miles, and LP10
(up to 10 watts ERP and up to 30 meters HAAT) with a service area radius of
approximately 1 to 2 miles. The FCC will not permit any broadcaster or other
media entity subject to the FCC's ownership rules to control or hold an
attributable interest in an LPFM station or enter into related operating
agreements with an LPFM licensee. Thus, absent a waiver, the Company could not
own or program an LPFM station. LPFM stations will be allocated throughout the
FM broadcast band, i.e., 88 to 108 MHz, although they must operate with a
noncommercial format. The FCC has established allocation rules that require FM
stations to be separated by specified distances to other stations on the same
frequency, and stations on frequencies on the first, second and third channels
adjacent to the center frequency. The FCC has accepted applications for LPFM
stations, but no construction permits have yet been granted. The Company cannot
predict what, if any, adverse effect future LPFM stations may have on its FM
stations.

      PROPOSED CHANGES. The FCC has under consideration, and may in the future
consider and adopt, new laws, regulations and policies regarding a wide variety
of matters that could, directly or indirectly, affect the operation and
ownership of the Company and its broadcast properties. New application
processing rules adopted by the FCC might require the Company to apply for
facilities modifications to its standard broadcast stations in future "window"
periods for filing applications or result in the stations being "locked in" with
their present facilities. On March 3, 1997, the FCC adopted rules for the
Digital Audio Radio Satellite Service ("DARS") in the 2310-2360 MHz frequency
band. In adopting the rules, the FCC stated, "although healthy satellite DARS
systems are likely to have some adverse impact on terrestrial radio audience
size, revenues and profits, the record does not demonstrate that licensing
satellite DARS would have such a strong adverse impact that it threatens the
provision of local service." Because the DARS service is novel, the Company
cannot predict whether it will have an adverse impact on its business. The
Balanced Budget Act of 1997 authorizes the FCC to use auctions for the
allocation of radio broadcast spectrum frequencies for commercial use. The
implementation of this law could require the Company to bid for the use of
certain frequencies. Proposals are pending in Congress to repeal the FCC's ban
restricting broadcasters from owning newspapers in the same market.

                                      -18-
   19
      On November 1, 1999, the FCC released a Notice of Proposed Rule Making
that is the initial step in its plan to authorize digital audio broadcasting
systems ("DAB"). If implemented, the FCC's proposal would permit the Company's
radio stations to offer digital audio broadcasts on their existing frequencies.
The Company cannot predict when the FCC will act, what standard the FCC may
adopt, or its impact on the operations of the Company's stations. Presumably,
the Company's stations would be required to purchase and install new equipment
so that the stations could transmit digital signals in addition to their current
analog signals.

      The FCC on January 13, 1999 released a study and conducted a forum on the
impact of advertising practices on minority-owned and minority-formatted
broadcast stations. The study provided evidence that advertisers often exclude
radio stations serving minority audiences from ad placements and pay them less
than other stations when they are included. On February 22, 1999, a "summit" was
held at the FCC's headquarters to continue this initiative where participants
considered the advertising study's recommendations to adopt a Code of Conduct to
oppose unfair ad placement and payment, to encourage diversity in hiring and
training and to enforce laws against unfair business practices. The Company
cannot predict at this time whether the FCC will adopt new rules that would
require the placement of part of an advertiser's budget on minority-owned and
minority-formatted broadcast stations, and if so, whether such rules would have
an adverse impact on the Company.

      The Satellite Home Viewer Act ("SHVA"), a copyright law, prevents
direct-to-home satellite television carriers from retransmitting broadcast
network television signals to consumers unless those consumers (1) are
"unserved" by the over-the-air signals of their local network affiliate
stations, and (2) have not received cable service in the last 90 days. According
to the SHVA, "unserved" means that a consumer cannot receive, using a
conventional outdoor rooftop antenna, a television signal that is strong enough
to provide an adequate television picture. If the FCC's new testing methods
determine that a consumer resides in an "unserved household" and the court
accepts this methodology, the consumer may continue to receive network
programming via satellite. However, federal courts have determined that a
substantial number of satellite subscribers have been receiving CBS and Fox
network programming in violation of the SHVA, and have taken steps to terminate
the retransmission by the satellite carriers. The FCC has said that the majority
of these consumers are not likely to be assisted by the FCC's action and can
expect to have their CBS and Fox network programming terminated. The Company
owns two CBS-affiliated television stations and has an LMA with a Fox-affiliated
television station.

      Congress, the courts and the FCC have recently taken actions that may lead
to the provision of video services by telephone companies. The 1996
Telecommunications Act has lifted previous restrictions on a local telephone
company providing video programming directly to customers within the telephone
company's service areas. The law now permits a telephone company to distribute
video services either under the rules applicable to cable television systems or
as operators of so-called "wireless cable" systems as common carriers or under
new FCC rules regulating "open video systems" subject to common carrier
regulations. The Company cannot predict what effect these services may have on
the Company. Likewise, the Company cannot predict what other changes might be
considered in the future, nor can it judge in advance what impact, if any, such
changes might have on its business.

                                      -19-
   20
EXECUTIVE OFFICERS

         Our current executive officers are:

         Name                                 Age                         Position
         ----                                 ---                         --------
                                                                    
  Edward K. Christian                         56                          President, Chief Executive Officer
                                                                          and Chairman; Director

  Steven J. Goldstein                         44                          Executive Vice President and
                                                                          Group Program Director

  Warren Lada                                 46                          Senior Vice President, Operations

  Samuel D. Bush                              43                          Vice President, Chief Financial
                                                                          Officer and Treasurer

  Marcia K. Lobaito                           52                          Vice President,
                                                                          Corporate Secretary, and
                                                                          Director of Business Affairs

  Catherine A. Bobinski                       41                          Vice President, Chief Accounting
                                                                          Officer and Corporate Controller

Officers are elected annually by our Board of Directors and serve at the
discretion of the Board. Set forth below is information with respect to our
executive officers.

         MR. CHRISTIAN has been President, Chief Executive Officer and Chairman
since our inception in 1986.

         MR. GOLDSTEIN has been Executive Vice President and Group Program
Director since 1988. Mr. Goldstein has been employed by us since our inception
in 1986.

         MR. LADA has been Senior Vice President, Operations since 2000. He was
Vice President, Operations from 1997 to 2000. From 1992 to 1997 he was Regional
Vice President of our subsidiary, Saga Communications of New England, Inc.

         MR. BUSH has been Vice President, Chief Financial Officer and Treasurer
since September 1997. From 1988 to 1997 he held various positions with the Media
Finance Group at AT&T Capital Corporation, most recently as Senior Vice
President.

         MS. LOBAITO has been Vice President since 1996, and Director of
Business Affairs and Corporate Secretary since our inception in 1986.

         MS. BOBINSKI has been Vice President since March 1999 and Chief
Accounting Officer and Corporate Controller since September 1991. Ms. Bobinski
is a certified public accountant.

                                      -20-
   21
FORWARD LOOKING STATEMENTS; RISK FACTORS

      Risks and uncertainties inherent in our business are set forth in detail
below. However, this section does not discuss all possible risks and
uncertainties to which we are subject, nor can you assume that there are no
other risks and uncertainties which may be more significant to us.

      DEPENDENCE ON KEY PERSONNEL

      Our business is partially dependent upon the performance of certain key
individuals, particularly Edward K. Christian, our President and the holder of
approximately 56% of the combined voting power of our Common Stock. Although we
have entered into long-term employment and non-competition agreements with Mr.
Christian and certain other key personnel, we cannot be sure that such key
personnel will remain with us. We do not maintain key man life insurance on Mr.
Christian's life.

      FINANCIAL LEVERAGE AND DEBT SERVICE REQUIREMENTS

      At December 31, 2000 our long-term debt (including the current portion
thereof) was approximately $94,641,000. We have borrowed and expect to continue
to borrow to finance acquisitions and for other corporate purposes. Because of
our substantial indebtedness, a significant portion of our cash flow from
operations is required for debt service. Our leverage could make us vulnerable
to an increase in interest rates or a downturn in our operating performance or a
decline in general economic conditions. Under the terms of our Credit Agreement,
our $70,000,000 commitment under the Term Loan and any indebtedness outstanding
under our $60,000,000 Acquisition Facility will be reduced on a quarterly basis
in amounts ranging from 3.125% to 7.5%, commencing on March 31, 2003. We believe
that cash flow from operations will be sufficient to meet debt service
requirements for interest and scheduled quarterly payments of principal under
the Credit Agreement. If such cash flow is not sufficient, we may be required to
sell additional equity securities, refinance our obligations or dispose of one
or more of our properties in order to make such scheduled payments. We cannot be
sure that we would be able to effect any such transactions on favorable terms.

      DEPENDENCE ON KEY STATIONS

      For the years ended December 31, 2000, 1999 and 1998 our Columbus, Ohio
stations accounted for an aggregate of 16%, 15% and 22%, respectively, and our
Milwaukee, Wisconsin stations accounted for an aggregate of 22%, 22% and 24%,
respectively, of our station operating income. While radio revenues in each of
the Columbus and Milwaukee markets have remained relatively stable historically,
an adverse change in either radio market or either location's relative market
position could have a significant impact on our operating results as a whole.

                                      -21-
   22
      REGULATORY MATTERS

      The broadcasting industry is subject to extensive federal regulation
which, among other things, requires approval by the FCC of transfers,
assignments and renewals of broadcasting licenses, and limit the number of
broadcasting properties that may be acquired within a specific market. Federal
regulation also restricts alien ownership of capital stock of and participation
in the affairs of licensees.

      NEW TECHNOLOGIES MAY AFFECT OUR BROADCASTING OPERATIONS

      The FCC is considering ways to introduce new technologies to the
broadcasting industry, including satellite and terrestrial delivery of digital
audio broadcasting and the standardization of available technologies which
significantly enhance the sound quality of AM broadcasters. We are unable to
predict the effect such technologies will have our broadcasting operations, but
the capital expenditures necessary to implement such technologies could be
substantial. We also face risks in implementing the conversion of our television
stations to digital television, which the FCC has ordered and for which it has
established a timetable. We will incur considerable expense in the conversion to
digital television and are unable to predict the extent or timing of consumer
demand for any such digital television services. Moreover, the FCC may impose
additional public service obligations on television broadcasters in return for
their use of the digital television spectrum. This could add to our operational
costs. One issue yet to be resolved is the extent to which cable systems will be
required to carry broadcasters' new digital channels. Our television stations
are highly dependent on their carriage by cable systems in the areas they serve.
Thus, FCC rules that impose no or limited obligations on cable systems to carry
the digital television signals of television broadcast stations in their local
markets could adversely affect our television operations.

      DEPENDENCE ON LOCAL AND NATIONAL ECONOMIC CONDITIONS

      Our financial results are dependent primarily on our ability to generate
advertising revenue through rates charged to advertisers. The advertising rates
a station is able to charge is affected by many factors, including the general
strength of the local and national economies.

      SUCCESS OF ACQUISITIONS DEPEND ON COMPANY'S ABILITY TO INTEGRATE ACQUIRED
      STATIONS

      We have pursued and intend to continue to pursue acquisitions of
additional radio and television stations. The success of any completed
acquisition will depend on our ability to effectively integrate the acquired
stations. The process of integrating acquired stations may involve numerous
risks, including difficulties in the assimilation of operations, the diversion
of management's attention from other business concerns, risk of entering new
markets, and the potential loss of key employees of the acquired stations.

                                      -22-
   23
ITEM 2.  PROPERTIES

       Our corporate headquarters is located in Grosse Pointe Farms, Michigan.
The types of properties required to support each of our stations include
offices, studios, transmitter sites and antenna sites. A station's studios are
generally housed with its offices in downtown or business districts. The
transmitter sites and antenna sites are generally located so as to provide
maximum market coverage.

       As of December 31, 2000 the studios and offices of sixteen of our
twenty-one operating locations, as well as our corporate headquarters in
Michigan, are located in facilities owned by us. The remaining studios and
offices are located in leased facilities with lease terms that expire in 2 to 4
years. We own or lease our transmitter and antenna sites, with lease terms that
expire in 2 to 88 years. We do not anticipate any difficulties in renewing those
leases that expire within the next five years or in leasing other space, if
required.

       No one property is material to our overall operations. We believe that
our properties are in good condition and suitable for our operations.

       We own substantially all of the equipment used in our broadcasting
business.

       Our bank indebtedness is secured by a first priority lien on all of our
assets and those of our subsidiaries.

ITEM 3.  LEGAL PROCEEDINGS

       There are no material legal proceedings pending against us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           Not applicable.

                                      -23-
   24
                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        Our Class A Common Stock trades on the American Stock Exchange. There is
no public trading market for our Class B Common Stock. The following table sets
forth the high and low sales prices of the Class A Common Stock as reported by
Tradeline for the calendar quarters indicated:

Year                                            High                    Low
- ----                                            ----                    ---
1999:
    First Quarter                             $16.70                 $13.70
    Second Quarter                            $16.20                 $14.25
    Third Quarter                             $19.30                 $15.10
    Fourth Quarter                            $22.10                 $16.45

2000:
    First Quarter                             $25.00                 $16.50
    Second Quarter                            $22.81                 $17.75
    Third Quarter                             $25.00                 $13.88
    Fourth Quarter                            $17.25                 $12.75

       As of March 15, 2001, there were approximately 152 holders of record of
our Class A Common Stock, and one holder of our Class B Common Stock.

       We have not paid any cash dividends on our Common Stock during the three
most recent fiscal years. We intend to retain future earnings for use in our
business and do not anticipate paying any dividends on our Common Stock in the
foreseeable future. We are prohibited by the terms of our bank loan agreement
from paying dividends on our Common Stock without the banks' prior consent. See
Item 7. Management's Discussion and Analysis of Financial Position and Results
of Operations - Liquidity and Capital Resources.

                                      -24-
   25
ITEM 6. SELECTED FINANCIAL DATA

                                                                                  Years Ended December 31,
                                                      -----------------------------------------------------------------------------
                                                      2000(1)(2)       1999(1)(3)        1998(1)(4)       1997(1)(5)     1996(1)(6)
                                                      ----             ----              ----             ----           ----
                                                                           (In thousands except per share amounts)
                                                                                                       
OPERATING DATA:
Net Operating Revenue                                 $101,746       $ 90,020          $ 75,871         $ 66,258      $ 56,240
Station Operating Expense (excluding
    depreciation, amortization, corporate general
    and administrative)                                 62,487         56,552            48,544           43,796        36,629
                                                      --------       --------          --------         --------      --------
Station Operating Income (excluding depreciation,
    amortization, corporate general and
    administrative)                                     39,259         33,468            27,327           22,462        19,611

Depreciation and Amortization                            9,019          8,022             6,420            5,872         5,508
Corporate General and Administrative                     5,101          5,095             4,497            3,953         3,299
                                                      --------       --------          --------         --------      --------
Operating Profit                                        25,139         20,351            16,410           12,637        10,804
Interest Expense                                         6,793          5,988             4,609            4,769         3,814
Net Income                                            $  8,650       $  8,552          $  6,351         $  4,492      $  3,935
Basic Earnings Per Share                              $    .53       $    .52          $    .40         $    .28      $    .25
Cash Dividends Declared Per Common Share
Weighted Average Common Shares                          16,434         16,315            15,896           15,796        15,716
Diluted Earnings Per Share                            $    .52       $    .51          $    .39         $    .28      $    .25
Weighted Average Common Shares and Common
    Equivalents                                         16,792         16,665            16,238           16,110        16,020

OTHER DATA:
After-Tax Cash Flow (7)                               $ 21,515       $ 17,585          $ 14,328         $ 11,083      $ 10,143
After-Tax Cash Flow Per Share-Basic                   $   1.31       $   1.08          $    .90         $    .70      $    .65
After-Tax Cash Flow Per Share-Diluted                 $   1.28       $   1.06          $    .88         $    .69      $    .63

                                      -25-
   26

                                                                                        December 31,
                                                      2000(1)(2)       1999(1)(3)        1998(1)(4)       1997(1)(5)    1996(1)(6)
                                                      ----             ----              ----             ----          ----
                                                                                       (In thousands)
                                                                                                              
BALANCE SHEET DATA:
    Working Capital                               $   20,793      $    22,756          $ 15,255        $   1,587     $  10,997
    Net Fixed Assets                                  47,672           44,455            35,564           34,028        29,704
    Net Other Assets                                 100,872           84,901            70,505           60,886        48,636
    Total Assets                                     179,906          162,496           130,013          112,433        96,415
    Long-term Debt Including Current
       Portion                                        94,641           85,774            70,906           61,605        52,754
    Equity                                            65,618           59,102            44,723           38,255        33,113

(1)      All periods presented include the weighted average shares and common
         equivalents related to certain stock options. In December 1999, June
         1998, April, 1997 and May, 1996 we consummated a five-for-four split of
         our Class A and Class B Common Stock. All share and per share
         information has been restated to reflect the retroactive equivalent
         change in the weighted average shares.

(2)      Reflects the results of KICD AM/FM and KLLT, acquired in January, 2000;
         WKIO, acquired in July, 2000; and WHMP and WLZX, acquired in August,
         2000.

(3)      Reflects the results of KAFE and KPUG, acquired in January, 1999;
         Michigan Farm Radio Network, acquired in January, 1999; KAVU and KUNU,
         acquired in April, 1999 and the results of a local marketing agreement
         for KVCT which began in April, 1999; KIXT, acquired in May, 1999; WXVT,
         acquired in July, 1999.

(4)      Reflects the results of Michigan Radio Network, acquired in March,
         1998; and KGMI and KISM, acquired in December, 1998.

(5)      Reflects the results of KAZR, acquired in March, 1997; KLTI, acquired
         in April, 1997 and the results of a local marketing agreement for KLTI
         which began in January, 1997; WDBR, WMHX, WTAX, and WLLM, acquired in
         May, 1997; WFMR and WJMR, acquired in May, 1997; WQLL, acquired in
         November, 1997, and the results of a local marketing agreement for WQLL
         which began in July, 1997; and the Illinois Radio Network, acquired in
         November, 1997.

(6)      Reflects the results of WNAX AM/FM, acquired in June, 1996; WPOR and
         WBAE, acquired in June 1996; the results of a local marketing agreement
         for WDBR, WYXY, WTAX, and WLLM which began in July, 1996; and the
         results of a local marketing agreement for KAZR which began in August,
         1996.

(7)      Defined as net income plus depreciation, amortization (excluding film
         rights), other expense, and deferred taxes.

                                      -26-
   27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

      The following discussion should be read in conjunction with Item 6.
Selected Financial Data and the financial statements and notes thereto of Saga
Communications, Inc. and its subsidiaries contained elsewhere herein.

GENERAL

      Our financial results are dependent on a number of factors, the most
significant of which is the ability to generate advertising revenue through
rates charged to advertisers. The rates a station is able to charge are, in
large part, based on a station's ability to attract audiences in the demographic
groups targeted by its advertisers. Various factors affect the rate a station
can charge, including the general strength of the local and national economies,
population growth, ability to provide popular programming, local market
competition, relative efficiency of radio and/or broadcasting compared to other
advertising media, signal strength and government regulation and policies. The
primary operating expenses involved in owning and operating radio stations are
employee salaries, depreciation and amortization, programming expenses,
solicitation of advertising, and promotion expenses. In addition to these
expenses, owning and operating television stations involve the cost of acquiring
certain syndicated programming.

      During the years ended December 31, 2000, 1999 and 1998, none of our
operating locations represented more than 15% of our station operating income
(i.e., net operating revenue less station operating expense), other than the
Columbus, Ohio and Milwaukee, Wisconsin stations. For the years ended December
31, 2000, 1999 and 1998, Columbus accounted for an aggregate of 16%, 15% and
22%, respectively, and Milwaukee accounted for an aggregate of 22%, 22%, and
24%, respectively, of our station operating income. While radio revenues in each
of the Columbus and Milwaukee markets have remained relatively stable
historically, an adverse change in either radio market or either location's
relative market position could have a significant impact on our operating
results as a whole.

      Because audience ratings in the local market are crucial to a station's
financial success, we endeavor to develop strong listener/viewer loyalty. We
believe that the diversification of formats on our radio stations helps us to
insulate ourselves from the effects of changes in musical tastes of the public
on any particular format.

      The number of advertisements that can be broadcast without jeopardizing
listening/viewing levels (and the resulting ratings) is limited in part by the
format of a particular radio station and, in the case of television stations, by
restrictions imposed by the terms of certain network affiliation and syndication
agreements. Our stations strive to maximize revenue by constantly managing the
number of commercials available for sale and adjusting prices based upon local
market conditions. In the broadcasting industry, stations often utilize trade
(or barter) agreements to generate advertising time sales in exchange for goods
or services used or useful in the operation of the stations, instead of for
cash. We minimize our use of trade agreements and historically have sold over
95% of our advertising time for cash.

                                      -27-
   28
      Most advertising contracts are short-term, and generally run only for a
few weeks. Most of our revenue is generated from local advertising, which is
sold primarily by each station's sales staff. In 2000, approximately 80% of our
gross revenue was from local advertising. To generate national advertising
sales, we engage an independent advertising sales representative that
specializes in national sales for each of our stations.

      Our revenue varies throughout the year. Advertising expenditures, our
primary source of revenue, generally have been lowest during the winter months
comprising the first quarter.

      The following tables summarize our results of operations for the three
years ended December 31, 2000. The as-reported amounts reflect our historical
financial results and include the results of operations for stations that we did
not own for the entire comparable period. The same station amounts reflect the
results of operations for stations that we owned for the entire comparable
period.

CONSOLIDATED RESULTS OF OPERATIONS
(In thousands of dollars)

                                                                   2000 vs. 1999                 1999 vs. 1998
                                                                   -------------                 -------------
                                                             As-Reported   Same Station    As-Reported   Same Station
                                                             % Increase     % Increase     % Increase     % Increase
                           Years Ended December 31,
                         2000         1999         1998      (Decrease)     (Decrease)     (Decrease)     (Decrease)
                         ----         ----         ----      ----------     ----------     ----------     ----------
                                                                                        
Net operating
  revenue               $101,746     $90,020      $75,871      13.03%          6.79%         18.65%          5.42%
Station operating
  expense                 62,487      56,552       48,544      10.49%          2.78%         16.50%          2.40%
                          ------      ------       ------
Station operating
  income*                 39,259      33,468       27,327      17.30%         13.45%         22.47%         10.77%
Corporate G&A              5,101       5,095        4,497        .12%             N/A        13.30%             N/A
Depreciation and
  amortization             9,019       8,022        6,420      12.43%          1.13%         24.95%          6.37%
                           -----       -----        -----
Operating profit          25,139      20,351       16,410      23.53%         16.81%         24.02%         12.22%
Interest expense           6,793       5,988        4,609      13.44%                        29.92%
Other expense              2,104         269          570          N/A                          N/A
Income taxes               7,592       5,542        4,880      36.99%                        13.57%
                           -----       -----        -----
Net income             $   8,650     $ 8,552     $  6,351       1.15%                        34.66%
                       =========     =======     ========

* Programming, technical, selling and station general and administrative
  expenses.

                                      -28-
   29

RADIO BROADCASTING SEGMENT
(In thousands of dollars)

                                                                   2000 vs. 1999                 1999 vs. 1998
                                                                   -------------                 -------------
                                                             As-Reported   Same Station    As-Reported   Same Station
                                                             % Increase     % Increase     % Increase     % Increase
                            Years Ended December 31,
                         2000         1999        1998       (Decrease)     (Decrease)     (Decrease)     (Decrease)
                         ----         ----        ----       ----------     ----------     ----------     ----------
                                                                                        
Net operating
  revenue                $89,127     $80,167     $70,243       11.18%          6.98%         14.13%          5.66%
Station operating
  expense*                53,886      49,823      44,998        8.16%          3.19%         10.72%          2.02%
                          ------      ------      ------
Station operating
  income                  35,241      30,344      25,245       16.14%         13.19%         20.20%         12.14%
Depreciation and
  amortization             6,680       6,056       5,156       10.30%           .96%         17.46%          6.48%
                           -----       -----       -----
Operating profit         $28,561     $24,288     $20,089       17.59%         16.24%         20.90%         13.57%

TELEVISION BROADCASTING SEGMENT
(In thousands of dollars)

                                                                   2000 vs. 1999                 1999 vs. 1998
                                                                   -------------                 -------------
                                                             As-Reported   Same Station    As-Reported   Same Station
                                                             % Increase     % Increase     % Increase     % Increase
                            Years Ended December 31,
                         2000         1999        1998       (Decrease)     (Decrease)     (Decrease)     (Decrease)
                         ----         ----        ----       ----------     ----------     ----------     ----------
                                                                                        
Net operating
  revenue                $12,619      $9,853      $5,628       28.07%          4.27%         75.07%          2.43%
Station operating
  expense*                 8,601       6,729       3,546       27.82%         (2.58%)        89.76%          7.16%
                           -----       -----       -----
Station operating
  income                   4,018       3,124       2,082       28.62%         17.51%         50.05%         (5.62%)
Depreciation and
  amortization             1,963       1,525         809       28.72%          2.34%         88.50%          5.69%
                           -----       -----         ---
Operating profit         $ 2,055      $1,599      $1,273       28.52%         29.19%         25.61%        (12.80%)

* Programming, technical, selling and station general and administrative
  expenses.

                                      -29-
   30
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

      For the year ended December 31, 2000, net operating revenue was
$101,746,000 compared with $90,020,000 for the year ended December 31, 1999, an
increase of $11,726,000 or 13%. Approximately $5,899,000 or 50% of the increase
was attributable to revenue generated by stations which we did not own or
operate for the entire comparable period in 1999. The balance of the increase in
net operating revenue of approximately $5,827,000 was attributable to stations
we owned and operated for at least two years, representing a 6.8% increase in
comparable station/comparable period net operating revenue. The overall increase
in comparable station/comparable period revenue was primarily the result of
increased advertising rates at a majority of our stations. Improvements were
noted in most of our markets on a comparable station/comparable period basis.

      Station operating expense (i.e., programming, technical, selling, and
station general and administrative expenses) increased by $5,935,000 or 10.5% to
$62,487,000 for the year ended December 31, 2000, compared with $56,552,000 for
the year ended December 31, 1999. Of the total increase, approximately
$4,446,000 or 75% was the result of the impact of the operation of stations
which were not owned or operated by us for the entire comparable period in 1999.
The remaining balance of the increase in station operating expense of $1,489,000
represents a total increase in station operating expense of 2.8% for the year
ended December 31, 2000 compared to the year ended December 31, 1999 on a
comparable station/comparable period basis.

      Operating profit for the year ended December 31, 2000 was $25,139,000
compared to $20,351,000 for the year ended December 31, 1999, an increase of
$4,788,000 or 23.5%. The improvement was the result of the $11,726,000 increase
in net operating revenue, offset by the $5,935,000 increase in station operating
expense and a $997,000 or 12.4% increase in depreciation and amortization. The
increase in depreciation and amortization charges was principally the result of
recent acquisitions.

                                      -30-
   31

      We generated net income in the amount of approximately $8,650,000 ($0.52
per share on a fully diluted basis) during the year ended December 31, 2000
compared with $8,552,000 ($0.51 per share on a fully diluted basis) for the year
ended December 31, 1999, an increase of approximately $98,000 or 1%. The
increase was the result of the $4,788,000 improvement in operating profit,
offset by a $805,000 increase in interest expense, a $1,835,000 increase in
other expense, and a $2,050,000 increase in income tax expense. The increase in
interest expense was principally the result of additional borrowings to finance
acquisitions. The increase in other expense was principally the result of
non-recurring charges including a $1,300,000 loss resulting from the sale of our
equity in an investment in Reykjavik, Iceland, and a $125,000 loss on the sale
of a building in one of our markets. Additionally, we had non-recurring income
of $500,000 during the year ended December 31, 1999 resulting from an agreement
to downgrade an FCC license at one of our stations. The increase in income tax
expense and the effective tax rate was directly associated with our improved
operating performance and the result of the nondeductible capital loss realized
on the sale of the equity investment, mentioned above, and the related equity in
the operations of that investment during the first six months of 2000.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

      For the year ended December 31, 1999, net operating revenue was
$90,020,000 compared with $75,871,000 for the year ended December 31, 1998, an
increase of $14,149,000 or 19%. Approximately $10,088,000 or 71% of the increase
was attributable to revenue generated by stations which we did not own or
operate for the entire comparable period in 1998. The balance of the increase in
net operating revenue of approximately $4,061,000 was attributable to stations
we owned and operated for at least two years, representing a 5% increase in
comparable station/comparable period net operating revenue. The overall increase
in comparable station/comparable period revenue was primarily the result of
increased advertising rates at a majority of our stations. Improvements were
noted in most of our markets on a comparable station/comparable period basis.

      The net increase in net operating revenue in stations we owned and
operated for the entire comparable period was reflective of an overall increase
of 7% or $4,325,000 in our markets excluding Columbus, Ohio. The overall
increase in markets other than Columbus, Ohio was offset by a $264,000 or 2%
decrease in net operating revenue in the Columbus market, all of which pertained
to the first nine months of 1999. The fourth quarter of 1999 had a slight
increase in revenue of $60,000 over the fourth quarter of 1998. The decrease in
revenue in the Columbus market was primarily due to competitive pressures in the
market which resulted in a short-term decline in the station's listener ratings.
While these competitive pressures created challenges, the decline in ratings was
only temporary in nature and did not persist beyond the third quarter of 1999.

      Station operating expense (i.e., programming, technical, selling, and
station general and administrative expenses) increased by $8,008,000 or 17% to
$56,552,000 for the year ended December 31, 1999, compared with $48,544,000 for
the year ended December 31, 1998. Of the total increase, approximately
$6,859,000 or 86% was the result of the impact of the operation of stations
which we did not own or operate for the entire comparable period in 1998. The
remaining balance of the increase in station operating expense of $1,149,000
represents a total increase in station operating expense of 2% for the year
ended December 31, 1999 compared to the year ended December 31, 1998 on a
comparable station/comparable period basis.

                                      -31-
   32

      The net increase in station operating expense in stations we owned and
operated for the entire comparable period was reflective of an increase of 1% or
$536,000 in our markets excluding Columbus, Ohio. The overall increase included
a $613,000 or 12% increase in station operating expense in the Columbus market.
The increase in station operating expense in the Columbus market was primarily
due to competitive pressures in the market. In an effort to protect the
station's franchise with its target audience, we spent additional non-budgeted
monies on market research, advertising and promotion.

      Operating profit for the year ended December 31, 1999 was $20,351,000
compared to $16,410,000 for the year ended December 31, 1998, an increase of
$3,941,000 or 24%. The improvement was the result of the $14,149,000 increase in
net operating revenue, offset by the $8,008,000 increase in station operating
expense, a $1,602,000 or 25% increase in depreciation and amortization, and a
$598,000 or 13% increase in corporate general and administrative charges. The
increase in depreciation and amortization charges was principally the result of
recent acquisitions. The increase in corporate general and administrative
charges was primarily attributable to an increase in compensation charges of
$75,000 relating to an accrued bonus to our principal stockholder, an increase
of approximately $30,000 pertaining to a discretionary contribution to our
401(k) plan, and an increase of approximately $133,000 in employee benefit
related matters. The remaining increase in corporate general and administrative
expenses of approximately $360,000 represents additional costs due to our growth
as a result of recent acquisitions.

      We generated net income in the amount of approximately $8,552,000 ($0.51
per share on a fully diluted basis) during the year ended December 31, 1999
compared with $6,351,000 ($0.39 per share on a fully diluted basis) for the year
ended December 31, 1998, an increase of approximately $2,201,000 or 35%. The
increase in net income was the result of the $3,941,000 improvement in operating
profit and a $301,000 decrease in other expense, offset by a $1,379,000 increase
in interest expense and a $662,000 increase in income tax expense. The decrease
in other expense was principally the result of non-recurring income of $500,000
resulting from an agreement to downgrade an FCC license at one of our stations,
offset by a $240,000 increase in the loss of an unconsolidated affiliate. The
increase in interest expense was principally the result of additional borrowings
to finance acquisitions. The increase in income tax expense was directly
associated with our improved operating performance.

                                      -32-
   33
LIQUIDITY AND CAPITAL RESOURCES

      As of December 31, 2000, we had $94,641,000 of long-term debt (including
the current portion thereof) outstanding and approximately $56,250,000 of unused
borrowing capacity under the Credit Agreement in place at December 31, 2000.

      On March 28, 2001, we amended and refinanced our Credit Agreement to
modify our three financing facilities (the "Facilities"): a $105,000,000 senior
secured term loan (the "Term Loan"), a $75,000,000 senior secured acquisition
loan facility (the "Acquisition Facility"), and a $20,000,000 senior secured
revolving credit facility (the "Revolving Facility"). The Facilities mature
September 30, 2008. Our indebtedness under the Facilities is secured by a first
priority lien on substantially all of our assets and of our subsidiaries, by a
pledge of our subsidiaries' stock and by a guarantee of our subsidiaries.

      The Term Loan was used to refinance our existing credit agreement, fund
permitted acquisitions and pay related transaction expenses. The Acquisition
Facility may be used for permitted acquisitions and to pay related transaction
expenses. The Revolving Facility may be used for general corporate purposes,
including working capital, capital expenditures, permitted acquisitions (to the
extent that the Acquisition Facility has been fully utilized and limited to
$10,000,000) and permitted stock buybacks. On March 28, 2003, the Acquisition
Facility will convert to a five and a half year term loan. The outstanding
amount of the Term Loan is required to be reduced quarterly in amounts ranging
from 3.125% to 7.5% of the initial commitment commencing on March 31, 2003. The
outstanding amount of the Acquisition Facility is required to be reduced
quarterly in amounts ranging from 3.125% to 7.5% commencing on March 31, 2003.
Any outstanding amount under the Revolving Facility will be due on the maturity
date of September 30, 2008. In addition, the Facilities may be further reduced
by specified percentages of Excess Cash Flow (as defined in the Credit
Agreement) based on leverage ratios.

      Interest rates under the Facilities are payable, at our option, at
alternatives equal to LIBOR plus 1.25% to 2.0% or the Agent bank's base rate
plus .25% to 1.0%. The spread over LIBOR and the base rate vary from time to
time, depending upon our financial leverage. We also pay quarterly commitment
fees of 0.375% to 0.625% per annum on the aggregate unused portion of the
Acquisition and Revolving Facilities.

      The amended Credit Agreement contains a number of financial covenants
which, among other things, require us to maintain specified financial ratios and
impose certain limitations on us with respect to investments, additional
indebtedness, dividends, distributions, guarantees, liens and encumbrances.

                                      -33-
   34
      At December 31, 2000, we had an interest rate swap agreement with a total
notional amount of $24,500,000. In connection with this agreement, we also had
an interest rate cap under the same terms with a fixed price of 7.45%. In March
2001, we amended this agreement to terminate the interest rate cap portion of
the agreement effective March 30, 2001. The swap agreement will be used to
convert the variable Eurodollar interest rate of a portion of our bank
borrowings to a fixed interest rate. The swap agreement was entered into to
reduce our risk of rising interest rates. In accordance with the terms of the
swap agreement, we pay 6.875% calculated on the $24,500,000 notional amount. We
receive LIBOR (6.66% at December 31, 2000) calculated on the notional amount of
$24,500,000. The interest rate cap agreement requires that if LIBOR is greater
than 7.45% on any reset date we will pay the difference between 7.45% and the
LIBOR rate at the reset date calculated on the notional amount of $24,500,000.
As a result of this combination, we will pay a rate of 6.875% with benefits up
to 7.45%. Should LIBOR increase above 7.45%, we will pay LIBOR less a 31.5 basis
point benefit. Net receipts or payments under the agreements are recognized as
an adjustment to interest expense. The swap agreement expires in September 2001.
The fair value of the swap and interest rate cap agreements at December 31, 2000
was approximately ($176,000), estimated using discounted cash flows analyses,
based on a discount rate equivalent to a U.S. Treasury security with a
comparable remaining maturity plus a 50 basis point spread for credit risk and
other factors.

      At December 31, 2000, we had two other interest rate swap agreements with
a total notional amount of $24,500,000. In connection with these agreements, we
also sold two interest rate caps under the same terms with a fixed price of
6.0%. In March 2001, we amended this agreement to terminate the interest rate
cap portion of the agreement effective March 30, 2001. The swap agreements will
be used to convert the variable Eurodollar interest rate of a portion of our
bank borrowings to a fixed interest rate. The swap agreements were entered into
to reduce the risk of rising interest rates. In accordance with the terms of the
swap agreements, we pay 5.685% calculated on the $24,500,000 notional amount. We
receive LIBOR (6.66% at December 31, 2000) calculated on the notional amount of
$24,500,000. The interest rate cap agreement requires that if LIBOR is greater
than 6.00% on any reset date we will pay the difference between 6.00% and the
LIBOR rate at the reset date calculated on the notional amount of $24,500,000.
As a result of this combination, we will pay a rate of 5.685% with benefits up
to 6%. Should LIBOR increase above 6.00%, we will pay LIBOR less a 31.5 basis
point benefit. Net receipts or payments under the agreements are recognized as
an adjustment to interest expense. The swap agreements expire in September 2001.
The fair value of the swap and interest rate cap agreements was approximately
$33,000 at December 31, 2000, estimated using discounted cash flows analyses,
based on a discount rate equivalent to a U.S. Treasury security with a
comparable remaining maturity plus a 50 basis point spread for credit risk and
other factors.

      In March 2001, we amended all three of our interest rate cap agreements to
terminate them effective March 30, 2001.

      Net receipts or payments under the swap and cap agreements are recognized
as an adjustment to interest expense. Approximately $11,000 in additional
interest expense was recognized as a result of the interest rate swap and cap
agreements for the year ended December 31, 1999. A decrease of approximately
$65,000 in interest expense was recognized as a result of the interest rate swap
and cap agreements for the year ended December 31, 2000 and an aggregate
decrease in interest expense of approximately $54,000 has been recognized since
the inception of the agreements.

                                      -34-
   35
      During the years ended December 31, 2000, 1999 and 1998, we had net cash
flows from operating activities of $21,074,000, $16,481,000, and $12,927,000,
respectively. We believe that cash flow from operations will be sufficient to
meet quarterly debt service requirements for interest and scheduled payments of
principal under the Credit Agreement. If such cash flow is not sufficient we may
be required to sell additional equity securities, refinance our obligations or
dispose of one or more of our properties in order to make such scheduled
payments. There can be no assurance that we would be able to effect any such
transactions on favorable terms.

      The following acquisitions in 2000 were financed through funds generated
from operations and additional borrowings of $13,500,000 under the existing
Credit Agreement:

- -        January 1, 2000: two FM and one AM radio station (KICD-AM/FM and
         KLLT-FM) serving the Spencer, Iowa market for approximately $6,400,000.

- -        July 17, 2000: an FM radio station (WKIO-FM) serving the
         Champaign-Urbana, Illinois market for approximately $6,800,000.

- -        August 30, 2000: an AM and FM radio station (WHMP-AM and WLZX-FM)
         serving the Northampton, Massachusetts market for approximately
         $12,000,000.

      The following acquisitions in 1999 were financed through funds generated
from operations, issuance of our Class A Common Stock and additional borrowings
of $14,500,000 under the existing Credit Agreement:

- -        January 1, 1999: an AM and FM radio station (KAFE-FM and KPUG-AM)
         serving the Bellingham, Washington market for approximately $6,350,000.

- -        January 14, 1999: a regional and state farm information network (The
         Michigan Farm Radio Network) for approximately $1,660,000,
         approximately $1,036,000 of which was paid in our Class A Common Stock.

- -        April 1, 1999: KAVU-TV (an ABC affiliate), a low power Univision
         affiliate (KUNU-LPTV) and a low power construction permit (KVTX-LPTV)
         serving the Victoria, Texas market for approximately $10,700,000,
         approximately $1,840,000 of which was paid in our Class A Common Stock.
         We also assumed an existing Local Marketing Agreement for KVCT-TV (a
         Fox affiliate).

- -        May 1, 1999: an AM radio station (KIXT-AM) serving the Bellingham,
         Washington market for approximately $1,000,000.

- -        July 1, 1999: WXVT-TV (a CBS affiliate) serving the Greenville,
         Mississippi market for approximately $5,200,000, approximately $600,000
         of which was paid in our Class A Common Stock.

     During 1999: converted a $1,540,000 non-interest bearing loan to equity in
Finn Midill, ehf., an Icelandic corporation that owns six FM radio stations
serving Reykjavik, Iceland. As of December 31, 1999 we loaned an additional
$1,333,000 to Finn Midill for working capital needs. We sold this equity
investment in 2000.

                                      -35-
   36
      The following acquisitions in 2001 were financed with $7,500,000 of
additional borrowings under the existing credit agreement, approximately
$1,000,000 of our Class A Common Stock and approximately $5,200,000 in cash:

- -        February 1, 2001: two FM and two AM radio stations (WCVQ-FM, WZZP-FM,
         WDXN-AM, and WJMR-AM) serving the Clarksville, Tennessee /
         Hopkinsville, Kentucky market for approximately $6,700,000.

- -        February 1, 2001: one FM radio station (WVVR-FM) serving the
         Clarksville, Tennessee / Hopkinsville, Kentucky market for
         approximately $7,000,000, including approximately $1,000,000 of the
         Company's Class A common stock.

      In addition, in December 2000 we entered into agreements to acquire
additional stations:

- -        December 15, 2000: an AM and FM radio station (WHAI-AM/FM) serving the
         Greenfield, Massachusetts market for approximately $2,200,000.

- -        December 22, 2000: two FM radio stations (KMIT-FM and KGGK-FM) serving
         the Mitchell, South Dakota market for approximately $4,050,000.

      Both of these acquisitions are subject to the approval of the Federal
Communications Commission and are expected to close during the second quarter of
2001.

      We anticipate that any future acquisitions of radio and television
stations will be financed through funds generated from operations, borrowings
under the Credit Agreement, additional debt or equity financing, or a
combination thereof. However, there can be no assurances that any such financing
will be available.

      We continue to actively seek and explore opportunities for expansion
through the acquisition of additional broadcast properties.

      Our capital expenditures for the year ended December 31, 2000 were
approximately $5,401,000 ($5,177,000 in 1999). We anticipate capital
expenditures in 2001 to be approximately $5,500,000, which we expect to finance
through funds generated from operations or additional borrowings under the
Credit Agreement.

      In September 2000, we modified our Stock Buy-Back Program so that we may
purchase up to $6,000,000 of our Class A Common Stock. Since inception of the
Stock Buy-Back program in 1998 through December 31, 2000 we have repurchased
approximately $3,827,000 of our Class A Common Stock.

                                      -36-
   37
MARKET RISK AND RISK MANAGEMENT POLICIES

      Our earnings are affected by changes in short-term interest rates as a
result of its long-term debt arrangements. However, due to our purchase of an
interest rate swap and cap agreements, the effects of interest rate changes are
limited. If market interest rates averaged 1% more in 2000 than they did during
2000, our interest expense, after considering the effect of our interest rate
swap and cap agreements, would increase and income before taxes would decrease
by $1,284,000 ($484,000 in 1999). These amounts are determined by considering
the impact of the hypothetical interest rates on our borrowing cost, short-term
investment balances, and interest rate swap agreements. This analysis does not
consider the effects of the reduced level of overall economic activity that
could exist in such an environment. Further, in the event of a change of such
magnitude, management would likely take actions to further mitigate its exposure
to the change. However, due to the uncertainty of the specific actions that
would be taken and their possible effects, the sensitivity analysis assumes no
changes in our financial structure.

INFLATION

      The impact of inflation on our operations has not been significant to
date. There can be no assurance that a high rate of inflation in the future
would not have an adverse effect on our operations.

FORWARD-LOOKING STATEMENTS

      Statements contained in this Form 10-K that are not historical facts are
forward-looking statements that are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. In addition, words such
as "believes," "anticipates," "estimates," "expects," and similar expressions
are intended to identify forward looking statements. These statements are made
as of the date of this report based on current expectations. We undertake no
obligation to update this information. A number of important factors could cause
our actual results for 2001 and beyond to differ materially from those expressed
in any forward looking statements made by or on our behalf. Forward looking
statements involve a number of risks and uncertainties including, but not
limited to, our financial leverage and debt service requirements, dependence on
key personnel, dependence on key stations, U.S. and local economic conditions,
the successful integration of acquired stations, and regulatory matters. We
cannot be sure that we will be able to anticipate or respond timely to changes
in any of these factors, which could adversely affect the operating results in
one or more fiscal quarters. Results of operations in any past period should not
be considered, in and of itself, indicative of the results to be expected for
future periods. Fluctuations in operating results may also result in
fluctuations in the price of our stock.

                                      -37-
   38
RECENT ACCOUNTING PRONOUNCEMENTS

      Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities", as amended by
SFAS 137 and 138, becomes effective for all fiscal quarters for all fiscal years
beginning after June 30, 2000. We adopted SFAS 133 on January 1, 2001. SFAS 133
will require us to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If the derivative is a hedge, depending on the nature of the hedge, changes in
fair value of derivatives will either be offset against the change in fair value
of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. Based on our derivative position at December
31, 2000, upon adoption of SFAS 133 we will record a loss from the cumulative
effect of an accounting change of approximately $93,000, net of an applicable
tax benefit of approximately $50,000, in the statement of income and an increase
of $93,000 in other comprehensive income.

      In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 provides guidance for revenue recognition and disclosure in
financial statements under certain circumstances. The accounting and disclosures
prescribed by SAB 101 are effective for the fourth quarter of fiscal year 2000.
There was no material impact resulting from the application of SAB 101.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

      Information appearing under the caption "Market Risk and Risk Management
Policies" in Item 7 is hereby incorporated by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

      The financial statements attached hereto are filed as part of this annual
report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

      None.

                                      -38-
   39
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

        "Election of Directors" and "Compensation of Directors and Officers -
Section 16(a) Beneficial Ownership Reporting Compliance" in our Proxy Statement
for the 2001 Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission on or before April 30, 2001 are hereby incorporated by
reference herein. See also "Business-Executive Officers."

ITEM 11.  EXECUTIVE COMPENSATION

        "Compensation of Directors and Officers" in our Proxy Statement for the
2001 Annual Meeting of Stockholders to be filed with the Securities and Exchange
Commission on or before April 30, 2001 is hereby incorporated by reference
herein. Such incorporation by reference shall not be deemed to specifically
incorporate by reference the information referred to in Item 402(a)(8) of
Regulation S-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        "Security Ownership of Certain Beneficial Owners and Management" in our
Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission on or before April 30, 2001 is hereby
incorporated by reference herein.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        "Certain Transactions" in our Proxy Statement for the 2001 Annual
Meeting of Stockholders to be filed with the Securities and Exchange Commission
on or before April 30, 2001 is hereby incorporated by reference herein.

                                      -39-
   40
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      1.       Financial Statements

                  The financial statements attached hereto pursuant to Item 8
                  hereof are filed as part of this annual report.

         2.       Financial Statement Schedules

                  II       -Valuation and Qualifying Accounts

                  All other schedules for which provision are made in the
                  applicable accounting regulations of the Securities and
                  Exchange Commission are not required under the related
                  instructions or are inapplicable and therefore have been
                  omitted.

         3 .      Exhibits

Exhibit No.       Description

3(a)              Amended and Restated Certificate of Incorporation (3(a))*

3(b)              By-laws, as amended (3(b))**

4(a)              Plan of Reorganization (2)*

4(b)              Credit Agreement dated as of March 28, 2001 between the
                  Company and Fleet National Bank, as Agent for the lenders and
                  The Bank of New York, as syndication agent

Executive Compensation Plans and Arrangements

10(a)(1)          Employment Agreement of Edward K. Christian dated April 8,
                  1997 ***

10(a)(2)          Amendment to Employment Agreement of Edward K. Christian dated
                  December 8, 1998 ******

10(b)             Saga Communications, Inc. 1992 Stock Option, as amended *****

10(c)             Summary of Executive Insured Medical Reimbursement Plan
                  (10(2)) *

10(d)             Saga Communications, Inc. 1997 Non-Employee Director Stock
                  Option Plan ****

                                      -40-
   41
Other Material Agreements

10(e)(1)          Promissory Note of Edward K. Christian dated December 10, 1992
                  (10(l)(a)) *

10(e)(2)          Amendment to Promissory Note of Edward K. Christian dated
                  December 8, 1998 ******

10(e)(3)          Loan Agreement and Promissory Note of Edward K. Christian
                  dated May 5, 1999 *******

(21)              Subsidiaries (22) *

(23)              Consent of Ernst & Young LLP

*                 Exhibit indicated in parenthesis of the Company's Registration
                  Statement on Form S-1 (File No. 33-47238) incorporated by
                  reference herein.

**                Exhibit indicated in parenthesis of the Company's Form 10-K
                  for the year ended December 31, 1992 incorporated by reference
                  herein.

***               Exhibit indicated in parenthesis of the Company's Form 10-Q
                  for the quarter ended March 31, 1997 incorporated by reference
                  herein.

****              Exhibit indicated in parenthesis of the Company's Form 10-Q
                  for the quarter ended June 30, 1997 incorporated by reference
                  herein.

*****             Exhibit indicated in parenthesis of the Company's Form 10-K
                  for the year ended December 31, 1997 incorporated by reference
                  herein.

******            Exhibit indicated in parenthesis of the Company's Form 10-K
                  for the year ended December 31, 1998 incorporated by reference
                  herein.

*******           Exhibit indicated in parenthesis of the Company's Form 10-K
                  for the year ended December 31, 1999 incorporated by
                  reference herein.

(b)               Reports on Form 8-K

                  None

                                      -41-
   42
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on March 29, 2001.

                                                     SAGA COMMUNICATIONS, INC.

                                                     By:/S/ Edward K. Christian
                                                        ------------------------
                                                          Edward K. Christian
                                                          President

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 29, 2001.

             Signatures

         /S/ Edward K. Christian                      President, Chief Executive
         ---------------------------------            Officer, and Chairman of
         Edward K. Christian                          the Board

         /S/ Samuel D. Bush                           Vice President, Chief
         ---------------------------------            Financial Officer and
         Samuel D. Bush                               Treasurer

         /S/ Catherine A. Bobinski                    Vice President, Corporate
         ---------------------------------            Controller and Chief
         Catherine A. Bobinski                        Accounting Officer

         /S/ Kristin M. Allen                         Director
         ---------------------------------
         Kristin M. Allen

         /S/ Donald J. Alt                            Director
         ---------------------------------
         Donald J. Alt

         /S/ Jonathan Firestone                       Director
         ---------------------------------
         Jonathan Firestone

         /S/ Robert J. Maccini                        Director
         ---------------------------------
         Robert J. Maccini

         /S/ Joseph P. Misiewicz                      Director
         ---------------------------------
         Joseph P. Misiewicz

         /S/ Gary Stevens                             Director
         ---------------------------------
         Gary Stevens

                                      -42-
   43
Item 14(a)1

                         Report of Independent Auditors

The Board of Directors and Stockholders
Saga Communications, Inc.

We have audited the accompanying consolidated balance sheets of Saga
Communications, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 2000. Our audits
also included the financial statement schedule listed in the index at item
14(a). These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Saga
Communications, Inc. and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

                                        /s/ Ernst & Young LLP
                                        ---------------------

Detroit, Michigan
February 16, 2001
except for notes 3 and 14, as to which the date is
March 28, 2001

   44

                            SAGA COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                                                   DECEMBER 31,
                                                                              2000              1999
                                                                            --------------------------
                                                                                        
ASSETS
Current assets:
    Cash and cash equivalents                                               $  8,670          $ 11,342
    Accounts receivable, less allowance of $730
      ($573 in 1999)                                                          19,747            18,121
    Prepaid expenses                                                           1,531             1,642
    Barter transactions                                                          972               811
    Deferred taxes                                                               442             1,224
                                                                            --------          --------
Total current assets                                                          31,362            33,140

Net property and equipment                                                    47,672            44,455

Other assets:
    Favorable lease agreements, net of accumulated amortization of
       $4,094 ($3,934 in 1999)                                                   482               613
    Excess of cost over fair value of assets acquired, net of
       accumulated amortization of $9,009 ($8,289 in 1999)
                                                                              19,788            20,508
    Broadcast licenses, net of accumulated amortization of $5,722
       ($3,984 in 1999)                                                       73,256            53,360
    Other intangibles, deferred costs and investments, net of
       accumulated amortization of $9,659 ($8,603 in 1999)
                                                                               7,346            10,420
                                                                            --------          --------
Total other assets                                                           100,872            84,901
                                                                            --------          --------
                                                                            $179,906          $162,496
                                                                            ========          ========

See accompanying notes.

                                       2
   45

                            SAGA COMMUNICATIONS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

                                                                                DECEMBER 31,
                                                                          2000                1999
                                                                        -----------------------------
                                                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
    Accounts payable                                                    $     933           $   1,417
    Accrued expenses:
       Payroll and payroll taxes                                            4,868               4,664
       Other                                                                3,150               2,867
    Barter transactions                                                     1,228               1,041
    Current portion of long-term debt                                         390                 395
                                                                        ---------           ---------
Total current liabilities                                                  10,569              10,384

Deferred income taxes                                                       8,569               6,811
Long-term debt                                                             94,251              85,379
Broadcast program rights                                                      461                 602
Other                                                                         438                 218
Commitments and contingencies                                                  --                  --

Stockholders' equity:
    Preferred stock, 1,500 shares authorized, none issued and
       outstanding                                                             --                  --
    Common stock:
       Class A common stock, $.01 par value, 35,000 shares
          authorized, 14,590 issued and outstanding                           146                 146
       Class B common stock, $.01 par value, 3,500 shares
          authorized, 1,888 issued and outstanding                             19                  19
    Additional paid-in capital                                             42,325              42,273
    Note receivable from principal stockholder                               (335)               (486)
    Retained earnings                                                      25,918              17,268
    Accumulated other comprehensive income                                     --                  33
    Treasury stock (161 shares in 2000 and 8 in 1999, at cost)
                                                                           (2,307)               (151)
    Unearned compensation on restricted stock                                (148)                 --
                                                                        ---------           ---------
Total stockholders' equity                                                 65,618              59,102
                                                                        ---------           ---------
                                                                        $ 179,906           $ 162,496
                                                                        =========           =========

See accompanying notes.

                                       3
   46

                            SAGA COMMUNICATIONS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                              YEARS ENDED DECEMBER 31,
                                                                     2000              1999              1998
                                                                   --------------------------------------------
                                                                                              
Net operating revenue                                              $101,746          $ 90,020          $ 75,871
Station operating expense:
    Programming and technical                                        22,670            20,305            16,900
    Selling                                                          25,471            23,378            20,675
    Station general and administrative                               14,346            12,869            10,969
                                                                   --------          --------          --------
       Total station operating expense                               62,487            56,552            48,544
                                                                   --------          --------          --------
    Station operating income before corporate general and
       administrative, depreciation and amortization                 39,259            33,468            27,327

Corporate general and administrative                                  5,101             5,095             4,497
Depreciation                                                          5,343             4,614             3,597
Amortization                                                          3,676             3,408             2,823
                                                                   --------          --------          --------
    Operating profit                                                 25,139            20,351            16,410

Other expenses:
    Interest expense                                                  6,793             5,988             4,609
    Other                                                             2,104               269               570
                                                                   --------          --------          --------
Income before income tax                                             16,242            14,094            11,231
Income tax provision:
    Current                                                           5,850             4,800             3,893
    Deferred                                                          1,742               742               987
                                                                   --------          --------          --------
                                                                      7,592             5,542             4,880
                                                                   --------          --------          --------
Net income                                                         $  8,650          $  8,552          $  6,351
                                                                   ========          ========          ========
Basic earnings per share                                           $    .53          $    .52          $    .40
                                                                   ========          ========          ========
Weighted average common shares                                       16,434            16,315            15,896
                                                                   ========          ========          ========
Diluted earnings per share                                         $    .52          $    .51          $    .39
                                                                   ========          ========          ========
Weighted average common and common equivalent shares                 16,792            16,665            16,238
                                                                   ========          ========          ========

See accompanying notes.

                                       4
   47

                            SAGA COMMUNICATIONS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
                                 (IN THOUSANDS)

                                                                      NOTE                 ACCUM-
                                                                   RECEIVABLE              ULATED
                                                                      FROM                 OTHER                             TOTAL
                                    CLASS A    CLASS B  ADDITIONAL  PRINCIPAL             COMPRE-              DEFERRED      STOCK
                                    COMMON     COMMON     PAID-IN     STOCK     RETAINED  HENSIVE  TREASURY     COMPEN-    HOLDERS'
                                     STOCK      STOCK     CAPITAL    HOLDER     EARNINGS   INCOME    STOCK      SATION      EQUITY
                                                                                                
BALANCE AT JANUARY 1, 1998          $    89    $    12    $36,513    $  (790)    $ 2,431    $ --    $    --     $    --     $38,255
    Comprehensive income
    Net income                                                                     6,351                                      6,351
    Foreign currency translation
     adjustment                                                                               31                                 31
                                                                                                                            -------
         Total comprehensive income                                                                                           6,382
    Net proceeds from exercised
     options                              1                   608                                                               609
    Five-for-four stock split            23          3                               (27)                                        (1)
    Accrued interest                                                     (45)                                                   (45)
    Note forgiveness                                                     187                                                    187
    Station acquisition                                       234                                                               234
    Purchase of shares held in
     treasury                                                                                          (898)                   (898)
                                    -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998            113         15     37,355       (648)      8,755      31       (898)         --      44,723
    Comprehensive income
    Net income                                                                     8,552                                      8,552
    Foreign currency translation
     adjustment                                                                                2                                  2
                                                                                                                            -------
         Total comprehensive income                                                                                           8,554
    Net proceeds from exercised
     options                              2                 2,237                                      (354)                  1,885
    Five-for-four stock split            29          4                               (35)                                        (2)
    Accrued interest                                                     (25)                                                   (25)
    Note forgiveness                                                     187                                                    187
    Station acquisitions                  2                 2,675                     (4)             1,040                   3,713
    Employee stock purchase plan                                6                                        61                      67
                                    -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1999            146         19     42,273       (486)     17,268      33       (151)         --      59,102
    Comprehensive income
    Net income                                                                     8,650                                      8,650
    Foreign currency translation
     adjustment                                                                              (33)                               (33)
                                                                                                                            -------
         Total comprehensive income                                                                                           8,617
    Issuance of restricted stock                               30                                       139        (169)         --
    Amortization of deferred
     compensation                                                                                                    21          21
    Accrued interest                                                     (23)                                                   (23)
    Note forgiveness                                                     174                                                    174
    Employee stock purchase plan                               22                                       279                     301
    Purchase of shares held in
     treasury                                                                                        (2,574)                 (2,574)
                                    -----------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2000        $   146    $    19    $42,325    $  (335)    $25,918    $ --    $(2,307)    $  (148)    $65,618
                                    ===============================================================================================

See accompanying notes.

                                       5
   48

                            SAGA COMMUNICATIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

                                                                           YEARS ENDED DECEMBER 31,
                                                                        2000         1999        1998
                                                                     ----------------------------------
                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                       $  8,650     $  8,552     $  6,351
    Adjustments to reconcile net income to net cash provided by
       operating activities:
          Depreciation and amortization                                 9,019        8,022        6,420
          Barter revenue, net of barter expenses                          (81)         (53)          56
          Broadcast program rights amortization                           438          386          212
          Deferred taxes                                                1,742          742          987
          Loss (gain) on sale of assets                                   238         (485)          26
          Equity in loss of unconsolidated affiliate                      600          800          560
          Loss on sale of stock of unconsolidated affiliate             1,266           --           --
          Note forgiveness                                                174          187          187
          Amortization of deferred compensation and other
                                                                           21           --          (19)
          Changes in assets and liabilities:
              Increase in receivables and prepaids                     (1,122)      (2,346)      (2,045)
              Payments for broadcast program rights                      (434)        (398)        (214)
              Increase in accounts payable, accrued expenses, and
                 other liabilities                                        563        1,074          406
                                                                     --------     --------     --------
              Total adjustments                                        12,424        7,929        6,576
                                                                     --------     --------     --------
Net cash provided by operating activities                              21,074       16,481       12,927

CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment                              (5,401)      (5,177)      (3,003)
    Increase in other intangibles and other assets                     (1,770)      (2,323)      (4,120)
    Acquisition of stations                                           (25,145)     (20,870)     (10,160)
    Proceeds from sale of assets                                        2,277          619            5
                                                                     --------     --------     --------
Net cash used in investing activities                                 (30,039)     (27,751)     (17,278)

CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from long-term debt                                       13,524       14,500       12,287
    Payments on long-term debt                                         (4,657)        (231)      (2,986)
    Purchase of shares held in treasury                                (2,574)          --         (898)
    Net proceeds from exercise of stock options                            --        1,681          404
    Fractional shares - five for four stock split                          --           (2)          (1)
                                                                     --------     --------     --------
Net cash provided by financing activities                               6,293       15,948        8,806
                                                                     --------     --------     --------
Net increase (decrease) in cash and cash equivalents
                                                                       (2,672)       4,678        4,455
Cash and cash equivalents, beginning of year                           11,342        6,664        2,209
                                                                     --------     --------     --------
Cash and cash equivalents, end of year                               $  8,670     $ 11,342     $  6,664
                                                                     ========     ========     ========

See accompanying notes.

                                       6
   49

                            Saga Communications, Inc.
                   Notes to Consolidated Financial Statements

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS

Saga Communications, Inc. is a broadcasting company whose business is devoted to
acquiring, developing and operating broadcast properties. As of December 31,
2000 the Company owned or operated forty-eight radio stations, four television
stations, two low power television stations, two state radio networks and 1 farm
radio network, serving sixteen markets throughout the United States including
Columbus, Ohio; Milwaukee, Wisconsin; and Norfolk, Virginia.

BASIS OF PRESENTATION

On December 15, 1999 the Company consummated a five-for-four split of its Class
A and Class B Common Stock, resulting in additional shares being issued of
2,918,000 and 378,000, respectively, for holders of record on November 30, 1999.

On May 29, 1998 the Company consummated a five-for-four split of its Class A and
Class B Common Stock, resulting in additional shares being issued of 2,240,000
and 302,000, respectively, for holders of record on May 15, 1998.

All share and per share information in the accompanying financial statements has
been restated retroactively to reflect the splits.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Saga
Communications, Inc. and its wholly-owned subsidiaries. All significant
inter-company balances and transactions have been eliminated in consolidation.
The Company sold its equity investment in six FM radio stations in Iceland (the
"Iceland radio stations") in June 2000.

USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

RECLASSIFICATION

Certain amounts previously reported in the 1999 and 1998 financial statements
have been reclassified to conform to the 2000 presentation.

                                       7
   50

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are carried at cost. Depreciation is provided using the
straight-line method over five to thirty-one and one-half years.

INTANGIBLE ASSETS

Intangible assets are amortized using the straight-line method. Favorable lease
agreements are amortized over the lives of the leases. The excess of cost over
fair value of identifiable assets acquired and broadcast licenses are amortized
over forty years. Other intangibles are amortized over five to forty years.

The Company periodically assesses the recoverability of the cost of its
intangible assets based on a review of projected undiscounted cash flows of the
related station. If this review indicates that goodwill will not be recoverable,
the Company's carrying value of goodwill would be reduced by the estimated
shortfall of discounted cash flows using an interest rate commensurate with the
risk involved. To date, no such reductions in goodwill have been recorded.

BROADCAST PROGRAM RIGHTS

The Company records the capitalized costs of broadcast program rights when the
license period begins and the programs are available for use. Amortization of
the program rights is recorded using the straight-line method over the license
period or based on the number of showings. Amortization of broadcast program
rights is included in station operating expense. Unamortized broadcast program
rights are classified as current or non-current based on estimated usage in
future years.

FINANCIAL INSTRUMENTS

The Company's financial instruments are comprised of cash and cash equivalents
and long-term debt. The carrying value of long-term debt approximates fair value
as it carries interest rates that either fluctuate with prime or have been reset
at the prevailing market rate at December 31, 2000.

The Company has three interest rate swap and cap agreements which are its only
derivatives. See note 3.

                                       8
   51

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FINANCIAL INSTRUMENTS (CONTINUED)

The Company enters into interest-rate swap agreements to modify the interest
characteristics of its outstanding debt. Each interest rate swap agreement is
designated with all or a portion of the principal balance and term of a specific
debt obligation. These agreements involve the exchange of amounts based on a
fixed interest rate for amounts based on variable interest rates over the life
of the agreement without an exchange of the notional amount upon which the
payments are based. The differential to be paid or received as interest rates
change is accrued and recognized as an adjustment of the interest expense
related to the debt (the accrual accounting method). The related amount payable
to or receivable from counterparties is included in other liabilities or assets.
The fair values of the swap agreements are not recognized in the financial
statements. Gains and losses on terminations of interest-rate swap agreements
are deferred as an adjustment to interest expense related to the debt over the
remaining term of the original contract life of the terminated swap agreement.
In the event of the early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the swap would be recognized in income
in connection with the extinguishment. Any swap agreements that are not
designated with outstanding debt or notional amounts (or durations) of
interest-rate swap agreements in excess of the principal amounts (or maturities)
of the underlying debt obligations are recorded as an asset or liability at fair
value, with changes in fair value recorded in other income or expense (the fair
value method).

FOREIGN CURRENCY TRANSLATION

The initial investment in the Iceland radio stations was translated into U.S.
dollars at the current exchange rate. Resulting translation adjustments were
reflected as a separate component of stockholders' equity. Transaction gains and
losses that arose from exchange rate fluctuations on transactions denominated in
a currency other than the functional currency were included in the results of
operations as incurred.

                                       9
   52

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

TREASURY STOCK

In September 2000, the Company modified its Stock Buy-Back Program (the
"Buy-Back Program") to allow the Company to purchase up to $6,000,000 of its
Class A Common Stock. The Company's repurchases of shares of its Common Stock
are recorded as Treasury Stock and result in a reduction of Stockholders'
Equity. During 2000 and 1999, the Company acquired 180,480 shares at an average
price of $14.27 per share and 20,308 shares at an average price of $17.43 per
share, respectively. During 2000, the Company issued 26,989 shares of Treasury
Stock in connection with its employee stock purchase plan and restricted stock
issued to an employee. During 1999 the Company issued 67,779 shares of Treasury
Stock in connection with its acquisitions of broadcast properties and its
employee stock purchase plan.

REVENUE RECOGNITION

Revenue is recognized as commercials are broadcast.

BARTER TRANSACTIONS

The Company trades air time for goods and services used principally for
promotional, sales and other business activities. An asset and a liability are
recorded at the fair market value of goods or services received. Barter revenue
is recorded when commercials are broadcast, and barter expense is recorded when
goods or services are received or used.

ADVERTISING AND PROMOTION COSTS

Advertising and promotion costs are expensed as incurred. Such costs amounted to
approximately $6,436,000, $6,195,000 and $5,579,000 for the years ended December
31, 2000, 1999 and 1998, respectively.

                                       10
   53

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:

                                                            YEARS ENDED DECEMBER 31,
                                                        2000          1999          1998
                                                       -------       -------       -------
                                                                 (In thousands)
                                                                          
Numerator:
    Net income available to common stockholders        $ 8,650       $ 8,552       $ 6,351
                                                       =======       =======       =======
Denominator:
    Denominator for basic earnings per share
       weighted average shares                          16,434        16,315        15,896
    Effect of dilutive securities:
       Stock options                                       358           350           342
                                                       -------       -------       -------
    Denominator for diluted earnings per share -
          adjusted weighted-average shares and
          assumed conversions
                                                        16,792        16,665        16,238
                                                       =======       =======       =======
Basic earnings per share                               $   .53       $   .52       $   .40
                                                       =======       =======       =======
Diluted earnings per share                             $   .52       $   .51       $   .39
                                                       =======       =======       =======

RECENT ACCOUNTING PRONOUNCEMENTS

Statement of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting
for Derivative Instruments and Hedging Activities", as amended by SFAS 137 and
138, becomes effective for all fiscal quarters for all fiscal years beginning
after June 30, 2000. The Company adopted SFAS 133 on January 1, 2001. SFAS 133
will require the Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in fair value of derivatives will either be offset against the
change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. Based on the Company's
derivative positions at December 31, 2000, upon adoption of SFAS 133 the Company
will record a loss from the cumulative effect of an accounting change of
approximately $93,000, net of an applicable tax benefit of approximately
$50,000, in the statement of income and an increase of $93,000 in other
comprehensive income.

                                       11
   54

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial Statements". SAB
101 provides guidance for revenue recognition and disclosure in financial
statements under certain circumstances. The accounting and disclosures
prescribed by SAB 101 are effective for the fourth quarter of fiscal year 2000.
There was no material impact resulting from the application of SAB 101.

2.   PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

                                                               DECEMBER 31,
                                                           2000            1999
                                                         --------        --------
                                                               (In thousands)
                                                                   
    Land and land improvements                           $  8,968        $  8,355
    Buildings                                              14,904          13,479
    Towers and antennae                                    16,529          15,936
    Equipment                                              48,657          43,886
    Furniture, fixtures and leasehold improvements          5,999           5,590
    Vehicles                                                1,958           1,745
                                                         --------        --------
                                                           97,015          88,991
    Accumulated depreciation                              (49,343)        (44,536)
                                                         --------        --------
Net property and equipment                               $ 47,672        $ 44,455
                                                         ========        ========

                                       12
   55

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

3.   LONG-TERM DEBT

Long-term debt consists of the following:                                  DECEMBER 31,
                                                                        2000          1999
                                                                       -------       -------
                                                                           (In thousands)
                                                                               
Credit Agreement:
    Senior secured term loan facility                                  $70,000       $70,000
    Senior secured acquisition loan facility                            23,750        10,250
    Senior secured revolving term loan facility                             --         4,250
Subordinated promissory note. Payments are due monthly including
    interest at 10%. The note matures in 2004                              325           401
Other, primarily covenants not to compete                                  566           873
                                                                       -------       -------
                                                                        94,641        85,774
Amounts due within one year                                                390           395
                                                                       -------       -------
                                                                       $94,251       $85,379
                                                                       =======       =======

Future maturities of long-term debt are as follows:

           Year Ending December 31,            (In Thousands)
           ------------------------
                     2001                         $    390
                     2002                              273
                     2003                           11,901
                     2004                           11,764
                     2005                           14,063
                  Thereafter                        56,250
                                                  --------
                                                  $ 94,641
                                                  ========

                                       13
   56

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

3.   LONG-TERM DEBT (CONTINUED)

The senior secured term loan facility has a total commitment of $70,000,000,
while the senior secured acquisition loan facility has a total commitment of
$60,000,000. Each is secured by all assets of the Company and subsidiary stock
and guarantees. Interest on amounts outstanding is at a Eurodollar rate (6.6875%
at December 31, 2000) plus a margin ranging from 1.0% to 1.75%. All interest is
due quarterly. The maximum commitment and amounts outstanding under the term and
acquisition facilities reduce by 10% in 2001, 15% in 2002, 17.5% in 2003, 20% in
2004, 22.5% in 2005, and 15% in 2006, based on the original commitment of
$70,000,000 and $60,000,000, respectively. (See note 14.) In addition, each
facility may be further reduced by specified percentages of Excess Cash Flow (as
defined in the Credit Agreement) based on leverage ratios. The Credit Agreement
also requires a commitment fee of 0.375% to 0.5% per annum on the daily average
amount of the available acquisition facility. Both the term facility and the
acquisition facility mature on June 30, 2006.

The senior secured revolving term loan facility has a total commitment of
$20,000,000 and is secured by all assets of the Company and subsidiary stock and
guarantees. Interest on amounts outstanding is at a Eurodollar rate plus a
margin ranging from 1.0% to 1.75%. All interest is due quarterly. In addition,
the revolving term facility may be further reduced by specified percentages of
Excess Cash Flow (as defined in the Credit Agreement) based on leverage ratios.
The loan agreement also requires a commitment fee of 0.375% to 0.5% per annum on
the daily average amount of the available revolving term loan facility. This
facility matures on June 30, 2006.

Interest rates under the term, acquisition and revolving facilities are payable
at the Company's option, at alternatives equal to a Eurodollar rate plus 1.0% to
1.75% or the Agent bank's base rate plus 0% to 0.75%. The spread over the
Eurodollar rate and the base rate vary from time to time, depending upon the
Company's financial leverage.

The term, acquisition and revolving facilities contain a number of covenants
(all of which the Company was in compliance with at December 31, 2000) that,
among other things, require the Company to maintain specified financial ratios
and impose certain limitations on the Company with respect to (i) the incurrence
of additional indebtedness; (ii) acquisitions, except under specified
conditions; (iii) the incurrence of additional liens, except those relating to
capital leases and purchase money indebtedness; (iv) the disposition of assets;
(v) the payment of cash dividends; and (vi) mergers, changes in business and
management, investments and transactions with affiliates. The Credit Agreement
prohibits the payment of dividends without the banks' prior consent.

                                       14
   57

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

3.   LONG-TERM DEBT (CONTINUED)

The Company amended the Credit Agreement on March 28, 2001. Under the terms of
the amended Credit Agreement the Term and Acquisition Facilities will reduce by
12.5% in 2003, 12.5% in 2004, 15% in 2005, 17.5% in 2006, 20% in 2007 and 22.5%
in 2008. At December 31, 2000 the Company has classified its current and
non-current portion of long-term debt in accordance with the amended Credit
Agreement.

At December 31, 2000, the Company had an interest rate swap agreement with a
total notional amount of $24,500,000. In connection with this agreement, the
Company also had an interest rate cap under the same terms with a fixed price of
7.45%. In March 2001, the Company amended this agreement to terminate the
interest rate cap portion of the agreement effective March 30, 2001 (See note
14). The swap agreement will be used to convert the variable Eurodollar interest
rate of a portion of its bank borrowings to a fixed interest rate. The swap
agreement was entered into to reduce the risk to the Company of rising interest
rates. In accordance with the terms of the swap agreement, the Company pays
6.875% calculated on the $24,500,000 notional amount. The Company receives LIBOR
(6.66% at December 31, 2000) calculated on the notional amount of $24,500,000.
The interest rate cap agreement requires that if LIBOR is greater than 7.45% on
any reset date the Company will pay the difference between 7.45% and the LIBOR
rate at the reset date calculated on the notional amount of $24,500,000. As a
result of this combination, the Company will pay a rate of 6.875% with benefits
up to 7.45%. Should LIBOR increase above 7.45%, the Company will pay LIBOR less
a 31.5 basis point benefit. Net receipts or payments under the agreements are
recognized as an adjustment to interest expense. The swap agreement expires in
September 2001. The fair value of the swap and interest rate cap agreements at
December 31, 2000 was approximately ($176,000), estimated using discounted cash
flows analyses, based on a discount rate equivalent to a U.S. Treasury security
with a comparable remaining maturity plus a 50 basis point spread for credit
risk and other factors.

                                       15
   58

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

3.   LONG-TERM DEBT (CONTINUED)

At December 31, 2000, the Company had two other interest rate swap agreements
with a total notional amount of $24,500,000. In connection with these
agreements, the Company also sold two interest rate caps under the same terms
with a fixed price of 6.0%. In March 2001, the Company amended this agreement to
terminate the interest rate cap portion of the agreement effective March 30,
2001 (See note 14). The swap agreements will be used to convert the variable
Eurodollar interest rate of a portion of its bank borrowings to a fixed interest
rate. The swap agreements were entered into to reduce the risk to the Company of
rising interest rates. In accordance with the terms of the swap agreements, the
Company pays 5.685% calculated on the $24,500,000 notional amount. The Company
receives LIBOR (6.66% at December 31, 2000) calculated on the notional amount of
$24,500,000. The interest rate cap agreement requires that if LIBOR is greater
than 6.00% on any reset date the Company will pay the difference between 6.00%
and the LIBOR rate at the reset date calculated on the notional amount of
$24,500,000. As a result of this combination, the Company will pay a rate of
5.685% with benefits up to 6%. Should LIBOR increase above 6.00%, the Company
will pay LIBOR less a 31.5 basis point benefit. Net receipts or payments under
the agreements are recognized as an adjustment to interest expense. The swap
agreements expire in September 2001. The fair value of the swap and interest
rate cap agreements was approximately $33,000 and $94,000 at December 31, 2000
and 1999, respectively, estimated using discounted cash flows analyses, based on
a discount rate equivalent to a U.S. Treasury security with a comparable
remaining maturity plus a 50 basis point spread for credit risk and other
factors.

                                       16
   59

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

4.   SUPPLEMENTAL CASH FLOW INFORMATION

For the purposes of the statements of cash flows, cash and cash equivalents
include temporary investments with maturities of three months or less.

                                                   YEARS ENDED DECEMBER 31,
                                                2000         1999         1998
                                               ------       ------       ------
                                                         (In thousands)
                                                                
Cash paid during the period for:
Interest                                       $6,654       $5,837       $4,930
Income taxes                                    6,004        3,553        4,124

Non-cash transactions:
Barter revenue                                 $2,308       $2,205       $1,835
Barter expense                                  2,227        2,152        1,891
Acquisition of property and equipment              62           85           18

In conjunction with the acquisition of the net assets of broadcasting companies,
liabilities were assumed as follows:

                                                 YEARS ENDED DECEMBER 31,
                                             2000          1999          1998
                                           --------      --------      --------
                                                      (In thousands)
                                                              
Fair value of assets acquired              $ 25,496      $ 26,010      $ 10,770
Cash paid                                   (25,145)      (20,870)      (10,160)
Issuance of restricted stock                     --        (3,713)           --
                                           --------      --------      --------
Liabilities assumed                        $    351      $  1,427      $    610
                                           ========      ========      ========

                                       17
   60

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

5.   INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:

                                              DECEMBER 31,
                                           2000         1999
                                          ------       ------
                                             (In thousands)
                                                 
Deferred tax liabilities:
    Property and equipment                $5,040       $4,633
    Intangible assets                      3,529        2,468
                                          ------       ------
Total deferred tax liabilities             8,569        7,101

Deferred tax assets:
    Allowance for doubtful accounts          248          195
    Compensation                             630          439
    Loss carry forwards                    1,288        1,343
                                          ------       ------
                                           2,166        1,977
Less: valuation allowance                    927          463
                                          ------       ------
Total net deferred tax assets              1,239        1,514
                                          ------       ------
Net deferred tax liabilities              $7,330       $5,587
                                          ======       ======

At December 31, 2000, the Company has state tax loss carry forwards, which will
expire from 2003 to 2014 and a capital loss carry forward, which will expire in
2005. The valuation allowance for net deferred tax assets increased by $464,000
related to a capital loss incurred during 2000. SFAS No. 109 requires that
deferred tax assets be reduced by a valuation allowance if it is more likely
than not that some portion or all of the deferred tax asset will not be
realized.

                                       18
   61

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

5.   INCOME TAXES (CONTINUED)

The significant components of the provision for income taxes are as follows:

                                                                   YEARS ENDED DECEMBER 31,
                                                               2000         1999         1998
                                                              ------       ------       ------
                                                                       (In thousands)
                                                                               
Current:
    Federal                                                   $4,664       $3,701       $2,920
    State                                                      1,186        1,099          973
                                                              ------       ------       ------
Total current                                                  5,850        4,800        3,893

Total deferred                                                 1,742          742          987
                                                              ------       ------       ------
                                                              $7,592       $5,542       $4,880
                                                              ======       ======       ======

The reconciliation of income tax at the U. S. federal statutory tax rates to
income tax expense is as follows:

                                                                    YEARS ENDED DECEMBER 31,
                                                               2000          1999           1998
                                                              -------       -------        -------
                                                                         (In thousands)
                                                                                  
Tax at U.S. statutory rates                                   $ 5,522       $ 4,792        $ 3,819
State taxes, net of federal benefit                             1,329           811            642
Amortization of excess of cost over fair value of
    assets acquired                                               200           187            188
Other, net                                                         77            70             41
Increase (reduction) of valuation allowance on loss
    carry forwards                                                464          (318)           190
                                                              -------       -------        -------
                                                              $ 7,592       $ 5,542        $ 4,880
                                                              =======       =======        =======

                                       19
   62

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

6.   STOCK OPTION PLANS

In 1992, the Company adopted the 1992 Stock Option Plan (the "Plan") pursuant to
which key employees of the Company, including directors who are employees, are
eligible to receive grants of options to purchase Class A Common Stock or Class
B Common Stock. At December 31, 2000, approximately 728,000 shares of Common
Stock are reserved for issuance under the Plan. Options granted under the Plan
may be either incentive stock options (within the meaning of Section 422A of the
Internal Revenue Code of 1986) or non-qualified options. Incentive stock options
granted under the Plan may be for terms not exceeding ten years from the date of
grant, except in the case of incentive stock options granted to persons owning
more than 10% of the total combined voting power of all classes of stock of the
Company, which may be granted for terms not exceeding five years. These options
may not be granted at a price which is less than 100% of the fair market value
of shares at the time of grant (110% in the case of persons owning more than 10%
of the combined voting power of all classes of stock of the Company). The terms
and price of non-qualified stock options granted pursuant to the Plan shall be
determined by the Compensation Committee.

In 1997, the Company adopted the 1997 Non-Employee Director Stock Option Plan
(the "Directors Plan") pursuant to which directors of the Company who are not
employees of the Company are eligible to receive options. Under the terms of the
Directors Plan, on the last business day of January of each year during the term
of the Directors Plan, in lieu of their directors' retainer for the previous
year, each eligible director shall automatically be granted an option to
purchase that number of shares of the Company's Class A Common Stock equal to
the amount of the retainer divided by the fair market value of the Company's
Common Stock on the last trading day of the December immediately preceding the
date of grant less $.01 per share. The option exercise price is $.01 per share.
At December 31, 2000, approximately 148,000 shares of common stock are reserved
for issuance under the Directors Plan. Options granted under the Directors Plan
are non-qualified stock options and shall be immediately vested and exercisable
on the date of grant. The options may be exercised for a period of 10 years from
the date of grant of the option. On January 31, 2001 a total of 3,713 shares
were issued under the Directors Plan in lieu of their directors' retainer for
the year ended December 31, 2000.

                                       20
   63

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

6.   STOCK OPTION PLANS (CONTINUED)

The Company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations, in accounting
for its employee and non-employee director stock options. Under APB 25, when the
exercise price of the Company's employee stock options equals or exceeds the
market price of the underlying stock on the date of grant, no compensation
expense is recognized. Total compensation costs recognized in the income
statement for stock based compensation awards to employees for the years ended
December 31, 2000, 1999 and 1998, was $52,000, $143,000 and $196,000,
respectively. Total Directors fees recognized in the income statement for stock
based compensation awards for the years ended December 31, 2000, 1999 and 1998,
was $55,000, $62,000 and $50,000, respectively.

In October 1995 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123 ("Statement 123"), "Accounting
for Stock-Based Compensation." This standard defines a fair value based method
of accounting for an employee stock option or similar equity instrument.

Pro forma information regarding net income and earnings per share is required by
Statement 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of that Statement. The fair
value of the Company's stock options were estimated as of the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 2000, 1999, and 1998, respectively: risk-free interest rates of
5.3%, 6.4% and 4.7%, a dividend yield of 0%; expected volatility of 28.6%, 27.9%
and 28.9%, and a weighted average expected life of the options of 7 years. Under
these assumptions, the weighted average fair value of an option to purchase one
share granted in 2000, 1999 and 1998, was approximately $8.92, $7.17 and $5.53,
respectively.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion the existing models do not necessarily provide a reliable single measure
of the fair value of its employee stock options.

                                       21
   64

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

6.   STOCK OPTION PLANS (CONTINUED)

For purposes of the pro forma disclosures required under Statement 123, the
estimated fair value of the options is amortized to expense over the options'
vesting period. The Company's pro forma information is as follows:

                                                          2000          1999           1998
                                                         -------------------------------------
                                                           (In thousands except per share data)
                                                                            
    Pro forma net income                                 $ 7,802       $ 7,848       $   5,710
                                                         =======       =======       =========
    Pro forma earnings per share:
       Basic                                             $   .47       $   .48       $     .36
                                                         =======       =======       =========
       Diluted                                           $   .46       $   .47       $     .35
                                                         =======       =======       =========

The following summarizes the Plan stock option transactions for the three years
ended December 31, 2000.

                                                                                      WEIGHTED
                                                 NUMBER                                AVERAGE
                                                   OF           EXERCISE PRICE        PRICE PER
                                                 OPTIONS           PER SHARE            SHARE
                                                ----------------------------------------------
                                                                             
Options outstanding at January 1, 1998           706,063    $  1.740   To   $  9.280   $  3.97
Granted                                          675,998                      13.200     13.20
Exercised                                        (96,745)      3.390   To      5.000      3.69
Forfeited                                        (29,738)      1.740   To     13.200      7.64
                                               -----------------------------------------------
Options outstanding at December 31, 1998       1,255,578       1.740   To      9.280      8.87
Granted                                          187,572                      15.900     15.90
Exercised                                       (299,706)      1.740   To      9.280      3.76
Forfeited                                             --                                    --
                                               -----------------------------------------------
Options outstanding at December 31, 1999       1,143,444       1.740   To     15.900     11.37
Granted                                          185,755      20.000   To     21.000     20.79
Exercised                                             --                                    --
Forfeited                                         (1,681)                     21.000     21.00
                                               -----------------------------------------------
Options outstanding at December 31, 2000       1,327,518    $  1.740   To   $ 21.000   $ 12.68
                                               ===============================================

                                       22
   65

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

6.   STOCK OPTION PLANS (CONTINUED)

The following summarizes the Directors Plan stock option transactions for the
three years ended December 31, 2000.

                                                                                WEIGHTED
                                                 NUMBER                          AVERAGE
                                                   OF        EXERCISE PRICE     PRICE PER
                                                 OPTIONS        PER SHARE         SHARE
                                                                       
Options outstanding at January 1, 1998                --                              --
Granted                                            2,452               $ .006     $ .006
Exercised                                             --                              --
Forfeited                                             --                              --
                                                 ---------------------------------------
Options outstanding at December 31, 1998           2,452       --      $ .006     $ .006
Granted                                            3,042                 .008       .008
Exercised                                             --                              --
Forfeited                                             --                              --
                                                 ---------------------------------------
Options outstanding at December 31, 1999           5,494   $ .006  To  $ .008     $ .007
Granted                                            3,048                 .010       .010
Exercised                                             --                              --
Forfeited                                             --                              --
                                                 ---------------------------------------
Options outstanding at December 31, 2000           8,542   $ .006  To  $ .010     $ .008
                                                 =======================================

The following summarizes stock options exercisable and available for the three
years ended December 31, 2000:

                                              THE              THE DIRECTORS
                                             PLAN                  PLAN
                                         ----------------------------------------
                                                         
Options exercisable at December 31:
         2000                                 576,915                 8,542
         1999                                 384,227                 5,494
         1998                                 479,590                 2,452

Available for grant at December 31:
         2000                                 728,383               147,708
         1999                                 912,457               150,756
         1998                               1,100,029               153,798

                                       23
   66

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

6.   STOCK OPTION PLANS (CONTINUED)

Stock options outstanding in the Plan at December 31, 2000 are summarized as
follows:

                                                                             Weighted Average
               Exercise   Options Outstanding   Options Exercisable     Remaining Contractual
                  Price                                                                  Life
    -------------------- --------------------- --------------------- -------------------------
                                                            
              $  1.74                 37,827                 37,827                      4.2
              $  3.40                156,360                156,360                      2.9
              $  5.00                 52,595                 52,595                      3.2
              $  7.29                 15,622                 11,326                      5.2
              $  9.28                 28,904                 15,467                      6.3
              $ 13.20                664,564                265,826                      7.2
              $ 15.90                187,572                 37,514                      8.2
              $ 20.00                 25,209                     --                      9.2
              $ 21.00                158,865                     --                      9.2
                         --------------------- --------------------- -------------------------
                                   1,327,518                576,915                      6.8
                         ===================== ===================== =========================
   Weighted Average
    Exercise Price                    $12.68                 $9.00
                         ===================== =====================

Stock options outstanding in the Directors Plan at December 31, 2000 are
summarized as follows:

                                                                                 Weighted Average
                   Exercise   Options Outstanding   Options Exercisable     Remaining Contractual
                      Price                                                                  Life
        -------------------- --------------------- --------------------- -------------------------
                                                                
               $ 0.006                     2,452                 2,452                       7.1
               $ 0.008                     3,042                 3,042                       8.1
               $ 0.010                     3,048                 3,048                       9.1
                             --------------------- --------------------- -------------------------
                                           8,542                 8,542                       8.1
                             ===================== ===================== =========================
       Weighted Average
        Exercise Price                   $0.008                $0.008
                             ===================== =====================

                                       24
   67

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

7.   EMPLOYEE BENEFIT PLANS

401(k) PLAN

The Company has a defined contribution pension plan ("401(k) Plan") that covers
substantially all employees. Employees can elect to have a portion of their
wages withheld and contributed to the plan. The 401(k) Plan also allows for a
discretionary contribution by the Company. Total expense under the 401(k) Plan
was approximately $180,000, $170,000 and $140,000 in 2000, 1999 and 1998,
respectively.

EMPLOYEE STOCK PURCHASE PLAN

In 1999 the Company's stockholders approved the Employee Stock Purchase Plan
("ESPP") under which 1,250,000 shares of the Company's Class A Common Stock
could be sold to the Company's employees. The ESPP was effective July 1, 1999.
Each quarter, an eligible employee may elect to withhold up to 10 percent of his
or her compensation to purchase shares of the Company's stock at a price equal
to 85 percent of the fair value of the stock as of the last day of such quarter.
The ESPP will terminate on the earlier of the issuance of 1,250,000 shares
pursuant to the ESPP or December 31, 2008. There were 16,809 and 3,309 shares
issued under the ESPP in 2000 and 1999, respectively. Compensation expense
recognized related to the ESPP for the years ended December 31, 2000 and 1999
was approximately $45,000 and $10,000, respectively.

DEFERRED COMPENSATION PLAN

In 1999 the Company established a Nonqualified Deferred Compensation Plan which
allows officers and certain management employees to annually elect to defer a
portion of their compensation, on a pre-tax basis, until their retirement. The
retirement benefit to be provided is based on the amount of compensation
deferred and any earnings thereon. Deferred compensation expense for the years
ended December 31, 2000 and 1999 was approximately $300,000 and $101,000,
respectively. The Company has invested in company-owned life insurance policies
to assist in funding these programs. The cash surrender values of these policies
are in a rabbi trust and are recorded as assets of the Company.

                                       25
   68

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

8.   PRO FORMA FINANCIAL INFORMATION (UNAUDITED)

ACQUISITIONS

On January 1, 2000, the Company acquired two FM and one AM radio station
(KICD-AM/FM and KLLT-FM) serving the Spencer, Iowa market for approximately
$6,400,000.

On July 17, 2000, the Company acquired an FM radio station (WKIO-FM) serving the
Champaign-Urbana, Illinois market for approximately $6,800,000.

On August 30, 2000, the Company acquired an AM and FM radio station (WHMP-AM and
WLZX-FM) serving the Northampton, Massachusetts market for approximately
$12,000,000.

On January 1, 1999, the Company acquired an AM and FM radio station (KAFE-FM and
KPUG-AM), serving the Bellingham, Washington market for approximately
$6,350,000.

On January 14, 1999, the Company acquired a regional and state farm information
network (The Michigan Farm Radio Network) for approximately $1,660,000,
approximately $1,036,000 of which was paid in the Company's Class A Common
Stock.

On April 1, 1999, the Company acquired KAVU-TV (an ABC affiliate) and a low
power Univision affiliate, serving the Victoria, Texas market for approximately
$10,700,000, approximately $1,840,000 of which was paid in the Company's Class A
Common Stock. The Company also assumed an existing Local Marketing Agreement for
KVCT-TV (a Fox affiliate).

On May 1, 1999, the Company acquired an AM radio station (KIXT-AM) serving the
Bellingham, Washington market for approximately $1,000,000.

On July 1, 1999, the Company acquired WXVT-TV (a CBS affiliate) serving the
Greenville, Mississippi market for approximately, $5,200,000, approximately
$600,000 of which was paid in the Company's Class A Common Stock.

                                       26
   69

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

8.   PRO FORMA FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)

ACQUISITIONS (CONTINUED)

All acquisitions have been accounted for as purchases and, accordingly, the
total costs were allocated to the acquired assets including broadcast licenses
and other intangibles and assumed liabilities based on their estimated fair
values as of the acquisition dates. The excess of the consideration paid over
the estimated fair value of net assets acquired has been recorded as goodwill.
The consolidated statements of income include the operating results of the
acquired businesses from their respective dates of acquisition or operation
under the terms of local marketing agreements.

The following unaudited pro forma results of operations of the Company for the
years ended December 31, 2000 and 1999 assume the acquisitions occurred as of
January 1, 1999. The pro forma results give effect to certain adjustments,
including depreciation, amortization of intangible assets, increased interest
expense on acquisition debt and related income tax effects. The pro forma
results have been prepared for comparative purposes only and do not purport to
indicate the results of operations which would actually have occurred had the
combinations been in effect on the dates indicated, or which may occur in the
future.

                                                            2000        1999
                                                          --------    --------
                                                        (In thousands except per
                                                               share data)
                                                                
PRO FORMA RESULTS OF OPERATIONS FOR ACQUISITIONS:
    Net operating revenue                                 $103,930    $ 97,972
    Net income                                            $  8,185    $  8,148
    Basic earnings per share                              $    .50    $    .50
    Diluted earnings per share                            $    .49    $    .49

9.   CONCENTRATION OF CREDIT RISK

The Company sells advertising to local and national companies throughout the
United States. The Company performs ongoing credit evaluations of its customers
and generally does not require collateral. The Company maintains an allowance
for doubtful accounts at a level which management believes is sufficient to
cover potential credit losses.

                                       27
   70

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

10.  NOTE RECEIVABLE FROM PRINCIPAL STOCKHOLDER

The loan from the Company to the principal stockholder bears interest at a rate
per annum equal to the lowest rate necessary to avoid the imputation of income
for federal income tax purposes. As part of a five year employment agreement
with the principal stockholder, the Company will forgive 20% of the note balance
ratably over five years, and pay him an amount in cash equal to such amount as
is necessary to enable the principal stockholder or his estate to pay all
related federal and state income tax liabilities. The Company recorded
compensation expense of approximately $331,000, $314,000 and $326,000 in 2000,
1999 and 1998, respectively, relative to the agreement.

11.  COMMON STOCK

Dividends. Stockholders are entitled to receive such dividends as may be
declared by the Company's Board of Directors out of funds legally available for
such purpose. However, no dividend may be declared or paid in cash or property
on any share of any class of Common Stock unless simultaneously the same
dividend is declared or paid on each share of the other class of common stock.
In the case of any stock dividend, holders of Class A Common Stock are entitled
to receive the same percentage dividend (payable in shares of Class A Common
Stock) as the holders of Class B Common Stock receive (payable in shares of
Class B Common Stock). The payment of dividends is prohibited by the terms of
the Company's bank loan agreement, without the banks' prior consent.

Voting Rights. Holders of shares of Common Stock vote as a single class on all
matters submitted to a vote of the stockholders, with each share of Class A
Common Stock entitled to one vote and each share of Class B Common Stock
entitled to ten votes, except (i) in the election for directors, (ii) with
respect to any "going private" transaction between the Company and the principal
stockholder, and (iii) as otherwise provided by law.

In the election of directors, the holders of Class A Common Stock, voting as a
separate class, are entitled to elect two of the Company's directors. The
holders of the Common Stock, voting as a single class with each share of Class A
Common Stock entitled to one vote and each share of Class B Common Stock
entitled to ten votes, are entitled to elect the remaining directors. The Board
of Directors consisted of six members at December 31, 2000. Holders of Common
Stock are not entitled to cumulative votes in the election of directors.

The holders of the Common Stock vote as a single class with respect to any
proposed "going private" transaction with the principal stockholder, with each
share of each class of Common Stock entitled to one vote per share.

                                       28
   71

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

11.  COMMON STOCK (CONTINUED)

Under Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares of any class of common stock is required to approve, among
other things, a change in the designations, preferences and limitations of the
shares of such class of common stock.

Liquidation Rights. Upon liquidation, dissolution, or winding-up of the Company,
the holders of Class A Common Stock are entitled to share ratably with the
holders of Class B Common Stock in all assets available for distribution after
payment in full of creditors.

Other Provisions. Each share of Class B Common Stock is convertible, at the
option of its holder, into one share of Class A Common Stock at any time. One
share of Class B Common Stock converts automatically into one share of Class A
Common Stock upon its sale or other transfer to a party unaffiliated with the
principal stockholder or, in the event of a transfer to an affiliated party,
upon the death of the transferor.

12.  COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases certain land, buildings and equipment under noncancellable
operating leases. Rent expense for the year ended December 31, 2000 was
$1,356,000 ($1,332,000 and $1,353,000 for the years ended December 31, 1999 and
1998, respectively). Minimum annual rental commitments under noncancellable
operating leases consisted of the following at December 31, 2000 (in thousands):

             2001                  $1,003
             2002                     852
             2003                     515
             2004                     228
             2005                      62
             Thereafter               778
                                 --------
                                   $3,438
                                 ========

                                       29
   72

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

BROADCAST PROGRAM RIGHTS

The Company has entered into contracts for broadcast program rights that expire
at various dates during the next five years. The aggregate minimum payments
relating to these commitments consisted of the following at December 31, 2000
(in thousands):

                           2001                                 $  235
                           2002                                    159
                           2003                                    117
                           2004                                    112
                           2005                                     72
                           Thereafter                                1
                                                                ------
                                                                $  696
Amounts due within one year (included in accounts payable)         235
                                                                ------
                                                                $  461
                                                                ======

PRINCIPAL STOCKHOLDER EMPLOYMENT AGREEMENT

In April, 1997 the Company entered into a five year employment agreement with
its principal stockholder which provides that, upon the consummation of a sale
or transfer of control of the Company, the principal stockholder's employment
will be terminated and the Company will pay the principal stockholder an amount
equal to five times the average of his total annual compensation for the
preceding three years, plus an additional amount as is necessary for applicable
income taxes related to the payment. At December 31, 2000 the stockholder's
average compensation as defined by the employment agreement was approximately
$721,000.

ACQUISITIONS

On October 3, 2000, the Company entered into an agreement to acquire two FM and
two AM radio stations (WCVQ-FM, WZZP-FM, WDXN-AM, and WJMR-AM) serving the
Clarksville, Tennessee / Hopkinsville, Kentucky market for approximately
$6,700,000. The Company closed on this transaction in February 2001.

                                       30
   73

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

12.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

ACQUISITIONS (CONTINUED)

On December 5, 2000, the Company entered into an agreement to acquire one FM
radio station (WVVR-FM) serving the Clarksville, Tennessee / Hopkinsville,
Kentucky market for approximately $7,000,000, including approximately $1,000,000
of the Company's Class A Common Stock. The Company closed on this transaction in
February 2001.

On December 15, 2000, the Company entered into an agreement to acquire an AM and
FM radio station (WHAI-AM/FM) serving the Greenfield, Massachusetts market for
approximately $2,200,000. The acquisition, which is subject to the approval of
the Federal Communications Commission is expected to close during the second
quarter of 2001.

On December 22, 2000 the Company entered into an agreement to acquire two FM
radio stations (KMIT-FM and KGGK-FM) serving the Mitchell, South Dakota market
for approximately $4,050,000. The acquisition, which is subject to the approval
of the Federal Communications Commission is expected to close during the second
quarter of 2001.

13.  SEGMENT INFORMATION

The Company's management evaluates the operating performance of its stations
individually. For purposes of business segment reporting, the Company has
aggregated operations with similar characteristics into two reportable segments:
Radio and Television.

The Radio segment includes all forty-eight of the Company's radio stations and
three radio information networks. The Television segment consists of four
television stations and two low power television ("LPTV") stations. The Radio
and Television segments derive their revenue from the sale of commercial
broadcast inventory. The category "Corporate and Other" represents the income
and expense not allocated to reportable segments.

The Company evaluates performance of its operating entities based on station
operating income before corporate general and administrative, depreciation and
amortization ("station operating income"). Management believes that station
operating income is useful because it provides a meaningful comparison of
operating performance between companies in the broadcasting industry and serves
as an indicator of the market value of a group of stations. Station operating
income is generally recognized by the broadcasting industry as a measure of
performance and is used by analysts who report on the performance of
broadcasting groups. Station operating income is not necessarily indicative of
amounts that may be available to the Company for debt service requirements,
other commitments, reinvestment in the Company or other discretionary uses.
Station operating income is not a measure of liquidity or of performance in
accordance with generally accepted accounting principles, and should be viewed
as a supplement to and not a substitute for the results of operations presented
on the basis of generally accepted accounting principles.

                                       31
   74

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

13.  SEGMENT INFORMATION (CONTINUED)

YEAR ENDED DECEMBER 31, 2000:                                                  CORPORATE AND
                                                RADIO           TELEVISION         OTHER            CONSOLIDATED
                                              -----------------------------------------------------------------
                                                                                        
Net operating revenue                         $  89,127          $ 12,619               --             $101,746
Station operating expense                        53,886             8,601               --               62,487
                                              -----------------------------------------------------------------
Station operating income                         35,241             4,018               --               39,259
Corporate general and
    administrative                                   --                --         $  5,101                5,101
Depreciation and amortization
                                                  6,680             1,963              376                9,019
                                              -----------------------------------------------------------------
Operating profit (loss)                       $  28,561          $  2,055         $ (5,477)           $  25,139
                                              =================================================================
Total assets at December 31,
    2000                                       $140,080           $26,716          $13,110             $179,906
                                              =================================================================

YEAR ENDED DECEMBER 31, 1999:                                                  CORPORATE AND
                                                RADIO           TELEVISION         OTHER            CONSOLIDATED
                                              -----------------------------------------------------------------
Net operating revenue                         $  80,167          $  9,853               --            $  90,020
Station operating expense                        49,823             6,729               --               56,552
                                              -----------------------------------------------------------------
Station operating income                         30,344             3,124               --               33,468
Corporate general and
    administrative                                   --                --         $  5,095                5,095
Depreciation and amortization
                                                  6,056             1,525              441                8,022
                                              -----------------------------------------------------------------
Operating profit (loss)                       $  24,288          $  1,599         $ (5,536)           $  20,351
                                              =================================================================
Total assets at December 31,
    1999                                       $115,834           $27,476          $19,186             $162,496
                                              =================================================================

YEAR ENDED DECEMBER 31, 1998:                                                  CORPORATE AND
                                                RADIO           TELEVISION         OTHER            CONSOLIDATED
                                              -----------------------------------------------------------------
Net operating revenue                         $  70,243          $  5,628               --            $  75,871
Station operating expense                        44,998             3,546               --               48,544
                                              -----------------------------------------------------------------
Station operating income                         25,245             2,082               --               27,327
Corporate general and
    administrative                                   --                --         $  4,497                4,497
Depreciation and amortization
                                                  5,156               809              455                6,420
                                              -----------------------------------------------------------------
Operating profit (loss)                       $  20,089          $  1,273         $ (4,952)           $  16,410
                                              =================================================================
Total assets at December 31,
    1998                                       $106,976          $  9,132          $13,905             $130,013
                                              =================================================================

                                       32
   75

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

14.  SUBSEQUENT EVENTS

On March 28, 2001, the Company amended its Credit Agreement with a group of
banks, to modify the Company's financing facilities (the "Facilities"): a
$105,000,000 senior secured term loan (the "Term Loan"), a $75,000,000 senior
secured acquisition loan facility (the "Acquisition Facility"), and a
$20,000,000 senior secured revolving credit facility (the "Revolving Facility").
The Facilities mature September 30, 2008. The Company's indebtedness under the
Facilities is secured by a first priority lien on substantially all the assets
of the Company and its subsidiaries, by a pledge of its subsidiaries' stock and
by a guarantee of its subsidiaries.

The Term Loan was used to amend the Company's existing credit agreement, fund
permitted acquisitions and pay related transaction expenses. The Acquisition
Facility may be used for permitted acquisitions and to pay related transaction
expenses. The Revolving Facility may be used for general corporate purposes,
including working capital, capital expenditures, permitted acquisitions (to the
extent that the Acquisition Facility has been fully utilized and limited to
$10,000,000) and permitted stock buybacks. On March 28, 2003, the Acquisition
Facility will convert to a five and a half year term loan. The outstanding
amount of the Term Loan is required to be reduced quarterly in amounts ranging
from 3.125% to 7.5% of the initial commitment commencing on March 31, 2003. The
outstanding amount of the Acquisition Facility is required to be reduced
quarterly in amounts ranging from 3.125% to 7.5% commencing on March 31, 2003.
Any outstanding amount under the Revolving Facility will be due on the maturity
date of September 30, 2008. In addition, the Facilities may be further reduced
by specified percentages of Excess Cash Flow (as defined in the Credit
Agreement) based on leverage ratios.

Interest rates under the Facilities are payable, at the Company's option, at
alternatives equal to LIBOR plus 1.25% to 2.0% or the Agent bank's base rate
plus .25% to 1.0%. The spread over LIBOR and the base rate vary form time to
time, depending upon the Company's financial leverage. The Company also pays
quarterly commitment fees of 0.375% to 0.625% per annum on the aggregate unused
portion of the Acquisition and Revolving Facilities.

The amended Credit Agreement contains a number of financial covenants which,
among other things, require the Company to maintain specified financial ratios
and impose certain limitations on the Company with respect to investments,
additional indebtedness, dividends, distributions, guarantees, liens and
encumbrances.

In March 2001, the Company amended all three of its interest rate cap agreements
to terminate them effective March 30, 2001.

                                       33
   76

                            Saga Communications, Inc.
             Notes to Consolidated Financial Statements (Continued)

15.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

                                   MARCH 31,              JUNE 30,            SEPTEMBER 30,           DECEMBER 31,
                              ---------------------------------------------------------------------------------------
                               2000       1999        2000       1999       2000        1999       2000        1999
                                                      (In thousands, except per share data)

Net operating revenue         $22,042    $18,267     $26,180    $23,459    $25,478     $23,882    $28,046     $24,412
Station operating expense:
   Programming and
     technical                  5,598      4,671       5,461      4,843      5,769       5,399      5,842       5,392
   Selling                      5,741      4,978       6,872      6,411      5,677       5,434      7,181       6,555
   Station general and
     administrative             3,980      3,085       3,170      3,177      3,419       3,290      3,777       3,317
                              ---------------------------------------------------------------------------------------
     Total station
       operating expense       15,319     12,734      15,503     14,431     14,865      14,123     16,800      15,264
                              ---------------------------------------------------------------------------------------
Station operating income
   before corporate
   general and
   administrative,
   depreciation and
   amortization                 6,723      5,533      10,677      9,028     10,613       9,759     11,246       9,148
   Corporate general and
     administrative             1,211      1,167       1,453      1,471      1,239       1,128      1,198       1,329
   Depreciation and
     amortization               2,198      1,803       2,199      1,959      2,286       2,138      2,336       2,122
                              ---------------------------------------------------------------------------------------
Operating profit                3,314      2,563       7,025      5,598      7,088       6,493      7,712       5,697

Other expenses:
   Interest expense             1,570      1,377       1,569      1,451      1,781       1,566      1,873       1,594
   Other                          425        214       1,630       (320)       (13)        198         62         177
                              ---------------------------------------------------------------------------------------
Income before income
   tax                          1,319        972       3,826      4,467      5,320       4,729      5,777       3,926
   Income tax provision           599        416       1,689      1,876      2,252       1,983      3,052       1,267
                              ---------------------------------------------------------------------------------------
Net income                    $   720    $   556     $ 2,137    $ 2,591    $ 3,068     $ 2,746    $ 2,725     $ 2,659
                              =======================================================================================
Basic earnings per share
                              $   .04    $   .03     $   .13    $   .16    $   .19     $   .17    $   .17     $   .16
                              =======================================================================================
Weighted average common
    shares                     16,479     16,080      16,479     16,313     16,479      16,403     16,319      16,460
                              =======================================================================================
Diluted earnings per share
                              $   .04    $   .03     $   .13    $   .16    $   .18     $   .16    $   .16     $   .16
                              =======================================================================================
Weighted average common
   and common equivalent
   shares                      16,861     16,429      16,868     16,628     16,871      16,766     16,545      16,856
                              =======================================================================================

                                       34
   77
Item 14(a)2

                            SAGA COMMUNICATIONS, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                 (in thousands)

                                                          Additions
                                                   ------------------------
                                       Balance at  Charged to    Charged to                 Balance at
                                       Beginning   Costs and       Other                      End of
Description                            of Period    Expenses      Accounts   Deductions       Period
- ------------------------------------------------------------------------------------------------------
                                                                             
Year Ended December 31, 2000
     Allowance for doubtful accounts        $573        $623                    $466 (1)        $730
                                         =======     =======                  ======          ======

Year Ended December 31, 1999
     Allowance for doubtful accounts        $496        $519                    $442 (1)        $573
                                         =======     =======                  ======          ======

Year Ended December 31, 1998
     Allowance for doubtful accounts        $514        $441                    $459 (1)        $496
                                         =======     =======                  ======          ======

Year Ended December 31, 1997
     Allowance for doubtful accounts        $319        $549                    $354 (1)        $514
                                         =======     =======                  ======          ======

(1)  Write-off of uncollectible accounts, net of recoveries.
   1

                                                                   Exhibit 4.(b)

                                CREDIT AGREEMENT

                           DATED AS OF March 28, 2001

                                      AMONG

                           SAGA COMMUNICATIONS, INC.,

                          CERTAIN OF ITS SUBSIDIARIES,

                            THE LENDERS PARTY HERETO,

                          FLEET NATIONAL BANK as Agent,

                       FLEET SECURITIES, INC. as Arranger

                                       AND

                   THE BANK OF NEW YORK, as Syndication Agent
   2
                                TABLE OF CONTENTS

                                                                                                      Page
                                                                                                      ----
                                                                                                   
ARTICLE I.               Definitions; Designation of Unrestricted Subsidiaries.................          2

         Section 1.1.    Definitions...........................................................          2
         Section 1.2.    General Provisions Pertaining to Definitions..........................         34
         Section 1.3.    Designation of Unrestricted Subsidiaries;
                          Certain Obligations Respecting Restricted Subsidiaries...............         34

ARTICLE II.              Commitments; Loans; Collateral........................................         36

         Section 2.1.    Loans.................................................................         36
         Section 2.2.    Notices Relating to Loans;
                           Requests for Eurodollar Loans.......................................         38
         Section 2.3.    Disbursement of Loan Proceeds.........................................         39
         Section 2.4.    Notes.................................................................         39
         Section 2.5.    Mandatory Principal Payments..........................................         40
         Section 2.6.    Reduction or Termination of Commitments;
                           Voluntary Payments..................................................         45
         Section 2.7.    Interest..............................................................         45
         Section 2.8.    Fees..................................................................         46
         Section 2.9.    Use of Proceeds of Loans..............................................         47
         Section 2.10.   Computations..........................................................         48
         Section 2.11.   Minimum Amounts of Borrowings, Conversions and
                           Prepayments.........................................................         48
         Section 2.12.   Time and Method of Payments...........................................         48
         Section 2.13.   Lending Offices.......................................................         49
         Section 2.14.   Several Obligations...................................................         49
         Section 2.15.   Security..............................................................         49
         Section 2.16.   Pro Rata Treatment Among Lenders......................................         50
         Section 2.17.   Non-Receipt of Funds by Agent.........................................         51
         Section 2.18.   Sharing of Payments and Set-Off Among Lenders.........................         51
         Section 2.19.   Conversion of Loans; Continuation of Loans............................         52
         Section 2.20.   Additional Costs; Capital Requirements................................         52
         Section 2.21.   Limitation of Types of Loans..........................................         55
         Section 2.22.   Illegality............................................................         55
         Section 2.23.   Certain Conversions Pursuant to
                           Sections 2.20 and 2.22..............................................         55
         Section 2.24.   Indemnification.......................................................         56
         Section 2.25.   Waiver of Claims......................................................         57
         Section 2.26.   Assignment and Reassignment of Existing Loans.........................         57

   3
                                      -ii-

ARTICLE III.             Letters of Credit.....................................................         58

         Section 3.1.    Letter of Credit Commitment...........................................         58
         Section 3.2.    Issuance of Letters of Credit.........................................         58
         Section 3.3.    Participation by Lenders..............................................         59
         Section 3.4.    Letter of Credit Disbursements........................................         60
         Section 3.5.    Obligation to Repay Letter of Credit
                           Disbursements, etc..................................................         61
         Section 3.6.    Letter of Credit Fees.................................................         62
         Section 3.7.    Letter of Credit Applications.........................................         62

ARTICLE IV.              Representations and Warranties........................................         62

         Section 4.1.    Organization, Etc.....................................................         62
         Section 4.2.    Power; Authority; Consents; No Conflicts..............................         63
         Section 4.3.    Due Execution, Validity and Enforceability............................         64
         Section 4.4.    Priority of Liens; Condition of Assets................................         64
         Section 4.5.    Judgments, Actions, Proceedings.......................................         65
         Section 4.6.    No Defaults; Compliance with Laws.....................................         65
         Section 4.7.    Burdensome Documents..................................................         65
         Section 4.8.    Governing Documents...................................................         65
         Section 4.9.    Financial Information.................................................         65
         Section 4.10.   No Material Changes...................................................         66
         Section 4.11.   Taxes.................................................................         66
         Section 4.12.   Intangible Assets.....................................................         66
         Section 4.13.   Licenses and Approvals................................................         66
         Section 4.14.   Environmental Compliance..............................................         67
         Section 4.15.   Employee Benefit Plans................................................         67
         Section 4.16.   Labor Disputes; Collective Bargaining Agreements;
                           Employee Grievances.................................................         68
         Section 4.17.   Insurance.............................................................         69
         Section 4.18.   Absence of Certain Restrictions.......................................         69
         Section 4.19.   Ancillary Documents...................................................         69
         Section 4.20.   Solvency..............................................................         69
         Section 4.21.   Application of Certain Laws and Regulations........... ...............         70
         Section 4.22.   Year 2000 Problem.....................................................         70
         Section 4.23.   No Material Real Property; No Material Intellectual
                           Property............................................................         70
         Section 4.24.   Full Disclosure.......................................................         70

ARTICLE V.               Conditions to Credit Extensions.......................................         71

         Section 5.1.    Conditions to Initial Credit Extensions...............................         71
         Section 5.2.    Conditions Precedent to Each Credit Extension.........................         75

   4
                                     -iii-

                                                                                                   
ARTICLE VI.              Guaranty..............................................................         76

         Section 6.1.    Guaranty of Payment...................................................         76
         Section 6.2.    Waivers of Notice, Etc................................................         77
         Section 6.3.    Election of Remedies..................................................         78
         Section 6.4.    Expenses..............................................................         78
         Section 6.5.    Unenforceability of Obligations.......................................         79
         Section 6.6.    Subrogation Rights; Subordination
                           of Subrogation Rights...............................................         79
         Section 6.7.    Limitation on Obligations.............................................         80

ARTICLE VII.             Delivery of Financial Reports,
                             Documents and Other Information...................................         80

         Section 7.1.    Annual Financial Statements...........................................         80
         Section 7.2.    Quarterly Financial Statements........................................         81
         Section 7.3.    Compliance Information................................................         81
         Section 7.4.    Accountants' Reports..................................................         81
         Section 7.5.    Copies of Documents...................................................         82
         Section 7.6.    Annual Budget.........................................................         82
         Section 7.7.    Additional Information................................................         82

ARTICLE VIII.            Affirmative Covenants.................................................         83
         Section 8.1.    Payment and Performance of
                           Obligations.........................................................         83
         Section 8.2.    Conduct of Business...................................................         83
         Section 8.3.    Books and Records.....................................................         84
         Section 8.4.    Inspections and Audits................................................         84
         Section 8.5.    Insurance.............................................................         85
         Section 8.6.    Notice of Defaults, Litigation; Etc,..................................         86
         Section 8.7.    ERISA Notices.........................................................         86
         Section 8.8.    No Termination of Loan
                           Documents, Etc......................................................         86
         Section 8.9.    Environmental Laws....................................................         87
         Section 8.10.   [Intentionally deleted]...............................................         87
         Section 8.11.   Governmental Approvals................................................         87
         Section 8.12.   Collateral for Loans..................................................         87
         Section 8.13.   Dividends.............................................................         88
         Section 8.14.   Appraisals............................................................         88
         Section 8.15.   Permitted Acquisitions................................................         88
         Section 8.16.   Further Assurances....................................................         89

   5
                                      -iv-

                                                                                                   
ARTICLE IX.              Negative Covenants....................................................         89

         Section 9.1.    Indebtedness..........................................................         90
         Section 9.2.    Liens.................................................................         90
         Section 9.3.    Mergers, Consolidations, Sales of Assets..............................         91
         Section 9.4.    Investments...........................................................         94
         Section 9.5.    Restricted Payments...................................................         96
         Section 9.6.    Issuance of Capital Stock.............................................         97
         Section 9.7.    Sale and Leaseback....................................................         97
         Section 9.8.    ERISA Compliance......................................................         97
         Section 9.9.    Amendment or Termination of Documents.................................         97
         Section 9.10.   Restrictive Agreements................................................         98
         Section 9.11.   Transactions with Affiliates..........................................         98
         Section 9.12.   Limitation on Operation of Saga Real Estate...........................         98

ARTICLE X.               Financial Covenants...................................................         99

         Section 10.1.   Maximum Total Funded Debt Leverage Ratio..............................         99
         Section 10.2.   Pro Forma Fixed Charges Coverage Ratio................................         99
         Section 10.3.   Minimum Interest Coverage Ratio.......................................         99
         Section 10.4.   General Provisions Relating to
                           Financial Terms and Covenants.......................................        100

ARTICLE XI.              Events of Default; Acceleration.......................................        101

         Section 11.1.   Events of Default.....................................................        101
         Section 11.2.   Termination of Commitments;
                           Acceleration of Obligations.........................................        104
         Section 11.3.   No Implied Waivers; Rights Cumulative.................................        105
         Section 11.4.   Letters of Credit.....................................................        105

ARTICLE XII.             The Agent.............................................................        106

         Section 12.1.   Appointment, Powers and Immunities....................................        106
         Section 12.2.   Reliance by Agent.....................................................        106
         Section 12.3.   Events of Default.....................................................        107
         Section 12.4.   Rights as a Lender....................................................        107
         Section 12.5.   Indemnification.......................................................        107
         Section 12.6.   Non-Reliance on Agent and Other Lenders...............................        108
         Section 12.7.   Failure to Act........................................................        108
         Section 12.8.   Resignation or Removal of Agent.......................................        108
         Section 12.9.   Sharing of Collateral and Payments....................................        109

   6
                                       -v-

                                                                                                   
ARTICLE XIII.            Miscellaneous Provisions..............................................        110

         Section 13.1.   Fees and Expenses; Indemnity..........................................        110
         Section 13.2.   Taxes.................................................................        112
         Section 13.3.   Survival of Agreements and Representations;
                           Construction........................................................        112
         Section 13.4.   Modifications, Consents and Waivers;
                           Entire Agreement....................................................        112
         Section 13.5.   Remedies Cumulative...................................................        115
         Section 13.6.   Further Assurances....................................................        115
         Section 13.7.   Notices...............................................................        115
         Section 13.8.   Counterparts..........................................................        117
         Section 13.9.   Severability..........................................................        117
         Section 13.10.  Binding Effect; No Assignment or Delegation
                               by Borrower.....................................................        117
         Section 13.11.  Assignments and Participations by
                               Lenders.........................................................        117
         Section 13.12.  FCC Approval..........................................................        122
         Section 13.13.  Usury Provision.......................................................        122
         Section 13.14.  Certain Lien Releases.................................................        123
         Section 13.15.  Confidentiality.......................................................        123
         Section 13.16.  Governing Law; Consent to Jurisdiction;
                               Waiver of Trial by Jury.........................................        123
         Section 13.17.  Integration of Schedules and Exhibits.................................        124

   7
                                      -vi-

                         LIST OF SCHEDULES AND EXHIBITS

         SCHEDULES             DESCRIPTION
         ---------             -----------
                            
            4.1                Organization; Capitalization

            4.2                Approvals and Consents

            4.4(A)             Priority of Liens

            4.5                Litigation

            4.7                Burdensome Documents

            4.11               Taxes

            4.13               FCC Licenses

            4.14               Environmental Compliance

            4.15               Employee Benefit Plans

            4.16               Labor Disputes; Collective Bargaining Agreements

            4.17               Insurance

            8.2                Location of the Company's Executive Offices and
                               Location of the Principal Places of Business of
                               Each Principal Company

            8.2(a)             Local Marketing Agreements

            8.2.(b)            Brokerage Agreements

            9.1(i)             Existing Indebtedness

            9.2                Liens

            9.3                Corporate Structure and Organization

            9.4(h)             Investments

   8
                                      -vii-

         EXHIBITS              DESCRIPTION
         --------              -----------
                            
            A-1                Form of Revolving Credit Note

            A-2                Form of Term Loan Note

            A-3                Form of Acquisition Loan Note

            A-4                Form of Incremental Facility Loan Note

            B                  Form of Indemnity, Subrogation and Contribution
                               Agreement

            C                  Form of Effective Date Certificate

            D                  Form of Assignment and Acceptance Agreement

            E                  Form of Collateral Trust Agreement

            F                  Form of Borrower Security Agreement

            G                  Form of Borrower Stock Pledge Agreement

            H                  Form of Borrower Subsidiary Security Agreement

            I                  Form of Lakefront Membership Interest Pledge
                               Agreement

            J                  Form Lakefront Stock Pledge Agreement

   9
                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT is made as of March 28, 2001, by and among (1)
SAGA COMMUNICATIONS, INC., a Delaware corporation (the "Borrower"); (2) the
Subsidiaries of the Borrower party hereto; (3) the various financial
institutions which are now, or in accordance with Section 13.11 hereafter
become, parties hereto as Lenders (individually, a "Lender" and collectively,
the "Lenders"); (4) FLEET NATIONAL BANK, a national banking association, as
administrative and documentation agent for the Lenders (the "Agent"); and (5)
THE BANK OF NEW YORK, as syndication agent (the "Syndication Agent").

                              W I T N E S S E T H:

         WHEREAS, the Borrower has requested the Agent and the Lenders to
provide the Borrower with senior secured revolving credit, term loan and
acquisition loan facilities (collectively, the "Initial Facilities") in the
maximum aggregate principal amount of $200,000,000, consisting of a senior
secured term loan facility in the aggregate principal amount of $105,000,000, a
senior secured revolving credit facility in the aggregate principal amount of
$20,000,000, and a senior secured multiple-draw acquisition loan facility in the
aggregate principal amount of $75,000,000;

         WHEREAS, the Borrower has further requested the Agent and the Lenders
to consider providing the Borrower with an additional credit facility (the
"Incremental Facility") in the aggregate principal amount of up to $50,000,000;
and

         WHEREAS, the Agent and the Lenders are willing, subject to the terms
and conditions set forth herein to provide to the Borrower the Initial
Facilities and to consider providing to the Borrower the Incremental Facility;

         NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto hereby agree as follows:

                                    ARTICLE I

                           DEFINITIONS; DESIGNATION OF
                            UNRESTRICTED SUBSIDIARIES

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

         "Acquisition" - shall mean any transaction, or any series of related
transactions, consummated on, prior to, or after the date of this Agreement, in
which the Borrower or any Restricted Subsidiary (in one transaction or as the
most recent transaction in a series of transactions) (i) acquires any
Communications System, any business or all or substantially all of the assets of
any Person or any division or business unit thereof, whether through
   10
                                      -2-

purchase of assets, merger or otherwise, (ii) directly or indirectly acquires
control of at least a majority (in number of votes) of the Capital Stock of a
Person which have ordinary voting power for the election of directors or other
governing body or (iii) directly or indirectly acquires control of a majority
ownership interest in any partnership, joint venture or limited liability
company.

         "Acquisition Documents" - all agreements, documents and instruments
executed and/or delivered in connection with any Acquisition, including the
Scheduled Acquisitions.

         "Acquisition Loan Commitment" - with respect to a Lender, the
commitment of such Lender to make Acquisition Loans to the Borrower in the
amount set forth on Schedule 1 hereto, as the same may be reduced from time to
time or terminated in accordance with the terms hereof.

         "Acquisition Loan Commitment Fees" - as defined in Subsection 2.8(b).

         "Acquisition Loan Commitment Period" - the period from and including
the Effective Date to the earlier to occur of (i) the day before the Conversion
Date and (ii) the termination of the Acquisition Loan Commitments.

         "Acquisition Loan Payment Date" - as defined in Subsection 2.5(c).

         "Acquisition Loans" - as defined in Subsection 2.1(b).

         "Acquisition Loan Notes" - as defined in Subsection 2.4 (c).

         "Additional Costs" - as defined in Subsection 2.20 (b).

         "Affected Loans" - as defined in Section 2.23.

         "Affected Type" - as defined in Section 2.23.

         "Affiliate" - any Person that directly or indirectly controls, or is
under common control with, or is controlled by, the Borrower. As used in this
definition, "control" (including, with its correlative meanings, "controlled by"
and "under common control with") shall mean possession, directly or indirectly,
of power to direct or cause the direction of management or policies (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise), provided that, in any event, any Person that owns
directly or indirectly securities having 5% or more of the voting power for the
election of directors or other governing body of a corporation or 5% or more of
the partnership or other ownership interests of any other Person (other than as
a limited partner of such other Person) will be deemed to control such
corporation or other Person. Notwithstanding the foregoing, (a) no wholly-owned
Restricted Subsidiary of the Borrower shall be an Affiliate and (b) neither the
Agent, nor any Lender, shall be an Affiliate.

         "Agent" - as defined in the preamble hereof.

         "Agent's Fee" - the Agent's fee payable from time to time by the
Borrower to the Agent, for the Agent's own account, as provided in the Fee
Letter.
   11
                                      -3-

         "Agent's Special Counsel" - Bingham Dana LLP and such other counsel as
the Agent may from time to time retain as special counsel in connection with the
financing arrangements contemplated by or arising under the Loan Documents.

         "Agreement" - this Credit Agreement, including the Schedules and
Exhibits hereto.

         "Ancillary Documents" - collectively, (i) the Seller Debt Documents and
(ii) the Acquisition Documents.

         "Applicable Lending Office" - with respect to each Lender, with respect
to each type of Loan, the lending office as designated for such type of Loan
below its name on the signature pages hereof or such other office of such Lender
or of an affiliate of such Lender as such Lender may from time to time specify
to the Agent and the Borrower as the office at which its Loans of such type are
to be made and maintained.

         "Applicable Margin" - for any calendar quarter, the applicable
percentage set forth in the table below opposite the Total Funded Debt Leverage
Ratio as of the end of the Most Recent Reference Period prior to the
commencement of such calendar quarter:

                               APPLICABLE MARGINS

        Total Funded Debt                     Applicable Margin                  Applicable Margin
          Leverage Ratio                     for Base Rate Loans                for Eurodollar Loans
          --------------                     -------------------                --------------------
                                                                          
 Greater than or equal to 5.0:1.0                  1.000%                              2.000%

  Less than 5.0:1.0 but greater                    0.750%                              1.750%
     than or equal to 4.0:1.0

  Less than 4.0:1.0 but greater                    0.625%                              1.625%
     than or equal to 3.5:1.0

  Less than 3.5:1.0 but greater                    0.500%                              1.500%
     than or equal to 3.0:1.0

        Less than 3.0:1.0                          0.250%                              1.250%

Notwithstanding the foregoing, in the event that the Lenders shall not have
received the most recent financial statements and certificates required to be
delivered to them pursuant to Article VII prior to the first day of such
calendar quarter, the Applicable Margins for such calendar quarter shall (until
all of such financial statements and certificates are delivered to the Lenders)
be the highest of the Applicable Margins specified above.
   12
                                      -4-

         "Arranger" - Fleet Securities, Inc., acting as exclusive arranger in
connection with the arranging of the Facilities.

         "Asset" - any asset, property, interest (including equity interests) or
effect, real or personal, tangible or intangible, wherever situated.

         "Assigning Lender" - as defined in Subsection 13.11(b).

         "Assignment" - as defined in Subsection 13.11(b).

         "Assignment and Acceptance Agreement" - as defined in Subsection
13.11(b).

         "Available Acquisition Loan Commitments" - at any time, an amount equal
to the excess, if any, of (i) the aggregate Acquisition Loan Commitments at such
time over (ii) the aggregate outstanding Acquisition Loans at such time.

         "Available Revolving Credit Commitments" - at any time, an amount equal
to the excess, if any, of (i) the aggregate Revolving Credit Commitments at such
time over (ii) the Revolving Credit Outstandings at such time.

         "Balance Sheet Date" - December 31, 2000.

         "Base Rate" - a fluctuating rate of interest per annum equal to the
greater of (i) the rate established by the Agent from time to time at its office
in Boston as its "base rate" and (ii) the Federal Funds Rate plus 1/2%; in each
case, including any applicable adjustments for reserves or FDIC requirements.
The Base Rate is not necessarily intended to be the lowest rate of interest
determined by the Agent in connection with extensions of credit.

         "Base Rate Loans" - Loans which bear interest at a rate based upon the
Base Rate.

         "Borrower" - as defined in the preamble hereof.

         "Borrower Affiliated Companies" - collectively, the Borrower and each
of its Subsidiaries.

         "Borrower Security Agreement" - the Borrower Security Agreement, dated
as of the Effective Date, by and between the Borrower and the Collateral
Trustee, substantially in the form attached hereto as Exhibit F.

         "Borrower Stock Pledge Agreement" the Borrower Stock Pledge Agreement,
dated as of the Effective Date, by and between the Borrower and the Collateral
Trustee, substantially in the form attached hereto as Exhibit G.

         "Borrower Subsidiary Security Agreement" - the Borrower Subsidiary
Security Agreement, dated as of the Effective Date, by and among the Restricted
Subsidiaries and the Collateral Trustee, substantially in the form attached
hereto as Exhibit H.

         "Borrowing Notice" - as defined in Section 2.2.
   13
                                      -5-

         "Business Day" - any day other than Saturday, Sunday or any other day
on which commercial banks in Boston are authorized or required to close.

         "Capital Expenditures" - as to any Person for any period, the sum of
all amounts which would, in accordance with GAAP consistently applied, be
included as additions to property, plant and equipment and other capital
expenditures on a consolidated statement of cash flows for such Person for such
period.

         "Capital Stock" - any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in any Person which is not a corporation,
and any and all warrants, options or other rights to acquire any of the
foregoing.

         "Capitalized Lease" - any lease or similar instrument the obligations
to pay rent or other amounts under which constitute Capitalized Lease
Obligations.

         "Capitalized Lease Obligations" - as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on a balance
sheet of such Person under GAAP and, for purposes of this Agreement, the amount
of such obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.

         "Cash" - as to any Person, such Person's cash and cash equivalents, as
defined in accordance with GAAP.

         "CERCLA" - the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

         "Change in Control" - shall be deemed to have occurred if: (i) any
Person (other than a Permitted Holder) or any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of Persons (other than any Permitted
Holders) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Exchange Act),
directly or indirectly, in one or more transactions, of Capital Stock of the
Borrower (including other Capital Stock convertible into such Capital Stock)
representing 35% or more of the combined voting power of all Capital Stock of
the Borrower (on a fully-diluted basis) entitled to vote in the election of
directors, other than Capital Stock having such power only by reason of the
happening of a contingency, or (ii) a change in the composition of the board of
directors of the Borrower shall have occurred such that a majority of the
members of the board of directors are not Continuing Directors.

         "Chief Financial Officer" - Mr. Samuel D. Bush or such other individual
as may perform the duties of "chief financial officer" (as commonly understood)
of the Borrower.

         "Christian" - Edward K. Christian.

         "Christian Note" - the promissory note dated December 10, 1992, in the
original principal amount of $690,700, issued by Christian to the Borrower, as
amended by the First
   14
                                      -6-

Amendment to Promissory Note, dated as of December 6, 1995, between the Borrower
and Christian.

         "Class A Common Stock" - the Class A Common Stock of the Borrower, par
value $.01 per share.

         "Class B Common Stock" - the Class B Common Stock of the Borrower, par
value $.01 per share.

         "Closing Costs" - for any period, all fees and costs (including legal,
accounting, appraisal, environmental site assessments and travel fees and costs)
incurred by the Borrower or any of its Restricted Subsidiaries in connection
with the financing contemplated by this Agreement or any Permitted Acquisition,
in each case to the extent expensed during such period.

         "Code" - the Internal Revenue Code of 1986, as it may be amended from
time to time.

         "Collateral" - collectively, all of the agreements, instruments,
contracts, assets, accounts, moneys and all of the income, proceeds and products
of any thereof, under or in respect of which the Agent or the Collateral
Trustee, for the benefit of the Lenders, shall have, at the time of reference to
the term "Collateral", any rights or interests as security for the payment or
performance of all or any part of the Obligations and shall, in any event,
include the Collateral (as defined in the respective Security Documents).

         "Collateral Trust Agreement" - the Collateral Trust Agreement, dated as
of the Effective Date, by and among the Collateral Trustee, the Lenders, the
Issuing Bank and the Agent, and countersigned by the Principal Companies,
substantially in form attached hereto as Exhibit E.

         "Collateral Trustee" - Fleet, or any other Person succeeding to the
duties of Collateral Trustee under the Collateral Trust Agreement.

         "Commitment Fees" - collectively, the Acquisition Loan Commitment Fees
and the Revolving Credit Commitment Fees.

         "Commitments" - as to any Lender, collectively, such Lender's (i)
Revolving Credit Commitment, (ii) Term Loan Commitment, (iii) Acquisition Loan
Commitment and (iv) Incremental Facility Commitment of each Series of
Incremental Facility Loans.

         "Common Stock" - collectively, (i) the Class A Common Stock, (ii) the
Class B Common Stock and (iii) any other Permitted Capital Stock having economic
attributes substantially equivalent to the Class A Common Stock and the Class B
Common Stock.

         "Communications Act" - the Federal Communications Act of 1934, as
amended, and the rules and regulations of the FCC thereunder, as now or
hereafter in effect.

         "Communications System" - all of the properties and operating rights
constituting a complete, fully integrated system for transmitting radio or
television signals from a
   15
                                      -7-

transmitter licensed by the FCC, together with any subsystem which is ancillary
to such system, and including any radio or television network.

         "Consolidated or consolidated" - as to any term used in this Agreement,
the relevant figures for any Person and its Subsidiaries on a consolidated basis
determined in accordance with GAAP after eliminating all intercompany items and
minority interests.

         "Consolidated Adjusted Net Income" - for any period, net earnings (or
loss) of the Borrower and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP, but excluding: (i) any net gain or
loss arising from the sale of capital assets; (ii) any gain arising from any
write-up of assets; (iii) net earnings of any Person (other than a wholly-owned
Restricted Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest (other than any such net earnings which
have actually been received by the Borrower or wholly-owned Restricted
Subsidiary in the form of cash distributions); (iv) any extraordinary earnings
or extraordinary losses, as such terms are interpreted under GAAP; (v) any
interest or other non-operating income of the Borrower or any of its
Subsidiaries; (vi) the effect of all barter transactions for such period; and
(vii) proceeds of any Interest Rate Contracts.

         "Consolidated Current Assets"- as of any date, all assets (other than
Cash) of the Borrower and its Restricted Subsidiaries on a consolidated basis
that, in accordance with GAAP, are properly classified as current assets as of
such date.

         "Consolidated Current Liabilities" - as of any date, all liabilities of
the Borrower and its Restricted Subsidiaries on a consolidated basis properly
classified as current liabilities in accordance with GAAP (other than the
current portion of long-term Indebtedness for Borrowed Money, and calculated
without regard to (i) any repayment of Revolving Credit Loans with Net Proceeds
and (ii) any borrowing of Revolving Credit Loans the proceeds of which are used
to finance any Permitted Acquisition).

         "Consolidated EBITDA" - for any period (subject to any adjustments
required by Section 10.4 and determined on a consolidated basis in accordance
with GAAP), Consolidated Adjusted Net Income for such period plus (A) (to the
extent, but only to the extent, the following amounts have reduced Consolidated
Adjusted Net Income for such period) the sum of (without duplication) (i)
Consolidated Total Interest Expense of the Borrower and its Restricted
Subsidiaries for such period, (ii) the aggregate amount of all federal, state
and local income taxes accrued by the Borrower and its Restricted Subsidiaries
for such period, (iii) the aggregate amount of depreciation and amortization
expense (including programming amortization expense) of the Borrower and its
Restricted Subsidiaries for such period, (iv) the aggregate amount of Closing
Costs, if any, incurred by the Borrower and its Restricted Subsidiaries during
such period, to the extent that such costs are non-recurring, and (v) the
aggregate amount of any non-cash charges of the Borrower during such period
relating to the issuance or vesting of stock options granted by the Borrower to
its employees or directors minus (B) the sum of (i) the aggregate amount of all
cash television programming payments made by the Borrower and its Restricted
Subsidiaries during such period and (ii) the aggregate amount of any cash
payments made by the Borrower during such period relating to any non-cash
charges described in clause (A)(v) of this definition.
   16
                                      -8-

         "Consolidated Total Funded Debt" - at any time, on a consolidated
basis, all Indebtedness for Borrowed Money of the Borrower and its Restricted
Subsidiaries at such time, determined in accordance with GAAP. The aggregate
amount of Consolidated Total Funded Debt at any time shall include all accrued
interest which has become due and payable but has not been paid (whether or not
capitalized) and the accreted amount of any Subordinated Debt issued with
original issue discount.

         "Consolidated Total Interest Expense" - for any period (subject to any
adjustments required by Section 10.4), without duplication, the sum of (i) the
interest expense of the Borrower and its Restricted Subsidiaries for such
period, (ii) the interest component of Capitalized Lease Obligations of the
Borrower and its Restricted Subsidiaries for such period, and (iii) all
Commitment Fees, Letter of Credit Fees and similar fees payable by the Borrower
and its Restricted Subsidiaries during such period in respect of Consolidated
Total Funded Debt; in each case determined on a consolidated basis in accordance
with GAAP.

         "Consolidated Working Capital" - as of any date, the excess of
Consolidated Current Assets over Consolidated Current Liabilities as of such
date.

         "Continuing Directors" - as of any date of determination, any member of
the Board of Directors of the Borrower who (i) was a member of such Board of
Directors on the Effective Date or (ii) was nominated for election or elected to
such Board of Directors either with the affirmative vote of a majority of the
directors who were either members of such Board of Directors on the Effective
Date or whose nomination or election was previously so approved.

         "Contractual Obligations" - as to any Person, any provision of any
note, debenture or security issued by such Person or of any agreement,
indenture, mortgage, instrument or other undertaking to which such Person is a
party or by which it or any of its property is bound.

         "Conversion Date" - March 28, 2003.

         "Copyright" - collectively, all of the following, to the extent that
any Principal Company now or hereafter has any right, title or interest therein:
(i) all copyright rights in any work subject to the copyright laws of the United
States or any other country, whether as author, assignee, licensee, transferee
or otherwise, and (ii) all registrations and applications for registration of
any such copyright in the United States or any other country, as well as all
registrations, recordings, supplemental registrations and pending applications
for registration in the United States Copyright Office or the copyright office
of any other country.

         "Copyright Security Agreements" - collectively, the Memoranda of Grant
of Security Interest in Copyrights from time to time entered into by and between
the Collateral Trustee and one or more of the Principal Companies with respect
to Material Federal Copyrights

         "Credit Extensions" - collectively, (i) any Loan and (ii) any Letter of
Credit.

         "Default" - an event which, with notice or lapse of time, or both,
would constitute an Event of Default.
   17
                                      -9-

         "Default Notice" - as defined in Subsection 8.5(a).

         "Default Rate" - with respect to any amounts payable hereunder or under
any of the other Loan Documents, a rate per annum equal to 2% above the rate of
interest otherwise applicable to such amounts.

         "Distribution" - as to any Person, any direct or indirect: (i)
declaration or payment of any dividend on or in respect of any Capital Stock of
such Person (except, in the case of the Borrower, a dividend payable solely in
shares of Permitted Capital Stock); (ii) redemption, purchase or other
retirement or acquisition of any Capital Stock of such Person, through a
Subsidiary of such Person or otherwise; (iii) return of capital by such Person
to its shareholders or other equityholders as such; or (iv) other distribution
on or in respect of any Capital Stock of such Person (except, in the case of the
Borrower, any distribution made by the Borrower solely in shares of Permitted
Capital Stock in connection with any stock split or reverse stock split).

         "Dollars" and "$" - lawful money of the United States of America.

         "Drawdown Date" - the date on which any Credit Extension is made or is
to be made.

         "Effective Date" - the date on which each of the conditions precedent
set forth in Section 5.1 hereof shall have been waived or satisfied and the
initial Credit Extensions are made hereunder.

         "Effective Date Certificate" - a certificate, to be dated as of the
Effective Date, executed and delivered to the Agent by the Borrower,
substantially in the form attached hereto as Exhibit C.

         "Employee Benefit Plan or Plan" - any employee benefit plan within the
meaning of Section 3(3) of ERISA maintained or contributed to by any Principal
Company or any ERISA Affiliate, other than a Multiemployer Plan.

         "Environmental Laws" - any judgment, decree, order, law, license, rule
or regulation pertaining to environmental matters, including without limitation
those arising under the Resource Conservation and Recovery Act ("RCRA"), CERCLA,
the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act,
any state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment, or any law or regulation of any foreign
jurisdiction outside the United States relating to health, safety or the
environment.

         "Environmental Liability" - any liability under any Environmental Laws
for any release of a Hazardous Substance, and any liability for the costs of any
clean up or other remedial action.

         "Environmental Matter(s)" - a release of any Hazardous Substance into
the environment or the generation, treatment, storage or disposal of any
Hazardous Substance.
   18
                                      -10-

         "Environmental Proceeding" - any judgment, action, proceeding or
investigation pending before any Governmental Authority, including any
environmental regulatory body, with respect to or threatened against or
affecting any Borrower Affiliated Company or relating to the Assets or
liabilities of any of them, including in respect of any "facility" owned, leased
or operated by any of them under CERCLA or under any Requirement of Law in
respect thereof, or in connection with any release of any Hazardous Substance or
the generation, storage or disposal of any Hazardous Substance.

         "ERISA" - the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time, and the regulations promulgated thereunder.

         "ERISA Affiliate" - any Person which is treated as a single employer
with the Borrower and its Subsidiaries under Section 414 of the Code.

         "ERISA Reportable Event" - a reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA.

         "Eurocurrency Reserve Requirements" - for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates (expressed as
a decimal fraction) of reserve requirements in effect on such day (including
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto) prescribed for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) maintained by a member bank of such System.

         "Eurodollar Base Rate" - with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the average interest rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%) at which the Agent
is offered Dollar deposits at or about 10:00 a.m., Boston time, two (2) Business
Days prior to the beginning of such Interest Period in the Eurodollar Interbank
Market where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery on the
first day of such Interest Period, for the number of days comprised therein and
in an amount comparable to the amount of its Eurodollar Loan to be outstanding
during such Interest Period.

         "Eurodollar Business Day" - a Business Day on which dealings in Dollar
deposits are carried out in the Eurodollar Interbank Market.

         "Eurodollar Interbank Market" - any lawful offshore market in which
deposits of Dollars are offered by foreign branches of U.S. banking institutions
and by foreign banking institutions to each other.

         "Eurodollar Loans" - Loans the rate of interest applicable to which is
determined on the basis of the Eurodollar Rate.

         "Eurodollar Rate" - with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for such day
in accordance with the following formula (rounded upward, if necessary, to the
nearest 1/100th of 1%):
   19
                                      -11-

                              Eurodollar Base Rate
                              --------------------
                    1.00 - Eurocurrency Reserve Requirements

         "Event of Default" - as defined in Article XI hereof.

         "Excess Cash Flow" - for any period, Consolidated EBITDA for such
period minus, without duplication, the sum of (i) federal, state and local
income taxes of the Borrower and its Subsidiaries for such period paid in cash
by the Borrower or any of its Restricted Subsidiaries (other than any such taxes
referred to in clause (ii) of the definition of Net Proceeds) during such
period, (ii) all Capital Expenditures of the Borrower and its Restricted
Subsidiaries made and permitted hereunder during such period (other than any
such Capital Expenditures made with proceeds of Indebtedness permitted by
Section 9.1(c) hereof and other than Capital Expenditures made in completing a
Permitted Acquisition), (iii) Consolidated Total Interest Expense for such
period required to be paid in cash by the Borrower or any of its Restricted
Subsidiaries during such period, (iv) the aggregate amount of mandatory
permanent payments or prepayments of principal of Consolidated Total Funded Debt
during such period (other than any Net Proceeds Payments or Excess Cash Flow
Payments), (v) the excess (if any) of Consolidated Working Capital as at the
last day of such period over Consolidated Working Capital as at the day before
the first day of such period and (vi) $1,000,000.

         "Excess Cash Flow Payment" - as defined in Subsection 2.5(e).

         "Exchange Act" - the Securities and Exchange Act of 1934, as amended.

         "Existing Credit Agreement" - The Second Amended and Restated Credit
Agreement, dated as of December 30, 1998 (as heretofore amended, restated, or
otherwise modified and in effect immediately prior to the date hereof) among the
Borrower, certain Subsidiaries of the Borrower, certain lenders party thereto
and Fleet as agent for such lenders.

         "Facilities" - collectively, the Initial Facilities and the Incremental
Facility.

         "FASB" - the Financial Accounting Standards Board, and its predecessor
and successor organizations.

         "FCC" - the Federal Communications Commission, or any successor agency,
commission, bureau, department or other Governmental Authority.

         "FCC Licenses" - any radio, television or other license, permit,
certificate of compliance, franchise, approval or authorization granted or
issued by the FCC.

         "FDIC" - the Federal Deposit Insurance Corporation or any successor
thereof.

         "Federal Funds Rate" - for any period, a fluctuating interest rate per
annum (based on a 365 day or 366 day year, as the case may be) equal for each
day during such period to the average of the rates of interest charged on
overnight federal funds transactions, with member banks of the Federal Reserve
System only, as published for any day which is a
   20
                                      -12-

Business Day by the Federal Reserve Bank of New York (or, in the absence of such
publication, as reasonably determined by the Agent).

         "Fee Letter" - the letter agreement, dated as of February 15, 2001, by
and among the Agent, the Arranger and the Borrower regarding payment of certain
fees by the Borrower to the Agent and the Arranger.

         "Fees" - collectively, (i) the Agent's Fee, (ii) the Commitment Fees,
(iii) the Letter of Credit Fees, and (iv) any fees (other than closing fees)
payable by the Borrower in connection with the Incremental Facility Loans or
Incremental Facility Loan Commitments.

         "Final" - as to an action by the FCC or its staff, the date on which
the time for rehearing, reconsideration, review or appeal of such action shall
have expired without objection or claim by any Person.

         "Financial Statements" - any financial statements from time to time
delivered by the Borrower to the Agent or to any Lender pursuant to the
provisions of this Agreement, including any financial statements and schedules
thereto delivered by the Borrower on the Effective Date. As used herein,
"Financial Statements" do not include any Projections.

         "Fleet" - Fleet National Bank, a national banking association organized
under the laws of the United States of America.

         "GAAP" - when used in Article X hereof, whether directly or indirectly
by reference to a capitalized term used therein, principles which are consistent
with (i) the principles promulgated or adopted by FASB, as in effect on the
Balance Sheet Date, and (ii) the accounting practices of Borrower and its
Subsidiaries reflected in the consolidated financial statements of the Borrower
and its Subsidiaries as at and for the quarter ended on the Balance Sheet Date.
When used in general, other than as provided above, principles which are (i)
consistent with the principles promulgated or adopted by FASB, as in effect from
time to time, and (ii) consistently applied with past consolidated financial
statements of the Borrower and its Subsidiaries adopting the same principles. In
the event of any material change in the principles promulgated or adopted by
FASB after the Balance Sheet Date, the Borrower, the Agent and the Lenders will
undertake in good faith to negotiate appropriate changes to this definition of
GAAP and Article X hereof with the objective of having the Borrower's compliance
with the provisions of Article X determined by reference to GAAP as in effect
after such change, rather than GAAP as in effect on the Balance Sheet Date.
Until such changes have been agreed to in writing by the Borrower and the
Required Lenders, the definition of GAAP and the provisions of Article X shall
remain unchanged and in full force and effect.

         "Governing Documents" - as to any Person, the articles or certificate
of incorporation or certificate of formation and by-laws or limited liability
company agreement or other organizational documents of such Person.

         "Governmental Authority" - any nation or government, any state or other
political subdivision thereof, and any entity exercising any executive,
legislative, judicial, regulation, or administrative functions of or pertaining
to government.
   21
                                      -13-

         "Guarantor(s)" - the Subsidiaries of the Borrower party to this
Agreement and any other Subsidiary of the Borrower which assumes the obligations
of a Guarantor under Article VI hereof.

         "Guaranteed Pension Plan" - any employee pension benefit plan within
the meaning of Section 3(2) of ERISA maintained or contributed to by any
Principal Company or any ERISA Affiliate the benefits of which are guaranteed on
termination in full or in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.

         "Guaranty" - in relation to any Person, any obligation, contingent or
otherwise, of such Person guarantying or having the economic effect of
guarantying any Indebtedness of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including any obligation of such
Person, direct or indirect, (i) to purchase or pay (or advance or supply funds
for the purchase of payment of) such Indebtedness or to purchase (or to advance
or supply funds for the purchase of) any security for the payment of such
Indebtedness, (ii) to purchase property, securities or services for the purpose
of assuring the owner of such Indebtedness of the payment of such Indebtedness
or (iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Indebtedness.

         "Hazardous Substances" - any hazardous substances as defined by 42
U.S.C. Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) and any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws.

         "Historical Financials" - as defined in Subsection 4.9(a).

         "Immaterial Real Property" - real property owned by a Principal Company
other than Material Real Property.

         "Incremental Facility" - as defined in the recitals hereto.

         "Incremental Facility Commitment" - with respect to a Lender and for
each Series of Incremental Facility Loans, the commitment, if any, of such
Lender to make Incremental Facility Loans of such Series to the Borrower
hereunder (as the same may be reduced from time to time or terminated in
accordance with the terms hereof).

         "Incremental Facility Commitment Period" - the period from and
including the Effective Date to the earlier to occur of (i) the day before the
Conversion Date and (ii) the termination of the Incremental Facility
Commitments.

         "Incremental Facility Loan(s)" - as defined in Subsection 2.1(d).

         "Incremental Facility Loan Note(s)" - as defined in Subsection 2.4(d).

         "Incremental Facility Loan Payment Date" - as defined in Subsection
2.5(d).
   22
                                      -14-

         "Indebtedness" - with respect to any Person, all: (i) liabilities or
obligations, direct or contingent, which in accordance with GAAP would be
included in determining total liabilities as shown on the liability side of a
balance sheet of such Person at the date as of which Indebtedness is to be
determined, including contingent liabilities which, in accordance with GAAP,
would be set forth in a specific amount on the liability side of such balance
sheet, and Capitalized Lease Obligations of such Person; (ii) liabilities or
obligations of others for which such Person is directly or indirectly liable, by
way of Guaranty or otherwise; (iii) liabilities or obligations secured by Liens
on any assets of such Person, whether or not such liabilities or obligations
shall have been assumed by it; and (iv) liabilities or obligations of such
Person, direct or contingent, with respect to letters of credit issued for the
account of such Person and bankers acceptances created for such Person;
provided, however, that in the case of liabilities or obligations in respect of
which the holder has recourse only against certain assets of a Person,
Indebtedness in respect of such liabilities or obligations shall be limited to
the fair market value of the assets with respect to which recourse is not
prohibited.

         "Indebtedness for Borrowed Money" - without duplication, all
Indebtedness with respect to any of the following: (i) money borrowed (whether
recourse or non-recourse), including principal, interest and premiums, (ii)
obligations evidenced by a bond, debenture, note or other like written
obligation to pay money, (iii) Capitalized Lease Obligations, (iv) obligations
under conditional sales or other title retention agreements or secured by any
Lien, (v) any letters of credit or similar instruments (including reimbursement
obligations with respect thereto), (vi) the deferred unpaid purchase price of
property or services, except trade payables and accrued expenses incurred in the
ordinary course of business, or (vii) any Guaranty of any or all of the
foregoing.

         "Indemnity, Contribution and Subrogation Agreement" - the Indemnity,
Contribution and Subrogation Agreement, dated as of the Effective Date, by and
among the Borrower Affiliated Companies, substantially in the form attached
hereto as Exhibit B.

         "Initial Facilities" - as defined in the recitals hereto.

         "Insurance Policies" - as defined in Section 4.17.

         "Intellectual Property Security Agreements" - collectively, (i) the
Copyright Security Agreements, (ii) the Patent Security Agreements, and (iii)
the Trademark Security Agreements.

         "Interest Coverage Ratio" - as defined in Section 10.3.

         "Interest Period" - with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or converted from a Base Rate Loan or
Base Rate Loans, or the last day of the next preceding Interest Period with
respect to such Eurodollar Loan, and ending on the same day in the first,
second, third or sixth calendar month as the Borrower may select as provided in
Section 2.2, except that each such Interest Period which commences on the last
Eurodollar Business Day of a calendar month shall end on the last Eurodollar
Business Day of the appropriate subsequent calendar month.
   23
                                      -15-

         Notwithstanding the foregoing: (i) each Interest Period which would
otherwise end on a day which is not a Eurodollar Business Day shall end on the
next succeeding Eurodollar Business Day (or, if such next succeeding Eurodollar
Business Day falls in the next succeeding calendar month, on the next preceding
Eurodollar Business Day); (ii) no more than seven (7) Interest Periods for
Eurodollar Loans shall be in effect at the same time; and (iii) no Interest
Period shall end after the Maturity Date. In the event that the Borrower fails
to select the duration of any Interest Period for any Loan within the time
period and otherwise as provided in Section 2.2, such Loans will be
automatically converted into a Base Rate Loan on the last day of the preceding
Interest Period for such Loan.

         "Interest Rate Contracts" - any interest rate swap, cap, collar or
other agreement or arrangement designed to provide protection against
fluctuation in interest rates.

         "Investment" - in relation to any Person, all investments by such
Person, by stock purchase, capital contribution, loan, advance, Guaranty of any
Indebtedness of any other Person, acquisition by such Person of any
Communications System or any business or all or any substantial part of the
Assets of any other Person or any division or Subsidiary of such Person or the
transfer or sale of property by such Person (otherwise than in the ordinary
course of the business of such Person) to any other Person for less than payment
in full in cash of the transfer or sale price or the fair value thereof
(whichever of such price or value is higher).

         "IRS" - Internal Revenue Service.

         "Issue Date" - in relation to any Letter of Credit, the day on which
such Letter of Credit is issued or to be issued by the Issuing Bank for the
account of the Borrower pursuant to this Agreement.

         "Issuing Bank" - with respect to any Letter of Credit, Fleet and any
successor issuing bank.

         "Issuing Bank Fees" - as defined in Section 3.6.

         "KMIT-FM and KGGK-FM Acquisition" - the acquisition by Saga Broadcast
of the capital stock of Mitchell Broadcasting, Ltd. relating to radio stations
KMIT-FM licensed to Mitchell, South Dakota and KGGK-FM licensed to Wessington
Springs, South Dakota.

         "Lakefront" - Lakefront Communication, Inc., a Delaware corporation.

         Lakefront Membership Interest Pledge Agreement" - the Membership
Interest Pledge Agreement, dated as of the Effective Date, by and between
Lakefront and the Collateral Trustee, substantially in the form attached hereto
as Exhibit I.

         "Lakefront Stock Pledge Agreement" - the Stock Pledge Agreement, dated
as of the Effective Date, by and between Lakefront and the Collateral Trustee,
substantially in the form attached hereto as Exhibit J.

         "Lakefront Pledge Agreements" - collectively, the Lakefront Stock
Pledge Agreement and the Lakefront Membership Interest Pledge Agreement.
   24
                                      -16-

         "Leases" - leases and subleases (other than Capitalized Leases),
licenses for the use of real property, easements, grants, pole attachment and
conduit or trench agreements and other attachment rights and similar instruments
under which any Principal Company has the right to use real or personal property
or rights of way.

         "Lenders" - as defined in the preamble hereof.

         "Letter of Credit" - any irrevocable standby letter of credit issued or
to be issued by the Issuing Bank for the account of the Borrower upon the terms
and subject to the conditions contained in this Agreement.

         "Letter of Credit Application" - as defined in Section 3.2(b).

         "Letter of Credit Disbursement" - a disbursement by the Issuing Bank to
the beneficiary of a Letter of Credit in connection with a drawing thereunder.

         "Letter of Credit Exposure" - at any time, the sum of (i) the aggregate
undrawn face amount of all Letters of Credit outstanding at such time, and (ii)
the aggregate amount of all drawings under Letters of Credit for which the
Issuing Bank shall not have been reimbursed by the Borrower as provided in
Section 3.4. The amount of any Lender's Letter of Credit Exposure at any time
shall be the product of (i) the Letter of Credit Exposure, multiplied by (ii)
such Lender's Revolving Credit Commitment Percentage at such time.

         "Letter of Credit Fees" - as defined in Section 3.6.

         "Lien" - any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature of any of the foregoing, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction.

         "Loans" - collectively, (i) Revolving Credit Loans, (ii) Term Loans,
(iii) Acquisition Loans and (iv) Incremental Facility Loans. Loans of different
types made or converted from Loans of other types on the same day (or of the
same type but having different Interest Periods) shall be deemed to be separate
Loans for all purposes of this Agreement.

         "Loan Documents" - collectively (i) this Agreement, (ii) the Notes,
(iii) the Security Documents, (iv) the Indemnity, Contribution and Subrogation
Agreement, (v) each Assignment and Acceptance Agreement, (vi) the Letter of
Credit Applications, (vii) the Fee Letter and (viii) any other documents,
instruments or agreements executed and/or delivered in connection with the
foregoing or from time to time designated by the Borrower and the Agent as a
Loan Document hereunder.

         "Mandatory Payment" - as defined in Section 2.17.

         "Material Adverse Effect" - any of the following: (i) any material
adverse effect on the business, Assets, operations, prospects or condition,
financial or otherwise, of the Borrower and its Restricted Subsidiaries taken as
a whole, (ii) any material impairment of
   25
                                      -17-

the ability of any Principal Company to perform any of its material obligations
under any Loan Document, or (iii) any material impairment of the validity or
enforceability of any Loan Document or any material impairment of the rights,
remedies or benefits available to, the Collateral Trustee, the Agent or any
Lender under any Loan Document.

         "Material Federal Copyrights" - with respect to any Principal Company,
all copyrights of such Principal Company which (i) are registered in the United
States Copyright Office, and (ii) the Agent has determined (A) are material to
the business of the Principal Companies, taken as a whole, or (B) have an
economic value which is not insubstantial compared to all other Assets of all
the Principal Companies, taken as a whole.

         "Material Federal Patents" - with respect to any Principal Company, all
patents of such Principal Company which (i) are registered in the United States
Patent and Trademark Office, and (ii) the Agent has determined (A) are material
to the business of the Principal Companies, taken as a whole, or (B) have an
economic value which is not insubstantial compared to all other Assets of all
the Principal Companies, taken as a whole.

         "Material Federal Trademarks" - with respect to any Principal Company,
all trademarks of such Principal Company which (i) are registered in the United
States Patent and Trademark Office, and (ii) the Agent has determined (A) are
material to the business of the Principal Companies, taken as a whole, or (B)
have an economic value which is not insubstantial compared to all other Assets
of all the Principal Companies, taken as a whole.

         "Material Intellectual Property" - with respect to any Principal
Company, any Material Federal Trademarks, any Material Federal Copyrights, and
any Material Federal Patents.

         "Material Labor Dispute" - with respect to any Person, any strike, work
stoppage, material unfair labor practice claim or charge, arbitration or other
material labor dispute against or affecting such Person.

         "Material Real Property" - any and all real property owned by any
Principal Company on which is located a tower, transmitter or antenna system
used in connection with the operations of any Station or Stations, if (but only
if) the aggregate Consolidated EBITDA attributable to such Station or Stations
for the Reference Period most recently ended equals or exceeds ten percent (10%)
of Consolidated EBITDA of the Principal Companies for such Reference Period.

         "Maturity Date" - September 30, 2008.

         "Mortgages" - collectively, the instruments of mortgage executed and
delivered by the Principal Companies in favor of the Collateral Trustee
(including any predecessors to Fleet as collateral trustee) from time to time
with respect to Material Real Properties.

         "Most Recent Reference Period" means the most recent Reference Period
for which financial statements of the Borrower and its Restricted Subsidiaries
have been delivered to the Lenders in compliance with Article VII hereof.
   26
                                      -18-

         "Multiemployer Plan" - any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by any Principal Company or
any ERISA Affiliate.

         "Net Proceeds" - with respect to any Prepayment Event (i) the gross
amount of cash consideration payable to or receivable by any Principal Company
in respect of such Prepayment Event, less (ii) the amount, if any, of all
estimated taxes payable as a result of gain realized with respect to such
Prepayment Event, whether or not payable during the taxable year in which such
Prepayment Event occurred, and less (iii) estimated fees, commissions, costs and
other expenses (other than those payable to any Affiliate) which are incurred in
connection with such Prepayment Event and are payable by the seller or the
transferor of the assets or property to which such Prepayment Event relates, but
only to the extent not already deducted in arriving at the amount referred to in
clause (i). To the extent that the estimate of taxes payable, or fees,
commissions, costs and other expenses incurred, proves incorrect, an adjustment
shall be made by way of an additional payment to the Agent, for the ratable
benefit of the Lenders, or a credit against amounts payable in respect of any
future Prepayment Events, as applicable.

         "Net Proceeds Payment" - as defined in Subsection 2.5(f).

         "Net Proceeds Payment Date" - as defined in Subsection 2.5(f).

         "New Type Loan" - as defined in Section 2.23.

         "Next Reference Period" - with respect to any Reference Period, the
Reference Period commencing immediately after the end of such Reference Period.

         "Notes" - collectively (i) the Term Loan Notes, (ii) the Revolving
Credit Notes, (iii) the Acquisition Loan Notes, and (iv) the Incremental
Facility Loan Notes.

         "Obligations" - collectively, all of the Indebtedness, liabilities and
obligations, whether direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, of any Principal
Company (i) to any Lender, the Issuing Bank, the Agent or the Collateral
Trustee, whether now existing or hereafter arising, whether or not currently
contemplated, arising under any Loan Document, and (ii) under any Interest Rate
Contract entered into with any Person that was (a) a Lender or an Affiliate of
any Lender hereunder or (b) a Lender or an Affiliate of any Lender (as each such
term is defined under the Existing Credit Agreement) under the Existing Credit
Agreement, at the time such Person entered into such Interest Rate Contract.

         "Participant" - as defined in Subsection 13.11(a).

         "Patent Security Agreements" - collectively, the Patent Collateral
Assignment and Security Agreements from time to time entered into by and between
the Collateral Trustee and one or more of the Principal Companies with respect
to Material Federal Patents.

         "Payor" - as defined in Section 2.17.

         "PBGC" - Pension Benefit Guaranty Corporation.
   27
                                      -19-

         "Perfected Collateral" - as defined in Section 4.4(a).

         "Permitted Acquisition" - any Acquisition after the Effective Date by
the Borrower or any of its Restricted Subsidiaries of any Communications System
so long as, in each case, either the Required Lenders have given their written
consent to such Acquisition or all of the following conditions have been
satisfied:

                  (i) after giving effect to such Acquisition, the Assets
         comprising such Communications System (as used in this definition, the
         "Acquired Assets") shall be owned exclusively by the Borrower or a
         wholly-owned Restricted Subsidiary of the Borrower;

                  (ii) if the Acquired Assets are owned by a newly-formed or
         newly-acquired Restricted Subsidiary of the Borrower, such Restricted
         Subsidiary (and any parent of such Restricted Subsidiary that is not
         already a Principal Company) shall have executed and delivered to the
         Agent and the Lenders (A) an accession agreement reasonably
         satisfactory to the Agent, pursuant to the terms of which such
         Restricted Subsidiary (and such parent or parents, if applicable) (1)
         becomes a party to this Agreement as a Principal Company and as a
         Guarantor, becomes a party to the Borrower Subsidiary Security
         Agreement as a Restricted Subsidiary, becomes a party to the Indemnity,
         Contribution and Subrogation Agreement as a "Borrower Affiliated
         Company", and becomes a party to any other Loan Document as the Agent
         may reasonably request, and (2) agrees to perform and observe all of
         the obligations and covenants (including all obligations and covenants
         contained in Article VI hereof) of a Principal Company and a Guarantor
         hereunder, of a Restricted Subsidiary under the Borrower Subsidiary
         Security Agreement, of a Borrower Affiliated Company under the
         Indemnity, Contribution and Subrogation Agreement, and of the
         appropriate party under any other Loan Document to which it becomes a
         party and (B) one or more Intellectual Property Security Agreements, if
         requested by the Agent;

                  (iii) the Borrower shall have demonstrated to the reasonable
         satisfaction of the Agent (based on, among other things, operating and
         financial projections and pro forma financial statements delivered to
         the Agent and certified by the Chief Financial Officer) that,
         immediately after giving effect to the Acquisition (including the
         making of any Loans and the incurrence of any Indebtedness required to
         finance such Acquisition), all covenants (including all covenants
         contained in Article X hereof) contained herein (A) would have been
         satisfied on a pro forma basis as at the end of and for the Most Recent
         Reference Period, and (B) will be satisfied on a pro forma basis
         through the period ending two years after the date of such Acquisition.
         The Agent acknowledges that, as of the date hereof, based on the
         information provided to it by the Borrower through the date hereof, the
         requirements of this paragraph (iii) are satisfied with respect to all
         Scheduled Acquisitions. Notwithstanding such acknowledgement by the
         Agent, the Borrower shall still be required to satisfy the requirements
         of this paragraph (iii) for any Scheduled Acquisition prior to the
         completion of such Scheduled Acquisition;
   28
                                      -20-

                  (iv) no Default or Event of Default is continuing immediately
         prior to such Acquisition, and no Default or Event of Default would
         result from such Acquisition;

                  (v) if the Total Consideration (as defined below) payable by
         the Principal Companies in connection with such Acquisition would be
         greater than $20,000,000, the Required Lenders have approved such
         Acquisition in writing (it being understood that the Required Lenders
         have no obligation to provide such written approval);

                  (vi) if the Total Consideration (as defined below) payable by
         the Borrower and its Restricted Subsidiaries in connection with such
         Acquisition would be greater than $10,000,000, the Agent shall have
         received such due diligence materials relating to the Acquisition as
         the Agent shall have reasonably requested, and the Agent shall be
         reasonably satisfied with the results of its review of such materials;

                  (vii) the Agent shall have received satisfactory evidence that
         the Communication System to be acquired has complied with, is in
         compliance with, and, after the Acquisition, will be in compliance
         with, in all material respects all applicable Requirements of Law,
         including the Communications Act and all Environmental Laws; and

                  (viii) prior to any such Acquisition, the Borrower shall have
         delivered to the Agent the definitive acquisition agreement between the
         Borrower and/or applicable Restricted Subsidiary or Subsidiaries and
         the applicable seller.

As used in this definition, "Total Consideration" means all consideration
payable by any Principal Company in connection with any Acquisition, including
cash payments at closing, the principal amount of any promissory notes issued by
any Principal Company, the principal amount of any amounts payable by any
Principal Company in consideration for any non-compete covenant, and the amount
of any Indebtedness for Borrowed Money assumed by any Principal Company (but
excluding any consideration paid by the issuance of Permitted Capital Stock).

The purchase by any Principal Company of any Communication System pursuant to
any local market agreement or time brokerage agreement entered into by any
Principal Company in connection with any Permitted LMA Transaction must satisfy
all of the above requirements.

         "Permitted Capital Stock" - Capital Stock of the Borrower with respect
to which the Borrower has no obligation to make any Distributions prior to the
payment in full in cash of all the Obligations.

         "Permitted Holder" means (i) Christian or (ii) any of Christian's
Permitted Transferees.

         "Permitted LMA Transaction" - any agreement or arrangement pursuant to
which the Borrower or any of its Restricted Subsidiaries purchases broadcast
time on any Communications System (other than a Station) for the purpose of
programming such
   29
                                      -21-

broadcast time or any other similar arrangement, so long as in each case, either
the Required Lenders have given their written consent to such transaction or:

                  (i) if the Borrower or any of its Restricted Subsidiaries has
         the obligation to purchase such Communications System pursuant to or in
         connection with such agreement, the requirements set forth in clauses
         (i) through (viii) of the definition of "Permitted Acquisition" would
         be met; for purposes of determining whether such agreement or
         arrangement would meet such requirements, references in such clauses to
         the "Acquisition" or any similar reference shall be deemed to refer to
         the Acquisition contemplated by such agreement. This clause (i) shall
         not apply if the Borrower or its Restricted Subsidiaries has a mere
         option to purchase such Communication System;

                  (ii) the Borrower shall have demonstrated to the reasonable
         satisfaction of the Agent that the Pro Forma Fixed Charges Coverage
         Ratio (as defined in Section 10.2), after giving pro forma effect to
         the transactions contemplated by such agreement or arrangement, shall
         be not less than the ratio then required by Section 10.2; and

                  (iii) no Default or Event of Default is continuing immediately
         prior to the effectiveness of such agreement or arrangement, and no
         Default or Event of Default would result from such agreement or
         arrangement.

                  "Permitted Liens" - as to any Principal Company:

                  (i) Liens to secure taxes, assessments, levies or other
         governmental charges imposed upon such Principal Company, to the extent
         (in each case) that the payment thereof shall not at the time be
         required to be made in accordance with the provisions of Section 8.1;

                  (ii) deposits or pledges made by such Principal Company in the
         ordinary course of its business (A) to secure payment of workers'
         compensation, unemployment insurance, or other forms of governmental
         insurance or benefits, (B) to secure performance of bids, tenders,
         statutory obligations, leases and contracts (other than contracts
         relating to borrowed money), or (C) to secure surety, appeal, indemnity
         or performance bonds, in each case in the ordinary course of business
         of such Principal Company, and in each case only to the extent that
         payment thereof shall not at the time be required to be made in
         accordance with the provisions of Section 8.1;

                  (iii) Liens in respect of judgments or awards against such
         Principal Company with respect to which such Principal Company shall
         currently be processing an appeal or proceedings for review; provided,
         that (A) appropriate reserves with respect thereto have been
         established and maintained on the consolidated books of the Principal
         Companies in accordance with GAAP and (B) no such Lien or judgment
         constitutes an Event of Default described in Subsection 11.1(i) or (o);
   30
                                      -22-

                  (iv) Liens of carriers, warehousemen, mechanics, landlords or
         materialmen incurred in the ordinary course of the business of such
         Principal Company, in each case for sums not at the time required to be
         paid in accordance with provisions of Section 8.1; and

                  (v) easements, rights-of-way, zoning and similar restrictions
         and other similar encumbrances or title defects which, in the
         aggregate, are not substantial in amount, and which do not in any case
         materially detract from the value of the property subject thereto or
         interfere with the ordinary conduct of the business of such Principal
         Company.

         "Permitted Sale" - any Sale by any Principal Company (i) in the
ordinary course of its business of immaterial Assets or obsolete or unusable
equipment, (ii) in the ordinary course of its business of other equipment as
long as such equipment is replaced by equipment of like function and comparable
value within a period of three months after the date of such Sale or (iii) in
the ordinary course of its business of Immaterial Real Property; provided,
however, that (A) the total consideration payable to or receivable by the
Principal Companies in connection with any Permitted Sale (1) is an amount not
less than the fair market of the Assets subject to such Sale and (2) consists of
at least 90% cash which is payable at the closing of such Sale, and (B) no Sale
shall be deemed a Permitted Sale if it occurs in connection with any Sale of a
Communications System or other business by any Principal Company.

         "Permitted Subordinated Seller Debt" - Seller Debt incurred in
connection with any Permitted Acquisition which:

                  (i) is not (A) Guaranteed in any manner by any Principal
         Company unless such Guaranty is by the Borrower and is subordinated in
         right of payment and exercise of remedies to the prior payment in full
         in cash of all the Obligations, and any Indebtedness which refunds,
         refinances or replaces the Obligations, pursuant to a subordination
         agreement which is acceptable in all respects to the Agent; or (B)
         secured by any Assets of any Principal Company;

                  (ii) requires no principal payments prior to one year after
         the Maturity Date;

                  (iii) bears interest at a fixed annual rate not in excess of
         10%;

                  (iv) is subordinated in right of payment and exercise of
         remedies to the prior payment in full in cash of all the Obligations,
         and any Indebtedness which refunds, refinances or replaces the
         Obligations, pursuant to a subordination agreement which is acceptable
         in all respects to the Agent; and

                  (v) is in a face amount at the time of incurrence thereof
         which, when added to the aggregate amount of all principal payment
         obligations of the Principal Companies in respect of any other Seller
         Debt, does not exceed $3,000,000.

         "Permitted Transferees" - with respect to any Person, (i) any Affiliate
of such Person, (ii) the heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries of
   31
                                      -23-

any such Person or (iii) a trust, the primary beneficiaries of which, or a
corporation, partnership or other entity, the stockholders or general or limited
partners or other owners of which, include only such Person or his or her spouse
or lineal descendants, in each case to whom such Person has transferred the
beneficial ownership of any Capital Stock of the Borrower.

         "Person" - an individual, a corporation, a partnership, a joint
venture, a trust or unincorporated organization, a joint stock company or other
similar organization, a government or any political subdivision thereof, a
court, or any other legal entity, whether acting in an individual, fiduciary or
other capacity.

         "Prepayment Event" - any Sale (other than a Permitted Sale), or any
series of related Sales, of any Asset or Assets of any Principal Company
(including Capital Stock of any Restricted Subsidiary) which takes place at any
time after the date hereof and pursuant to which the gross amount of
consideration payable to or receivable by the Borrower Affiliated Companies
exceeds $2,000,000.

         "Principal Companies" - collectively, (i) the Borrower and (ii) the
Restricted Subsidiaries.

         "Principal Office" - the principal office of the Agent in the United
States, presently located at 100 Federal Street, Boston, Massachusetts 02110.

         "Pro Forma Fixed Charges" - for any Reference Period, without
duplication, the sum of (i) all interest in respect of Consolidated Total Funded
Debt paid by the Borrower and its Restricted Subsidiaries during such Reference
Period, (ii) all Commitment Fees paid by the Borrower and its Restricted
Subsidiaries during such Reference Period, (iii) the aggregate amount of Capital
Expenditures made by the Borrower and its Restricted Subsidiaries during such
Reference Period, (iv) the aggregate amount of all federal, state or local
income taxes paid by the Borrower and its Restricted Subsidiaries during such
Reference Period, and (v) all principal in respect of Consolidated Total Funded
Debt scheduled to be paid by the Principal Companies during the Next Reference
Period, calculated assuming:

                  (A)that no Acquisition Loans or Incremental Facility Loans are
         made during such Next Reference Period; and

                  (B)that no Term Loans, Acquisition Loans or Incremental
         Facility Loans are prepaid during such Next Reference Period, and that
         the only payments of Term Loans, Acquisition Loans and Incremental
         Facility Loans made during such Next Reference Period are scheduled
         amortization payments made on the respective due dates thereof.

         "Projections" - the projections of the Borrower delivered on or prior
to the Effective Date which shall be certified by the Chief Financial Officer
and identified as projections through the Maturity Date.

         "Public Filings" - as defined in Section 7.5.

         "Purchase Money Security Interest" - as defined in Subsection 9.2(d).
   32
                                      -24-

         "Purchasing Lender" - as defined in Subsection 13.11(b).

         "Quarterly Dates" - the last Business Day of each March, June,
September and December, the first of which shall be March 31, 2001.

         "Reference Period" - each period of four consecutive fiscal quarters of
the Borrower.

         "Regulation D" - Regulation D of the Board of Governors of the Federal
Reserve System, as the same may be amended or supplemented from time to time.

         "Regulatory Change" - as to any Lender, any change after the date of
this Agreement in United States federal, state or foreign laws or regulations
(including Regulation D and the laws or regulations which designate any
assessment rate relating to certificates of deposit or otherwise) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks, including such Lender, of or under any
United States federal, state or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.

         "Reinvestment Collateral Account" - as defined in the Collateral Trust
Agreement.

         "Required Acquisition Loan Lenders" - at any time, Lenders the sum of
whose (a) outstanding Acquisition Loan Commitments represent at least fifty-one
percent (51%) of the Total Acquisition Loan Commitment or (b) after the
termination of the Acquisition Loan Commitment Period, outstanding Acquisition
Loans represent at least fifty-one percent (51%) of all outstanding Acquisition
Loans made by the Lenders.

         "Required Incremental Facility Lenders" - at any time, with respect to
any Series of Incremental Facility Loans, Lenders the sum of whose (a)
outstanding Incremental Facility Commitments of such Series of Incremental
Facility Loans represent at least fifty-one percent (51%) of the aggregate
Incremental Facility Commitments of such Series, or (b) after the termination of
the Incremental Facility Commitment Period, outstanding Incremental Facility
Loans of such Series represent at least fifty-one percent (51%) of all
outstanding Incremental Facility Loans of such Series made by the Lenders.

         "Required Lenders" - at any time, Lenders the sum of whose (a)
outstanding (i) Term Loan Commitments or, after the termination thereof,
outstanding Term Loans, (ii) Revolving Credit Commitments or, after the
termination thereof, outstanding Revolving Credit Loans, (iii) Acquisition Loans
Commitments or, after the termination thereof, outstanding Acquisition Loans,
(iv) Incremental Facility Commitments of each Series of Incremental Facility
Loans or, after the termination thereof, outstanding Incremental Facility Loans
and (v) Letter of Credit Exposure, represent at least 51% of the sum of (b) all
outstanding (i) Term Loan Commitments or, after the termination thereof, all
outstanding Term Loans, (ii) Revolving Credit Commitments or, after the
termination thereof, all outstanding Revolving Credit Loans, (iii) Acquisition
Loan Commitments or, after the termination thereof, all outstanding Acquisition
Loans, (iv) Incremental Facility Commitments of each Series of Incremental
Facility Loans or, after the termination thereof, all outstanding Incremental
Facility Loans and (v) Letter of Credit Exposure.
   33
                                      -25-

         "Required Revolving Credit Lenders" - at any time, Lenders the sum of
whose (a) outstanding Revolving Credit Commitments represent at least fifty-one
percent (51%) of the Total Revolving Credit Commitment, or (b) after the
termination of the Revolving Credit Commitments, outstanding Revolving Credit
Loans represent at least fifty-one percent (51%) of all outstanding Revolving
Credit Loans made by Lenders.

         "Required Term Loan Lenders" - at any time, Lenders the sum of whose
(a) outstanding Term Loan Commitments represent at least fifty-one percent (51%)
of the Total Term Loan Commitment, or (b) after the termination of the Term Loan
Commitments, outstanding Term Loans represent at least fifty-one percent (51%)
of all outstanding Term Loans made by Lenders.

         "Requirement of Law" - as to the any Principal Company, (i) the
Governing Documents of such Principal Company, and (ii) any law, treaty, rule or
regulation (whether Federal, state, local or foreign) or determination of any
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Principal Company or any of its property or to which
such or any of its property is subject.

         "Reserved Commitment Amount" - as defined in Subsection 2.1(a).

         "Restricted Payments" - with reference to any Principal Company, (i)
any Distribution (other than any distribution by the Borrower of Class A Common
Stock to any Person in connection with such Person's conversion of any Class B
Common Stock owned by such Person into Class A Common Stock) or (ii) any
optional retirement, repurchase, defeasance or redemption of, any acquisition
for value of, or any repayment or prepayment of, any Indebtedness for Borrowed
Money (other than Obligations) of any Principal Company other than as required
by mandatory or scheduled repayment obligations.

         "Restricted Subsidiary" - any Subsidiary of the Borrower other than an
Unrestricted Subsidiary.

         "Revolving Credit Commitment" - with respect to a Lender, the
commitment of such Lender to make Revolving Credit Loans to the Borrower in the
amount set forth on Schedule 1 hereto, as the same may be reduced from time to
time or terminated in accordance with the terms hereof.

         "Revolving Credit Commitment Percentage" - with respect to each
Revolving Credit Lender, the percentage of such Lender's Revolving Credit
Commitment to the Total Revolving Credit Commitment or, after the termination of
the Revolving Credit Commitments, the percentage of such Lender's outstanding
Revolving Credit Loans to the aggregate outstanding Revolving Credit Loans.

         "Revolving Credit Commitment Fees" - as defined in Section 2.8(a).

         "Revolving Credit Lender" - each Lender having a Revolving Credit
Commitment or holding any Revolving Credit Loans.

         "Revolving Credit Loan(s)" - as defined in Section 2.1(a).
   34
                                      -26-

         "Revolving Credit Note(s)" - as defined in Section 2.4(a).

         "Revolving Credit Outstandings" - at any time, the sum of (i) the
aggregate principal amount of Revolving Credit Loans outstanding at such time,
and (ii) the Letter of Credit Exposure at such time.

         "Saga Air" - Saga Air, LLC, a Delaware limited liability company.

         "Saga Broadcast" - Saga Broadcasting Corp., a Delaware corporation.

         "Saga Broadcast Stock Pledge Agreement" - the Stock Pledge Agreement,
dated as of the Effective Date, by and between Saga Broadcast and the Collateral
Trustee, in substantially the form attached hereto as Exhibit J.

         "Sale" - a sale, lease, transfer or other disposition of any Asset.

         "Scheduled Acquisitions" - collectively, (i) the WHAI-AM/FM Acquisition
and (ii) the KMIT-FM and KGGK-FM Acquisition.

         "Scheduled Acquisition Documents" - all agreements, documents and
instruments executed and/or delivered in connection with any Scheduled
Acquisition.

         "Secondary Stations" - collectively, the Low Power Television Stations
KUNU-LP, KVTX-LP and KXTS-LP, Victoria, Texas, FM Translator Stations W270AH,
Peterborough, New Hampshire, and W272AX, Keene, New Hampshire, K283AG, Sioux
City, Iowa, and such other low power television and FM translator stations
acquired by any Principal Company after the Effective Date.

         "Secured Creditors" - as defined in the Collateral Trust Agreement.

         "Securities Act" - the Securities Act of 1933, as amended.

         "Security Documents" - (i) the Collateral Trust Agreement, (ii) the
Stock Pledge Agreements, (iii) the Borrower Security Agreement, (iv) the
Borrower Subsidiary Security Agreement, (v) the Intellectual Property Security
Agreements, (vi) the Mortgages, and (vii) any other instruments or documents
from time to time securing or guaranteeing any of the Obligations or from time
to time designated by the Borrower and the Agent as Security Documents
hereunder.

         "Seller Debt" - Indebtedness (other than Loans or Letters of Credit) of
any Principal Company (whether in respect of promissory notes, non-compete
covenants or otherwise) incurred in connection with any Acquisition.

         "Seller Debt Documents" - all agreements, instruments or other
documents evidencing or relating to Seller Debt.

         "Series" - as defined in Section 2.1(d).
   35
                                      -27-

         "Specified Default" - as of any date of determination, any Event of
Default (other than an Event of Default described in Sections 11.1(d), (f) or
(j)) which shall not have been remedied within five (5) days after notice
thereof shall have been given to the Borrower by the Agent.

         "Stations" - collectively, (i) radio station WAQY-FM, licensed to
Springfield, Massachusetts; (ii) radio station WHNP(AM), licensed to East
Longmeadow, Massachusetts; (iii) radio stations WZAN(AM), WPOR-FM, WGAN (AM),
WBAE(AM) and WMGX (FM) licensed to Portland, Maine; (iv) radio stations WFEA(AM)
and WZID(FM) licensed to Manchester, New Hampshire, (v) radio stations WVKO(AM)
and WSNY(FM) licensed to Columbus, Ohio, (vi) radio stations WKLH(FM), WJYI(AM)
and WLZR-FM licensed to Milwaukee, Wisconsin, (vii) radio station WJOI(AM) and
WNOR-FM licensed to Norfolk, Virginia, (viii) radio stations WLRW(FM) and
WIXY(FM) licensed to Champaign, Illinois, (ix) radio station WYMG(FM) licensed
to Jacksonville, Illinois, (x) radio stations KRNT(AM), KSTZ(FM), KXTK(AM) and
KIOA-FM licensed to Des Moines, Iowa, (xi) radio station WYNZ(FM) licensed to
Westbrook, Maine, (xii) radio stations WQQL(FM), WDBR(FM) and WTAX(AM) licensed
to Springfield, Illinois, (xiii) radio station WAFX(FM) licensed to Suffolk,
Virginia, (xiv) television station KOAM - TV licensed to Pittsburg, Kansas, (xv)
radio stations WNAX(AM) and WNAX-FM licensed to Yankton, South Dakota, (xvi)
radio stations KGMI(AM), KISM(FM), KPUG(AM), KIXT(AM), and KAFE(FM), licensed to
Bellingham, Washington, (xvii) radio station WQLL(FM), licensed to Bedford, New
Hampshire, (xviii) radio station WJMR-FM, licensed to Menomonee Falls,
Wisconsin, (xix) radio station WFMR(FM) licensed to Brookfield, Wisconsin, (xx)
radio station KAZR(FM) licensed to Pella, Iowa, (xxi) radio station KLTI-FM
licensed to Ames, Iowa, (xxii) radio stations WLLM(AM) and WMHX(FM) licensed to
Lincoln, Illinois, (xxiii) radio stations KICD(AM) and KICD-FM and KLLT(FM),
licensed to Spencer, Iowa, (xxiv) radio stations WJMR(AM) and WCVQ(FM), licensed
to Fort Campbell, Kentucky, (xxv) radio stations WZZP(FM) and WVVR(FM), licensed
to Hopkinsville, Kentucky, (xxvi) radio station WDXN(AM), licensed to
Clarksville, Tennessee, (xxvii) television station WXVT(TV), Greenville,
Mississippi, (xxviii) television station KAVU(TV), Victoria, Texas, (xxix) radio
stations WHMP(AM) and WLZX(FM), Northampton, Massachusetts, (xxx) radio station
WKIO(FM), Urbana, Illinois and (xxxi) any other Communications Systems acquired
by any Principal Company after the Effective Date.

         "Stock Pledge Agreements" - collectively, (i) the Borrower Stock Pledge
Agreement, (ii) the Saga Broadcast Stock Pledge Agreement, and (iii) the
Lakefront Pledge Agreements.

         "Subordinated Debt" - collectively, (i) Permitted Subordinated Seller
Debt and (ii) any other unsecured Indebtedness for Borrowed Money of the
Borrower the principal amount of, the interest rate on and all other terms
(including covenants, events of default, remedies and subordination provisions)
of which have been approved in writing by the Required Lenders.

         "Subordinated Debt Documents" - all agreements, instruments or other
documents evidencing or relating to any Subordinated Debt.

         "Subrogation Rights" - as defined in Section 6.6.
   36
                                      -28-

         "Subsidiary" - with respect to any Principal Company, any corporation,
partnership, limited liability company, or joint venture whether now existing or
hereafter organized or acquired: (i) in the case of a corporation, of which a
majority of the securities having ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) are at the time owned by such Principal Company
and/or one or more Subsidiaries of such Principal Company, or (ii) in the case
of a partnership, limited liability company, or joint venture in which such
Principal Company is a general partner, member, or joint venturer, or of which a
majority of the partnership or other ownership interests are at the time owned
by such Principal Company and/or one or more of its Subsidiaries. Unless the
context otherwise requires, references in this Agreement to "Subsidiary" or
"Subsidiaries" shall be deemed to be references to a Subsidiary or Subsidiaries
of the Borrower.

         "Syndication Agent" - as defined in the preamble hereof.

         "Taxes" - any federal, state or local taxes or tax liabilities.

         "Term Loan(s)" - as defined in Subsection 2.1(c).

         "Term Loan Commitment" - with respect to a Lender, the commitment of
such Lender to make Term Loans to the Borrower in the amount set forth on
Schedule 1 hereto, as the same may be reduced from time to time or terminated in
accordance with the terms hereof.

         "Term Loan Commitment Percentage" - with respect to each Lender with a
Term Loan Commitment, the percentage of such Lender's Term Loan Commitment to
the Total Term Loan Commitment or, after the termination of the Total Term Loan
Commitment, the percentage of such Lender's outstanding Term Loans to the
aggregate outstanding Term Loans.

         "Term Loan Notes - as defined in Subsection 2.4(b).

         "Term Loan Payment Date" - as defined in Subsection 2.5(b).

         "Total Acquisition Loan Commitment" - the sum of the Acquisition Loan
Commitments of the Lenders, as in effect from time to time. The initial Total
Acquisition Loan Commitment as of the Effective Date is $75,000,000.

         "Total Funded Debt Leverage Ratio" - as defined in Section 10.1.

         "Total Revolving Credit Commitment" - the sum of the Revolving Credit
Commitments of the Lenders, as in effect from time to time. The initial Total
Revolving Credit Commitment as of Effective Date is $20,000,000.

         "Total Term Loan Commitment" - the sum of the Term Loan Commitments of
the Lenders, as in effect from time to time. The initial Total Term Loan
Commitment as of the Effective Date in $105,000,000.

   37
                                      -29-

         "Trademark" - collectively, all of the following, to the extent that
any Principal Company now or hereafter has any right, title or interest herein:
(i) all trademarks, service marks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, logos,
other source or business identifiers, designs and general intangibles or like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all registration and recording applications filed in
connection therewith, including registrations and registration applications in
the United States Patent and Trademark Office, or any state of the United
States, or in any country, as well as all extensions or renewals thereof, and
(ii) all goodwill associated therewith or symbolized thereby, and (iii) all
other assets, rights and interests that uniquely reflect or embody such
goodwill.

         "Trademark Security Agreements" - collectively, the Trademark
Collateral Assignment and Security Agreements from time to time entered into by
and between the Collateral Trustee and one or more of the Principal Companies
with respect to Material Federal Trademarks.

         "Tranche" - the respective facilities and commitments utilized in
making Loans hereunder, i.e., Term Loans, Revolving Credit Loans, Acquisition
Loans, and each Series of Incremental Facility Loans, respectively, and the
Commitments corresponding to each such Tranche of Loans.

         "Transaction" - the loans and other transactions contemplated by the
Loan Documents to occur on or about the Effective Date.

         "Transaction Documents" - (i) this Agreement, (ii) the Notes, (iii) the
Indemnity, Contribution and Subrogation Agreement, (iv) the Fee Letter, (v) the
Collateral Trust Agreement, (vi) the Stock Pledge Agreements, (vii) the Borrower
Security Agreement, (viii) the Borrower Subsidiary Security Agreement, and (ix)
any other documents executed or delivered in connection with the Transaction.

         "Transfer Effective Date" - as defined in Section 13.11(b).

         "Transferee" - as defined in Section 13.11(f).

         "type" - with respect to any Loan or portion thereof, such Loan's
designation as a Base Rate Loan or Eurodollar Loan.

         "Unrestricted Subsidiary" - any Subsidiary that (i) shall have been
designated as an "Unrestricted Subsidiary" in accordance with the provisions of
Section 1.3 and (ii) any Subsidiary of an Unrestricted Subsidiary.

         "Utilization Level" - shall mean, as at any date of determination, as
it relates to (a) the Revolving Credit Commitment, the ratio (expressed as a
percentage) of (x) the daily average amount of the Revolving Credit Outstandings
during the applicable calendar quarter or relevant portion thereof, as the case
may be, over (y) the daily average amount of the Total Revolving Credit
Commitment during the applicable calendar quarter or relevant portion thereof,
as the case may be; and (b) the Acquisition Loan Commitment, the ratio
(expressed as a percentage) of (x) the daily average amount of the aggregate
amount of all
   38
                                      -30-

Acquisition Loans outstanding during the applicable calendar quarter or relevant
portion thereof, as the case may be, over (y) the daily average amount of the
Total Acquisition Loan Commitment during the applicable calendar quarter or
relevant portion thereof, as the case may be.

         "Voting Stock" - Capital Stock the holders of which are at the time
entitled, as such holders, to vote for the election of a majority of the
directors (or persons performing similar functions) of the corporation,
association, trust or other business entity involved, whether or not the right
so to vote exists by reason of the happening of a contingency.

         "WHAI-AM/FM Acquisition" - the acquisition by Saga Communications of
New England, Inc. of the assets of Haigis Broadcasting Corporation relating to
radio stations WHAI(AM) and WHAI-FM licensed to Greenfield, Massachusetts.

         Section 1.2. General Provisions Pertaining to Definitions. All terms of
an accounting character not specifically defined herein shall have the meanings
assigned thereto by GAAP. The definitions in this Article I shall apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". All references herein to
Sections, Subsections, paragraphs, clauses and Exhibits shall be deemed
references to Sections, Subsections, paragraphs on clauses of, and Exhibits to,
this Agreement unless the context shall otherwise require. Each reference herein
to a particular Person shall include a reference to such Person's successors and
permitted assigns. References to any agreement, instrument or document defined
in this Article I refer to such agreement, instrument or document as originally
executed, or if subsequently varied, replaced or supplemented from time to time,
as so varied, supplemented or replaced and in effect at the relevant time of
reference thereto.

         Section 1.3. Designation of Unrestricted Subsidiaries; Certain
Obligations Respecting Restricted Subsidiaries.

         (a) Designation of Unrestricted Subsidiaries. The Borrower may at any
time designate any of its Subsidiaries formed or acquired after the date hereof
an Unrestricted Subsidiary for purposes of this Agreement, by delivering to the
Agent a certificate of the Chief Financial Officer (and the Agent shall promptly
forward a copy of such certificate to each Lender) attaching a copy of a
resolution of the Borrower's board of directors setting forth such designation
and stating that the conditions set forth in this Section 1.3 have been
satisfied with respect to such designation, provided that no such designation
shall be effective unless at the time of such designation and after giving
effect thereto (i) no Default or Event of Default shall have occurred and be
continuing, (ii) no Subsidiary of an Unrestricted Subsidiary is a Restricted
Subsidiary, and (iii) the Borrower would be in compliance with the restrictions
on Investments in Unrestricted Subsidiaries set forth in Subsection 9.4(i).

         (b) Revocation of Designation. The Borrower may revoke any designation
of a Subsidiary as an Unrestricted Subsidiary by delivering to the Agent a
certificate of the Chief Financial Officer (and the Agent shall promptly forward
a copy of such certificate to
   39
                                      -31-

each Lender) attaching a copy of a resolution of the Borrower's board of
directors setting forth such revocation and stating that the conditions set
forth in this Section 1.3 have been satisfied with respect to such revocation,
provided that no such revocation shall be effective unless (i) at the time of
such revocation and after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing; (ii) all Liens, Indebtedness and
Investments of such Unrestricted Subsidiary outstanding immediately following
such revocation would, if incurred at such time, have been permitted to be
incurred under this Agreement and (iii) the Borrower shall have demonstrated to
the reasonable satisfaction of the Agent that (based on, among other things
operating and financial projections and pro forma financial statements delivered
to the Agent and certified by the Chief Financial Officer), immediately after
giving effect to such revocation, all covenants (including all covenants
contained in Article X hereof) contained herein (A) would have been satisfied on
a pro forma basis as at the end of and for the Most Recent Reference Period had
such Subsidiary been a Restricted Subsidiary at all times during such period,
and (B) will be satisfied and pro forma basis through the period ending two
years after the date of such designation.

         (c) Certain Restrictions Regarding Principal Companies. No Principal
Company shall at any time (i) provide credit support for, subject any of its
Assets (other than the Capital Stock of such Unrestricted Subsidiary owned by
such Principal Company) to the satisfaction of, or guarantee any Indebtedness of
any Unrestricted Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness), (ii) be directly or indirectly liable for any
Indebtedness or other obligations of any Unrestricted Subsidiary or (iii) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary.

         (d) The Borrower hereby designates Saga Air as an Unrestricted
Subsidiary as of the Effective Date. The Borrower represents and warrants to the
Agent and the Lenders that the requirements of this Section 1.3 with respect to
such designation have been satisfied.

                                   ARTICLE II

                         COMMITMENTS; LOANS; COLLATERAL

         Section 2.1. Loans.

         (a) Revolving Credit Loans. Subject to the terms and conditions set
forth in this Agreement, each Lender with a Revolving Credit Commitment
severally agrees to make revolving credit loans (individually, a "Revolving
Credit Loan" and, collectively, the "Revolving Credit Loans") to the Borrower
from time to time from and after the Effective Date until the Maturity Date in
an aggregate principal amount at any time outstanding (after giving effect to
all requests therefor) up to, but not exceeding, the Revolving Credit Commitment
of such Lender at such time, minus such Lender's Letter of Credit Exposure at
such time. Subject to the terms and conditions of this Agreement, from time to
time from
   40
                                      -32-

and after the Effective Date until the Maturity Date, the Borrower may borrow,
repay (provided that repayment of Eurodollar Loans shall be subject to the
provisions of Section 2.25) and reborrow Revolving Credit Loans.

         Proceeds of Revolving Credit Loans shall be available for any use
permitted by Subsection 2.9(a), provided that, in the event that the Borrower
shall prepay Revolving Credit Loans in accordance with Subsection 2.5(f)(ii)(x)
with Net Proceeds, then an amount of Revolving Credit Commitments equal to the
amount of such prepayment (a "Reserved Commitment Amount") shall be reserved and
shall not be available for any Credit Extension hereunder, except and to the
extent that the proceeds of such Credit Extension are used to (i) finance a
Permitted Acquisition in accordance with Subsection 2.5(f)(ii)(y) or (ii) prepay
Loans in accordance with Subsection 2.5(f)(ii)(y). The Borrower shall notify the
Agent in writing, at the time of any request for a Revolving Credit Loan that
would utilize any Reserved Commitment Amount, of (A) the amount of any Reserved
Commitment Amount to be so utilized, (B) the amount of the remaining Reserved
Commitment Amounts after giving effect to such Revolving Credit Loan, (C) the
Permitted Acquisition to be financed with proceeds of such Revolving Credit
Loan, or the prepayment of Loans to be made pursuant to Subsection 2.5(f)(ii)(y)
with proceeds of such Revolving Credit Loan.

         (b) Acquisition Loans. Subject to the terms and conditions set forth in
this Agreement, each Lender with an Acquisition Loan Commitment severally agrees
to make acquisition loans (individually, an "Acquisition Loan" and,
collectively, the "Acquisition Loans") to the Borrower from time to time during
the Acquisition Loan Commitment Period, on the closing date of each Permitted
Acquisition, in an aggregate principal amount at any time outstanding (after
giving effect to all requests therefor) up to, but not exceeding, the
Acquisition Loan Commitment of such Lender at such time. The Borrower shall not
be entitled to reborrow all of any part of the principal of Acquisition Loans
which shall be paid or prepaid at any time.

         (c) Term Loans. Subject to the terms and conditions set forth in this
Agreement, each Lender with a Term Loan Commitment severally agrees to make a
term loan to the Borrower on the Effective Date in a principal amount equal to
such Lender's Term Loan Commitment Percentage of $105,000,000 (each such term
loan being, individually, a "Term Loan" and, collectively, the "Term Loans").
The Borrower shall not be entitled to reborrow all or any part of the principal
of any Term Loans which shall be paid or prepaid at any time.

         (d) Incremental Facility Loans. In addition to borrowings of Term
Loans, Revolving Credit Loans and Acquisition Loans, at any time during the
Incremental Facility Commitment Period, the Borrower may from time to time
request that the Lenders offer to enter into commitments to make additional term
loans (individually, an "Incremental Facility Loan" and collectively, the
"Incremental Facility Loans") to the Borrower hereunder, which commitments
shall, with respect to any Series (as defined below) of any Incremental Facility
Loans, not be less than $10,000,000 nor greater than $50,000,000 in the
aggregate. Subject to the terms and conditions hereof, in the event that one or
more of the Lenders offer, in their sole discretion, to enter into such
commitments, and the Agent, such Lenders and the Borrower agree as to the amount
of such commitments that shall be allocated to the respective Lenders making
such offers and the fees (if any) to be payable by the Borrower in connection
therewith and the other terms of such Incremental Facility
   41
                                      -33-

Loans, then such Lenders shall become obligated to make Incremental Facility
Loans under this Agreement in an amount equal to the amount of their respective
Incremental Facility Commitments. The Incremental Facility Loans to be made
pursuant to any such agreement between the Borrower and one or more Lenders in
response to any such request by the Borrower shall be deemed to be a separate
"Series" of Incremental Facility Loans for all purposes of this Agreement. No
Lender shall be obligated to make any Incremental Facility Loans of any Series
and no Incremental Facility Loans of any Series shall be permitted to be made,
unless:

                  (i) the terms and conditions of such Series of Incremental
         Facility Loans shall have been approved by the Required Lenders;

                  (ii) no Default or Event of Default is continuing immediately
         prior to the making of such Incremental Facility Loan of such Series,
         and no Default or Event of Default would result therefrom; and

                  (iii) the Borrower shall have demonstrated to the reasonable
         satisfaction of the Agent (based on, among other things, operating and
         financial projections and pro forma financial statements delivered to
         the Agent and certified by the Chief Financial Officer) that,
         immediately after giving effect to the making of such Incremental
         Facility Loans of such Series, all covenants (including all covenants
         contained in Article X hereof) contained herein (A) would have been
         satisfied on a pro forma basis as at the end of and for the Most Recent
         Reference Period, and (B) will be satisfied on a pro forma basis
         through the period ending two years after the date such Incremental
         Facility Loans of such Series are made.

The aggregate principal amount of all Incremental Facility Commitments and
Incremental Facility Loans shall not exceed $50,000,000.

         Section 2.2. Notices Relating to Loans; Requests for Eurodollar Loans.

         (a) Notices Relating to Loans. The Borrower shall give the Agent
written or telephonic notice of each termination or reduction of the Revolving
Credit Commitments, the Acquisition Loan Commitments or the Incremental Facility
Commitments, each borrowing and prepayment of a Loan, each continuation or
conversion of a Loan (other than any conversion of Eurodollar Loans to Base Rate
Loans upon the expiration of the Interest Period for such Eurodollar Loans) and
the duration of each Interest Period applicable to each Eurodollar Loan (in each
case, a "Borrowing Notice", which shall be in form and substance satisfactory to
the Agent). Each such notice shall be irrevocable and shall be effective only if
received by the Agent not later than 11 a.m., Boston time, on the date which is:

                  (i) in the case of each notice of termination or reduction and
         each notice of borrowing or prepayment of, or conversion into, Base
         Rate Loans, one (1) Business Day prior to the date of the related
         termination, reduction, borrowing, prepayment or conversion; and

                  (ii) in the case of each notice of borrowing or prepayment of,
         continuation of or conversion into, Eurodollar Loans, or the duration
         of an Interest Period for
   42
                                      -34-

         Eurodollar Loans, three (3) Eurodollar Business Days prior to the date
         of the related borrowing, prepayment, continuation or conversion.

Each such notice of termination or reduction shall specify the amount thereof.
Each such notice of borrowing, conversion, continuation or prepayment shall
specify the amount (subject to Section 2.1) and type of Loans to be borrowed,
converted, continued or prepaid (and, in the case of a conversion, the type of
Loans to result from such conversion), the date of borrowing, continuation,
conversion or prepayment (which shall be: (x) a Business Day in the case of each
borrowing or prepayment of Base Rate Loans, and (y) a Eurodollar Business Day in
the case of each borrowing or prepayment of Eurodollar Loans and each conversion
of or into a Eurodollar Loan). Each such notice of the duration of an Interest
Period shall specify the Loans to which such Interest Period is to relate. The
Agent shall notify the Lenders of the content of each such Borrowing Notice
promptly after its receipt thereof. Any telephonic notice given under this
Section 2.2 shall be promptly (and in any event, within one (1) Business Day)
confirmed in writing and delivered to the Agent, provided that the Lenders and
the Agent shall be fully entitled to rely on any telephonic notice believed by
the Agent to have been given by an authorized person on behalf of the Borrower.

         (b) Requests for Eurodollar Loans. The Borrower may request a Loan in
the form of a Eurodollar Loan only if compliance with Section 2.5 (with the
payments provided for therein being applied in accordance with Subsection
2.5(h)) would not result in any portion of the principal amount of such
Eurodollar Loan being paid prior to the last day of the Interest Period
applicable thereto. No Lender shall have more than seven (7) Eurodollar Loans
outstanding at any one time.

         Section 2.3. Disbursement of Loan Proceeds. Not later than 1:00 p.m.,
Boston time, on the date specified for each borrowing hereunder, each Lender
shall transfer to the Agent, by wire transfer or otherwise, but in any event in
immediately available funds, the amount of the Loan to be made by it on such
date, and the Agent, upon its receipt thereof, shall disburse such sum to the
Borrower by depositing the amount thereof in an account of the Borrower
designated by the Borrower and maintained with the Agent.

         Section 2.4. Notes.

         (a) Revolving Credit Notes. The Revolving Credit Loans made by any
Lender shall be evidenced by a single promissory note of the Borrower
substantially in the form of Exhibit A-1 annexed hereto (each, a "Revolving
Credit Note" and, collectively, the "Revolving Credit Notes"), with appropriate
insertions. Each Revolving Credit Note shall be payable to the order of such
Lender in a principal amount equal to such Lender's Revolving Credit Commitment,
and shall otherwise be duly completed. The Revolving Credit Loans shall be
payable as provided in Section 2.5.

         (b) Term Loan Notes. The Term Loans made by any Lender shall be
evidenced by a single promissory note of the Borrower substantially in the form
of Exhibit A-2 annexed hereto (each, a "Term Loan Note" and, collectively, the
"Term Loan Notes"), with appropriate insertions. Each Term Loan Note shall be
payable to the order of such Lender in a principal amount equal to such Lender's
Term Loan Commitment as of the Effective Date (or in the case of a Term Loan
Note issued pursuant to Section 13.11(b), the respective
   43
                                      -35-

Term Loan evidenced thereby at the time of issuance), and shall otherwise be
duly completed. The Term Loan Notes shall be payable as provided in Section 2.5.

         (c) Acquisition Loan Notes. The Acquisition Loans made by any Lender
shall be evidenced by a single promissory note of the Borrower substantially in
the form of Exhibit A-3 annexed hereto (each, an "Acquisition Loan Note" and,
collectively, the "Acquisition Loan Notes"), with appropriate insertions. Each
Acquisition Loan Note shall be payable to the order of such Lender in a
principal amount equal to such Lender's Acquisition Loan Commitment as of the
Effective Date (or in the case of an Acquisition Loan Note issued pursuant to
Section 13.11(b), the Acquisition Loan Commitment or, after the termination of
the Acquisition Loan Commitment Period, the Acquisition Loans, evidenced thereby
at the time of issuance), and shall otherwise be duly completed. The Acquisition
Loan Notes shall be payable as provided in Section 2.5.

         (d) Incremental Facility Loan Notes. The Incremental Facility Loans of
each Series made by any Lender shall be evidenced by a single promissory note of
the Borrower substantially in the form of Exhibit A-4 annexed hereto (each, an
"Incremental Facility Loan Note and, collectively, the Incremental Facility Loan
Notes"). Each Incremental Facility Loan Note of each Series shall be dated on or
prior to the date the related Incremental Facility Loan is made, shall be
payable to the order of such Lender in a principal amount equal to such Lender's
Incremental Facility Loan Commitment for such Series (or in the case of an
Incremental Facility Loan Note issued pursuant to Section 13.11(b), the
Incremental Facility Loan evidenced thereby at the time of issuance), and shall
otherwise be duly completed. The Incremental Facility Loan Notes shall be
payable as provided in Section 2.5.

         (e) Notations on Notes. Each Lender may enter on a schedule attached to
each of its Notes a notation with respect to each Loan evidenced thereby of: (A)
the date and principal amount thereof, (B) each payment and prepayment of
principal thereof, (C) whether such Loan is a Base Rate Loan or a Eurodollar
Loan, and (D) the Interest Period for such Loan, if applicable. The failure of
any Lender to make a notation on the schedule to any of its Notes as aforesaid
shall not limit or otherwise affect the obligation of the Borrower to repay the
Loans in accordance with their respective terms as set forth herein.

         Section 2.5. Mandatory Principal Payments.

         (a) Repayment of Revolving Credit Loans at Maturity Date. All Revolving
Credit Loans shall mature on the Maturity Date. All principal of, interest on
and other amounts payable in respect of Revolving Credit Loans will, if not
sooner paid, be absolutely due and payable on the Maturity Date.

         (b) Scheduled Repayments of Term Loans. The Borrower shall pay to the
Agent, for the account of the Lenders with Term Loans, principal of the Term
Loans in consecutive quarterly installments payable on the last day of each
March, June, September and December, commencing on June 30, 2003, and on the
Maturity Date (each such date a "Term Loan Payment Date"). The aggregate
principal amount of the Term Loans due each Term Loan Payment Date shall be the
amount obtained by (i) multiplying (A) $105,000,000 by (B) the percentage set
forth below opposite the period during which such Term Loan
   44
                                      -36-

Payment Date falls and (ii) dividing the product of clause (i) above by the
number of Term Loan Payment Dates in such period.

                                                       AMORTIZATION
                        PERIOD                          PERCENTAGE
                        ------                          ----------
                                                    
              Effective Date - 12/31/02                     0.00%
                  1/1/03 - 12/31/03                        12.50%
                  1/1/04 - 12/31/04                        12.50%
                  1/1/05 - 12/31/05                        15.00%
                  1/1/06 - 12/31/06                        17.50%
                  1/1/07 - 12/31/07                        20.00%
                   1/1/08 - 9/30/08                        22.50%
                        TOTAL                             100.00%

The Term Loans shall in any event mature on the Maturity Date. All principal of,
interest on and other amounts payable in respect of the Term Loans will, if not
sooner paid, become and be absolutely due and payable on the Maturity Date.

         (c) Scheduled Repayments of Acquisition Loans. The Borrower shall pay
to the Agent, for the account of the Lenders with Acquisition Loans, the
aggregate principal amount of the Acquisition Loans outstanding on the
Conversion Date in consecutive quarterly installments payable on the last day of
each March, June, September and December, commencing on June 30, 2003, and on
the Maturity Date (each such date an "Acquisition Loan Payment Date"). The
aggregate principal amount of the Acquisition Loans due each Acquisition Loan
Payment Date shall be the amount obtained by (i) multiplying (A) the aggregate
principal amount of the Acquisition Loans outstanding on the Conversion Date by
(B) the percentage set forth below opposite the period during which such
Acquisition Loan Payment Date falls and (ii) dividing the product of clause (i)
above by the number of Acquisition Loan Payment Dates in such period.

                                                       AMORTIZATION
                        PERIOD                          PERCENTAGE
                        ------                          ----------
                                                    
              Effective Date - 12/31/02                     0.00%
                  1/1/03 - 12/31/03                        12.50%
                  1/1/04 - 12/31/04                        12.50%
                  1/1/05 - 12/31/05                        15.00%
                  1/1/06 - 12/31/06                        17.50%
                  1/1/07 - 12/31/07                        20.00%
                   1/1/08 - 9/30/08                        22.50%
                        TOTAL                             100.00%

All Acquisition Loans shall in any event mature on the Maturity Date. All
principal of, interest on and other amounts payable in respect of the
Acquisition Loans will, if not sooner paid, become and be absolutely due and
payable on the Maturity Date.

         (d) Scheduled Repayments of Incremental Facility Loans. The Borrower
shall pay to the Agent, for the account of the Lenders with Incremental Facility
Loans, the aggregate principal amount of the Incremental Facility Loans
outstanding on the
   45
                                      -37-

Conversion Date in consecutive quarterly installments payable on the last day of
each March, June, September and December, commencing on June 30, 2003, and on
the Maturity Date (each such date an "Incremental Facility Loan Payment Date").
The aggregate principal amount of the Incremental Facility Loans due each
Incremental Facility Loan Payment Date shall be the amount obtained by (i)
multiplying (A) the aggregate principal amount of the Incremental Facility Loans
outstanding on the Conversion Date by (B) the percentage set forth below
opposite the period during which such Incremental Facility Loan Payment Date
falls and (ii) dividing the product of clause (i) above by the number of
Incremental Facility Loan Payment Dates in such period.

                                                       AMORTIZATION
                        PERIOD                          PERCENTAGE
                        ------                          ----------
                                                    
              Effective Date - 12/31/02                     0.00%
                  1/1/03 - 12/31/03                        12.50%
                  1/1/04 - 12/31/04                        12.50%
                  1/1/05 - 12/31/05                        15.00%
                  1/1/06 - 12/31/06                        17.50%
                  1/1/07 - 12/31/07                        20.00%
                   1/1/08 - 9/30/08                        22.50%
                        TOTAL                             100.00%

All Incremental Facility Loans shall in any event mature on the Maturity Date.
All principal of, interest on and other amounts payable in respect of the
Incremental Facility Loans will, if not sooner paid, become and be absolutely
due and payable on the Maturity Date.

         (e) Mandatory Payments from Excess Cash Flow. On March 31 of each year,
commencing March 31, 2003, the Borrower shall prepay Loans in an aggregate
principal amount equal to (i) 40% of Excess Cash Flow for the fiscal year of the
Borrower most recently ended if the Total Funded Debt Leverage Ratio of the
Borrower and its Restricted Subsidiaries at the end of such fiscal year was
equal to or greater than 4.00:1.00, and (ii) 0% of Excess Cash Flow for such
fiscal year if the Total Funded Debt Leverage Ratio of the Borrower and its
Restricted Subsidiaries at the end of such fiscal year was less than 4.00:1.00
(each such payment being referred to herein as an "Excess Cash Flow Payment").
Excess Cash Flow Payments shall be applied as provided in Subsection 2.5(h).

         (f) Mandatory Payments in Connection with Prepayment Events.

                  (i) The Borrower shall, not later than the Business Day next
         following each day any Net Proceeds are received by any Borrower
         Affiliated Company, pay to the Agent the amount of such Net Proceeds
         (each such payment to the Agent being referred to herein as a "Net
         Proceeds Payment" and the date of each such payment being referred to
         herein as a "Net Proceeds Payment Date"). Each Net Proceeds Payment
         shall be applied as provided in Subsection 2.5(h).

                  (ii) Notwithstanding the foregoing, the Borrower shall not be
         required to make a Net Proceeds Payment with respect to any Net
         Proceeds if (A) the Borrower notifies the Agent in writing at the time
         such Net Proceeds are received that it
   46
                                      -38-

         intends to use such Net Proceeds to finance a Permitted Acquisition and
         (B) each of the following conditions is satisfied:

                  (x) such Net Proceeds are either (i) held by the Collateral
                  Trustee in the Reinvestment Collateral Account pending
                  application of such Net Proceeds, in which event the
                  Collateral Trustee need not release such Net Proceeds to the
                  Borrower except upon presentation of evidence satisfactory to
                  it that such Net Proceeds are to be applied in accordance with
                  the provisions of this Agreement, or (ii) applied by the
                  Borrower to the prepayment of Revolving Credit Loans hereunder
                  (in which event the Borrower shall notify the Agent in writing
                  at the time of such prepayment of Revolving Credit Loans that
                  such prepayment is being made from such Net Proceeds and that,
                  as provided in Subsection 2.1(a), a portion of the Revolving
                  Credit Commitments equal to the amount of such prepayment
                  constitutes a Reserved Commitment Amount); and

                  (y) such Net Proceeds are in fact so used to finance a
                  Permitted Acquisition within nine months after the date such
                  Net Proceeds are received (or, if the Borrower has, prior to
                  the expiration of such nine month period, entered into a
                  binding written agreement to make a Permitted Acquisition no
                  later than the date which is six months after the termination
                  of such nine month period, within fifteen months after the
                  date such Net Proceeds are received), it being understood
                  that, in the event Net Proceeds from more than one Prepayment
                  Event are held by the Collateral Trustee in the Reinvestment
                  Collateral Account or applied to the prepayment of Revolving
                  Credit Loans in accordance with clause (x) above, such Net
                  Proceeds shall be deemed to be released (or, as the case may
                  be, Revolving Credit Loans utilizing the Reserved Commitment
                  Amount shall be deemed to be made) in the same order in which
                  such Prepayment Events occurred and, accordingly, (A) any such
                  Net Proceeds so held for more than nine months (or, as
                  provided above, fifteen months) shall be forthwith used to
                  make a Net Proceeds Payment and applied as provided in
                  Subsection 2.5(h)(i) and (B) any Reserved Commitment Amount
                  that remains so unutilized for more than nine months (or, as
                  provided above, fifteen months) shall be utilized through the
                  borrowing by the Borrower of Revolving Credit Loans, the
                  proceeds of which shall be applied as provided in Subsection
                  2.5(h)(i).

         (g) Mandatory Payments if Loans Exceed Related Maximum Commitments.

                  (i) Upon any reduction in the Total Revolving Credit
         Commitment, the Borrower agrees immediately to repay principal of
         Revolving Credit Loans in such amount as may be necessary so that the
         Revolving Credit Outstandings do not exceed the Total Revolving Credit
         Commitment, as so reduced.

                  (ii) At any time during the Acquisition Loan Commitment
         Period, upon any reduction in the Total Acquisition Loan Commitment,
         the Borrower agrees immediately to repay principal of Acquisition Loans
         in such amount as may be necessary so that the outstanding Acquisition
         Loans do not exceed the Total Acquisition Loan Commitment, as so
         reduced.
   47
                                      -39-

                  (iii) At any time during the Incremental Facility Commitment
         Period, upon any reduction in the aggregate amount of the Incremental
         Facility Commitments of any Series, the Borrower agrees immediately to
         repay principal of Incremental Facility Loans of such Series in such
         amount as may be necessary so that the outstanding Incremental Facility
         Loans of such Series do not exceed the aggregate amount of the
         Incremental Facility Commitments of such Series, as so reduced.

         (h) Application of Payments.

                  (i) All Excess Cash Flow Payments, all Net Proceeds Payments
         and all proceeds of Revolving Credit Loans that utilize a Reserved
         Commitment Amount and do not finance a Permitted Acquisition in
         accordance with Subsection 2.5(f)(ii)(y) shall be applied by the Agent
         to pay principal of the Term Loans, the Acquisition Loans and the
         Incremental Facility Loans of each Series, on a pro rata basis,
         determined based on the aggregate principal amount of each such Tranche
         of Loans outstanding immediately prior to such application.

                  (ii) Each payment of Term Loans pursuant to clause (i) of this
         Subsection 2.5(h) shall reduce the remaining scheduled installments of
         principal of the Term Loans on a pro rata basis (based upon the
         remaining principal amount of each such installment at the time of such
         payment).

                  (iii) Each payment prior to the Conversion Date of any
         Acquisition Loans or Incremental Facility Loans of any Series pursuant
         to clause (i) of this Subsection 2.5(h) may not be reborrowed and shall
         reduce the remaining scheduled installments of principal of such Loans
         by operation of the applicable provisions of Section 2.16. Each payment
         on or after the Conversion Date of any Acquisition Loans or Incremental
         Facility Loans of any Series pursuant to clause (i) of this Subsection
         2.5(h) shall reduce the remaining scheduled installments of principal
         of such Loans on a pro rata basis (based upon the remaining principal
         amount of each such installment at the time of such payment).

                  (iv) Except for payments and prepayments required to be made
         pursuant to Subsections 2.5(a) through (g), and except for payments
         required to be made pursuant to Sections 2.20, 2.21 and 2.23, all
         payments and repayments made pursuant to the terms hereof shall be
         applied (A) first to all (if any) Obligations (except principal,
         interest and Fees) due and payable under this Agreement at such time,
         (B) then to payment of all Fees due and payable at such time, (C) then
         to interest due and payable at such time, (D) then to accrued interest
         and then to principal of Base Rate Loans, and (E) finally, to principal
         of Eurodollar Loans.

         Section 2.6. Reduction or Termination of Commitments; Voluntary
Payments.

         (a) Voluntary Reduction or Termination of Commitments. The Borrower
shall be entitled to terminate or reduce the Revolving Credit Commitments, the
Acquisition Loan Commitments and/or the Incremental Facility Commitments from
time to time subject to the terms and conditions set forth herein, provided that
(i) the Borrower must give notice of
   48
                                      -40-

such termination or reduction to the Lenders as provided in Section 2.2 and (ii)
any partial reduction of any such Commitments shall be in an integral multiple
of One Million Dollars ($1,000,000). Any such termination or reduction shall be
permanent and irrevocable.

         (b) Voluntary Prepayments. The Borrower shall be entitled to prepay the
Revolving Credit Loans, the Term Loans, the Acquisition Loans and the
Incremental Facility Loans from time to time (in accordance with Section 2.11),
in whole or in part, without premium or penalty, provided, that (i) the Borrower
must give notice of such payment to the Agent as provided in Section 2.2, and
(ii) Eurodollar Loans may be repaid only on the last day of an Interest Period
for such Loans. All prepayments of Term Loans pursuant to this paragraph (b),
and all prepayments of Acquisition Loans or Incremental Facility Loans after the
Conversion Date pursuant to this paragraph (b), shall reduce the then remaining
scheduled installments of such Tranche of Loans being prepaid on a pro rata
basis (based upon the principal amount of each such installment at the time of
such payment). Optional prepayments of Revolving Credit Loans may, subject to
the terms and conditions hereof, be reborrowed hereunder until the Revolving
Credit Commitments are terminated. Optional prepayments of Terms Loans,
Acquisition Loans or Incremental Facility Loans may not be reborrowed.

         Section 2.7. Interest.

         (a) Base Rate Loans. Each Base Rate Loan shall bear interest at the
Base Rate plus the Applicable Margin for Base Rate Loans then in effect.

         (b) Eurodollar Loans. Each Eurodollar Loan shall bear interest at the
Eurodollar Rate applicable to such Loan and the Interest Period therefor, plus
the Applicable Margin for Eurodollar Loans in effect on the first day of such
Interest Period.

         (c) Default Rate. Notwithstanding the foregoing, during the continuance
of a Specified Default, the Borrower shall pay interest at the applicable
Default Rate on the principal of the Loans and (to the extent permitted by law)
interest and all other amounts payable hereunder or under any of the other Loan
Documents.

         (d) Payment of Interest. Except as provided in the next sentence,
accrued interest on each Loan shall be payable: (i) in the case of each Base
Rate Loan, quarterly in arrears on the Quarterly Dates, (ii) in the case of each
Eurodollar Loan, on the last day of the Interest Period for such Loan (and, if
such Interest Period exceeds three months' duration, quarterly, on any Quarterly
Date falling during such Interest Period), (iii) in the case of any Loan, (A)
upon any payment or prepayment thereof or the conversion thereof into a Loan of
another type (but only on the principal so paid, prepaid or converted) and (B)
on the Maturity Date, (iv) in the case of the Revolving Credit Loans, on the
date of termination of the Revolving Credit Commitments, (v) in the case of the
Acquisition Loans on the date of termination of the Acquisition Loan
Commitments, and (vi) in the case of the Incremental Facility Loans on the date
of termination of the Incremental Facility Loan Commitments. Interest which is
payable at the Default Rate shall be payable from time to time on demand of the
Agent or any Lender. Promptly after the establishment of any interest rate
provided for herein or any change therein, the Agent will notify the Lenders and
the Borrower thereof, provided that the failure of the Agent to so notify the
Borrower or
   49
                                      -41-

the Lenders shall not affect the obligations of the Borrower hereunder or under
any of the Notes in any respect.

         Section 2.8. Fees.

         (a) Revolving Credit Commitment Fees. The Borrower shall pay to the
Agent, for the accounts of the Lenders with Revolving Credit Commitments, with
respect to any calendar quarter or portion thereof commencing on or after the
Effective Date, commitment fees ("Revolving Credit Commitment Fees") in an
amount equal to the product of (i) the daily average amount of the Available
Revolving Credit Commitments during the applicable calendar quarter or portion
thereof and (ii) the annual rate set forth in the table below based upon the
Utilization Level for such calendar quarter or portion thereof. The Revolving
Credit Commitment Fees shall be payable (i) quarterly in arrears on the
Quarterly Dates, and (ii) on the date the Revolving Credit Commitments
terminate.

                  Utilization Level                    Annual Rate
                  -----------------                    -----------
                                                    
                  Greater than 50%                       0.375%

              Less than or equal to 50%                  0.500%
                but greater than 25%

              Less than or equal to 25%                  0.625%

         (b) Acquisition Loan Commitment Fees. The Borrower shall pay to the
Agent, for the accounts of the Lenders with Acquisition Loan Commitments, with
respect to any calendar quarter or portion thereof commencing on or after the
Effective Date, commitment fees ("Acquisition Loan Commitment Fees") in an
amount equal to the product of (i) the daily average amount of the Available
Acquisition Loan Commitments during the applicable calendar quarter or portion
thereof and (ii) the annual rate set forth in the table below based upon the
Utilization Level for such calendar quarter or portion thereof. The Acquisition
Loan Commitment Fees shall be payable (i) quarterly in arrears on the Quarterly
Dates and (ii) on the date the Acquisition Loan Commitments terminate.

                  Utilization Level                    Annual Rate
                  -----------------                    -----------
                                                    
                  Greater than 50%                       0.375%

              Less than or equal to 50%                  0.500%
                but greater than 25%

              Less than or equal to 25%                  0.625%

         (c) Other Fees. The Borrower shall pay to the Agent certain fees as
provided in the Fee Letter.

         Section 2.9. Use of Proceeds of Loans. The Borrower hereby covenants,
warrants and represents as follows:
   50
                                      -42-

         (a) All proceeds of Revolving Credit Loans shall be used by the
Borrower solely (i) for working capital and general corporate purposes of the
Principal Companies (including the making of Investments permitted by paragraphs
(a), (b), (c), (f) and (i) of Section 9.4), (ii) to finance Permitted
Acquisitions and (iii) to finance the repurchase of shares of Class A Common
Stock of the Borrower in accordance with the terms and conditions of paragraph
(c) of Section 9.5; provided, however, that (i) any proceeds of Revolving Credit
Loans that would utilize any Reserved Commitment Amount shall be applied solely
(x) to finance a Permitted Acquisition in accordance with Subsection
2.5(f)(ii)(y) or (y) as provided in Subsection 2.5(h)(i); and (ii) proceeds of
Revolving Loans shall not be used to finance any Permitted Acquisitions, unless
(A) the Acquisition Loan Commitments have either been fully utilized or
terminated at the time of the Loan request, and (B) after giving effect to the
making of such Revolving Credit Loans, the aggregate amount of Revolving Loans
made from and after the Effective Date and used to finance all Permitted
Acquisitions does not exceed $10,000,000. The $10,000,000 limitation in the
preceding clause (ii) shall not limit the amount of Revolving Credit Loans the
proceeds of which utilize any Reserved Commitment Amount and are used to finance
a Permitted Acquisition in accordance with Subsection 2.5(f)(ii)(y).

         (b) All proceeds of Term Loans shall be used by the Borrower solely (i)
to repay the Obligations (as defined under the Existing Credit Agreement) of the
Borrower under the Existing Credit Agreement, (ii) to pay fees, costs and
expenses incurred by the Borrower and its Restricted Subsidiaries in connection
with the Transaction, (iii) to make Investments permitted by Subsection 9.4(a),
and (iv) to finance Permitted Acquisitions and to pay fees, costs and expenses
incurred in connection therewith.

         (c) All proceeds of Acquisition Loans shall be used by the Principal
Companies solely to finance Permitted Acquisitions and to pay fees, costs and
expenses incurred in connection therewith.

         (d) All proceeds of Incremental Facility Loans shall be used by the
Principal Companies solely to finance Permitted Acquisitions and to pay fees,
costs and expenses incurred in connection therewith.

         (e) No part of the proceeds of any Loan will be used (directly or
indirectly) (i) to purchase or carry, or to extend credit to any Person or
Persons for the purpose of purchasing or carrying (A) any margin security or
margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or (B) any other stock of any class in
the capital of the Borrower, or (ii) otherwise in any manner which would be in
violation of such Regulations U or X.

         Section 2.10. Computations. Interest on Eurodollar Loans and each Fee
(other than the Agent's Fee) shall be computed on the basis of a year of 360
days and actual days elapsed (including the first day but excluding the last)
during the period for which payable. Interest on Base Rate Loans shall be
computed on the basis of a year of 365 or 366 days (as the case may be), and
actual days elapsed (including the first day but excluding the last) during the
period for which payable.

         Section 2.11. Minimum Amounts of Borrowings, Conversions and
Prepayments. Except for borrowings of Revolving Credit Loans, Acquisition Loans
or Incremental Facility
   51
                                      -43-

Loans which exhaust the full remaining amount of the Revolving Credit
Commitments, the Acquisition Loan Commitments or the Incremental Facility
Commitments of any Series, respectively, conversions or prepayments of all Loans
of a particular type, or conversions made pursuant to Sections 2.19, 2.20(c) or
2.22, each borrowing, each conversion of Loans of one type into Loans of another
type and each prepayment of principal of Loans hereunder shall (i) in the case
of Base Rate Loans, be in an integral multiple of $100,000, and (ii) in the case
of Eurodollar Loans, be in a minimum amount of $1,000,000 and in an integral
multiple of $100,000 if in excess of $1,000,000 (prepayments of different types
of Loans at the same time to be deemed separate borrowings, conversions or
prepayments for purposes of the foregoing, one for each type).

         Section 2.12. Time and Method of Payments. All payments of principal,
interest, Fees and other amounts (including indemnities) payable by any
Principal Company hereunder shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Agent at its Principal
Office on the date on which such payment shall become due; provided, however,
that any payment not received by the Agent by 1:00 p.m., Boston time, on the
date made shall be deemed received on the next Business Day; provided, however,
that no Default shall be deemed to have occurred under Section 11.1 if payment
is received after 1:00 p.m., Boston time, but prior to 5:00 p.m., Boston time,
on the date on which such payment shall become due. The Agent or any Lender for
whose account any such payment is to be made may, but shall not be obligated to,
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower with the Agent or such Lender, as the
case may be. Each payment received by the Agent hereunder for the account of a
Lender shall be paid promptly to such Lender, in like funds, for the account of
such Lender's Applicable Lending Office for the Loan in respect of which such
payment is made. If any payment of principal or interest becomes due on a day
other than a Business Day, such payment may be made on the next succeeding
Business Day, and such extension shall be included in computing interest in
connection with such payment. All payments hereunder and under the Notes shall
be made without set-off or counterclaim and in such amounts as may be necessary
in order that all such payments shall not be less than the amounts otherwise
specified to be paid under this Agreement and the Notes after withholding for or
on account of (i) any present or future taxes, levies, imposts, duties or other
similar charges of whatever nature imposed by any government or any political
subdivision or taxing authority thereof, other than any tax (except those
referred to in clause (ii) below) on or measured by the net income of the Lender
to which any such payment is due pursuant to applicable federal, state and local
income tax laws, and (ii) deduction of amounts equal to the taxes on or measured
by the net income of such Lender payable by such Lender with respect to the
amount by which the payments required to be made under this sentence exceed the
amounts otherwise specified to be paid in this Agreement and the Notes. Upon
payment in full of any Note, and in the case of any Lender holding any Revolving
Credit Note, the termination of the Revolving Credit Commitment of such Lender,
the Lender holding such Note shall mark the Note "Paid" and return it to the
Borrower.

         Section 2.13. Lending Offices. The Loans of each type made by each
Lender shall be made and maintained at such Lender's Applicable Lending Office
for Loans of such type.

         Section 2.14. Several Obligations. The failure of any Lender to make
any Loan to be made by it on the date specified therefor shall not relieve the
other Lenders of their
   52
                                      -44-

respective obligations to make their Loans on such date, but no Lender shall be
responsible for the failure of any other Lender to make Loans to be made by such
other Lender.

         Section 2.15. Security.

         (a) Collateral. In order to secure the payment and performance of all
the Obligations, it is the intention and understanding of each of the parties
hereto that the following Collateral has been or will be made available to the
Collateral Trustee on or prior to the Effective Date:

                  (i) the Borrower shall grant to the Collateral Trustee,
         pursuant to the Borrower Stock Pledge Agreement, a first-priority
         perfected security interest in and to all of the Capital Stock of each
         direct Restricted Subsidiary of the Borrower;

                  (ii) Saga Broadcast shall grant to the Collateral Trustee,
         pursuant to the Saga Broadcast Stock Pledge Agreement, a first-priority
         perfected security interest in and to all of the Capital Stock of each
         direct Restricted Subsidiary of Saga Broadcast;

                  (iii) Lakefront shall grant to the Collateral Trustee,
         pursuant to the Lakefront Pledge Agreements, a first-priority perfected
         security interest in and to all of the Capital Stock of each direct
         Restricted Subsidiary of Lakefront;

                  (iv) the Borrower shall grant to the Collateral Trustee,
         pursuant to the Borrower Security Agreement, a first-priority security
         interest (subject to Liens permitted by Section 9.2) in and to all of
         its Assets of every description (other than those Assets set forth on
         Schedule 4.4(a) or Assets which are expressly excluded by the express
         terms of the Borrower Security Agreement);

                  (v) the Restricted Subsidiaries shall grant to the Collateral
         Trustee, pursuant to the terms of the Borrower Subsidiary Security
         Agreement (to the maximum extent permitted by applicable law), a first
         priority security interest (subject to Liens permitted by Section 9.2)
         in and to all of their Assets of every description (other than those
         Assets set forth on Schedule 4.4(a) or Assets which are expressly
         excluded by the express terms of the Borrower Subsidiary Security
         Agreement); and

                  (vi) the due payment and performance in full of the
         Obligations shall be guaranteed to the Lenders by each of the
         Guarantors, upon the terms and subject to the conditions contained in
         Article VI hereof.

         (b) Additional Collateral. It is also the intention and understanding
of the parties hereto that the Collateral Trustee shall be granted additional
Collateral from time to time pursuant to Sections 8.12 and 8.15 to secure the
payment and performance of all the Obligations. The Principal Companies shall
execute and deliver such other agreements, instruments and documents as the
Agent or the Collateral Trustee (with the consent of the Agent) reasonably
requests in order to effect the purposes of the Security Documents and the other
Loan Documents.
   53
                                      -45-

         (c) Description of Collateral. Reference is hereby made to the Loan
Documents for a complete statement of the terms and provisions relating to, and
for a complete description of, the Collateral.

         Section 2.16. Pro Rata Treatment Among Lenders. Except as otherwise
provided herein: (i) each borrowing of Revolving Credit Loans, Term Loans,
Acquisition Loans or Incremental Facility Loans of any Series will be made from
the Lenders pro rata according to their respective Commitments with respect to
such Tranche of Loans, as applicable; (ii) each payment of each Revolving Credit
Commitment Fee, Acquisition Loan Commitment Fee, and Letter of Credit Fee (other
than the Issuing Bank Fee) shall be made for the account of the Lenders pro rata
according to their respective applicable Commitments; (iii) each partial
reduction of the Revolving Credit Commitments, Acquisition Loan Commitments or
Incremental Facility Commitments of any Series shall be applied to the
applicable Tranche of Commitments of each Lender pro rata according to each
Lender's respective Commitment with respect to such Tranche; (iv) each
conversion of Loans of a particular type under Section 2.19 (other than
conversions provided for by Section 2.23 or 2.24) will be made pro rata among
the Lenders holding Loans of such type according to the respective principal
amounts of such Loans held by such Lenders; (v) each payment and prepayment of
principal of or interest on Loans of a particular Tranche will be made to the
Agent for the account of the Lenders holding Loans of such Tranche pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
such Lenders; (vi) each purchase by Revolving Credit Lenders of a participation
in each Letter of Credit issued by the Issuing Bank under Article III hereof
will be made by such Lenders in accordance with such Lender's Revolving Credit
Commitment Percentage; and (vii) Interest Periods for Loans of a particular type
shall be allocated among the Lenders holding Loans of such type pro rata
according to the respective principal amounts of such Loans held by such
Lenders.

         Section 2.17. Non-Receipt of Funds by Agent. Unless the Agent shall
have been notified by a Lender or the Borrower (the "Payor") prior to the date
on which such Lender is to make payment to the Agent of the proceeds of a Loan
to be made by it hereunder or any Principal Company is to make a payment to the
Agent for the account of one or more of the Lenders, as the case may be (each
such payment being herein called a "Mandatory Payment"), which notice shall be
effective upon receipt, that the Payor does not intend to make the Mandatory
Payment to the Agent, the Agent may assume that the Mandatory Payment has been
made and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof available to the intended recipient on such date and, if
the Payor has not in fact made the Mandatory Payment to the Agent, the recipient
of such payment shall, on demand, repay to the Agent the amount made available
to it together with interest thereon in respect of each day during the period
commencing on the date such amount was so made available by the Agent until the
date the Agent recovers such amount at a rate per annum equal to the Federal
Funds Rate for such day (when the recipient is a Lender) or equal to the rate of
interest applicable to such Loan (when the recipient is the Borrower).

         Section 2.18. Sharing of Payments and Set-Off Among Lenders. The
Borrower hereby agrees that, in addition to (and without limitation of) any
right of set-off, banker's lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option, to offset balances held by it at
any of its offices against any principal of or interest on any of its Loans
hereunder, or any Fee payable to it, which is not paid when due
   54
                                      -46-

(regardless of whether such balances held by such Lender are then due to the
Borrower), in which case it shall promptly notify the Borrower and the Agent
thereof, provided that its failure to give such notice shall not affect the
validity thereof. If a Lender shall effect payment of any principal of or
interest on any of its Loans hereunder or any Fee payable to it, through the
exercise of any right of set-off, banker's lien, counterclaim, or otherwise, it
shall promptly purchase at par from the other Lenders participations in the
corresponding Obligations held by the other Lenders in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Lenders shall share the benefit of such payment pro rata in accordance
with the unpaid principal and interest on the Obligations held by each of them.
To such end all the Lenders shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if such payment is rescinded
or must otherwise be restored. The Borrower agrees that any Lender so purchasing
a participation in the Loans held by the other Lenders may exercise all rights
of set-off, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Obligations in
the amount of such participation. Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise and retain the benefits of exercising any such right with respect to
any other indebtedness or obligation of the Borrower.

         Section 2.19. Conversion of Loans; Continuation of Loans.

         (a) The Borrower shall have the right to convert Loans of one type of a
Tranche into Loans of another type of such Tranche from time to time, provided
that: (i) the Borrower shall give the Agent notice of each such conversion as
provided in Section 2.2; (ii) Eurodollar Loans may be converted only on the last
day of an Interest Period for such Loans; and (iii) no Base Rate Loan may be
converted into a Eurodollar Loan if on the proposed date of conversion a Default
or an Event of Default exists. The Agent shall notify the Lenders of the
effectiveness of such conversion, and the new interest rate to which the
converted Loans are subject, as soon as practicable after the conversion.

         (b) The Borrower shall have the right to continue any Eurodollar Loan
of a Tranche as a Eurodollar Loan of the same Tranche upon the expiration of an
Interest Period with respect thereto, provided that: (i) the Borrower shall give
the Agent notice of such continuation as provided in Section 2.2; and (ii) no
Eurodollar Loan may be continued as such when any Default or Event of Default
has occurred and is continuing, but shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period relating thereto ending
during the continuance of any Default or Event of Default. In the event that the
Borrower fails to provide any such notice with respect to the continuation of
any Eurodollar Loan as such, then such Eurodollar Loan shall be automatically
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto. The Agent shall notify the Lenders promptly (A) when any such
automatic conversion contemplated by this Section 2.19 is scheduled to occur;
and (B) of the effectiveness of the continuation of any Eurodollar Loan and the
new interest rate to which such continued Eurodollar Loan is subject.

         Section 2.20. Additional Costs; Capital Requirements.

         (a) In the event that any existing or future law or regulation,
guideline or interpretation thereof, by any Governmental Authority charged with
the administration
   55
                                      -47-

thereof, or compliance by any Lender or any Affiliate of any Lender with any
request or directive (whether or not having the force of law) of any such
Authority shall impose, modify or deem applicable or result in the application
of, any capital maintenance, capital ratio or similar requirement against any
Lender's Loans or Commitments hereunder, and the result of any such event is to
impose upon any Lender or any Affiliate of any Lender or increase any capital
requirement applicable as a result of the making or maintenance of such Lender's
Credit Extensions or its Commitments or the obligation of the Borrower hereunder
with respect to such Commitments (which imposition of capital requirements may
be determined by such Lender's reasonable allocation of the aggregate of such
capital increases or impositions), then such Lender may make demand on the
Borrower and within 30 days after demand made by such Lender (a copy of which
demand shall be delivered to the Agent), the Borrower shall immediately pay to
such Lender from time to time as specified by such Lender additional amounts
which shall be sufficient to compensate such Lender for such imposition of or
increase in capital requirements together with interest on each such amount from
the date such payment becomes due until payment in full thereof at the Default
Rate, provided, however, that if such Lender does not make demand on the
Borrower within 90 days after becoming aware of such imposition or increase in
capital requirements, then such Lender may make demand only for such additional
amounts which shall be sufficient to compensate such Lender for such imposition
or increase in capital requirements for periods not preceding the day 90 days
prior than the date on which demand is made. A certificate setting forth in
reasonable detail the amount necessary to compensate such Lender as a result of
an imposition of or increase in capital requirements submitted by such Lender to
the Borrower shall be conclusive, absent manifest error, as to the amount
thereof.

         (b) In the event that any Regulatory Change shall: (i) change the basis
of taxation of any amounts payable to any Lender under this Agreement or the
Notes in respect of any Loans including Eurodollar Loans (other than taxes
imposed on the overall net income of such Lender); or (ii) impose or modify any
reserve, FDIC premium or assessment, special deposit or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Lender (including any of such Loans or any deposits
referred to in the definition of "Eurodollar Base Rate" in Article I hereof); or
(iii) impose any other conditions affecting this Agreement in respect of Loans,
including Eurodollar Loans (or any of such extensions of credit, assets,
deposits or liabilities); and the result of any event referred to in clause (i),
(ii) or (iii) above shall be to increase such Lender's costs of making or
maintaining any Loans, including Eurodollar Loans, or its Commitments, or to
reduce any amount receivable by such Lender hereunder in respect of any of its
Eurodollar Loans, or its Commitments (such increases in costs and reductions in
amounts receivable are hereinafter referred to as "Additional Costs") in each
case, only to the extent that such Additional Costs are not included in the
Eurodollar Base Rate applicable to such Eurodollar Loans, then such Lender may
make demand on the Borrower and within 30 days after demand made by such Lender
(a copy of which demand shall be delivered to the Agent), the Borrower shall pay
to such Lender from time to time as specified by such Lender, additional amounts
which shall be sufficient to compensate such Lender for such increased cost or
reduction in amounts receivable by such Lender from the date of such change,
together with interest on each such amount from the date such payment becomes
due until payment in full thereof at the Default Rate, provided, however, that
if such Lender does not make demand on the Borrower within 90 days after
becoming aware of such Regulatory Change, then such Lender may make demand only
for such
   56
                                      -48-

additional amounts as shall be sufficient to compensate such Lender for
increased costs or reductions in amounts receivable by such Lender for periods
not preceding the day 90 days prior to such demand.

         (c) Without limiting the effect of the foregoing provisions of this
Section 2.20, in the event that, by reason of any Regulatory Change, any Lender
either: (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans, or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Lender
to make, and to convert Loans of any other type into, Loans of such type
hereunder shall be suspended until the date such Regulatory Change ceases to be
in effect (and all Loans of such type then outstanding shall be converted into
Base Rate Loans or into Eurodollar Loans of another duration, as the case may
be, in accordance with Sections 2.19 and 2.23).

         (d) Determinations by any Lender for purposes of this Section 2.20 of
the effect of any Regulatory Change on its costs of making or maintaining Loans
or on amounts receivable by it in respect of Loans, and of the additional
amounts required to compensate such Lender in respect of any Additional Costs,
shall be set forth in writing in reasonable detail and shall be conclusive,
absent manifest error. Each Lender shall allocate any cost increases required by
this Section 2.20 among its customers in good faith and on an equitable basis.

         (e) If any Lender makes demand pursuant to paragraphs (a) or (b) of
this Section 2.20, so long as no Event of Default shall have occurred and be
continuing and the Borrower has obtained from another Lender or another bank or
financial institution acceptable to the Agent a commitment to become a Lender
for all purposes under this Agreement and to assume all obligations of the
Lender to be replaced, the Borrower may require the Lender making such demand to
assign all of its rights and obligations under this Agreement, its Note and the
other Loan Documents to such other Lender or other bank or financial institution
pursuant to the provisions of Subsection 13.11(b); provided that, prior to or
concurrently with such replacement (i) the Borrower has paid to the Lender
making demand all principal, interest, fees and other amounts payable to such
Lender through such date of replacement, (ii) the Borrower has paid to the Agent
the registration and processing fee required to be paid by Section 13.11(d), and
(iii) all of the requirements for such assignment contained in Section 13.11(b),
including the receipt by the Agent of an executed Assignment and Acceptance
Agreement and other supporting documents, have been fulfilled.

         Section 2.21. Limitation of Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of an interest
rate for any Eurodollar Loans for any Interest Period therefor, the Agent or the
Required Lenders determine (which determination shall be conclusive absent
manifest error):

         (a) by reason of any event affecting the money markets in the United
States of America or the Eurodollar interbank market, quotations of interest
rates for the relevant
   57
                                      -49-

deposits are not being provided in the relevant amounts or for the relevant
maturities for purposes of determining the rate of interest for such Loans under
this Agreement; or

         (b) the rates of interest referred to in the definition of "Eurodollar
Base Rate" in Article I hereof upon the basis of which the rate of interest on
any Eurodollar Loans for such period is determined do not accurately reflect the
cost to the Lenders of making or maintaining such Loans for such period;

then the Agent shall give the Borrower and each Lender prompt notice thereof
(and shall thereafter give the Borrower and each Lender prompt notice of the
cessation, if any, of such condition), and so long as such condition remains in
effect, the Lenders shall be under no obligation to make Loans of such type or
to convert Loans of any other type into Loans of such type and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Loans of the affected type either prepay such Loans in accordance
with Section 2.6 or convert such Loans into Loans of another type in accordance
with Section 2.19.

         Section 2.22. Illegality. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to: (i) honor its obligation to make Eurodollar Loans
hereunder, or (ii) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof (with a copy to the Agent), describing such
illegality in reasonable detail (and shall thereafter promptly notify the
Borrower and the Agent of the cessation, if any, of such illegality), and such
Lender's obligation to make Eurodollar Loans and to convert other types of Loans
into Eurodollar Loans hereunder shall, upon written notice given by such Lender
to the Borrower, be suspended until such time as such Lender may again make and
maintain Eurodollar Loans and such Lender's outstanding Eurodollar Loans shall
be converted into Base Rate Loans in accordance with Sections 2.19 and 2.23.

         Section 2.23. Certain Conversions Pursuant to Sections 2.20 and 2.22.
If the Loans of any Lender of a particular type (Loans of such type are
hereinafter referred to as "Affected Loans" and such type is hereinafter
referred to as the "Affected Type") are to be converted pursuant to Section 2.20
or 2.22, such Lender's Affected Loans shall be converted into Base Rate Loans
(the "New Type Loans") on the last day(s) of the then current Interest Period(s)
for the Affected Loans (or, in the case of a conversion required by Subsection
2.20(c) or Section 2.22 on such earlier date as such Lender may specify to the
Borrower with a copy to the Agent) and, until such Lender gives notice as
provided below that the circumstances specified in Section 2.20 or 2.22 which
gave rise to such conversion no longer exist:

         (a) to the extent that such Lender's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Affected Loans shall be applied instead to its New Type Loans;

         (b) all Loans which would otherwise be made by such Lender as Loans of
the Affected Type shall be made instead as New Type Loans and all Loans of such
Lender which would otherwise be converted into Loans of the Affected Type shall
be converted instead into (or shall remain as) New Type Loans; and
   58
                                      -50-

         (c) if Loans of any of the Lenders other than such Lender which are the
same type as the Affected Type are subsequently converted into Loans of another
type (which type is other than New Type Loans), then such Lender's New Type
Loans shall be automatically converted on the conversion date into Loans of such
other type to the extent necessary so that, after giving effect thereto, all
Loans held by such Lender and the Lenders whose Loans are so converted are held
pro rata (as to principal amounts, types and, to the extent applicable, Interest
Periods) in accordance with their respective Commitments.

         Section 2.24. Indemnification. The Borrower shall pay to the Agent for
the account of each Lender, upon the request of such Lender through the Agent,
such amount or amounts as shall compensate such Lender for any loss (including
loss of profit), cost or expense incurred by such Lender (as reasonably
determined by such Lender) as a result of:

         (a) any payment or prepayment or conversion of a Eurodollar Loan held
by such Lender on a date other than the last day of an Interest Period for such
Eurodollar Loan; or

         (b) any failure by the Borrower to borrow, prepay or convert a
Eurodollar Loan on the date for such borrowing, prepayment or conversion
specified in the relevant notice under Section 2.2;

such compensation to include an amount equal to: (i) any loss or expense
suffered by such Lender during the period from the date of receipt of such early
payment or prepayment or the date of such conversion or failure to borrow,
prepay or convert to the last day of such Interest Period if the rate of
interest obtainable by such Lender upon the redeployment of an amount of funds
equal to such Lender's pro rata share of such payment, prepayment or conversion
or failure to borrow, prepay or convert is less than the rate of interest
applicable to such Eurodollar Loan for such Interest Period, or (ii) any loss or
expense suffered by such Lender in liquidating Eurodollar deposits prior to
maturity which correspond to such Lender's pro rata share of such payment,
prepayment or conversion or failure to borrow, prepay or convert. The
determination by each such Lender or the amount of any such loss or expense,
when set forth in a written notice to the Borrower, containing such Lender's
calculation thereof in reasonable detail, shall be presumed correct, in the
absence of manifest error.

                                   ARTICLE III

                                LETTERS OF CREDIT

         Section 3.1. Letter of Credit Commitment. On the terms and subject to
the conditions contained in this Agreement, the Issuing Bank shall from time to
time from and after the Effective Date until the Maturity Date issue Letters of
Credit for the account of the Borrower.
   59
                                      -51-

         Section 3.2. Issuance of Letters of Credit.

         (a) The obligation of the Issuing Bank to issue any Letter of Credit
requested by the Borrower is subject to the following conditions (in addition to
conditions specified elsewhere in this Agreement):

                  (i) The Issuing Bank shall have no obligation to issue any
         Letter of Credit if, after giving effect to such issuance, (A) the
         Revolving Credit Outstandings would exceed the Total Revolving Credit
         Commitment or (B) the Letter of Credit Exposure would exceed
         $5,000,000.

                  (ii) The form and terms of each Letter of Credit and any
         related documentation must be reasonably acceptable to the Issuing
         Bank.

                  (iii) Each Letter of Credit by its terms must provide for
         payment of drawings thereunder in Dollars and must expire on or prior
         to the earlier to occur of (A) ten days prior to the Maturity Date and
         (B) the first anniversary of the date of its issuance.

                  (iv) Each Letter of Credit may only be issued in connection
         with a Permitted Acquisition.

                  (v) Each Letter of Credit shall contain a provision permitting
         the Issuing Bank to terminate such Letter of Credit upon 30 days' prior
         written notice to the beneficiary thereof and authorizing such
         beneficiary to draw up to the full undrawn amount of such Letter of
         Credit during such 30-day period. The Issuing Bank agrees that it will
         not give any such termination notice except in compliance with Section
         11.4.

In determining compliance with clause (i) above, the Issuing Bank shall be
entitled to rely on information received by it from the Agent or the Borrower.

         (b) Whenever the Borrower desires to have a Letter of Credit issued,
the Borrower will furnish to the Agent and the Issuing Bank a written
application therefor (each, a "Letter of Credit Application") which shall (i) be
received by the Agent and the Issuing Bank not less than three (3) Business Days
and not more than ten (10) Business Days prior to the Issue Date of such Letter
of Credit and (ii) specify (A) the Issue Date of such Letter of Credit (which
must be a Business Day), (B) the expiration date of such Letter of Credit, (C)
the name and address of the beneficiary of the Letter of Credit, (D) the amount
of such Letter of Credit, and (E) the purpose and proposed form of such Letter
of Credit. The Agent shall give each Lender prompt notice of its receipt of each
such Letter of Credit Application and the Issuing Bank shall give the Agent and
each Lender prompt notice of the issuance and amount of each Letter of Credit
and the expiration date of each Letter of Credit.

         Section 3.3. Participation by Lenders.

         (a) By the issuance of a Letter of Credit and without any further
action on the part of the Issuing Bank or the other Lenders in respect thereof,
the Issuing Bank hereby
   60
                                      -52-

grants to each Revolving Credit Lender, and each Revolving Credit Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Revolving Credit Lender's Revolving Credit Commitment Percentage of the
face amount of such Letter of Credit, effective upon the issuance of such Letter
of Credit; provided, however, that no Revolving Credit Lender shall be required
to acquire a participation in any Letter of Credit that would result in its
Revolving Credit Commitment Percentage of all Revolving Credit Outstandings to
be greater than its Revolving Credit Commitment at the time of issuance of such
Letter of Credit. In consideration and in furtherance of the foregoing, each
Revolving Credit Lender hereby absolutely and unconditionally agrees to pay to
the Agent, for the account of the Issuing Bank, in accordance with Section 3.4
below, such Revolving Credit Lender's Revolving Credit Commitment Percentage of
each Letter of Credit Disbursement.

         (b) Each Revolving Credit Lender acknowledges and agrees that its
obligation to acquire participations pursuant to paragraph (a) above in respect
of Letters of Credit is absolute and unconditional and shall not be affected by
any circumstances whatsoever, including the occurrence and continuance of an
Event of Default or Default hereunder, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.

         Section 3.4. Letter of Credit Disbursements.

         (a) If the Agent has not received from the Borrower the payment
permitted pursuant to paragraph (b) of this Section 3.4 by 11:00 a.m., Boston
time, on the date on which the Issuing Bank has notified the Borrower that
payment of a draft presented under any Letter of Credit will be made, as
provided in such paragraph (b), the Agent shall promptly notify the Issuing Bank
and each other Lender of the Letter of Credit Disbursement and, in the case of
each Revolving Credit Lender, its Revolving Credit Commitment Percentage of such
Letter of Credit Disbursement. Each Revolving Credit Lender shall promptly pay
to the Agent (or, if the Issuing Bank shall elect to defer reimbursement from
the Revolving Credit Lenders hereunder, at such later time as the Issuing Bank
shall specify by notice to the Agent and the Revolving Credit Lenders), such
Revolving Credit Lender's Revolving Credit Commitment Percentage of such Letter
of Credit Disbursement, which the Agent shall promptly pay to the Issuing Bank.
The Agent will promptly remit to each Revolving Credit Lender its share of any
amounts subsequently received by the Agent or the Issuing Bank from the Borrower
in respect of such Letter of Credit Disbursement; provided that amounts so
received for the account of any Revolving Credit Lender prior to payment by such
Lender of amounts required to be paid by it hereunder in respect of any
Revolving Credit Disbursement shall be remitted to the Issuing Bank.

         (b) If the Issuing Bank shall receive any draft presented under any
Letter of Credit, the Issuing Bank shall give notice thereof as provided in
paragraph (c) below. If the Issuing Bank shall pay any draft presented under a
Letter of Credit, the Borrower may (but shall not be required to) pay to the
Agent, for the account of the Issuing Bank, an amount equal to the amount of
such draft before noon, Boston time, on the Business Day on which the Issuing
Bank shall have notified the Borrower that payment of such draft will be made.
The Agent will promptly pay any such amounts received by it to the Issuing Bank.
If the Borrower shall not elect to make such payment, the Borrower shall pay to
the Agent, on
   61
                                      -53-

behalf of the Issuing Bank, an amount equal to the Letter of Credit Disbursement
made by the Issuing Bank, together with interest thereon at the rate then
applicable to Base Rate Loans pursuant to Section 2.7 from and including the
date of such Letter of Credit Disbursement to but excluding the date of payment,
on or prior to the date one Business Day following the date of such Letter of
Credit Disbursement.

         (c) The Issuing Bank shall, promptly following its receipt thereof,
examine all documents purporting to represent a demand for payment under a
Letter of Credit to ascertain that the same appear on their face to be in
substantial conformity with the terms and conditions of such Letter of Credit.
The Issuing Bank shall as promptly as reasonably practicable give oral
notification, confirmed in writing, to the Agent and the Borrower of such demand
for payment and the determination by the Issuing Bank as to whether such demand
for payment was in accordance with the terms and conditions of such Letter of
Credit and whether the Issuing Bank has made or will make a Letter of Credit
Disbursement thereunder, provided that the failure to give such notice shall not
relieve the Borrower of its obligation to reimburse such Letter of Credit
Disbursement, and the Agent shall promptly give each Revolving Credit Lender
notice thereof.

         Section 3.5. Obligation to Repay Letter of Credit Disbursements, etc.
The Borrower assumes all risks in connection with the Letters of Credit and the
Borrower's obligation to repay Letter of Credit Disbursements shall be absolute,
unconditional and irrevocable under any and all circumstances and irrespective
of:

                  (i) any lack of validity or enforceability of any Letter of
         Credit;

                  (ii) the existence of any claim, setoff, defense or other
         right which the Borrower or any other person may at any time have
         against the beneficiary under any Letter of Credit, the Agent or the
         Issuing Bank (other than the defense of payment in accordance with the
         terms of this Agreement or a defense based on the gross negligence or
         willful misconduct of the Issuing Bank) or any other Person in
         connection with this Agreement or any other agreement or transaction;

                  (iii) any draft or other document presented under a Letter of
         Credit proving to be forged, fraudulent, invalid or insufficient in any
         respect or any statement therein being untrue or inaccurate in any
         respect; and

                  (iv) any other circumstance or event whatsoever, whether or
         not similar to any of the foregoing.

         It is understood that in making any payment under a Letter of Credit
(A) the Issuing Bank's exclusive reliance as to any and all matters set forth
therein, including reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face appears to be in order, and whether or not any such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever and (B) any noncompliance in any immaterial
respect of the documents presented under a Letter of Credit with the terms
thereof, shall, in each case, not be deemed willful misconduct or gross
negligence of the
   62
                                      -54-

Issuing Bank. It is further understood that in making any payment under a Letter
of Credit, the Issuing Bank's payment of any draft presented under such Letter
of Credit, if such document on its face is clearly not in order, shall be deemed
willful misconduct or gross negligence of the Issuing Bank.

         The Borrower absolutely and unconditionally agrees to hold the Issuing
Bank harmless from, and to indemnify the Issuing Bank immediately upon demand by
the Issuing Bank at any time and as often as the occasion therefor may require
against, any and all claims, demands, suits, actions, damages, losses, costs,
expenses and other liabilities whatsoever which shall at any time or times be
incurred or sustained by the Issuing Bank on account of, or in relation to, or
in any way in connection with, the Letters of Credit except that the Borrower
shall not be liable to the Lenders for any claims, demands, suits, actions,
damages, losses, costs, expenses and other liabilities resulting from the gross
negligence or willful misconduct of the Issuing Bank.

         Section 3.6 Letter of Credit Fees. The Borrower agrees to pay to the
Agent (a) for the account of the Revolving Credit Lenders, a fee in an amount
equal to the product of (i) the average undrawn face amount of each Letter of
Credit outstanding during all or any part of the applicable calendar quarter
multiplied by (ii) an annual rate equal to the Applicable Margin for Eurodollar
Loans during such calendar quarter and (b) for the account of the Issuing Bank,
a fee (the "Issuing Bank Fee") in an amount equal to the product of (i) the
average undrawn face amount of each Letter of Credit outstanding during all or
any part of the applicable calendar quarter multiplied by (ii) an annual rate
equal to 0.125% (the fees described in clause (a) of this Section 3.6 and the
Issuing Bank Fees shall be referred to herein collectively as the "Letter of
Credit Fees"). Letter of Credit Fees shall be payable (i) quarterly in arrears
on each of the Quarterly Dates and (ii) on the earlier of the Maturity Date and
the date the Revolving Credit Commitments terminate.

         Section 3.7 Letter of Credit Applications. To the extent that any
provision of any Letter of Credit Application is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         The Principal Companies hereby jointly and severally represent and
warrant to the Lenders, the Agent and the Issuing Bank as follows:

         Section 4.1. Organization, Etc. Each of the Principal Companies (a) is
duly organized, validly existing and in good standing under the laws of its
state of organization or incorporation, (b) has all requisite corporate (or the
equivalent company) power and authority, and all material licenses, permits,
franchises, consents and approvals, required to own its Assets and carry on its
business as now conducted and as proposed to be conducted, (c) is duly qualified
to do business and is in good standing as a foreign corporation (or similar
business entity) in each jurisdiction where the nature of its properties or its
business requires such qualification unless the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect. Schedule 4.1
accurately and
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                                      -55-

completely lists, as to (i) the Borrower as of the date hereof: (A) its state of
incorporation and (B) the classes and number of authorized and outstanding
shares of its Capital Stock, and (ii) each of the other Principal Companies: (A)
the state of incorporation of each such corporation or the state of formation
for each such limited liability company and (B) the classes and number of
authorized and outstanding shares or interests of Capital Stock of each such
corporation or limited liability company, and the owners of such outstanding
shares of Capital Stock. All the issued and outstanding shares or interests of
Capital Stock of each Restricted Subsidiary have been duly and validly issued
and are fully paid and non-assessable. All the issued and outstanding shares or
interests of Capital Stock of each Restricted Subsidiary are owned by the
Persons identified on Schedule 4.1, free and clear of any Liens or restrictions
on transfer, except for the pledge of such Capital Stock pursuant to the Stock
Pledge Agreements. There are no outstanding warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any Capital Stock of any Restricted Subsidiary nor are there outstanding any
securities which are convertible into or exchangeable for any Capital Stock of
any Restricted Subsidiary. Except for the obligations of the Borrower, Saga
Broadcast and Lakefront under the Stock Pledge Agreements, there are no
outstanding commitments, options, warrants, calls or other agreements (whether
written or oral) binding on any Principal Company to issue, sell, grant,
transfer, assign, mortgage, pledge or otherwise dispose of any Capital Stock of
any Restricted Subsidiary. No shares or interests of Capital Stock of any
Restricted Subsidiary are subject to (A) any restrictions on transfer pursuant
to any Governing Documents of such Restricted Subsidiary, or (B) any
shareholders agreements, voting trusts, voting agreements, trust agreements,
trust deeds, irrevocable proxies or any other similar agreements or instruments
(whether written or oral). The Principal Companies shall promptly notify the
Agent in writing of any changes which would make any of the representations set
forth in this Section 4.1 untrue, inaccurate or incomplete.

         Section 4.2. Power; Authority; Consents; No Conflicts. Each of the
Principal Companies has the power and corporate (or the equivalent company)
authority to execute and deliver the Loan Documents and to perform the Loan
Documents and the Ancillary Documents to which it is a party. The Borrower has
the power to borrow and request Letters of Credit hereunder and has taken all
necessary action to authorize the borrowings and requests for Letters of Credit
hereunder on the terms and conditions of this Agreement. Each of the Principal
Companies has taken all necessary action, corporate (or the equivalent company)
or otherwise, to authorize the execution and delivery of the Loan Documents and
the performance of the Loan Documents and the Ancillary Documents to which it is
a party. The execution and delivery by each Principal Company of each of the
Loan Documents and the performance of each of the Loan Documents and each of the
Ancillary Documents to which it is or is to become a party do not and will not
(i) contravene or result in a breach of any Requirement of Law, (ii) conflict
with or result in a breach of or (with the giving of notice or lapse of time, or
both) a default under any Contractual Obligation of any Principal Company, or
(iii) result in or require the creation of any Lien on any Assets of any
Principal Company, except for Liens created pursuant to the Security Documents.
No consent or approval of any Person, no waiver of any Lien or right of
distraint or other similar right and no consent, license, certificate of need,
approval, authorization or declaration of any Governmental Authority, including
the FCC, is or will be required in connection with the Transaction, the
execution and delivery by the Principal Companies of the Loan Documents or the
performance of the Loan Documents and the Ancillary Documents, or the validity,
enforcement or priority of the Loan Documents or any
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                                      -56-

Lien created and granted thereunder, except as set forth on Schedule 4.2, each
of which either has been duly and validly obtained on or prior to the date
hereof and is now in full force and effect.

         Section 4.3. Due Execution, Validity and Enforceability. Each
Transaction Document has been duly executed and delivered by each Principal
Company which is a party thereto. Upon execution and delivery of any Loan
Document by any Principal Company after the date hereof, such Loan Document
shall have been duly executed and delivered by each Principal Company which is a
party thereto. Each of the Loan Documents and the Ancillary Documents
constitutes the legal, valid and binding obligation of such Principal Company,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting generally the enforcement of creditors' rights or by general
principles of public policy and except to the extent that the availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought.

         Section 4.4. Priority of Liens; Condition of Assets.

         (a) All the Assets owned by each Principal Company are owned by it free
and clear of any Lien, except Liens permitted by Section 9.2. Each of the
Principal Companies has granted to the Collateral Trustee a perfected
first-priority security interest (to the maximum extent permitted by applicable
law and subject only to Liens permitted by Section 9.2) in all of its Assets,
other than those Assets which are (i) described on Schedule 4.4(a) or (ii)
excluded by the express terms of the Security Documents (any such Assets which
are not described in clauses (i) and/or (ii) herein are sometimes referred to
herein as the "Perfected Collateral"). The Liens which have been created and
granted by the Security Documents, to the extent such Liens may be perfected by
filing a financing statement under the Uniform Commercial Code of the applicable
jurisdiction, or by recording an assignment or other appropriate documents with
the U.S. Patent and Trademark Office or the United States Copyright Office, or
by taking possession of securities or instruments, or by recording a mortgage or
deed of trust in the real estate records of the applicable jurisdiction,
constitute valid perfected first-priority Liens on the Perfected Collateral,
subject to no prior or equal Lien except as permitted by Section 9.2. All Assets
of each Principal Company which are reasonably necessary for the operation of
its business are in good working condition, ordinary wear and tear excepted, and
are able to serve the function for which they are currently being used. Each
Principal Company enjoys peaceful and undisturbed possession under all material
leases of real and personal property to which it is a party, and all such
material leases are valid and subsisting and in full force and effect.

         (b) The Principal Companies are not engaged in any business or
activities other than (i) holding shares or interests of Capital Stock of other
Principal Companies, (ii) acquiring, owning, operating and disposing of Stations
and engaging in Permitted LMA Transactions, (iii) operating television and radio
networks and (iv) making other Investments permitted by Section 9.4.

         (c) The only material instrument held by any Principal Company as of
the Effective Date is the Christian Note.
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                                      -57-

         Section 4.5. Judgments, Actions, Proceedings. There are no outstanding
judgments, actions or proceedings, including any Environmental Proceeding,
pending before any Governmental Authority (including the FCC) with respect to
or, to the best of the Principal Companies' knowledge, threatened against or
affecting any Principal Company or any Assets of any Principal Company
(including any Assets to be acquired and any obligations to be assumed in any
Permitted Acquisition) which, if adversely determined, could (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect.

         Section 4.6. No Defaults; Compliance with Laws. No Default or Event of
Default is continuing. No Principal Company is in default under or has failed to
comply with any Requirement of Law or any Contractual Obligation to which it or
any of its Assets are bound, except for such defaults or failures which could
not (either individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect. Each Principal Company has complied and is in
compliance in all respects with each of its Governing Documents and in all
material respects with the Communications Act. Immediately prior to the
refinancing of the obligations under the Existing Credit Agreement with proceeds
of the initial Loans made hereunder, no Default or Event of Default (as such
terms are defined under the Existing Credit Agreement) was continuing under the
Existing Credit Agreement.

         Section 4.7. Burdensome Documents. Except as set forth on Schedule 4.7,
no Principal Company is a party to or bound by, and no Assets of any Principal
Company are affected by, any Requirement of Law or any Contractual Obligation
which could have a Material Adverse Effect.

         Section 4.8. Governing Documents. The Agent has been furnished with
true and complete copies of all Governing Documents of each Principal Company.

         Section 4.9. Financial Information.

         (a) Financial Statements. All balance sheets, all statements of
operations and of cash flows, and all other financial statements which have been
furnished by or on behalf of any of the Principal Companies to the Agent or any
Lender for the purposes of or in connection with this Agreement or any
transaction contemplated hereby, including the audited consolidated and
consolidating balance sheets of the Borrower and its Subsidiaries at December
31, 2000 and the related audited consolidated and consolidating statements of
operations and cash flows for the fiscal year of the Borrower then ended,
certified, in the case of the consolidated statements, by Ernst & Young
(collectively, together with the notes thereto, the "Historical Financials"),
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as disclosed therein) and present fairly the financial
position and the results of operations of the Borrower and its Subsidiaries and
of the Borrower and its Restricted Subsidiaries as at the date thereof and for
the periods then ended. None of the Principal Companies has any material
contingent liability or liabilities for taxes, long-term leases or unusual
forward or long-term commitments as of the date hereof which are not reflected
in the Historical Financials or in the notes thereto.

         (b) Projections. The Projections have been prepared on the basis of the
assumptions accompanying them and reflect as of the date hereof the Borrower's
good faith
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                                      -58-

projections, after reasonable analysis, of the matters set forth therein, based
on such assumptions.

         Section 4.10. No Material Changes. Since the Balance Sheet Date, there
has been no change, and no development or event involving a prospective change,
in the Assets, business, operations, prospects or condition, financial or
otherwise, of any Principal Company, which has had or could reasonably be
expected to have a Material Adverse Effect. Since the Balance Sheet Date, the
Borrower has not made any Restricted Payment.

         Section 4.11. Taxes. Each Principal Company has filed all returns for
Taxes required to be filed by it and has not failed to pay any Taxes, or
interest or penalties relating thereto, on or before the due dates thereof.
Except as set forth on Schedule 4.11: (i) as of the date hereof, there are no
material liabilities for Taxes of any Principal Company due or to become due and
(ii) there are no material claims pending or, to the knowledge of the Borrower,
proposed or threatened against any Principal Company for past Taxes, except
those, if any, as to which proper reserves are reflected in the Financial
Statements.

         Section 4.12. Intangible Assets. Each Principal Company possesses all
patents, Trademarks, Copyrights and rights with respect to the foregoing
reasonably necessary to conduct its business as now conducted and as proposed to
be conducted, without any known conflict with the patents, Trademarks,
Copyrights and rights with respect to the foregoing of any other Person.

         Section 4.13. Licenses and Approvals.

         (a) Each Principal Company has all requisite power and authority and
necessary licenses and permits, including all FCC Licenses, to own and operate
the Assets (including the Stations) owned or operated by it and to carry on its
businesses as now conducted.

         (b) Set forth in Schedule 4.13 is a complete list of all FCC Licenses
of the Principal Companies as of the date hereof. Each FCC License which is
necessary to the operation of the business of any Principal Company is validly
issued and in full force and effect or to the extent described in Schedule 4.13,
special temporary authority has been sought from the FCC to operate the
facilities for which such FCC authority is required. Each Principal Company has
fulfilled and performed all of its obligations in all material respects with
respect to each FCC License which is necessary to the operation of the business
of any Principal Company. No events or occurrences have occurred which
individually or in the aggregate: (i) have resulted in the revocation or
termination of any such FCC License, or (ii) materially and adversely affect or
could reasonably be expected to materially adversely affect any of the rights of
any Principal Company thereunder. Except as set forth on Schedule 4.13, as of
the date hereof, no license or franchise, other than the FCC Licenses described
in Schedule 4.13, is necessary for the operation of the business (including the
Stations) of the Principal Companies as now conducted.

         (c) No Principal Company is a party to nor does any Principal Company
have knowledge of any investigation, notice of violation, order or complaint
issued by or before any Governmental Authority, including the FCC, or of any
other proceedings (other than proceedings relating to the communications
industry generally) which could (individually or in the aggregate) reasonably be
expected to have a Material Adverse Effect. No Principal
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                                      -59-

Company has reason to believe (other than in connection with there being no
legal assurance thereof) that any of the FCC Licenses necessary to the operation
of the business of any Principal Company will not be renewed in the ordinary
course. Each Principal Company has filed all material reports, applications,
documents, instruments and information required to be filed by it pursuant to
applicable rules and regulations or requests of every regulatory body having
jurisdiction over any of its FCC Licenses or the activities of the Principal
Companies with respect thereto.

         Section 4.14. Environmental Compliance. Each of the Borrower Affiliated
Companies has obtained all environmental, health and safety permits, licenses
and other authorizations required under all applicable Environmental Laws to
carry on its business as now being or as proposed to be conducted, except to the
extent failure to have any such permit, license or authorization would not
(either individually or in the aggregate) reasonably be expected to have a
Material Adverse Effect. Each of such permits, licenses and authorizations is in
full force and effect and each of the Borrower Affiliated Companies is in
compliance with the terms and conditions thereof, and is also in compliance with
all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not (either
individually or in the aggregate) reasonably be expected to have a Material
Adverse Effect. On the date hereof, except as set forth in Schedule 4.14 hereto,
there are no underground storage tanks or surface impoundments for Hazardous
Substances, active or abandoned, at any site or facility owned, operated or
leased by the Borrower.

         Section 4.15. Employee Benefit Plans.

         (a) In General:

                  (i) Each Employee Benefit Plan of each of the Principal
         Companies has been maintained and operated in compliance in all
         material respects with the applicable provisions of ERISA and the Code,
         including the provisions thereunder respecting prohibited transactions.
         Each Principal Company has heretofore delivered to the Agent the most
         recently completed annual report, Form 5500, with all required
         attachments, and actuarial statement required to be submitted under
         Section 103(d) of ERISA, with respect to each Guaranteed Pension Plan.

                  (ii) Set forth on Schedule 4.15, as of the date hereof, is a
         list of each material pension, retirement or similar plan or obligation
         of the Principal Companies.

         (b) Retiree Welfare Obligations. The Principal Companies are not
obliged to provide health or life benefits to employees beyond their termination
of employment (other than as mandated by law) under any Employee Benefit Plan
which is a welfare plan within the meaning of Section 3(1) of ERISA to an extent
that would impair their ability to make timely the payments provided for under
this Agreement.
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                                      -60-

         (c) Guaranteed Pension Plans. Each contribution required to be made to
a Guaranteed Pension Plan, whether required to be made to avoid the incurrence
of an accumulated funding deficiency, the notice or lien provisions of
Section 302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan. No liability to the PBGC
(other than required insurance premiums, all of which have been paid on a timely
basis) has been incurred by any of the Principal Companies or any ERISA
Affiliate with respect to any Guaranteed Pension Plan, and there has not been
any ERISA Reportable Event (other than an event as to which the requirement of
30 days notice has been waived), or any other event or condition, which presents
a material risk of termination of any Guaranteed Pension Plan by the PBGC. Based
on the latest valuation of each Guaranteed Pension Plan and on the actuarial
methods and assumptions employed for that valuation, the aggregate accrued
benefits of all such Guaranteed Pension Plans did not exceed the aggregate value
of the assets of all such Plans by more than $100,000 Dollars, disregarding for
this purpose the accrued benefits and assets of any Guaranteed Pension Plan with
assets in excess of accrued benefits.

         (d) Multiemployer Plans. None of the Principal Companies or any ERISA
Affiliate has incurred any unpaid material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as a
result of a sale of assets described in Section 4204 of ERISA. None of the
Principal Companies or any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within the
meaning of Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of ERISA.

         Section 4.16. Labor Disputes; Collective Bargaining Agreements;
Employee Grievances. As of the date hereof, except as set forth on Schedule
4.16: (a) there are no collective bargaining agreements or other labor contracts
covering any Principal Company or any Station; (b) no such collective bargaining
agreement or other labor contract will expire prior to the Maturity Date; (c)
there is no pending or threatened Material Labor Dispute against or affecting
any Principal Company or any Station or its representative employees; and (d)
each Principal Company has complied with and is in compliance with the
provisions of the Fair Labor Standards Act.

         Section 4.17. Insurance. Each Principal Company has obtained all
property and liability insurance with reputable insurance companies satisfactory
to the Agent insuring against such risks and in such amounts as required by
Section 8.5. Set forth on Schedule 4.17 is a true, correct and complete list, as
of the Effective Date, of all insurance of any nature maintained by each
Principal Company (including all material fire, theft, casualty, general
liability, workers' compensation, business interruption, automobile and other
insurance policies insuring the Assets or business operations of each Principal
Company), specifying the type of coverage, the amount of coverage, the premium,
the insurer and the expiration date of each such policy (collectively, the
"Insurance Policies"). True, correct and complete copies of all of the Insurance
Policies have been made available by the Borrower to the Agent. All the
Insurance Policies are in full force and effect. All premiums (if any) due on
the Insurance Policies or renewals thereof have been paid and there is no
default under any of the Insurance Policies. None of the Principal Companies
have received any notice or other communication from any issuer of the Insurance
Policies canceling or materially
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                                      -61-

amending any of the Insurance Policies, any deductibles or retained amounts
thereunder, or the annual or other premiums payable thereunder, and no such
cancellation or material amendment is threatened.

         Section 4.18. Absence of Certain Restrictions. As of the date hereof,
no Principal Company is bound by any Contractual Obligation which, directly or
indirectly, prohibits or limits, or has the effect of prohibiting or limiting,
its incurrence of Indebtedness, its granting of Liens or its payment of
Distributions.

         Section 4.19. Ancillary Documents. The Borrower has furnished or caused
to be furnished to the Agent true and complete copies of each Ancillary
Document. No default by any Principal Company is continuing under any Ancillary
Document which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect. The Principal Companies are not aware of any
default by any other Person under any Ancillary Document to which such Person
and any Principal Company are a party which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.

         Section 4.20. Solvency.

                  (a) Fair Salable Value of Assets. The fair salable value of
the Assets of the Borrower exceeds the amount that will be required to be paid
on or in respect of the existing debts and other liabilities (including
contingent liabilities) of the Borrower as they mature.

                  (b) Capital Not Unreasonably Small. The Assets of the Borrower
do not constitute unreasonably small capital for the Borrower to carry out its
business as now conducted and as proposed to be conducted including the capital
needs of the Borrower, taking into account the particular capital requirements
of the business conducted by the Borrower, and the projected capital
requirements and capital availability thereof.

                  (c) Incurrence of Debts. The Borrower does not intend to and
will not incur debts beyond its ability to pay such debts as they mature taking
into account the timing and amounts of cash to be received by the Borrower and
of amounts to be payable on or in respect of obligations of the Borrower. The
cash flow of the Borrower, after taking into account all anticipated uses of the
cash of the Borrower, will at all times be sufficient to pay all such amounts on
or in respect of debt of the Borrower when such amounts are required to be paid.

         Section 4.21. Application of Certain Laws and Regulations. No Principal
Company is an "investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.
No Principal Company is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended. No Principal Company is a Person
prohibited from acquiring or holding a broadcasting license by the
Communications Act. No Principal Company is subject to any Requirement of Law
which regulates the incurring of Indebtedness for Borrowed Money.
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                                      -62-

         Section 4.22. No Material Real Property; No Material Intellectual
Property. As of the date hereof, no Principal Company owns (i) Material Real
Property or (ii) has any Material Intellectual Property.

         Section 4.23. Full Disclosure. To the best knowledge of the Principal
Companies, none of the Transaction Documents, the Loan Documents, the Historical
Financials, or any other agreement, instrument, document, certificate, statement
or letter furnished to the Agent or any Lender by or on behalf of any Principal
Company in connection with any of the transactions contemplated by this
Agreement, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained therein, taken
as a whole together with all Public Filings made by the Principal Companies, not
misleading in light of the circumstances in which they are made. Other than
publicly known matters affecting the communications industry generally and
publicly known matters affecting the local economies of the markets in which the
Principal Companies operate, there is no fact known to the Principal Companies
which has caused or is reasonably likely to cause a Material Adverse Effect,
which fact is not set forth in the Transaction Documents, the Loan Documents,
the Historical Financial Statements, the Public Filings or any other
certificate, opinion or other statement furnished to each Lender.

                                    ARTICLE V

                         CONDITIONS TO CREDIT EXTENSIONS

         Section 5.1. Conditions to Initial Credit Extensions. The fulfillment
(to the reasonable satisfaction of the Agent) of the following conditions
precedent shall be required before the Lenders have any obligation to make the
initial Credit Extensions:

         (a) Transaction Documents.

                  (i) Each of the Transaction Documents shall have been duly and
         properly authorized, executed and delivered by the respective party or
         parties thereto and each of the Transaction Documents shall be in full
         force and effect as of the effectiveness of this Agreement.

                  (ii) An executed original of each of the Revolving Credit
         Notes, the Term Loan Notes and the Acquisition Loan Notes shall have
         been delivered to the Agent. Executed originals or (as the case may be)
         executed counterparts of each of the other Transaction Documents shall
         have been delivered to the Agent. Each of the Transaction Documents
         (other than this Agreement) executed and delivered to the Agent shall
         be substantially in the form of the appropriate Exhibit hereto or in
         form and substance satisfactory to the Agent.

         (b) Organization Documents. The Agent shall have received:

                  (i) a copy of the certificate of incorporation or certificate
         of formation (or similar Governing Documents) of each Principal
         Company, certified as of a recent
   71
                                      -63-

         date by the Secretary of State of the state of incorporation or
         formation of each Principal Company;

                  (ii) a certificate stating that each Principal Company is a
         corporation or limited liability company duly organized or formed,
         validly existing and in good standing under the laws of its state of
         incorporation or formation, signed as of a recent date by the Secretary
         of State of such state;

                  (iii) a certificate stating that (A) each Principal Company is
         qualified to do business under the laws of each state wherein the
         character of the properties owned or held under lease by any Principal
         Company or the nature of the business conducted by it would require
         that such Principal Company qualify as a foreign corporation or foreign
         limited liability company and (B) such Principal Company is in good
         standing under the laws of such state, signed as of a recent date by
         the Secretary of State of such state; and

                  (iv) a certificate of a duly authorized officer of each
         Principal Company dated the Effective Date and certifying (A) that
         attached thereto is a true and complete copy of the by-laws or limited
         liability company agreement (or similar Governing Documents) of such
         Principal Company as in effect on the Effective Date, (B) that the
         certificate of incorporation or certificate of formation (or similar
         Governing Documents) of such Principal Company has not been amended
         since the last amendment referred to in the certificates delivered
         pursuant to clause (i) above, (C) that attached thereto are true and
         correct copies of the records of all corporate (or the company
         equivalent) action taken by such Principal Company to authorize its
         execution and delivery of the Transaction Documents and its performance
         of the Loan Documents (and the borrowings and other transactions
         contemplated thereby), and that such corporate (or the company
         equivalent) actions have not been modified, rescinded or amended and
         are in full force and effect on the Effective Date, and (D) as to the
         incumbency, the name and a specimen signature of each individual who
         shall be authorized: (1) to sign, in the name and on behalf of such
         Principal Company, the Loan Documents to which such Principal Company
         is or is to be a party; (2) to give notices and to take other action on
         its behalf under this Agreement; and (3) to make (in the case of the
         Borrower) applications for Loans and Letters of Credit.

         (c) Representations and Warranties. Each of the representations and
warranties made by or on behalf of any of the Principal Companies in any of the
Transaction Documents shall have been true and correct in all material respects
when made, and shall continue to be true and correct in all material respects as
of the Effective Date.

         (d) Lien Searches. The Agent shall have received written advice, in
form and substance reasonably satisfactory to the Agent, relating to such Lien
and judgment searches as the Agent may require and the results of such searches
shall be satisfactory to the Agent.

         (e) Filings, Registration and Recordings. Any documents (including
UCC-1 financing statements or UCC-3 termination statements) required by the
Agent or the
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                                      -64-

Agent's Special Counsel to be recorded or filed in order to (i) release any
Liens on any Assets of the Principal Companies (other than Liens permitted by
Section 9.2) and (ii) create, in favor of the Collateral Trustee, a perfected
first-priority Lien on the Perfected Collateral of the Principal Companies with
respect to which a Lien may be perfected by filing a financing statement under
the Uniform Commercial Code of the applicable jurisdiction, or by recording an
assignment or other document with the United States Copyright Office or the U.S.
Patent and Trademark Office, or by recording a mortgage or deed of trust in the
real estate records of the applicable jurisdiction, shall have been properly
recorded or filed in each office in each jurisdiction required. The Agent shall
have received acknowledgment copies of all such recordings and filings (or in
lieu thereof, the Agent shall have received other evidence satisfactory to it
that all such recordings and filings have been made); and the Agent shall have
received evidence that all necessary recording and filing fees and all taxes or
other expenses related to such filings have been paid in full. Any other action,
including the taking of possession of securities or instruments by the
Collateral Trustee, required in order to create in favor of the Collateral
Trustee, for the ratable benefit of the Agent and the Lenders, a perfected
first-priority Lien on such Assets to the extent such Liens may be perfected by
filing a financing statement under the Uniform Commercial Code of the applicable
jurisdiction, or by recording an assignment or other document with the United
States Copyright Office or the U.S. Patent and Trademark Office, or by recording
a mortgage or deed of trust in the real estate records of the applicable
jurisdiction, or by taking possession of the securities or instruments, shall
have been properly taken in order to create such a perfected first-priority
Lien, subject only to Liens permitted by Section 9.2.

         (f) Insurance. The Agent shall have received evidence, in form and
substance satisfactory to the Agent, that (i) each Principal Company has
obtained the policies of insurance required by the Loan Documents which
insurance shall be in form and substance satisfactory to the Agent, and (ii) the
Agent shall have been named additional insured with respect to all liability
insurance policies to the extent requested by the Agent, and the Collateral
Trustee shall have been named loss payee with respect to all casualty and
business interruption insurance policies to the extent requested by the
Collateral Trustee and (iii) all other requirements of any Loan Document with
respect to insurance shall have been fulfilled.

         (g) Fees. The Borrower shall have paid to the Agent all fees required
to be paid to the Agent on the Effective Date pursuant to the Fee Letter.

         (h) Legal Opinions. The Agent shall have received a written legal
opinion, with a counterpart for each Lender, addressed to the Agent and the
Lenders, dated the Effective Date, from (i) Edwards & Angell, LLP general
counsel to the Principal Companies, and such opinion shall be in form and
substance satisfactory to the Agent, and (ii) Smithwick & Belendiuk, P.C.,
special FCC counsel to the Principal Companies, and such opinion shall be in
form and substance satisfactory to the Agent.

         (i) Payment of Costs and Expenses. The Borrower shall have reimbursed
the Agent for all reasonable out-of-pocket expenses (including all reasonable
fees and disbursements of the Agent's Special Counsel) incurred by the Agent
through the Effective Date in connection with structuring and syndicating the
Facilities and preparation, review, negotiation, execution and delivery of the
Transaction Documents.
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                                      -65-

         (j) Due Diligence; Delivery of Financial Statements. The Agent shall
have completed and be satisfied with the results of all aspects of its due
diligence, including, receipt from the Borrower of the Historical Financials and
the Projections.

         (k) Real Estate Appraisals not Required. The Agent shall be satisfied
that no real estate appraisals are required or necessary as to the market value
of any real property of the Principal Companies subject to a Mortgage under 12
U.S.C. Section 93a and title XI of the Financial Institutions, Reform, Recovery
and Enforcement Act of 1989 and the corresponding regulations under 12 C.F.R.
34.41 et. seq. (1990).

         (l) Delivery of Consents. The Agent shall have received copies of all
consents referred to on Schedule 4.2, including consents of the FCC, if any,
required in connection with the transactions contemplated by the Transaction.

         (m) Effective Date Certificate. The Agent shall have received the duly
executed and completed Effective Date Certificate substantially in the form
attached hereto as Exhibit C.

         (n) Repayment under Existing Credit Agreement. The Borrower shall have
repaid all Obligations (as such term is defined in the Existing Credit
Agreement) under the Existing Credit Agreement and all such Obligations (as
defined therein) and all Commitments (as defined therein) shall have terminated.

         (o) Minimum EBITDA. The Agent shall have received satisfactory evidence
that, as of the date hereof, the Borrower shall have had pro forma Consolidated
EBITDA (assuming the completion of the KMIT-FM and KGGK-FM Acquisition and the
WHAI-AM/FM Acquisition) for the 12 month period ending prior to such date of not
less than $32,000,000.

         Section 5.2. Conditions Precedent to Each Credit Extension. The
obligation of each Lender and the Issuing Bank to make any Credit Extension
(including the initial Credit Extension) is subject to the satisfaction, as of
the date of such Credit Extension, of each of the following conditions
precedent:

         (a) Required Notices.

                  (i) In the case of any requested Loan, the Agent shall have
         timely received from the Borrower an application for such Loan in
         accordance with Section 2.2 which notice without more shall constitute
         certification by the Borrower as to the matters set forth in clause
         (ii) of paragraph (b) below and paragraphs (c) and (d) below; and

                  (ii) In the case of any requested Letter of Credit, the Agent
         and the Issuing Bank shall have timely received from the Borrower a
         request for such Letter of Credit in accordance with Article III
         hereof, which notice without more shall constitute certification by the
         Borrower as to the matters set forth in clause (ii) of paragraph (b)
         below and paragraphs (c) and (d) below.
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                                      -66-

         (b) Legality of Transactions. It shall not be unlawful (i) for the
Collateral Trustee, the Agent or the Lenders to perform any of their obligations
under any of the Loan Documents or (ii) for any Principal Company to perform any
of its obligations under any of the Loan Documents.

         (c) Representations and Warranties. Each of the representations and
warranties made by the Principal Companies in this Agreement and the other Loan
Documents shall be true and correct in all material respects as of the date of
the making of such Credit Extension with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is expressly
stated to relate only to a specific date, as of such specific date).

         (d) Performance, Etc. Each Principal Company shall have duly and
properly performed, complied with and observed in all material respects each of
its obligations contained in this Agreement. No Default or Event of Default
shall be continuing or shall result from the requested Credit Extension.

                                   ARTICLE VI

                                    GUARANTY

         Section 6.1. Guaranty of Payment.

         (a) Guaranty. The Guarantors hereby absolutely and unconditionally, and
jointly and severally guaranty (for purposes of this Article VI, the "Guaranty")
to the Agent, the Issuing Bank and each Lender the due and punctual payment in
full of all the Obligations in accordance with their respective terms, whether
such Obligations are outstanding on the date of this Agreement or arise or are
incurred at any time or times thereafter.

         (b) Guaranty of Payment. If any Principal Company shall fail to make
any payment of any of its Obligations to the Agent, the Issuing Bank or any
Lender when and as the same shall become due and payable, the Guarantors
absolutely and unconditionally promise, jointly and severally, to make such
payment to the Agent, the Issuing Bank or such Lender forthwith upon demand by
the Agent, the Issuing Bank or such Lender.

         (c) Unlimited Guaranty. Subject to the provisions of Section 6.7, the
liability of each Guarantor under this Guaranty shall be unlimited.

         (d) Guaranty Absolute. This Guaranty and the obligations of the
Guarantors hereunder shall be in addition to and shall not in any way be
prejudiced or affected by any other Collateral now or at any time or times
hereafter held by the Agent, the Collateral Trustee, the Issuing Bank or any
Lender, and every right, remedy, power or privilege given to the Issuing Bank,
the Lenders or the Agent under this Guaranty shall be in addition to and not in
limitation of any and every other right, remedy, power or privilege vested in
the Agent, the Collateral Trustee, the Issuing Bank or any Lender under any
other Collateral. No assurance, security or payment of any of the Obligations
which is avoided under any enactment relating to bankruptcy or liquidation or
insolvency, and no release, settlement or
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                                      -67-

discharge given or made by the Issuing Bank, any Lender or the Agent on the
faith of any such assurance, security or payment, shall prejudice or affect the
rights of the Issuing Bank, the Lenders and the Agent to recover from the
Guarantors to the full extent of this Guaranty as if such assurance, security,
payment, release, settlement or discharge (as the case may be) had never been
given or made.

         (e) Covenant by Guarantors. Without prejudice to any of the obligations
of the Guarantors to the Issuing Bank, the Lenders and the Agent under the
foregoing paragraphs of this Section 6.1, which obligations are absolute and
unconditional, but as a separate undertaking on the part of the Guarantors, the
Guarantors hereby absolutely covenant and agree to cause, to the extent it is
able, each Principal Company to perform and comply with all of the promises,
covenants, agreements and conditions to be performed and complied with by such
Principal Company which are contained in any of the Loan Documents, and the
Guarantors hereby further agree to take or to cause to be taken, promptly and
without any expense to the Agent, the Issuing Bank, or the Lenders, all such
measures as may be appropriate and can lawfully be effected by such Guarantors
to prevent the occurrence of any Default or Event of Default and to cure or make
good promptly any Default or Event of Default which may occur at any time or
times.

         Section 6.2. Waivers of Notice, Etc. It is the express intention of the
Guarantors, the Issuing Bank, the Lenders and the Agent that the obligations of
the Guarantors to the Issuing Bank, the Lenders and the Agent under this
Guaranty, this Agreement and under any of the other Loan Documents shall not be
to any extent or in any way or manner whatsoever satisfied, discharged, impaired
or otherwise affected, except by the payment of the Obligations to the Agent,
the Issuing Bank and the Lenders, and then only to the extent of such payment.
Without limitation of the generality of the foregoing provisions of this Section
6.2, the obligations of the Guarantors to the Issuing Bank, the Lenders and the
Agent under this Guaranty shall not be to any extent or in any way or manner
whatsoever satisfied, discharged, impaired or otherwise affected by any of the
following, whether or not the Guarantors shall have had any notice thereof:

         (a) The dissolution, termination of existence, insolvency, business
failure, appointment of a receiver for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against, any
Guarantor, any Principal Company, the Issuing Bank, the Agent or any Lender;

         (b) The absorption, merger or consolidation of, or the effectuation of
any other change whatsoever in the name, membership, constitution or place of
formation of, any Guarantor, any Principal Company, the Agent, the Issuing Bank
or any Lender;

         (c) Any extension or postponement of the time for the payment of any of
the Obligations, the acceptance of any partial payment thereon, any and all
other indulgences whatsoever by the Agent, the Issuing Bank or any Lender in
respect of any of the Obligations, the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any person or persons primarily or secondarily liable in respect of any of
the Obligations;
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                                      -68-

         (d) Any action or delay in acting or failure to act on the part of the
Agent, the Issuing Bank or any Lender under any of the Loan Documents or in
respect of any of the Obligations or any of the Collateral or otherwise,
including any failure strictly or diligently to assert any right or to pursue
any remedy against any Guarantor or other persons under any of the Loan
Documents or provided by statute or at law or in equity;

         (e) Any modification or amendment of, or any supplement or addition to,
the Obligations, this Agreement, any Note, or any of the other Loan Documents;

         (f) Any waiver, consent or other action or acquiescence by the Agent,
the Issuing Bank or any Lender at any time or times in respect of any default by
any Guarantor or other Persons in the performance or observance of or compliance
with any term, covenant or condition contained in any of the Loan Documents;

         (g) The existence or creation at any time or times on or after the date
of this Agreement of any claim, defense, right of set-off or counterclaim of any
nature whatsoever of any Guarantor against any Principal Company, the Agent, the
Issuing Bank or any Lender, or of any Principal Company against any Guarantor,
the Agent, the Issuing Bank or any Lender; or

         (h) This Agreement, the Notes, any of the other Loan Documents or any
provisions of any thereof shall at any time and for any reason whatsoever cease
to be in full force and effect or shall be declared null and void or illegal,
invalid, unenforceable or inadmissible in evidence.

         Each of the Guarantors hereby absolutely, unconditionally and
irrevocably assents to and waives notice of any and all events, conditions,
matters and things hereinbefore specified in clauses (a) through (h), inclusive,
of the foregoing sentence of this Section 6.2. Each of the Guarantors hereby
irrevocably waives presentment, demand, notice, protest, notice of protest,
notice of dishonor and all other demands and notices in connection with the
delivery, acceptance, performance, default or enforcement of this Agreement, any
Note, any of the other Loan Documents, any of the Obligations or any of the
Collateral.

         Section 6.3. Election of Remedies. This Guaranty hereby made by the
Guarantors is the guaranty of the full and punctual payment and performance by
each Principal Company of all the Obligations and not of the collectability only
of such Obligations. This Guaranty may be enforced by the Agent, the Collateral
Trustee, the Issuing Bank or any Lender from time to time as often as the
occasion therefor may arise, regardless of the adequacy of any other Collateral,
and without any requirement on the part of the Agent, the Collateral Trustee,
the Issuing Bank or any Lender first to exercise any rights or remedies against
any other persons or to exhaust any remedies available to the Agent, the
Collateral Trustee, the Issuing Bank or any Lender against any other Guarantor
or any other persons or to resort to any Collateral in the possession of the
Agent, the Issuing Bank, any Lender or the Collateral Trustee or under the
control of the Agent, the Issuing Bank, any Lender or the Collateral Trustee or
to resort to any other source or means of obtaining payment or enforcing
performance of the Obligations or any of them.

         Section 6.4. Expenses. The Guarantors hereby, jointly and severally,
unconditionally agree to pay to the Agent, on demand at any time by the Agent,
any and all
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                                      -69-

reasonable costs and expenses which shall at any time or times be incurred or
sustained by the Agent, the Issuing Bank or any Lender in connection with the
enforcement by the Agent, the Issuing Bank or any Lender of all or any of the
rights, remedies, powers or privileges of the Agent, the Issuing Bank or such
Lender under Article VI of this Agreement (including the reasonable fees and
disbursements of counsel incurred by the Agent, the Issuing Bank or any Lender
in connection therewith).

         Section 6.5. Unenforceability of Obligations. It is hereby agreed by
each Guarantor as a separate and independent stipulation that, if any other
Guarantor shall cease to have any obligation to discharge its Obligations or any
of them or if any of the moneys included in the Obligations shall become
irrecoverable from any other Guarantor or if any of the Obligations shall become
invalid or unenforceable, in whole or in part, against any other Guarantors for
any reason whatsoever (legal or otherwise), including, but not limited to, any
of the following reasons: (a) any defect in or insufficiency of the powers of
any other Guarantors or any irregular or improper exercise thereof, (b) the
operation of any statute of limitations or the operation of any other laws now
or hereafter in effect, or (c) the existence of any legal limitation, disability
or incapacity affecting or otherwise relating to any other Guarantor, then this
Guaranty and the obligations of such Guarantor to the Agent, the Issuing Bank
and the Lenders hereunder shall nevertheless be binding on and enforceable
against such Guarantors as if the Obligations were, at the time of demand by the
Agent, the Issuing Bank or any Lender upon the Guarantors for payment under this
Guaranty, fully valid and enforceable against such other Guarantors and as if
such Guarantors were, at the time of such demand, the principal debtors in
respect of all of the Obligations.

         Section 6.6. Subrogation Rights; Subordination of Subrogation Rights.
The rights which any Guarantor shall acquire against any Principal Company as a
consequence of making any payment to the Agent, the Issuing Bank or any Lender
under its Guaranty are, in this Section 6.6, collectively called the
"Subrogation Rights." In the event of any proceeding for the distribution,
division or application of all or any part of the assets of any such Principal
Company, whether such proceeding be for the liquidation, dissolution or winding
up of such Principal Company, a receivership, insolvency or bankruptcy
proceeding, an assignment for the benefit of creditors, or a proceeding by or
against such Principal Company for relief under any bankruptcy, reorganization
or insolvency law, if all of the Obligations have not been paid and satisfied in
full in cash at the time, the Agent is hereby irrevocably authorized by such
Guarantor at any such proceeding:

         (a) To enforce all the Subrogation Rights of such Guarantor, either in
the name of the Agent, the Issuing Bank or the Lenders or in the name of such
Guarantor, by proof of debt, proof of claim, suit or otherwise;

         (b) To collect any assets of such Principal Company distributed or
applied by way of dividend or payment on account of such Subrogation Rights, and
to apply the same, or the proceeds of any realization thereof, towards the
payment of Obligations until all Obligations have been paid and satisfied in
full; and

         (c) To vote claims arising under or in respect of all such Subrogation
Rights.

         So long as any Obligations remain unpaid, no Guarantor shall take any
action of any kind to enforce any of its Subrogation Rights, and no Guarantor
shall receive or accept from
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                                      -70-

any Person or Persons any payments or other distributions in respect of any of
its Subrogation Rights. Should any payment on account of any Subrogation Rights
be received by any Guarantor, such payment shall be delivered by such Guarantor
forthwith to the Agent in the form received by such Guarantor, except for the
addition of any endorsement or assignment necessary to effect transfer of all
rights therein to the Agent, the Issuing Bank and the Lenders. Until so
delivered, each such payment shall be held by such Guarantor in trust for the
ratable benefit of the Agent, the Issuing Bank and the Lenders and shall not be
commingled with any other funds of any Guarantor.

         Section 6.7. Limitation on Obligations. It is the intention and
agreement of each of the Guarantors, the Agent, the Issuing Bank and the Lenders
that the obligations of each Guarantor under the provisions of this Article VI
shall be in, but not in excess of, the maximum amount permitted by applicable
law. Accordingly, notwithstanding anything to the contrary contained in this
Article VI, the obligations of each Guarantor under this Article VI shall be
reduced to that amount which, after giving effect thereto, would not render such
Guarantor insolvent or unable to pay its debts and liabilities as they mature or
leave such Guarantor with unreasonably small capital or otherwise exceed the
maximum amount permitted under any federal or state fraudulent conveyance law
applicable to this Article VI. This Section 6.7 is intended solely to preserve
the rights of the Agent, the Issuing Bank and the Lenders under this Agreement
to the maximum extent permitted by applicable law and no Guarantor nor any other
Person shall have any right under this Section 6.7 that it would not otherwise
have under applicable law.

         Section 6.8. Security; Setoff. Each of the Guarantors grants to each of
the Agent, the Issuing Bank and the Lenders, as security for the full and
punctual payment and performance of all of the Guarantors' obligations
hereunder, a continuing lien on and security interest in all securities or other
property belonging to each such Guarantor now or hereafter held by such Agent,
the Issuing Bank or such Lender and in all deposits (general or special, time or
demand, provisional or final) and other sums credited by or due from such Agent,
the Issuing Bank or such Lender to such Guarantor or subject to withdrawal by
such Guarantor. Regardless of the adequacy of any collateral security or other
means of obtaining payment of any of the Obligations, each of the Agent, the
Issuing Bank and the Lenders is hereby authorized at any time and from time to
time, without notice to any of the Guarantors (any such notice being expressly
waived by each of the Guarantors) and to the fullest extent permitted by law, to
set off and apply such deposits and other sums against the obligations of such
Guarantor under this Guaranty, whether or not such Agent, the Issuing Bank or
such Lender shall have made any demand under this Guarantee and although such
obligations may be contingent or unmatured.

                                   ARTICLE VII

                    DELIVERY OF FINANCIAL REPORTS, DOCUMENTS
                              AND OTHER INFORMATION

         The undersigned Principal Companies agree with the Agent and each of
the Lenders that, until all Commitments have been terminated, all Letters of
Credit have been fully drawn or have terminated or expired and all Obligations
have been paid in cash in full, the Principal Companies shall deliver to each
Lender:
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                                      -71-

         Section 7.1. Annual Financial Statements. Annually, as soon as
available, but in any event within ninety (90) days after the last day of each
of the Borrower's fiscal years, consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries (and, separately stated, of the Borrower and
its Restricted Subsidiaries) at such last day of such fiscal year, and
consolidated and consolidating statements of operations and cash flow of the
Borrower and its Subsidiaries (and, separately stated, of the Borrower and its
Restricted Subsidiaries) for such fiscal year, each prepared in accordance with
GAAP consistently applied, in reasonable detail, and, as to the consolidated
statements, certified without qualification by Ernst & Young or another firm of
independent certified public accountants satisfactory to the Agent, or
certified, as to the consolidating statements, by the Chief Financial Officer,
as fairly presenting the financial position and the results of operations of the
Borrower and its Subsidiaries (or of the Borrower and its Restricted
Subsidiaries, as the case may be) as at and for the year ending on its date and
as having been prepared in accordance with GAAP.

         Section 7.2. Quarterly Financial Statements. As soon as available, but
in any event within sixty (60) days after the end of each of the Borrower's
fiscal quarters, a consolidated and consolidating balance sheet of the Borrower
and its Subsidiaries (and, separately stated, of the Borrower and its Restricted
Subsidiaries) as of the last day of such quarter and consolidated and
consolidating statements of operations and cash flow of the Borrower and its
Subsidiaries (and, separately stated, of the Borrower and its Restricted
Subsidiaries) for such quarter and for the portion of the Borrower's fiscal year
then elapsed, each such statement showing the comparison of the Borrower's
performance for such periods to the corresponding periods for the prior year,
all in reasonable detail, each such statement to be certified in a certificate
of the Chief Financial Officer as accurately representing the financial position
and the results of operations of the Borrower and its Subsidiaries (or of the
Borrower and its Restricted Subsidiaries, as the case may be) as at its date and
for such quarter and for the portion of the fiscal year then ended and as having
been prepared in accordance with GAAP consistently applied (subject to year-end
audit adjustments).

         Section 7.3. Compliance Information. Concurrently with any delivery of
financial statements under Sections 7.1 or 7.2, a certificate, in form and
substance reasonably satisfactory to the Agent, of the Chief Financial Officer
of the Borrower (i) certifying that as of the effective date of the certificate,
no Default or Event of Default is continuing or, if a Default or Event of
Default is continuing, specifying the nature and the extent thereof and any
corrective action taken or proposed to be taken with respect thereto, (ii)
setting forth computations in reasonable detail (A) demonstrating compliance
with the covenants set forth in Article X and Sections 9.1, 9.3 (with respect to
Permitted Sales), 9.4(i) and 9.5 and (B) in the case of any certificate
delivered with Financial Statements under Section 7.1, calculating Excess Cash
Flow for the fiscal year then ended (iii) certifying that the representations
and warranties contained in Article IV hereof are true and correct in all
material respects as of the date of such certificate, with the same force and
effect as if made on and as of such date (or, if any representation or warranty
is expressly stated to relate only to a specific date, as of such specific
date).

         Section 7.4. Accountants' Reports. Promptly upon receipt thereof,
copies of all management letters and other material reports submitted to any
Principal Company by its
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                                      -72-

independent accountants in connection with any annual or interim audit or review
of the books of any Principal Company made by such accountants.

         Section 7.5. Copies of Documents. Promptly upon their becoming
available, copies of any: (i) financial statements, projections, non-routine
reports, notices (other than routine correspondence), requests for waivers and
proxy statements, in each case, delivered by any Principal Company to any holder
of Indebtedness for Borrowed Money other than the Lenders; (ii) correspondence
or notices received by any Principal Company from any Governmental Authority
which regulates the operations of the Principal Companies, including the FCC,
relating to an actual or threatened change or development which could be
materially adverse to the Principal Companies or any Station, and all
applications for renewals of any of the FCC Licenses; (iii) registration
statements, prospectuses and any amendments and supplements thereto, and any
regular and periodic reports (including reports on Form 10K, Form 10Q or Form
8K), if any, filed by any Principal Company with any securities exchange or with
the Securities and Exchange Commission or any Governmental Authority succeeding
to any or all of the functions of the said Commission (collectively, the "Public
Filings"); (iv) letters of comment or correspondence sent to any Principal
Company by any such securities exchange or such Commission in relation to such
Principal Company and its affairs; (v) written reports submitted by any
Principal Company or by its independent accountants in connection with any
annual or interim audit of the books of such Principal Company made by such
accountants; (vi) any appraisals received by such Principal Companies with
respect to the properties or assets of such Principal Company; and (vii) any
report, document, notices or proxy statement sent by any Principal Company to
any of its stockholders or members.

         Section 7.6. Annual Budget. Annually, as soon as available but in any
event within thirty (30) days after the last day of each of the Borrower's
fiscal years, a summary of business plans in the form of consolidated and
consolidating (on a station-by-station and market-by-market basis) financial
operating projections for the Borrower and its Restricted Subsidiaries for the
upcoming year, including (a) balance sheets, and (b) statements of operations
and cash flows (indicating projected revenues and expenses), each prepared for
the upcoming fiscal year on a monthly basis (together with reasonable
assumptions and explanations attached thereto), all in form and substance
satisfactory to the Required Lenders.

         Section 7.7. Additional Information. Such other information regarding
the business, affairs and condition of the Borrower and its Subsidiaries as the
Agent or the Required Lenders may from time to time reasonably request,
including monthly financial statements.

                                  ARTICLE VIII

                              AFFIRMATIVE COVENANTS

         The undersigned Principal Companies agree with the Agent and each
Lender that, until all Commitments have been terminated, all Letters of Credit
have been fully drawn or have terminated or expired and all Obligations have
been paid in cash in full, each Principal Company shall:
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                                      -73-

         Section 8.1. Payment and Performance of Obligations. Pay its
Indebtedness and pay and perform its Contractual Obligations promptly and in
accordance with their respective terms, including all Taxes, assessments and
governmental charges upon its income or profits or in respect of its Assets and
all lawful claims for labor, material and supplies or otherwise which, if
unpaid, might give rise to a Lien upon its Assets, unless and to the extent that
such Indebtedness or Contractual Obligations are being contested in good faith
and by appropriate proceedings and that proper and adequate reserves relating
thereto are established in accordance with GAAP by the appropriate Principal
Companies and then only to the extent that a bond is filed in cases where the
filing of a bond is necessary to avoid the creation of a Lien against any of its
properties. Nothing in this Section 8.1 shall (i) relieve any Principal Company
from its absolute and unconditional obligation to pay and perform all
Obligations of such Principal Company promptly and in accordance with their
respective terms, or (ii) require any Principal Company to pay or perform any
obligations in respect of Subordinated Debt if prohibited by any subordination
provisions applicable thereto.

         Section 8.2. Conduct of Business. Do, or cause to be done, all things
reasonably necessary to (i) preserve and keep in full force and effect its
corporate (or the equivalent company) existence and good standing under the laws
of its jurisdiction of incorporation or formation, (ii) obtain, maintain,
preserve, renew, extend and keep in full force and effect all material permits,
rights, licenses, franchises, authorizations, patents, Trademarks, Copyrights
and privileges reasonably necessary for the proper conduct of its business,
including FCC Licenses (except for (a) FCC licenses for Secondary Stations and
(b) Sales of Assets permitted by Section 9.3), (iii) conduct and operate its
business substantially in the manner in which it is presently conducted and
operated, (iv) comply in all material respects with all Requirements of Law,
including the Communications Act, (v) comply with all its Governing Documents,
(vi) maintain its qualification to do business in each jurisdiction in which the
failure to do so would have a Material Adverse Effect, (vii) maintain and
preserve all the remainder of its Assets and property, and all improvements
thereon, in use or useful in the conduct of its business and keep the same in
reasonable repair, working order and condition as the same is now or may
hereafter be put (taking into consideration ordinary wear and tear), damage from
casualty expressly not excepted, and from time to time make, or cause to be
made, all needful and proper repairs, renewals and replacements, betterments,
additions and improvements thereto consistent with industry practices, so that
the business carried on in connection therewith may be properly and
advantageously conducted at all times, such repairs, renewals and replacements,
betterments, additions and improvements to be conducted in accordance with the
terms of Section 8.5, (viii) transact business in such names as such Principal
Company has from time to time used in conducting its business, and (ix) maintain
its executive offices and principal place of business at the locations set forth
on Schedule 8.2 hereto, or at such other place in the United States of America
as the Borrower shall designate upon written notice to the Agent.
Notwithstanding anything in this Section 8.1 or elsewhere in this Agreement to
the contrary, the Principal Companies will not, and will not cause or permit any
Station, to:

         (a) enter into any so called "local market agreements" or any other
arrangements with any other Communication System (other than another Station)
whereby the parties agree to function cooperatively in terms of programming,
advertising, sales, management, consulting or similar services, except for (i)
any such agreements or arrangements existing
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                                      -74-

on the date hereof and described in Schedule 8.2(a) or (ii) any Permitted LMA
Transactions; or

         (b) enter into any so-called "time brokerage agreements" or any other
agreements or arrangements under which any Station shall (i) sell broadcast time
to any other Communication System (other than another Station) which programs
such broadcast time and sells its own commercial advertising announcements
during such broadcast time or (ii) purchase broadcast time on any other
Communication System (other than another Station) for the purpose of programming
such broadcast time and selling its commercial advertisements during such time,
except for (i) such agreements or arrangements existing on the date hereof and
described on Schedule 8.2(b) hereto or (ii) Permitted LMA Transactions; or

         (c) otherwise enter into any oral or written agreement with any other
Person (other than one of the Principal Companies) pursuant to which any
employee or any Assets owned by any Principal Company would be used by or shared
with any other Person (other than one of the Principal Companies).

         Section 8.3. Books and Records. Keep proper books of record and account
in a manner reasonably satisfactory to the Agent in which full, true and correct
entries shall be made in accordance with GAAP and maintain adequate accounts and
reserves for all Taxes (including income taxes), all depreciation, depletion,
obsolescence and amortization of its properties, all other contingencies, and
all other proper reserves. Maintain a fiscal year ending December 31 of each
year.

         Section 8.4. Inspections and Audits. Permit any officer or employee
designated by the Agent or any Lender to visit and inspect any of its properties
and to examine and audit its books and discuss the affairs, finances and
accounts of any Principal Company with its officers, all at such reasonable
times, upon reasonable notice, in a reasonable manner and as often as the Agent
or the Required Lenders may reasonably request. The Principal Companies shall
pay all reasonable out-of-pocket expenses incurred by any officers or employees
of the Agent or any Lender in connection with any such visitation, audits and
inspection.

         Section 8.5. Insurance.

         (a) Maintain insurance covering, without limitation, fire, public
liability, property damage, product liability, workers' compensation and
insurance on all Assets of each Principal Company, all in amounts customary for
the industry and under policies issued by financially sound and reputable
insurers satisfactory to the Agent and, with respect to any such insurance
policies covering all or any portion of the Collateral or any business
interruption insurance, with a lender's loss payable clause in favor of the
Collateral Trustee for the benefit of the Lenders, as their interests may
appear, and naming the Agent as additional insured. All such policies of
insurance shall be endorsed or otherwise amended to include a lender's loss
payable endorsement, in form and substance reasonably satisfactory to the
Collateral Trustee, which shall provide that, from and after the date, if any,
on which the insurance carrier receives written notice from the Collateral
Trustee that an Event of Default (a "Default Notice") has occurred, all proceeds
otherwise payable to any Principal Company under such policies shall be payable
directly to the
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                                      -75-

Collateral Trustee. Such endorsement or an independent instrument furnished to
the Collateral Trustee shall provide that the insurance carriers will give the
Collateral Trustee at least 30 days' prior written notice before any such policy
or policies of insurance shall be altered or canceled and that no act or default
of any Principal Company or any other Person shall affect the right of the
Collateral Trustee to recover under such policy or policies of insurance in case
of loss or damage.

         (b) Each of the Principal Companies irrevocably makes, constitutes, and
appoints the Collateral Trustee (and all officers, employees, or agents
designated by the Collateral Trustee) as such Principal Company's true and
lawful attorney (and agent-in-fact) effective upon the giving of a Default
Notice and the continuance of an Event of Default for the purpose of making,
settling, and adjusting claims under policies of insurance, endorsing the name
of such Principal Company on any check, draft, instrument or other item or
payment for the proceeds of such policies of insurance and for making all
determinations and decisions with respect thereto. In the event that any
Principal Company at any time or times shall fail to obtain or maintain any of
the policies of insurance required hereby or to pay any premium in whole or part
relating thereto, the Collateral Trustee may, without waiving or releasing any
obligation or liability of such Principal Company hereunder or any Event of
Default, in the Collateral Trustee's sole discretion, obtain and maintain such
policies of insurance and pay such premiums and take any other actions with
respect thereto as the Collateral Trustee deems advisable. All such sums so
disbursed by the Collateral Trustee, including reasonable attorneys' fees, court
costs, expenses and other charges relating thereto, shall be payable, upon
demand, by such Principal Company to the Collateral Trustee and shall be
additional Obligations hereunder.

         Section 8.6. Notice of Defaults, Litigation; Etc. Deliver to the Agent
and the Lenders prompt written notice of the following:

         (a) Any Default or Event of Default, specifying the nature and extent
thereof and the corrective action proposed to be taken in respect thereto.

         (b) The filing or commencement of or written notice of intention to
file or commence any action, suit or proceeding, whether at law or at equity or
by or before any Governmental Authority, by or against or affecting any
Principal Company, that, if determined adversely to such Principal Company,
could result in a Default or an Event of Default described in Section 11.1(i)
hereof.

         (c) Any development that has resulted in, or could reasonably be
anticipated to result in, a Material Adverse Effect.

         (d) Any termination, amendment, modification or supplement of any
Governing Document of any Principal Company or any Ancillary Document or any
waiver under any Ancillary Document, and deliver to the Agent copies of any such
termination, amendment, modification, supplement, or waiver (to the extent the
same is reflected in any writing).

         Section 8.7. ERISA Notices.

         (a) Promptly notify the Agent in writing of the occurrence of any ERISA
Reportable Event, if a notice of such ERISA Reportable Event is required under
ERISA to
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                                      -76-

be delivered to the PBGC within thirty (30) days after the occurrence thereof,
together with a description of such ERISA Reportable Event and a statement of
the action the Principal Companies intends to take with respect thereto,
together with a copy of any notice thereof given to the PBGC.

         (b) Promptly upon filing the same with the Department of Labor or
Internal Revenue Service, furnish to the Agent a copy of the most recent
actuarial statement required to be submitted under Section 103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan; and

         (c) Promptly upon receipt or dispatch, furnish to the Agent any notice,
report or demand sent or received in respect of a Guaranteed Pension Plan under
Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242, or
4245 of ERISA.

         Section 8.8. No Termination of Loan Documents, Etc. Take or cause to be
taken, promptly and without expense to the Agent or the Lenders, all such action
as may be required to prevent, and refrain from taking any action that might
cause, the termination, cancellation, amendment, rescission or default of any
provision of any of the Loan Documents other than in accordance with the terms
thereof.

         Section 8.9. Environmental Laws.

         (a) Comply with, and use its best efforts to insure compliance by all
Subsidiaries, tenants and subtenants, if any, with, all Environmental Laws and
obtain and comply with and maintain, and use its best efforts to insure that all
tenants and subtenants obtain and comply with and maintain, any and all
licenses, approvals, registrations or permits required by any Environmental
Laws, except to the extent that the failure to do so could not have a Material
Adverse Effect.

         (b) Conduct and complete or cause to be conducted and completed, with
respect to its Assets and those of its Subsidiaries, all investigations,
studies, sampling and testing, and all remedial, removal and other actions
required under any Environmental Laws and promptly comply with, and cause its
Subsidiaries to comply with, all lawful orders and directives of all
Governmental Authorities respecting Environmental Laws, except to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not reasonably be expected to have a
Material Adverse Effect or result in a Lien upon any real property of any of the
Principal Companies.

         (c) Promptly notify the Agent in writing if any Borrower Affiliated
Company receives: (i) any notice of any violation or administrative or judicial
complaint or order having been filed or about to be filed against any Borrower
Affiliated Company alleging violations of any Environmental Law, or (ii) any
notice from any Governmental Authority or any other Person alleging that any
Borrower Affiliated Company is or may be subject to any Environmental Liability;
and promptly upon receipt thereof, provide the Agent with a copy of such notice
together with a statement of the action the Principal Companies intend to take
with respect thereto.

         Section 8.10. [Intentionally Deleted].
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                                      -77-

         Section 8.11. Governmental Approvals. Obtain all such approvals or
consents from, and take all such other actions with respect to, any Governmental
Authority as may be required for the execution, delivery and performance of the
Loan Documents and the Ancillary Documents, and duly perform and comply with all
of the terms and conditions of all approvals or consents so obtained.

         Section 8.12. Collateral for Loans.

         (a) Cause all outstanding shares or interests of the Capital Stock of
each Restricted Subsidiary to be pledged to the Collateral Trustee in accordance
with the provisions of the Stock Pledge Agreements at all times from and after
the Effective Date.

         (b) From time to time, at its own cost and expense, promptly secure or
cause to be secured the Obligations by creating or causing to be created in
favor of the Collateral Trustee for the benefit of the Secured Creditors
perfected security interests and liens (subject only to Liens permitted by
Section 9.2) with respect to all Perfected Collateral of the Principal
Companies, now owned or hereafter acquired, to the extent the Agent or the
Required Lenders shall so request. All such security interests will be created
under security agreements, mortgages and other instruments and documents in form
and substance satisfactory to the Agent, and the Borrower shall deliver to the
Collateral Trustee (with copies to the Agent) all such instruments and documents
(including legal opinions, title insurance policies and lien searches) as the
Agent or the Required Lenders shall reasonably request to evidence the
satisfaction of the obligations created by this Section 8.12. The Borrower
agrees to provide such evidence as the Agent or the Required Lenders shall
request as to the perfection and priority of such security interests (subject
only to Liens permitted by Section 9.2). So long as no Event of Default is
continuing, no Intellectual Property Security Agreement shall be required to be
recorded in the United States Patent and Trademark or the United States
Copyright Office if such Intellectual Property Security Agreement covers no
Material Intellectual Property.

         Section 8.13. Dividends. In the case of the Borrower, permit its
Restricted Subsidiaries to pay cash dividends or make advances or repay
advances, and cause its Restricted Subsidiaries to pay such cash dividends or
make such advances or repay such advances, to the extent required to ensure that
the Borrower can pay its monetary Obligations as the same become due.

         Section 8.14. Appraisals. If any Lender determines in good faith that
it is required, by Applicable Law or by the Comptroller of Currency or any other
Government Authority, to obtain appraisals as to the market value of any real
property constituting Collateral, obtain such appraisals, at the sole cost and
expense of the Principal Companies. Such appraisals shall conform in all
respects with the requirements contained in 12 U.S.C. Section 93a and Title XI
of the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 and
the corresponding regulations under 12 C.F.R. 34.41 et seq (1990) and shall be
consistent with the Comptroller of the Currency's Guidelines for Real Estate
Appraisal Policies and Review Procedures (as such Requirements of Law or such
policies and procedures may be amended, supplemented, restated, or otherwise
modified from time to time).
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                                      -78-

         Section 8.15. Permitted Acquisitions.

         (a) In the case of any personal property or fixtures (other than Assets
set forth on Schedule 4.4(a) or Assets excluded by the express terms of the
Security Documents) acquired by any Principal Company after the date hereof in
connection with a Permitted Acquisition (i) pledge such personal property or
fixtures (to the maximum extent permitted by applicable law) to the Collateral
Trustee as security for the payment in full of all the Obligations, pursuant to
documentation satisfactory to the Agent (but in any event not materially more
restrictive or burdensome than the Security Documents in effect as of the date
hereof), within ten (10) days of such Principal Company acquiring such personal
property or fixtures and (ii) perform any filings, recordings or other actions
necessary in the reasonable judgment of the Agent to create in favor of the
Collateral Trustee a perfected first-priority security interest in all such
personal property or fixtures subject only to Liens permitted by Section 9.2
within ten (10) days of such Principal Company acquiring such personal property
or fixtures. If any such personal property includes Trademarks, patents or
Copyrights, then so long as no Event of Default is continuing, no Intellectual
Property Security Agreement shall be required to be recorded in the United
States Patent and Trademark or the United States Copyright Office if such
Intellectual Property Security Agreement covers no Material Intellectual
Property.

         (b) In the case of any Material Real Property acquired by any Principal
Company after the date hereof in connection with a Permitted Acquisition or
otherwise, if the Required Lenders so request (i) execute and deliver to the
Collateral Trustee, within fifteen (15) days after such Principal Company takes
or receives possession of such Material Real Property, a mortgage granting to
the Collateral Trustee a perfected Lien on such Material Real Property and (ii)
deliver to the Collateral Trustee, within thirty (30) days after such Principal
Company takes or receives possession of such Material Real Property, ALTA
mortgage policies of title insurance covering all such Material Real Property
and issued by title insurance companies satisfactory to the Agent, with proof of
payment of all fees and premiums of such policy; provided, further that the
amount, form and substance of each such mortgage title insurance policy shall be
satisfactory to the Agent and each such title insurance policy shall contain no
Schedule B standard preprinted exceptions (other than for taxes not yet due and
payable and matters which would be disclosed by a current survey of the
property) and shall contain no exceptions for coverage other than for Liens
which the Agent reasonably determines are Permitted Liens.

         (c) Deliver to the Agent and the Agent's Special Counsel within ten
(10) days after the date of any Permitted Acquisition, true, complete and
correct copies of each instrument of transfer, officer's certificate, legal
opinion and other instrument or agreement executed and delivered by the
applicable seller and/or the applicable Principal Company in connection with
such Permitted Acquisition.

         Section 8.16. Further Assurances. Cooperate with the Agent and the
Lenders and take such action and execute such further instruments and documents
as the Agent shall reasonably request to further and more perfectly effect the
purposes of this Agreement and the other Loan Documents.
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                                      -79-

                                   ARTICLE IX

                               NEGATIVE COVENANTS

         The undersigned Principal Companies agree with the Agent and each of
the Lenders that, until all Commitments have been terminated, all Letters of
Credit have been fully drawn or have terminated or expired and all Obligations
have been paid in cash in full, the Principal Companies shall not:

         Section 9.1. Indebtedness. Create, incur, assume or permit to exist any
Indebtedness to any Person, except:

         (a) the Obligations,

         (b) Taxes, assessments and governmental charges, non-interest bearing
accounts payable and accrued liabilities, in any case not more than 120 days
past due from the original due date thereof (except any such amounts that are
not required to be paid in accordance with Section 8.1 or that are described on
Schedule 4.11), and non-interest bearing deferred liabilities other than
Indebtedness for Borrowed Money (e.g., deferred compensation and deferred
taxes), in each case incurred and continuing in the ordinary course of business;

         (c) Indebtedness consisting of purchase money debt and Capitalized
Lease Obligations in a combined aggregate principal amount not exceeding at any
time $3,000,000;

         (d) Subordinated Debt;

         (e) Indebtedness of any Principal Company to any other Principal
Company;

         (f) Indebtedness of the Principal Companies in respect of endorsements
of negotiable instruments for collection in the ordinary course of business;

         (g) Indebtedness of the Borrower in respect of Guaranties of
Indebtedness of any of the Restricted Subsidiaries;

         (h) Indebtedness of Saga Broadcast in respect of Guaranties of
Indebtedness of any of the Restricted Subsidiaries;

         (i) Indebtedness described on Schedule 9.1(i) annexed hereto; and

         (j) Indebtedness of the Borrower under Interest Rate Contracts entered
into for bona fide hedging purposes, and not for speculative purposes.

         Section 9.2. Liens. Create, incur, assume or permit to exist any Lien
on any of its Assets, now owned or hereafter acquired, except:

         (a) Liens created by the Security Documents;
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                                      -80-

         (b) Permitted Liens;

         (c) any Lien existing on any Asset prior to the acquisition thereof by
any Principal Company; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition; (ii) such Lien does not
apply to any other property or Assets of any Principal Company; (iii) such
acquisition is permitted by this Agreement, and (iv) all Indebtedness secured by
such Lien is permitted by this Agreement;

         (d) (i) purchase money mortgages or security interests, conditional
sale arrangements and other similar security interests, in real property,
improvements thereto, equipment or motor vehicles acquired (or, in the case of
improvements, constructed) by any Principal Company (hereinafter referred to
individually as a "Purchase Money Security Interest") with proceeds of
Indebtedness permitted by Subsection 9.1(c) and (ii) interests of lessors under
Capitalized Leases entered into by any Principal Company and permitted by
Subsection 9.1(c); provided, that with respect to any Purchase Money Security
Interest:

                  (A)the transaction in which any Purchase Money Security
         Interest is proposed to be created shall not be prohibited by this
         Agreement;

                  (B)any Purchase Money Security Interest shall attach only to
         the Asset acquired (or constructed) and shall not extend to or cover
         any other Asset of any Principal Company; and

                  (C)the Indebtedness secured by any Purchase Money Security
         Interest shall not exceed the lesser of the cost or fair market value
         of the Asset acquired (or constructed) and shall not be renewed,
         extended or repaid from the proceeds of any borrowing by any Principal
         Company.

         (e) Liens consisting of deposits made by any Principal Company to
secure performance of its obligations in connection with Permitted Acquisitions;

         (f) Liens on Assets of the Principal Companies existing on the date
hereof and described in Schedule 9.2; provided, that such Liens shall secure
only those obligations which they secure on the date hereof;

         (g) Liens on amounts held in a post-closing escrow account securing
indemnity obligations in connection with a Sale of Assets permitted hereunder;
and

         (h) Liens on Investments permitted by Subsection 9.4(i).

         Section 9.3. Mergers, Consolidations, Sales of Assets.

         (a) Merge into or consolidate with any other Person, or permit any
other Person to merge into or consolidate with it, or engage in any Sale of any
of its Assets; except that, so long as no Default or Event of Default is
continuing or would exist after giving effect thereto, the following shall be
permitted:

                  (i) (A) any merger of any wholly-owned Restricted Subsidiary
         of the Borrower with and into the Borrower or any other wholly-owned
         Restricted Subsidiary of the
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                                      -81-

         Borrower or (B) any sale, transfer or other disposition by any
         wholly-owned Restricted Subsidiary of the Borrower of any Assets to the
         Borrower or any other wholly-owned Restricted Subsidiary of the
         Borrower; provided, that (1) the Agent is satisfied that none of the
         Collateral Trustee's Liens on the Assets of the Borrower or any
         Restricted Subsidiary would become impaired, unperfected or
         unenforceable in any respect, and (2) the Agent is satisfied that all
         appropriate consents and approvals of any Governmental Authorities
         (including the FCC) have been obtained, and copies of all such consents
         and approvals have been delivered to the Agent;

                  (ii) any Permitted Sale; and

                  (iii) any other sale of any Assets by any Principal Company;
         provided, that:

                     (A) the total consideration (taking appropriate account of
         any tax benefits associated with any sale in which such Principal
         Company obtains tax certificates issued by the FCC) payable to or
         receivable by the Principal Companies in connection with such sale (1)
         is an amount not less than the fair value of the Assets sold and (2)
         consists of at least 90% cash which is (x) payable at the closing of
         such sale or (y) held in a post-closing escrow account as security for
         indemnity obligations;

                     (B) the aggregate annual Consolidated EBITDA attributable
         to all Assets sold by the Principal Companies during any Reference
         Period ending after the Effective Date (determined separately for each
         sale of Assets based upon Consolidated EBITDA attributable to such
         Assets for the Reference Period ending most recently prior to the date
         of sale) shall not exceed ten percent (10%) of the Consolidated EBITDA
         of the Principal Companies for such Reference Period (determined
         without regard to any sales of Assets during such Reference Period);
         and

                     (C) the aggregate annual Consolidated EBITDA attributable
         to all Assets sold by the Principal Companies during the period
         commencing on the Effective Date and ending on the last day of any
         Reference Period ending thereafter (determined separately for each sale
         of Assets based upon Consolidated EBITDA attributable to such Assets
         for the Reference Period ending most recently prior to the date of
         sale) shall not exceed twenty-five percent (25%) of the Consolidated
         EBITDA of the Principal Companies for such Reference Period (determined
         without regard to any sales of Assets during such Reference Period).

         (b) Change the corporate (or the company equivalent) structure or
organization of the Principal Companies from that set forth in Schedule 9.3,
provided, however, that any Principal Company may (x) make a Permitted
Acquisition, (y) be party to an intercompany merger permitted by Subsection
9.3(a)(i), and (z) form one or more wholly-owned Restricted Subsidiaries so long
as:

                  (i) the Borrower or such Restricted Subsidiary shall notify
         the Agent and the Collateral Trustee at least ten (10) days prior to
         the formation or acquisition of such Restricted Subsidiary;
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                                      -82-

                  (ii) each such new Restricted Subsidiary executes and delivers
         to the Agent and the Lenders (A) an accession agreement, in form and
         substance satisfactory to the Agent, pursuant to which such Restricted
         Subsidiary (1) becomes a party to this Agreement as a Principal Company
         and as a Guarantor, becomes a party to the Borrower Subsidiary Security
         Agreement as a "Borrower Subsidiary", becomes a party to the Indemnity,
         Contribution and Subrogation Agreement as a "Borrower Affiliated
         Company", and becomes a party to any other Loan Document as the Agent
         may reasonably request, and (2) agrees to perform and observe all of
         the obligations and covenants (including all obligations and covenants
         contained in Article VI hereof) of a Principal Company and a Guarantor
         hereunder, of a "Borrower Subsidiary" under the Borrower Subsidiary
         Security Agreement, of a "Borrower Affiliated Company" under the
         Indemnity, Contribution and Subrogation Agreement, and of the
         appropriate party under any other Loan Document to which it becomes a
         party and (B) any Intellectual Property Security Agreement, as
         applicable;

                  (iii) all of the outstanding Capital Stock of such new
         Restricted Subsidiary shall be pledged to the Collateral Trustee, for
         the ratable benefit of the Agent and the Lenders, pursuant to (A) a
         stock pledge agreement substantially in the form of the Borrower Stock
         Pledge Agreement or (B) a membership interest pledge agreement
         substantially in the form of the Lakefront Membership Interest Pledge
         Agreement, as applicable;

                  (iv) such new Restricted Subsidiary shall otherwise grant a
         security interest in all of its Assets of the type described in the
         Borrower Subsidiary Security Agreement to the Collateral Trustee as
         security for all the Obligations and shall make all filings, recordings
         and take such other actions (including the filing of financing
         statements and the filing of Intellectual Property Security Agreements,
         in form and substance satisfactory to the Agent, in the United States
         Patent and Trademark Office or the United States Copyright Office with
         respect to any Material Intellectual Property) required by the Agent or
         the Collateral Trustee in order to create, in favor of the Collateral
         Trustee, a perfected first-priority Lien on all of such Assets of the
         new Restricted Subsidiary (other than Assets of the type listed on
         Schedule 4.4(a)) and all of the Capital Stock of such new Restricted
         Subsidiary; and

                  (v) such new Restricted Subsidiary shall grant a security
         interest in and mortgage on its owned Material Real Property pursuant
         to a mortgage on such Assets in form and substance satisfactory to the
         Agent and the Collateral Trustee, which mortgage shall be filed of
         record promptly after such new Restricted Subsidiary is formed and ALTA
         mortgagee policies of title insurance covering such Material Real
         Property and issued by title insurance companies satisfactory to the
         Agent, with proof of payment of all fees and premiums of such policy;
         provided, further that the amount, form and substance of each such
         mortgage title insurance policy shall be satisfactory to the Agent and
         each such title insurance policy shall contain no Schedule B preprinted
         exceptions (other than for taxes not yet due and payable and matters
         which would be disclosed by a current survey of the property) and shall
         contain no exceptions for coverage other than for Liens which the Agent
         reasonably determines are permitted liens; and
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                                      -83-

         (c) form one or more Unrestricted Subsidiaries, so long as the
Principal Companies shall have complied with the provisions of Section 1.3.

         Section 9.4. Investments. Make or suffer to exist or to remain
outstanding any Investment, except:

         (a) Investments in:

                  (i) marketable direct obligations of, or obligations the
         principal of and interest on which are unconditionally guaranteed by,
         the United States (or by any agency thereof to the extent such
         obligations are backed by the full faith and credit of the United
         States), in each case maturing within 90 days from the date of
         acquisition thereof;

                  (ii) securities commonly known as "commercial paper" issued by
         a corporation organized and existing under the laws of the United
         States or any state thereof maturing within 90 days from the date of
         acquisition thereof and having, at such date of acquisition, the
         highest credit rating obtainable from Standard & Poor's Corporation or
         from Moody's Investors Service, Inc.;

                  (iii) certificates of deposit, banker's acceptances and time
         deposits maturing within 90 days from the date of acquisition thereof
         issued or guaranteed by or placed with, and demand deposit accounts or
         money market deposit accounts issued or offered by, any commercial bank
         organized under the laws of the United States of America or any state
         thereof, but only so long as such commercial bank is a Lender or has a
         combined capital and surplus and undivided profits of not less than
         $500,000,000, or has a credit rating of "A" or better from Standard &
         Poor's Corporation or from Moody's Investors Service, Inc.;

                  (iv) marketable direct obligations of any state of the United
         States or any political subdivision thereof maturing within 90 days
         from the date of acquisition thereof and having a credit rating of "A"
         or better from Standard & Poor's Corporation or from Moody's Investors
         Service, Inc.; and

                  (v) Fleet's Galaxy money market fund and in other overnight
         investments customarily provided by Fleet to its corporate customers;
         and

         (b) Investments in the form of loans to employees of the Principal
Companies (other than Christian), provided that the outstanding principal amount
of all such loans to any one employee shall at no time exceed $100,000 and that
the aggregate outstanding principal amount of all such loans shall at no time
exceed $300,000, and no such loan shall be made if, on the date of the proposed
loan, any Default or Event of Default exists or would exist after giving effect
to the making of any such loan;

         (c) Investments of any Principal Company in any other Principal
Company;

         (d) Permitted Acquisitions;
   92
                                      -84-

         (e) Investments consisting of loans evidenced by the Christian Note and
interest accrued thereon;

         (f) Investments in the form of deposits securing performance of any
Principal Company's obligations in connection with a Permitted Acquisition;

         (g) Investments in the form of promissory notes issued to any Principal
Company in a sale of Assets permitted by Section 9.3(a)(iii) representing the
non-cash portion of the consideration received by the Principal Companies
pursuant to such sale; provided that such notes are delivered in pledge to the
Collateral Trustee pursuant to the applicable Security Documents;

         (h) Investments described in Schedule 9.4 hereto; and

         (i) Investments (including Investments in Unrestricted Subsidiaries)
not otherwise permitted by any of paragraphs (a) through (h) above in the
Capital Stock of any Person that owns and operates as its principal business one
or more Communications Systems or other businesses reasonably related to the
radio or television business, provided, however, that (i) the aggregate amount
of such Investments by the Principal Companies from and after the Effective Date
shall not exceed $10,000,000 (it being understood and agreed that the
designation by the Borrower of a Subsidiary as an Unrestricted Subsidiary
pursuant to Section 1.3 shall be deemed an Investment by the Borrower (or by one
of its Restricted Subsidiaries which is the direct parent of such Unrestricted
Subsidiary) in such Unrestricted Subsidiary at the time of such designation in
an amount equal to the aggregate amount of Investments previously made by the
Borrower and its Restricted Subsidiary in such Subsidiary prior to its
designation as an Unrestricted Subsidiary); (ii) at the time of such Investment
and after giving effect thereto, no Default or Event of Default shall have
occurred and be continuing; and (iii) the Borrower shall have demonstrated to
the reasonable satisfaction of the Agent (based on, among other things,
operating and financial projections and pro forma financial statements delivered
to the Agent and certified by the Chief Operating Officer) that, immediately
after giving effect to such Investment (including any such designation), all
covenants (including all covenants contained in Article X hereof) contained
herein (A) would have been satisfied on a pro forma basis as at the end of and
for the Most Recent Reference Period had such Investment been made on the first
day of the Most Recent Reference Period (or had such Subsidiary been an
Unrestricted Subsidiary at all times during such period), and (B) will be
satisfied on a pro forma basis through the period ending two years after the
date of such Investment (including any such designation).

         The aggregate amount of an Investment described in paragraph (i) above
in any Person at any time (x) shall be equal to the aggregate amount of all
cash, plus the aggregate fair market value of all Assets, loaned, advanced,
contributed or transferred to, or otherwise invested in, such Person, and (y)
shall not be reduced by reason of any write-down or write-off of such Investment
or by reason of any dividends, distributions or payments received by any
Principal Company in respect of such Investment.
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                                      -85-

         Section 9.5. Restricted Payments. Make any Restricted Payments, other
than:

         (a) payments of cash dividends, making of advances, and repayment of
advances, in each case by any Restricted Subsidiary of the Borrower to the
parent of such Restricted Subsidiary which is also a Restricted Subsidiary;

         (b) if no Default or Event of Default is continuing or would exist
after giving effect thereto, the Borrower may prepay Indebtedness for Borrowed
Money and Capitalized Lease Obligations permitted by Section 9.1(c) and secured
by Liens permitted by Section 9.2(d); and

         (c) payments by the Borrower to stockholders of the Borrower in an
aggregate amount not to exceed $15,000,000 (from and after the Effective Date)
to repurchase shares of Class A Common Stock of the Borrower; provided that, (i)
no Default or Event of Default shall be continuing on the date of the proposed
payment or would result from such payment, and (ii) prior to such repurchase,
the Borrower shall have demonstrated to the reasonable satisfaction of the Agent
(based on, among other things, operating and financial projections and pro forma
financial statements delivered to the Agent and certified by the Chief Financial
Officer) that, immediately after giving effect to such repurchase (including the
making of any Loans and the incurrence of any Indebtedness required to finance
such repurchase), all covenants (including all covenants contained in Article X
hereof) contained herein (A) would be satisfied on a pro forma basis through the
end of and for the Most Recent Reference Period, and (B) will be satisfied on a
pro forma basis through the period ending two years after the date of such
repurchase; and provided further, that the Borrower shall immediately retire any
shares of its Class A Common Stock so repurchased.

         Section 9.6.Issuance of Capital Stock. Issue any Capital Stock if (i)
such Capital Stock is not Permitted Capital Stock or (ii) the issuance of such
Capital Stock, or the exercise or conversion thereof, would result in a Change
in Control.

         Section 9.7. Sale and Leaseback. Enter into any arrangement, directly
or indirectly, with any Person providing for the leasing by any Principal
Company of real or personal property which has been or is to be sold or
transferred by any Principal Company.

         Section 9.8. ERISA Compliance.

         (a) Engage or permit any of its Subsidiaries to engage in any
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code which is not subject to an exemption under Section 408
of ERISA or Section 4975(d) of the Code and which could result in a material
liability for any Principal Company.

         (b) Permit or allow any of its Subsidiaries to permit any Guaranteed
Pension Plan to incur an "accumulated funding deficiency", as such term is
defined in Section 302 of ERISA, whether or not such deficiency is or may be
waived.

         (c) Fail to contribute or permit any of its Subsidiaries to fail to
contribute to any Guaranteed Pension Plan to an extent which, or terminate or
permit any of its Subsidiaries to terminate any Guaranteed Pension Plan in a
manner which, could result in the
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                                      -86-

imposition of a lien or encumbrance on the assets of any Principal Company or
any of its Subsidiaries pursuant to Section 302(f) or Section 4068 of ERISA.

         (d) Permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of such
Plans, disregarding for this purpose the benefit liabilities and assets of
any such Plan with assets in excess of benefit liabilities, by more than
$100,000.

         Section 9.9. Amendment or Termination of Documents.

         (a) Amend or supplement any Governing Documents of any Principal
Company if the effect of such an amendment or supplementation could reasonably
be expected to impair the rights or interests of the Agent, the Collateral
Trustee or the Lenders under the Loan Documents.

         (b) Amend or supplement in any material respect or terminate or cancel
any Ancillary Document (other than any Seller Debt Document) if the effect of
such an amendment or supplementation could reasonably be expected to impair the
rights or interests of the Agent, the Collateral Trustee and the Lenders under
the Loan Documents.

         (c) Amend, supplement or otherwise modify in any respect any
Subordinated Debt Document if such amendment or supplementation would (i) add
any representation, covenant or agreement or event of default or make any
representation, covenant or agreement or event of default more restrictive as to
any Principal Company, (ii) alter any applicable subordination provisions, (iii)
require any additional payment or prepayment of any principal, interest, fee or
other amount, (iv) shorten the maturity or increase the rate or amount or the
frequency of payment of any principal, interest, fee or other amount, or (v)
grant any Lien to any holder of any obligation under or in respect of any
Subordinated Debt Documents. The Principal Companies will promptly provide to
the Agent a copy of any amendment, supplement or modification whether or not
such amendment, supplement or modification shall have required the consent of
the Required Lenders.

         (d) Waive, release, discharge or compromise any material obligations of
any parties other than Principal Companies under any Ancillary Documents.

         Section 9.10. Restrictive Agreements. Become or remain bound by any
Contractual Obligation (other than the Loan Documents) which, directly or
indirectly, prohibits or limits, or has the effect of prohibiting or limiting,
or imposes materially adverse conditions on, (i) the incurrence of Indebtedness,
the granting of Liens or the provision of Guaranties by any Principal Company,
or (ii) the making of Distributions by any Restricted Subsidiary of the
Borrower.

         Section 9.11. Transactions with Affiliates. Except as otherwise
expressly permitted by this Agreement, directly or indirectly (i) make any
Investment in any Affiliate, (ii) sell, lease or otherwise dispose of any Assets
or services to, or purchase, lease or otherwise acquire any Assets or services
from, any Affiliate, or (iii) directly or indirectly engage in any other
transaction with or for the benefit of, or make any payment or distribution to,
any Affiliate; provided, that: (i) any employee (or former employee) of the
Borrower owning any
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                                      -87-

Common Stock may serve as an employee or director of any Principal Company and
receive reasonable compensation for his services in such capacity, (ii) the
Principal Companies may perform all their respective obligations under the
Ancillary Documents in accordance with the terms thereof, and (iii) so long as
no Default or Event of Default is continuing, any Principal Company may enter
into any transaction with an Affiliate providing for the rendering or receipt of
services or the purchase, sale or lease of assets in the ordinary course of
business if the monetary or business consideration arising therefrom would be
substantially as advantageous to such Principal Company as the monetary or
business consideration which would obtain in a comparable arm's length
transaction with a Person not an Affiliate, and such transaction is accurately
reflected on the books of such Principal Company and specifically disclosed in
writing to the Agent.

                                    ARTICLE X

                               FINANCIAL COVENANTS

         The Borrower agrees with the Agent and each Lender that, until all
Commitments have been terminated, all Letters of Credit have been fully drawn or
have terminated or expired and all Obligations have been paid in cash in full,
the Borrower will not cause or permit:

         Section 10.1. Maximum Total Funded Debt Leverage Ratio. The Total
Funded Debt Leverage Ratio (as defined below) for any Reference Period ending
during any period identified in the table below to be greater than the ratio
specified in such table opposite such period:

                                                       Maximum Total Funded
                        Period                         Debt Leverage Ratio
                                                    
               Effective Date - 9/29/01                       5.25:1
                  9/30/01 - 12/30/01                          5.00:1
                 12/31/01 - 12/30/02                          4.50:1
                 12/31/02 - 12/30/03                          4.00:1
                 12/31/03 - 12/30/04                          3.75:1
                12/31/04 - thereafter                         3.50:1

As used in this Section 10.1, "Total Funded Debt Leverage Ratio" means, in
relation to any Reference Period, the ratio of (i) Consolidated Total Funded
Debt at the end of such Reference Period (net of the outstanding balance at such
time of any Net Proceeds deposited in the Reinvestment Collateral Account
pursuant to Subsection 2.5(f)(i)(x)(i) and then held by the Collateral Trustee
pending application to a Permitted Acquisition or as provided in Subsection
2.5(h)(i)) to (ii) Consolidated EBITDA for such Reference Period.

         Section 10.2. Pro Forma Fixed Charges Coverage Ratio. The Pro Forma
Fixed Charges Coverage Ratio (as defined below) for any Reference Period to be
less than 1.10:1. As used in this Section 10.2, "Pro Forma Fixed Charges
Coverage Ratio" means, in relation to any Reference Period, the ratio of (i)
Consolidated EBITDA for such Reference Period to (ii) Pro Forma Fixed Charges
for such Reference Period.
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                                      -88-

         Section 10.3. Minimum Interest Coverage Ratio. The Interest Coverage
Ratio (as defined below), for any Reference Period ending during any period
identified in the table below to be less than the ratio specified in such table
opposite such period:

                                                      Minimum Interest
                       Period                          Coverage Ratio
                                                   
              Effective Date - 9/29/01                     2.75:1
                 09/30/01 - 3/31/02                        3.00:1
                4/01/02 - thereafter                       3.25:1

As used in this Section 10.3, "Interest Coverage Ratio" means, in relation to
any Reference Period, the ratio of (i) Consolidated EBITDA for such Reference
Period to (ii) Consolidated Total Interest Expense for such Reference Period.

         Section 10.4. General Provisions Relating to Financial Terms and
Covenants. In the event the Borrower or any of its Subsidiaries acquires or
disposes of any Communications System or other business, the following
adjustments shall be made:

         (a) Consolidated EBITDA. In determining Consolidated EBITDA for any
period, there shall be (i) included in such Consolidated EBITDA all EBITDA
attributable to any Communications System or other business acquired by (and
thereafter owned by) the Borrower or any Restricted Subsidiary during such
period as if such Communications System or other business had been acquired on
the day before the first day of such period and (ii) excluded from such
Consolidated EBITDA all EBITDA attributable to any Communications System or
other business disposed of by the Borrower or any Restricted Subsidiary during
such period as if such Communications System or other business were disposed of
on the day before the first day of such period. For purposes hereof, the EBITDA
attributable to any such acquired or disposed Communications System or other
business prior to the date of acquisition or disposition thereof shall be
determined in a manner consistent with the method for determining Consolidated
EBITDA, but on a non-consolidated basis (subject to any adjustments made
pursuant to paragraph (c) below).

         (b) Consolidated Total Interest Expense. In determining Consolidated
Total Interest Expense for any period, there shall be (i) included all
Consolidated Total Interest Expense attributable to Indebtedness incurred or
assumed by the Borrower or any Restricted Subsidiaries during such period in
connection with any Permitted Acquisition as if such Indebtedness was incurred
or assumed on the day before the first day of such period and (ii) excluded all
Consolidated Total Interest Expense attributable to that portion of the
principal amount of the Loans prepaid during such period with Net Proceeds
pursuant to Section 2.5(f) as if such portion of the principal amount of the
Loans was prepaid on the day before the first day of such period.

         (c) Additional Adjustments. For purposes of this Section 10.4, the
EBITDA attributable to any Communications System or other business acquired or
disposed of by the Borrower or any of its Restricted Subsidiaries during any
period may be adjusted to more accurately reflect the financial condition and
results of operations of the acquired Communications System or other business
after giving effect to the acquisition as mutually
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                                      -89-

determined and agreed to by the Borrower and the Required Lenders. The Borrower
and the Required Lenders shall each use good faith efforts to mutually determine
and agree to any such adjustments. It is understood and agreed, however, that
the Required Lenders shall have no liability for failing to agree to any such
adjustments. In the case of an Acquisition by the Borrower or any of its
Restricted Subsidiaries, such adjustments may reflect any cost savings (but not
revenue enhancements) that would have been achieved if such business had been
owned by the Borrower or one of its Restricted Subsidiaries for the entire
relevant period, including adjustments for excess owner's compensation, excess
rent paid to related parties, directors' fees paid to related parties and
workmen's compensation and other insurance expense in excess of that which would
have been incurred under policies of the Borrower and its Restricted
Subsidiaries existing at the time of such Acquisition.

                                   ARTICLE XI

                         EVENTS OF DEFAULT; ACCELERATION

         Section 11.1. Events of Default. The occurrence of any one or more of
the following events or conditions shall constitute an "Event of Default":

         (a) the Borrower shall fail to make any payment or mandatory prepayment
of principal on any Note or to reimburse the Issuing Bank for any Letter of
Credit Disbursement when and as the same becomes due and payable; or

         (b) the Borrower shall fail to pay any interest on any Loan or Letter
of Credit Disbursement or any Fee or any other amount (other than an amount
referred to in paragraph (a) above) when and as the same shall become due and
payable, and such default shall continue unremedied for three (3) Business Days;
or

         (c) any Principal Company shall fail to perform or observe any of its
agreements contained in Section 8.14, Articles IX or X hereof; or

         (d) any Principal Company shall fail to perform or observe any of its
agreements in any of the Loan Documents (other than those specified in
paragraphs (a), (b) or (c) above) and such failure shall remain unremedied upon
the earlier to occur of thirty (30) days after any executive officer of the
Borrower shall know thereof and thirty (30) days after notice thereof shall have
been given to the Borrower by the Agent; or

         (e) (i) any Principal Company shall fail to pay any principal, interest
or other amounts due in respect of any Indebtedness for Borrowed Money and the
aggregate amount not paid when due, together with other such amounts not paid
when due by any Principal Companies, exceeds $1,000,000; or (ii) Indebtedness
for Borrowed Money of any Principal Company is accelerated or otherwise becomes
due and payable prior to its stated maturity and the aggregate amount
accelerated or otherwise due and payable, together with other such amounts of
any Principal Companies accelerated or otherwise due and payable, exceeds
$1,000,000; or (iii) any holder or holders (or any agent or trustee for any such
holder or holders) of Indebtedness for Borrowed Money of any Borrower Affiliated
Company take any legal proceeding against any Principal Company to collect such
Indebtedness or to
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                                      -90-

seek possession of any portion of the Collateral by any means or to enforce any
provision of any agreement or instrument evidencing or governing Indebtedness
for Borrowed Money of the Principal Companies and such Indebtedness, together
with other such Indebtedness of any Principal Companies with respect to which
such legal proceedings have been taken, exceeds $1,000,000; or

         (f) any representation or warranty made or deemed made by or on behalf
of any Principal Company in or in connection with any Loan Document or in any
report, certificate, financial statement or other instrument furnished in
connection with or pursuant to any Loan Document shall prove to have been false
or misleading in any material respect when made or deemed made; or

         (g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Principal Company or of a substantial part of the Assets of
any Principal Company under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Principal Company or for a substantial part of the property or assets of any
Principal Company or (iii) the winding-up or liquidation of any Principal
Company; and such proceeding or petition shall continue undismissed for sixty
(60) days or an order or decree approving or ordering any of the foregoing shall
be entered; or

         (h) any Principal Company shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States Code, as
now constituted or hereafter amended, or any other Federal, state or foreign
bankruptcy, insolvency, receivership or similar law, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or the filing of any petition described in (g) above, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Principal Company or for a substantial
part of the Assets of any Principal Company, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors, (vi) become unable or
admit in writing its inability or fail generally to pay its debts as they become
due or (vii) take any action for the purpose of effecting any of the foregoing;
or

         (i) one or more judgments for the payment of money shall be rendered
against any Principal Company which, together with other such judgments against
any Principal Companies, exceed $1,000,000, and the same shall remain
undischarged, unsatisfied or unstayed or a bond sufficient to cover such
judgment shall not have been provided by the Borrower for a period of thirty
(30) consecutive days, or any action shall be legally taken by a judgment
creditor to levy upon Assets or properties of any Principal Company to enforce
any such judgment; or

         (j) any Principal Company or any ERISA Affiliate incurs any liability
to the PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an
aggregate amount which, together with other such liabilities of the Principal
Companies and their ERISA Affiliates, exceeds $1,000,000; any Principal Company
shall fail to make required contributions, in accordance with applicable
provisions of ERISA, to each of the Plans; any
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                                      -91-

Principal Company or any ERISA Affiliate is assessed withdrawal liability
pursuant to Title IV of ERISA by a Multiemployer Plan in an aggregate amount
which, together with other such assessed withdrawal liabilities of any Principal
Companies or ERISA Affiliates, exceeds $1,000,000; or any of the following
occurs with respect to a Guaranteed Pension Plan: (i) an ERISA Reportable Event,
provided that the Required Lenders determine in their reasonable discretion that
such event reasonably could be expected to result in liability of the Principal
Companies to the PBGC or the Plan in an aggregate amount, together with other
such liabilities of the Principal Companies, exceeds $1,000,000 and such event
or events in the circumstances occurring reasonably could constitute grounds for
the termination of such Plan by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer such Plan;
(ii) the appointment by a United States District Court of a trustee to
administer such Plan; or (iii) the institution by the PBGC of proceedings to
terminate such Plan; or

         (k) any Liens granted to the Collateral Trustee for the benefit of the
Agent and the Lenders under the Security Documents on any material portion of
the Collateral shall fail to be a valid, perfected Lien, subject to no prior or
equal Lien, except as permitted by Section 9.2, or shall become otherwise
impaired or unenforceable in any material respect; or

         (l) the loss, revocation or failure to file for renewal of any FCC
License; the commencement of proceedings by the FCC to suspend, revoke,
terminate or substantially and adversely modify any FCC License, which
proceedings are resolved unfavorably to the applicable Principal Company and
which resolution shall be Final; or the designation of an application for
renewal of any such FCC License for an evidentiary hearing upon issues related
to the basic qualifications of the applicable Principal Company to be an FCC
licensee which hearing is resolved unfavorably to such Principal Company and
which resolution shall be Final, which FCC License is now held or hereafter
acquired by such Principal Company and is necessary for the continued operation
of such Principal Company's business in the same manner as is being conducted at
the time of such loss, revocation, failure to renew, commencement of proceedings
or designation for hearing; or

         (m) there shall have occurred a Change in Control; or

         (n) any Governmental Authority shall (i) enter a judgment, order or
decree requiring any Principal Company to divest itself of all or any
substantial part of its property or Assets, or (ii) take any action of any kind
whatever for the dissolution of any Principal Company or for the suspension of
any material operations of any Principal Company; or

         (o) (i) a creditor of any Borrower Affiliated Company shall obtain
possession of any substantial and material portion of the Collateral by any
means, including levy, distraint, replevin or self-help; or (ii) any material
portion of the Collateral shall be taken by eminent domain or condemnation; or
(iii) a material provision of any of the Loan Documents shall cease for any
reason to be in full force and effect other than pursuant to the terms of the
Loan Documents or as a result of a waiver or amendment by the Lenders or the
Required Lenders, as applicable, or any Principal Company party thereto shall
purport to disavow its material obligations thereunder or shall declare that it
does not have any further obligation thereunder or shall contest the validity or
enforceability thereof.
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                                      -92-

         Section 11.2. Termination of Commitments; Acceleration of Obligations.
If any one or more Events of Default shall at any time occur (other than an
Event of Default described in Sections 11.1(g) or 11.1(h)):

         (a) the Agent may and, at the request of the Required Lenders, shall,
by written notice to the Borrower, take any or all of the following actions, at
the same or different times: (i) terminate forthwith all the Commitments or (ii)
declare the Loans then outstanding to be forthwith due and payable in whole or
in part, whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Principal Companies accrued hereunder and under any other
Loan Document, shall become forthwith due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by the Principal Companies, anything contained herein or in any
other Loan Document to the contrary notwithstanding; and if any one or more
Events of Default described in Sections 11.1(g) or 11.1(h) above shall at any
time occur, the Commitments shall automatically terminate and the principal of
the Loans then outstanding, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Principal Companies accrued
hereunder and under any other Loan Document, shall automatically become due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Principal Companies, anything
contained herein or in any other Loan Document to the contrary notwithstanding.

         (b) Subject to the provisions of Article XII hereof, each of the
Lenders, the Agent and the Collateral Trustee may proceed to protect and enforce
all or any of its rights, remedies, powers and privileges under this Agreement,
the Notes or the other Loan Documents by action at law, suit in equity or other
appropriate proceedings, whether for specific performance of any covenant
contained in this Agreement, the Notes or any of the other Loan Documents or in
aid of the exercise of any power granted to the Agent, the Collateral Trustee or
any Lender herein or therein. Neither the Agent, the Lenders nor the Collateral
Trustee shall be required to marshall any present or future Collateral or any
other present or future security for or guaranties of, all or any of the
Obligations or to resort to any such Collateral, securities or guaranties in any
particular order.

         Section 11.3. No Implied Waivers; Rights Cumulative. No delay on the
part of the Collateral Trustee, the Agent, the Issuing Bank or any Lender in
exercising any right, remedy, power or privilege under any of the Loan Documents
or provided by statute or at law or in equity or otherwise shall impair,
prejudice or constitute a waiver of any such right, remedy, power or privilege
or be construed as a waiver of any Default or Event of Default or as an
acquiescence therein. No right, remedy, power or privilege conferred on or
reserved to the Collateral Trustee, the Agent, the Issuing Bank or any Lender
under any of the Loan Documents or otherwise is intended to be exclusive of any
other right, remedy, power or privilege. Each and every right, remedy, power and
privilege conferred on or reserved to the Collateral Trustee, the Agent, the
Issuing Bank or any Lender under any of the Loan Documents or otherwise shall be
cumulative and in addition to each and every other right, remedy, power or
privilege so conferred on or reserved to the Collateral Trustee, the Agent, the
Issuing Bank or any Lender and may be exercised at such time or times and in
such order and manner as the Collateral Trustee, the Agent, the Issuing Bank or
any Lender shall (in its sole and complete discretion) deem expedient.
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                                      -93-

         Section 11.4. Letters of Credit. If any one or more Events of Default
shall at any time occur (other than an Event of Default described in Section
11.1(g) or 11.1(h)) the Agent may and, at the request of the Required Lenders,
shall, by written notice to the Borrower, take any or all of the following
actions, at the same or different times:

         (a) declare all obligations of the Borrower under any outstanding
Letter of Credit, all the unpaid interest accrued thereon and all (if any) other
sums payable by the Borrower under Article III of this Agreement, to be
immediately due and payable;

         (b) send notices to all or any of the beneficiaries of the Letters of
Credit advising such beneficiaries of the intention and desire of the Agent, to
effect the termination, cancellation and surrender of such Letters of Credit in
thirty (30) days, provided, however, that the Agent shall not send any such
notice to any beneficiary unless the Agent has requested that the Principal
Companies deliver cash collateral to the Agent pursuant to paragraph (c) below
and the Principal Companies have failed to deliver such cash collateral to the
Agent within ten (10) days of such request; and

         (c) require that the Borrower deliver to the Agent, on behalf of the
Issuing Bank, cash collateral in an amount equal to the face amount of all
Letters of Credit which remain outstanding; and if any one or more Events of
Default described in Sections 11.1(g) or 11.1(h) shall occur, then (i) all of
the obligations of the Borrower under any outstanding Letter of Credit
Disbursement, together with accrued interest thereon and all (if any) other sums
payable by the Borrower under Article III of this Agreement, shall automatically
become due and payable, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Principal
Companies, anything contained herein or in any other Loan Document to the
contrary notwithstanding and (ii) the Agent may take any or all of the actions
set forth in clauses (b) and (c) of this Section 11.4.

                                   ARTICLE XII

                                    THE AGENT

         Section 12.1. Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents (excluding the Security Documents) with such
powers as are specifically delegated to the Agent by the terms of this Agreement
and such other Loan Documents together with such other powers as are reasonably
incidental thereto. The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents and
shall not be a trustee for any Lender. The Agent shall not be responsible to the
Lenders for any recitals, statements, representations or warranties contained in
this Agreement or the other Loan Documents or in any certificate or other
documents referred to or provided for in, or received by any of them under, this
Agreement or the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents or any other document referred to or provided for
herein or therein or for the collectability of the Loans or for the validity,
effectiveness or value of any interest or
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                                      -94-

security covered by the Security Documents or for the value of any Collateral or
for the validity or effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for the filing,
recording, re-filing, continuing or re-recording of any thereof or for any
failure by the Borrower or any of the other Borrower Affiliated Companies to
perform any of its obligations hereunder or under the other Loan Documents. The
Agent may employ agents and attorneys-in-fact and shall not be answerable,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Neither the Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them hereunder, or the other Loan Documents or in
connection herewith or therewith, except for its or their own gross negligence
or willful misconduct.

         Section 12.2. Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper person or persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. As to any matters not expressly provided
for by this Agreement or the other Loan Documents, the Agent shall in all cases
be fully protected in acting, or in refraining from acting hereunder or under
the other Loan Documents in accordance with instructions signed by the Required
Lenders, and such instructions of the Required Lenders and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.

         Section 12.3. Events of Default. The Agent shall not be deemed to have
knowledge of the occurrence of a Default (other than the non-payment of
principal, interest or fees on Loans) unless the Agent has received notice from
a Lender or the Borrower specifying such Default and stating that such notice is
a "Notice of Default". In the event that the Agent receives such a notice of the
occurrence of a Default, the Agent shall give prompt notice thereof to the
Lenders (and shall give each Lender notice of each such non-payment). The Agent
shall (subject to Section 12.7) take such action with respect to such Default as
shall be directed by either all of the Lenders or the Required Lenders, as
provided in Section 13.4.

         Section 12.4. Rights as a Lender. The Agent and its Affiliates may
(without having to account therefor to any Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Borrower Affiliated Companies or their Affiliates, as if it were not
acting as the Agent, and the Agent may accept fees and other consideration from
the Principal Companies or their Affiliates, for services in connection with
this Agreement or any of the other Loan Documents or otherwise without having to
account for the same to the Lenders.

         Section 12.5. Indemnification. The Lenders shall indemnify the Agent
(to the extent not reimbursed by the Principal Companies under Sections 13.1 and
13.2), ratably in accordance with the aggregate principal amount of the
outstanding Loans made by the Lenders (or, if no Loans are at the time
outstanding, ratably in accordance with their respective Commitments), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements or any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way
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                                      -95-

relating to or arising out of this Agreement or any of the other Loan Documents
or any other documents contemplated by or referred to herein or therein or the
transactions contemplated by or referred to herein or therein or the
transactions contemplated hereby and thereby (including the costs and expenses
which the Principal Companies are obligated to pay under Sections 13.1 and 13.2,
but excluding, unless a Default has occurred and is continuing, normal
administrative costs and expenses incident to the performance of its agency
duties hereunder) or the enforcement of any of the terms hereof, or of any such
other documents, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.

         Section 12.6. Non-Reliance on Agent and Other Lenders. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Principal Companies and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or the other Loan Documents. The Agent shall not be required to keep itself
informed as to the performance or observance by the Principal Companies of this
Agreement or the other Loan Documents or any other document referred to or
provided for herein or therein or to inspect the properties or books of the
Principal Companies. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder or the other Loan Documents, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Principal
Companies, which may come into the possession of the Agent or any of its
Affiliates.

         Section 12.7. Failure to Act. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder or thereunder unless it shall be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.

         Section 12.8. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent may
resign at any time by giving not less than thirty (30) days' prior written
notice thereof to the Lenders and the Principal Companies and the Agent may be
removed at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, after consultation with the Principal Companies, appoint a
successor Agent which shall be one of the Lenders. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article XII
shall continue
   104
                                      -96-

in effect for its benefit in respect of any actions taken or omitted to be taken
by it while it was acting as the Agent.

         Section 12.9. Sharing of Collateral and Payments.

         (a) Prior to any acceleration of the Obligations:

                  (i) in the event that any Lender shall obtain payment in
         respect of a Note or a Letter of Credit Disbursement, or interest
         thereon, whether voluntarily or involuntarily, and whether through the
         exercise of a right of banker's lien, set-off or counterclaim against
         any Principal Company or otherwise, in a greater proportion than any
         such payment obtained by any other Lender in respect of the
         corresponding Note held by it or the share of any Letter of Credit
         Disbursement owed to it, then the Lender so receiving such greater
         proportionate payment shall (A) purchase for cash from such other
         Lender or Lenders such portion of each such other Lender's or Lenders'
         Loan corresponding to such Note or (B) reimburse for cash to such other
         Lender or Lenders such portion of each such Lender's or Lenders' share
         of the Letter of Credit Disbursement, as shall be necessary to cause
         such Lender receiving the proportionate overpayment to share the excess
         payment with each such other Lender holding corresponding Notes or
         Letter of Credit Disbursements; and

                  (ii) in the event that any Lender shall obtain payment in
         respect of any Interest Rate Contract to which such Lender is a party,
         whether voluntarily or involuntarily, and whether through the exercise
         of a right of banker's lien, set-off or counterclaim against any
         Principal Company or otherwise, such Lender shall be permitted to
         retain the full amount of such payment and shall not be required to
         share such payment with any other Lender.

         (b) Upon or following any acceleration of the Obligations, in the event
that any Lender shall obtain payment in respect of a Note or Letter of Credit
Disbursement, or interest thereon, or in respect of an Interest Rate Contract to
which such Lender is a party, or receive any Collateral or proceeds thereof with
respect to any Note, Letter of Credit Disbursement or any Interest Rate Contract
to which it is a party, whether voluntarily or involuntarily, and whether from
the Agent or the Collateral Trustee or through the exercise of a right or
banker's lien, set-off or counterclaim, or otherwise, against any of the
Principal Companies, in a greater proportion than any such payment obtained by
any other Lender in respect of the aggregate amount of the corresponding Note
held by such Lender, the share of any Letter of Credit Disbursement owed to it
or Interest Rate Contract to which such Lender is a party, then the Lender so
receiving such greater proportionate payment or such greater proportionate
amount of Collateral, shall purchase for cash from the other Lender or Lenders
such portion or each such other Lender's or Lenders' Loan, or shall reimburse
for cash to each Lender or Lenders such portion of each such Lender's or
Lenders' share of the Letter of Credit Disbursement, or shall provide the other
Lenders with the benefits of any such Collateral as shall be necessary to cause
such Lender receiving the proportionate overpayment to share the excess payment
or benefits of such Collateral ratably with each Lender. For the purposes of
this Subsection 12.9(b), payments in respect of Notes or Letter of Credit
Disbursements or in respect of an Interest Rate Contract received by each Lender
and receipt of Collateral by each Lender shall be in the same proportion as the
proportion
   105
                                      -97-

of: (A) the sum of: (x) the Obligations owing to such Lender in respect of the
Notes held by such Lender, plus (y) the Obligations owing to such Lender in
respect of Interest Rate Contracts to which such Lender is party, if any, plus
(z) the Obligations owing to such Lender in respect of its share of any Letter
of Credit Disbursement, if any, to (B) the sum of: (x) the Obligations owing to
all of the Lenders in respect of all of the Notes, plus (y) the Obligations
owing to all of the Lenders in respect of all Interest Rate Contracts to which
any Lender is a party, plus (z) the Obligations owing to all of the Lenders in
respect of all Letters of Credit Disbursements outstanding; provided, however,
that, with respect to Subsections 12.9(a)(i) and (b) above, if all or any
portion of such excess payment or benefits is thereafter recovered from the
Lender which received the proportionate overpayment, such purchase of Loans,
reimbursement of Letter of Credit Disbursements or payment of benefits, as the
case may be, shall be rescinded, and the purchase price, reimbursements and
benefits returned, to the extent of such recovery, but without interest.

         Section 12.10. Obligations and Duties of Syndication Agent. The Bank of
New York, in its capacity as the Syndication Agent, shall not have any duties or
responsibilities, under this Agreement or any other Loan Document.

                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS

         Section 13.1. Fees and Expenses; Indemnity. The Principal Companies
will promptly pay all reasonable costs of the Agent and the Arranger (including
reasonable fees and disbursements of the Agent's Special Counsel incurred by
Agent) in connection with (a) structuring and syndicating the Facilities, (b)
preparing, reviewing, negotiating, executing and delivering the Loan Documents,
(c) the issuance of any of the Notes, (d) reviewing the Ancillary Documents, (e)
the Borrower's and the other Principal Companies' performance of and compliance
with all agreements and conditions contained herein on its part to be performed
or complied with (including all costs of filing or recording any assignments,
mortgages, financing statements and other documents), (f) the administration,
interpretation and enforcement of this Agreement, the other Loan Documents and
all other agreements, instruments and documents relating to the Transaction and
the consummation of the transactions contemplated by all such documents, and the
preservation of all rights of the Lenders and the Agent hereunder and
thereunder, (g) the negotiation, preparation, execution and delivery of any
amendment, modification or supplement of or to, or any consent or waiver under,
any such document (or any such instrument which is proposed but not executed and
delivered) and (h) any claim or action threatened, made or brought against any
of the Lenders or the Agent arising out of or relating to any extent to this
Agreement, the other Loan Documents or the transactions contemplated hereby or
thereby. In addition, the Principal Companies will promptly pay all reasonable
costs and expenses (including reasonable fees and disbursements of counsel)
suffered or incurred by the Agent, each Lender and the Collateral Trustee in
connection with its enforcement of the payment of the Notes held by it or any
other sum due to it under this Agreement or any of the other Loan Documents or
any of its other rights hereunder or thereunder. In addition to the foregoing,
the Principal Companies shall indemnify each Lender, the Agent and the
Collateral Trustee and each of their respective directors, officers, employees,
attorneys and agents against, and hold each of them harmless from, any loss,
liabilities, damages, claims,
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                                      -98-

costs and expenses (including reasonable attorneys' fees and disbursements)
suffered or incurred by any of them arising out of, resulting from or in any
manner connected with, the execution, delivery and performance of each of the
Loan Documents, the Loans, the Letters of Credit and any and all transactions
related to or consummated in connection with the Loans or the Letters of Credit.
The indemnity set forth in the immediately preceding sentence shall include any
losses, liabilities, damages, claims, costs and expenses suffered or incurred by
any Lender, the Agent or the Collateral Trustee or any of their respective
directors, officers, employees, attorneys or agents arising out of or related to
any Environmental Matter, Environmental Liability or Environmental Proceeding,
or in investigating, preparing for, defending against, or providing evidence,
producing documents or taking any other action in respect of any commenced or
threatened litigation, administrative proceeding or investigation under any
federal securities law or any other statute of any jurisdiction, or any
regulation, or at common law or otherwise, which is alleged to arise out of or
is based upon: (i) any untrue statement or alleged untrue statement of any
material fact of any Principal Company and any of its affiliates in any document
or schedule filed with the Securities and Exchange Commission or any other
governmental body; (ii) any omission or alleged omission to state any material
fact required to be stated in such document or schedule, or necessary to make
the statements made therein, in light of the circumstances under which made, not
misleading; (iii) any acts, practices or omission or alleged acts, practices or
omissions of any Principal Company or any of its agents related to the making of
any acquisition, purchase of shares or assets pursuant thereto, financing of
such purchases or the consummation of any other transactions contemplated by any
such acquisitions which are alleged to be in violation of any federal securities
law or of any other statute, regulation or other law of any jurisdiction
applicable to the making of any such acquisition, the purchase of shares or
assets pursuant thereto, the financing of such purchases or the consummation of
the other transactions contemplated by any such acquisition; or (iv) any
withdrawals, termination or cancellation of any such proposed acquisition for
any reason whatsoever. The indemnity set forth herein shall be in addition to
any other obligations or liabilities of the Principal Companies to the Agent and
the Lenders hereunder or at common law or otherwise. The provisions of this
Section 13.1 shall survive the payment of the Notes and the termination of this
Agreement.

         Section 13.2. Taxes. If, under any law in effect on the date of the
closing of any Loan hereunder, or under any retroactive provision of any law
subsequently enacted, it shall be determined that any Federal, state or local
tax (other than taxes based on the net income of the Lenders or the Agent) is
payable in respect of the issuance of any Note, or in connection with the filing
or recording of any assignments, mortgages, financing statements, or other
documents (whether measured by the amount of Indebtedness secured or otherwise)
as contemplated by this Agreement, then the Principal Companies will pay any
such tax and all interest and penalties, if any, and will indemnify the Lenders
and the Agent against and save each of them harmless from any loss or damage
resulting from or arising out of the nonpayment or delay in payment of any such
tax. If any such tax or taxes shall be assessed or levied against any Lender or
any other holder of a Note, such Lender, or such other holder, as the case may
be, may notify the Principal Companies and make immediate payment thereof,
together with interest or penalties in connection therewith, and shall thereupon
be entitled to and shall receive immediate reimbursement therefor from the
Principal Companies. Notwithstanding any other provision contained in this
Agreement, the covenants and agreements of the Principal Companies in this
Section 13.2 shall survive payment of the Notes and the termination of this
Agreement.
   107
                                      -99-

         Section 13.3. Survival of Agreements and Representations; Construction.
All agreements, representations and warranties made herein shall survive the
delivery of this Agreement and the Notes. The headings used in this Agreement
and the table of contents are for convenience only and shall not be deemed to
constitute a part hereof. All uses herein of the masculine gender or of singular
or plural terms shall be deemed to include uses of the feminine or neuter
gender, or plural or singular terms, as the context may require.

         Section 13.4. Modifications, Consents and Waivers; Entire Agreement. No
modification or amendment of any provision of this Agreement or any of the other
Loan Documents shall be effective unless it shall be in writing and signed by
the Principal Companies party to the relevant Loan Document. No modification,
amendment or waiver of or with respect to any provision of this Agreement or any
of the other Loan Documents nor consent to any departure by any Principal
Company from any of the terms or conditions thereof, shall in any event be
effective unless it shall be in writing and signed or consented to in writing by
the Required Lenders. Notwithstanding the foregoing,

(x) no such modification, amendment, waiver or consent shall, without the
consent of each Lender (with Obligations of the respective types being directly
affected thereby):

         (a) reduce the principal of, or contract rate of interest on (other
than the reduction of the Default Rate to the rate that would otherwise be
applicable), any Note;

         (b) postpone the date fixed for any payment of principal (other than
Excess Cash Flow Payments and Net Proceeds Payments) of or interest on any Note
or for any payment of Fees scheduled to be made hereunder for the account of any
Lender;

         (c) reduce the amount of any payment of principal of (other than Excess
Cash Flow Payments and Net Proceeds Payments) or interest on any Note or any
payment of Fees scheduled to be made hereunder for the account of any Lender;

         (d) increase any Commitment;

         (e) change the definition of "Required Lenders";

         (f) release any Collateral, unless either:

                  (i) such release is in connection with the Sale of such
         Collateral and either such Sale is permitted by this Agreement or is
         consented to by the Required Lenders, or

                  (ii) such release is not in connection with the Sale of such
         Collateral and the fair market value of the Collateral to be released,
         when added to the aggregate fair market value of all Collateral
         previously released by the Collateral Trustee (other than in connection
         with a Sale of such Collateral), is less than $5,000,000;
   108
                                     -100-

         (g) release any Guarantor (unless such release is in connection with
the Sale of all of the Capital Stock of such Guarantor and either such Sale is
permitted by this Agreement or substantially all of the Net Proceeds from such
Sale are used to pay the Obligations or pledged to the Agent as cash
collateral);

         (h) constitute the assignment or delegation of the rights and
obligations of the Principal Companies under this Agreement; or

         (i) amend this Section 13.4; and

(y) no such modification, amendment, waiver or consent shall:

         (a) increase the Commitments of any Lender of any Tranche of Loans over
the amount thereof then in effect (it being understood that a waiver of any
conditions precedent, covenants, Defaults or Events of Default or of a mandatory
prepayment shall not constitute an increase of the Commitment of any Lender)
without the consent of such Lender;

         (b) without the consent of the Issuing Bank, amend, modify or waive any
provision of Article III or alter its rights or obligations with respect to
Letters of Credit;

         (c) without the consent of the Agent, amend, modify or waive any
provision of Article XII or any other provision relating to the rights or
obligations of the Agent;

         (d) without the consent of the Required Term Loan Lenders (i) alter the
allocation or application of prepayments or repayments as among Term Loans,
Acquisition Loans and Incremental Facility Loans in a manner adverse to Term
Loan Lenders, (ii) amend, modify or waive any of the terms contained in Section
2.5(b) in a manner adverse to Term Loan Lenders, or (iii) amend the definition
of Required Term Loan Lenders;

         (e) without the consent of the Required Acquisition Loan Lenders (i)
alter the allocation or application of prepayments or repayments as among Term
Loans, Acquisition Loans and Incremental Facility Loans in a manner adverse to
Acquisition Loan Lenders, (ii) amend, modify or waive any of the terms contained
in Section 2.5(c) in a manner adverse to Acquisition Loan Lenders, or (iii)
amend the definitions of Acquisition Loan Commitment Period or Required
Acquisition Loan Lenders;

         (f) without the consent of the Required Incremental Facility Loan
Lenders of any Series (i) alter the allocation or application of prepayments or
repayments as among Term Loans, Acquisition Loans and Incremental Facility Loans
of such Series in a manner adverse to Incremental Facility Loan Lenders of such
Series, (ii) amend or waive any of the terms contained in Section 2.5(d) in a
manner adverse to Incremental Facility Loan Lenders of such Series, or (iii)
amend the definitions of Incremental Facility Commitment Period or Required
Incremental Facility Lenders; or

         (g) without the consent of the Required Revolving Credit Lenders, amend
the definition of Required Revolving Credit Lenders.
   109
                                     -101-

Any such modification, amendment, waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No consent to or
demand on any of the Principal Companies in any case shall, of itself, entitle
it to any other or further notice or demand in similar or other circumstances.
This Agreement and the other Loan Documents embody the entire agreement and
understanding among the Lenders, the Agent and the Principal Companies and
supersede all prior agreements and understandings relating to the subject matter
hereof. Notwithstanding the foregoing, Schedules 4.1, 4.13, 8.2 and 9.3 to the
Credit Agreement, Schedule III to the Collateral Trust Agreement, Schedules
3.01(a)(ii), 3.01(a)(iii), 3.01(b)(iii), 3.01(b)(iv), 3.01(c) and 3.04(a) to the
Borrower Security Agreement, Schedules 3.01(a)(ii), 3.01(a)(iii), 3.01(b)(iii),
3.01(b)(iv), 3.01(c) and 3.04(a) to the Borrower Subsidiary Security Agreement
and Schedule I to any Stock Pledge Agreement may be supplemented or amended and
restated by the Principal Company (or Principal Companies) party thereto, as the
case may be) in connection with any Permitted Acquisition, to the extent that
such supplement or amendment and restatement reflects changes that are permitted
by the Credit Agreement and the other Loan Documents. Such supplement or
amendment and restatement shall become effective upon the Borrower's delivery of
the same to the Agent, together with a certificate of an authorized officer of
the Borrower that such supplement or amendment and restatement reflects changes
that are permitted by the Credit Agreement and the other Loan Documents. The
Agent shall promptly distribute to each Lender a copy of any such supplement or
amendment and restatement, together with the certificate of the authorized
officer of the Borrower referred to above.

         Section 13.5. Remedies Cumulative. Each and every right granted to the
Agent, the Issuing Bank and the Lenders hereunder or under any other document
delivered hereunder or in connection herewith, or allowed it by law or equity,
shall be cumulative and may be exercised from time to time. No failure on the
part of the Agent, the Issuing Bank or any Lender or the holder of any Note to
exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The due
payment and performance of the Obligations shall be without regard to any
counterclaim, right of offset and any other claim whatsoever which any of the
Principal Companies may have against any Lender, the Issuing Bank or the Agent
and without regard to any other obligation of any nature whatsoever which any
Lender, the Issuing Bank or the Agent may have against any Principal Company,
and no such counterclaim or offset shall be asserted by any Principal Company in
any action, suit or proceeding instituted by any Lender, the Issuing Bank or the
Agent for payment or performance of the Obligations.

         Section 13.6. Further Assurances. At any time and from time to time,
upon the request of the Agent, the Principal Companies shall execute, deliver
and acknowledge or cause to be executed, delivered and acknowledged, such
further documents and instruments and do such other acts and things as the Agent
may reasonably request in order to fully effect the purposes of this Agreement,
the other Loan Documents and any other agreements, instruments and documents
delivered pursuant hereto or in connection with the Loans, including the
execution and delivery to the Agent of Mortgages in form and substance
satisfactory to the Agent covering all Material Real Property or interests
therein acquired by the Borrower, and all leases of Material Real Property
entered into by the Borrower as tenant or lessee, after the date of this
Agreement, as provided in Subsection 8.15(b).
   110
                                     -102-

         Section 13.7. Notices. All notices, requests, reports and other
communications pursuant to this Agreement shall be in writing, either by letter
(delivered by hand or commercial messenger service or sent by certified mail,
return receipt requested, except for routine reports delivered in compliance
with Article 5 hereof which may be sent by ordinary first-class mail) or
telegram or telecopy, addressed as follows:

                  (a)If to the Principal Companies:

                     c/o Saga Communications, Inc.
                     73 Kercheval Avenue
                     Grosse Pointe Farms, Michigan 48236
                     Attention:  Mr. Edward K. Christian
                     Telecopier No.:  (313) 886-7150

                     with a copy to:

                     Samuel D. Bush at the address set
                     forth above; and

                     a copy to:

                     Edwards & Angell, LLP
                     101 Federal Street
                     Boston, Massachusetts 02110
                     Attention:  Stephen O. Meredith, Esq.
                     Telecopier No.:  (617) 439-4170

                  (b)If to any Lender:

                     To its address set forth below its name on the signature
                     pages hereof, with a copy to the Agent; and

                  (c)If to the Agent:

                     Fleet National Bank
                     100 Federal Street
                     Media & Entertainment Group (MA\DE 10009D)
                     Boston, Massachusetts  02110
                     Attention:  Ms. Lisa M. Pellow, Managing Director
                     Telecopier No.:  (617) 434-8426

                     with a copy (other than in the case of Borrowing Notices
                     and Reports and other documents delivered in compliance
                     with Article V hereof) to:

                     Bingham Dana LLP
                     399 Park Avenue
                     New York, New York 10022
                     Attention:  Frederick F. Eisenbiegler, Esq.
                     Telecopier No.:  (212) 752-5378
   111
                                      -103-

Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is telecopied to such party at the telecopier
number specified above or delivered by hand or such commercial messenger service
to such party at its address specified above, or, if sent by mail, on the third
(3rd) Business Day after the day deposited in the mail, postage prepaid, or in
the case of telegraphic notice, when delivered to the telegraph company,
addressed as aforesaid. Any party may change the person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.

         Section 13.8. Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.

         Section 13.9. Severability. The provisions of this Agreement are
severable, and if any clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or provision in
any other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained in
this Agreement is independent, and compliance by the Principal Companies with
any of them shall not excuse noncompliance by the Principal Companies with any
other. All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any such covenants, the fact
that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default or
an Event of Default if such action is taken or condition exists.

         Section 13.10. Binding Effect; No Assignment or Delegation by Borrower.
This Agreement shall be binding upon and inure to the benefit of the Principal
Companies and their successors and to the benefit of the Lenders and the Agent
and their respective successors and assigns. The rights and obligations of the
Principal Companies under this Agreement shall not be assigned or delegated
without the prior written consent of the Agent and the Lenders, and any
purported assignment or delegation without such consent shall be void.

         Section 13.11. Assignments and Participations by Lenders.

         (a) Any Lender may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to one or more banks or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender, or any
other interest of such Lender hereunder and under the other Loan Documents;
provided, however, that the sum of the principal amount of Obligations and the
aggregate amount of available Commitments being sold shall in no event be less
than $5,000,000 and shall be an integral multiple of $1,000,000 in excess
thereof. In the event of any such sale by a Lender of participating interests to
a Participant, such Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain
solely responsible for the performance thereof, such Lender shall remain the
holder of any such Note for all purposes
   112
                                     -104-

under this Agreement and the other Loan Documents, the Borrower and the Agent
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents and such Lender shall retain the sole right to enforce the Obligations
of the Principal Companies to such Lender and to approve any amendment,
modification or waiver of any provision of this Agreement. It is understood that
nothing in the prior sentence or elsewhere in this Section 13.11 shall prohibit
a Lender from agreeing with any Participant that such Lender will not take any
action which would require approval of all of the Lenders under Section 13.4
without the consent of such Participant and each Lender hereby agrees that it
will not agree with any Participant that it will not take any action without
such Participant's consent except such actions as would require approval of all
Lenders under Section 13.4. The Borrower agrees that if amounts outstanding
under this Agreement or the Notes are due or unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement or any Note to the
same extent as if the amount of its participating interest were owing directly
to it as a Lender under this Agreement or any Note, provided that such
Participant shall only be entitled to such right of setoff if it shall have
agreed in the agreement pursuant to which it shall have acquired its
participating interest to purchase at par from the other Lenders participations
in the Credit Extensions held by the other Lenders in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Lenders shall share the benefit of such payment pro rata in accordance
with the unpaid principal and interest on the Credit Extensions held by each of
them as provided in Section 2.18. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 2.20, 2.24, and 13.2 with respect
to its participation in the Commitments and the Credit Extensions outstanding
from time to time and all amounts to which any Participant is entitled
thereunder shall be paid by the Borrower directly to the Lender; provided, that
no Participant shall be entitled to receive any greater amount pursuant to such
Sections than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.

         (b) Any Lender (any such Lender being referred to herein as an
"Assigning Lender") may, in the ordinary course of its business and in
accordance with applicable law, at any time sell to any other Lender or any
Affiliate of such Assigning Lender and, with the consent of the Borrower (except
(i) to the extent any such assignment relates to the Arranger's initial
syndication of the Facilities or (ii) during the continuance of an Event of
Default) and the Agent (neither of which consents shall be unreasonably
withheld), to one or more additional banks or other financial institutions (a
"Purchasing Lender") all or any part of its rights and obligations under this
Agreement and the Notes. Any such assignment (an "Assignment") shall be made
pursuant to an Assignment and Acceptance Agreement, substantially in the form of
Exhibit E attached hereto (an "Assignment and Acceptance Agreement"), executed
by such Purchasing Lender, such Assigning Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate of the Assigning
Lender, by the Borrower and the Agent) and delivered to the Agent for its
acceptance and recording in the Register; provided, however, that (i) except in
the case of an Assignment to a Lender or an Affiliate of such Assigning Lender,
the sum of such Assigning Lender's available Credit Extensions and Commitments
being assigned pursuant to such Assignment (determined as of the date of the
Assignment with respect to such Assignment)
   113
                                     -105-

shall in no event be less than $5,000,000 and shall be an integral multiple of
$1,000,000 (or, if less, the entire remaining amount of the Assigning Lender's
Commitments and Obligations), (ii) each such Assignment shall be of a constant,
and not a varying, percentage of all of the Assigning Lender's rights and
obligations under this Agreement. From and after the effective date specified in
each Assignment and Acceptance Agreement, which effective date must be at least
five (5) Business Days after the execution and delivery of such Assignment and
Acceptance Agreement to the Agent and (if required) the acceptance of such
Assignment and Acceptance Agreement by the Borrower and the Agent (the "Transfer
Effective Date"): (x) the Purchasing Lender thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance Agreement, have
the rights and obligations of a Lender hereunder with respect to the Commitments
and Credit Extensions as set forth therein, and (y) the Assigning Lender
thereunder shall, to the extent provided in such Assignment and Acceptance
Agreement, be released from its obligations under this Agreement to the extent
that such obligations have been assumed by the Purchasing Lender (and, in the
case of an Assignment and Acceptance Agreement covering all or the remaining
portion of an Assigning Lender's Commitments and Credit Extensions, such
Assigning Lender shall cease to be a party hereto). Each Assignment and
Acceptance Agreement duly executed and delivered in accordance with the
foregoing provisions of this paragraph (b) shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender as a Lender hereunder and the resulting
adjustment of Commitment percentages and amounts of affected Commitments arising
from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such Assigning Lender under this Agreement and the Notes.
Within five (5) Business Days after the Transfer Effective Date determined
pursuant to such Assignment and Acceptance Agreement and this paragraph (b), the
Borrower, at its own expense, shall execute and deliver to the Agent in exchange
for the surrender of the Note or Notes of the Assigning Lender to the Agent a
new Note or Notes to the order of such Purchasing Lender in an amount equal to
the applicable Commitments or Obligations assumed or acquired by the Purchasing
Lender pursuant to such Assignment and Acceptance Agreement and, if the
Assigning Lender has retained Commitments or outstanding Loans hereunder, a new
Note or Notes to the order of the Assigning Lender in an amount equal to the
applicable Commitments or Obligations retained by it hereunder. Such new Notes
shall be dated the Transfer Effective Date (or such other date as may be agreed
to by the Borrower, the Agent, the Assigning Lender and the Purchasing Lender)
and shall otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the Assigning Lender shall be returned by the Agent to the
Borrower marked "canceled."

         (c) The Agent shall maintain at its address a copy of each Assignment
and Acceptance Agreement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Commitments and Loans recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.

         (d) Upon its receipt of an Assignment and Acceptance Agreement executed
by an Assigning Lender and Purchasing Lender (and, in the case of a Purchasing
Lender that is
   114
                                      -106-

not then a Lender or an Affiliate of the Assigning Lender, by the Borrower and
the Agent) together with payment by the Purchasing Lender to the Agent for the
account of the Agent of a registration and processing fee of $2,500, the Agent
shall (i) promptly accept such Assignment and Acceptance Agreement, (ii) on the
Transfer Effective Date determined pursuant thereto and paragraph (b) of this
Section 13.11, record the information contained therein in the Register and
(iii) give notice of such acceptance and recordation to each of the Lenders and
the Borrower.

         (e) By executing and delivering an Assignment and Acceptance Agreement,
the Assigning Lender thereunder and the Purchasing Lender thereunder confirm to
and agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance Agreement, such Assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such Assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of any of the Principal Companies or the performance or
observance by any of the Principal Companies of any of their obligations under
this Agreement, any of the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (iii) such Purchasing Lender
confirms that it has received a copy of this Agreement, together with copies of
such financial statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance Agreement; (iv) such Purchasing Lender will,
independently and without reliance upon the Agent, such Assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Purchasing Lender appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement or any of the other Loan Documents as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; (vi) such Purchasing Lender agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement or any of the other Loan Documents are required to be
performed by it as a Lender; and (vii) such Purchasing Lender (A) consents in
all respects to the provisions of the Collateral Trust Agreement, (B) agrees to
be bound by the terms of the Collateral Trust Agreement and (C) authorizes the
Collateral Trustee as Collateral Trustee to act on its behalf under the
Collateral Trust Agreement and to exercise such powers under the Collateral
Trust Agreement as are delegated to the Collateral Trustee by the terms thereof,
together with such powers as are reasonably incidental thereto.

         (f) The Principal Companies authorize each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all information in such Lender's possession concerning the
Principal Companies which has been delivered to such Lender by or on behalf of
the Principal Companies or the Agent pursuant to this Agreement or the other
Loan Documents or which has been delivered to such Lender by or on behalf of the
Principal Companies or the Agent in connection with such Lender's credit
evaluation of the Principal Companies and its Affiliates prior to becoming a
party to this Agreement; provided, that prior to any such
   115
                                     -107-

disclosure, the Transferee or prospective Transferee shall agree to be bound by
the provisions of Section 13.14.

         (g) If any interest in this Agreement or any Note is transferred to any
Transferee which is organized under the laws of any jurisdiction other than the
United States or any state thereof, the Assigning Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer, (i) to
represent to the Assigning Lender (for the benefit of the Assigning Lender, the
Agent and the Borrower) that under applicable law and treaties no taxes will be
required to be withheld by the Agent, the Borrower or the Assigning Lender with
respect to any payments to be made to such Transferee in respect of the Credit
Extensions, (ii) to furnish to the Assigning Lender (and, in the case of any
Purchasing Lender registered in the Register, the Agent and the Borrower) either
U.S. Internal Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 or U.S. Internal Revenue Service Form W-8 (wherein such Transferee claims
entitlement to complete exemption from U.S. federal withholding tax on all
interest payments hereunder) and (iii) to agree (for the benefit of the
Assigning Lender, the Agent and the Borrower) to provide the Assigning Lender
(and, in the case of any Purchasing Lender registered in the Register, the Agent
and the Borrower) a new Form 4224 or Form 1001 upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

         (h) Nothing herein shall prohibit any Lender from pledging or assigning
any Note to any Federal Reserve Bank in accordance with applicable law.

         (i) Notwithstanding anything in this Section 13.11 or elsewhere in this
Agreement to the contrary, no Principal Company shall be obligated to reimburse
any Lender, any Purchasing Lender, any Participant or the Agent for any costs or
expenses incurred by any of them in connection with any Lender's sale of any
participating interest or any Assignment hereunder.

         (j) Notwithstanding anything in this Section 13.11 or elsewhere in this
Agreement to the contrary, any Lender may at any time pledge all or any portion
of its interest and rights under this Agreement (including all or any portion of
its Notes) to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
the enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents.

         Section 13.12. FCC Approval. Notwithstanding anything to the contrary
contained in this Agreement or in the other Loan Documents, neither the Agent
nor any of the Lenders will take any action pursuant to this Agreement or any of
the other Loan Documents, which would constitute or result in a change in
control of, or assignment of any FCC License of, any Principal Company requiring
the prior approval of the FCC without first obtaining such prior approval of the
FCC. After the occurrence of an Event of Default, each Principal Company shall
take or cause to be taken any action which the Agent or the Collateral Trustee
may reasonably request in order to obtain from the FCC such approval as may be
necessary to enable the Agent or the Collateral Trustee to exercise and enjoy
the full rights and benefits granted by this Agreement or any of the other Loan
Documents,
   116
                                     -108-

including, at the Principal Companies' cost and expense, the use of the
Principal Companies' best efforts to assist in obtaining such approval for any
action or transaction contemplated by this Agreement or any of the other Loan
Documents for which such approval is required by law, including specifically,
without limitation, upon request, to prepare, sign and file with the FCC the
assignor's or transferor's portion of any application or applications for the
consent to the assignment or transfer of control necessary or appropriate under
the FCC's rules and approval of any of the transactions contemplated by this
Agreement or any of the other Loan Documents.

         Section 13.13. Usury Provision. It is not the intention of any parties
to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision of this
Agreement, the Lenders shall never be entitled to receive, collect or apply, as
interest on the Loans, any amount in excess of the maximum amount permitted by
applicable law. If the Lenders ever receive, collect or apply, as interest, any
such excess, such amount which would be excessive interest shall be deemed a
partial repayment of principal and treated hereunder as such; and if principal
is paid in full, any remaining excess shall be paid to the Borrower. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the maximum amount permitted by applicable law, the Lenders
shall, to the extent permitted under applicable laws, and solely for purposes of
making such determination, (i) characterize any non-principal payment as an
expense, fee or premium rather than as interest, (ii) exclude voluntary
prepayments and the effect thereof, and (iii) amortize, prorate, allocate and
spread in equal parts the total amount of interest throughout the entire
contemplated term of this Agreement so that the interest rate is uniform
throughout the entire term of this Agreement; provided, however, that if the
Loans are paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence
thereof exceeds the maximum amount permitted by applicable law, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Loans owing, and, in such
event, the Lenders shall not be subject to any penalties provided by any laws
for contracting for, charging or receiving interest in excess of the maximum
amount permitted by applicable law. This Section 13.13 shall control every other
provision of all agreements pertaining to the transactions contemplated by or
contained in this Agreement.

         Section 13.14. Certain Lien Releases. Upon the occurrence of any
Permitted Sale or any other sale of Assets by the Borrower or any Restricted
Subsidiary permitted by Section 9.3(a)(iii) or consented to by the Required
Lenders, the Collateral Trustee's Liens on the Assets sold shall be
automatically released. Notwithstanding the foregoing, the Collateral Trustee's
Liens on the proceeds of any Assets sold shall continue in full force and
effect. The Lenders hereby authorize the Collateral Trustee to execute and
deliver such documents and to take such actions as may be appropriate to give
effect to the foregoing.

         Section 13.15. Confidentiality. The Agent and each Lender shall hold
all (i) projections and financial statements which have not been delivered to
the public, and (ii) all other non-public information which the Agent or such
Lender has been informed is non-public or the Agent or such Lender believes is
confidential and has been obtained pursuant to this Agreement, in accordance
with the Agent's or such Lender's customary procedures for handling confidential
information of such nature and in accordance with safe and sound banking
practices, provided that in any event it is understood and agreed that the Agent
   117
                                     -109-

and each Lender may make disclosure to its examiners, affiliates, outside
auditors, counsel, and other professional advisors in connection with this
Agreement or any other Loan Documents or as reasonably required by any bona fide
prospective Transferee or actual Transferee in connection with the contemplated
transfer of any Commitment, Loan, Letter of Credit or Note or any participation
therein (provided that such Transferee agrees to keep such information
confidential) or as required or requested by any Governmental Authority or
representative thereof or pursuant to legal process; provided, further, that in
no event shall any Lender be obligated or required to return any materials
furnished by the Borrower.

         Section 13.16. Governing Law; Consent to Jurisdiction; Waiver of Trial
by Jury.

         (a) THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND ALL OTHER DOCUMENTS
AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH AND THEREWITH,
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OR CHOICE
OF LAW).

         (b) THE PRINCIPAL COMPANIES IRREVOCABLY CONSENT THAT ANY LEGAL ACTION
OR PROCEEDING AGAINST ANY OF THEM UNDER, ARISING OUT OF OR IN ANY MANNER
RELATING TO THIS AGREEMENT, AND EACH OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY
COURT OF THE COMMONWEALTH OF MASSACHUSETTS OR IN THE UNITED SATES DISTRICT COURT
FOR MASSACHUSETTS. THE PRINCIPAL COMPANIES, BY THE EXECUTION AND DELIVERY OF
THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY ASSENT AND SUBMIT TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. THE
PRINCIPAL COMPANIES FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF ANY COMPLAINT,
SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER PROVIDED FOR IN SECTION
13.7. THE PRINCIPAL COMPANIES HEREBY EXPRESSLY AND IRREVOCABLY WAIVE ANY CLAIM
OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR
BASIS. THE PRINCIPAL COMPANIES SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR
PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE
OTHER THAN THE COMMONWEALTH OF MASSACHUSETTS UNLESS SUCH DEFENSE IS ALSO GIVEN
OR ALLOWED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. NOTHING IN THIS
SECTION 13.15 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
ANY LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
PRINCIPAL COMPANIES IN ANY JURISDICTION OR TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW.

         (c) EACH OF THE PRINCIPAL COMPANIES WAIVES TRIAL BY JURY IN ANY
LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF,
THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY INSTRUMENT OR DOCUMENT
DELIVERED PURSUANT TO THIS
   118
                                     -110-

AGREEMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR
ENFORCEMENT THEREOF.

         Section 13.17. Integration of Schedules and Exhibits. Annexed to this
Agreement are the Schedules and Exhibits. Such Schedules and Exhibits are an
integral part of this Agreement and are hereby incorporated by reference.
   119
                                     -111-

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

                                    BORROWER:

                                    SAGA COMMUNICATIONS, INC.

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

                                    RESTRICTED SUBSIDIARIES:

                                    SAGA BROADCASTING CORP.
                                    FRANKLIN COMMUNICATIONS, INC.
                                    TIDEWATER COMMUNICATIONS, INC.
                                    SAGA COMMUNICATIONS OF
                                       ILLINOIS, INC.
                                    LAKEFRONT COMMUNICATIONS, INC.
                                    SAGA COMMUNICATIONS OF
                                       NEW ENGLAND, INC.
                                    SAGA QUAD STATES COMMUNICATIONS, INC.
                                    SAGA COMMUNICATIONS OF
                                       MICHIGAN, INC.
                                    HARBISH CORP.
                                    SAGA COMMUNICATIONS OF IOWA, LLC
                                    SAGA COMMUNICATIONS OF
                                       NEW YORK, LLC
                                    SAGA COMMUNICATIONS OF
                                       TUCKESSEE, LLC

                                    By:
                                       -----------------------------------------
                                            Name:
                                            Title:
   120
                                     -112-

                                    AGENT:

                                    FLEET NATIONAL BANK

                                    By:
                                       -----------------------------------------
                                     Lisa M. Pellow, Managing Director

                                    Lending Office for all Loans:

                                    Fleet National Bank
                                    100 Federal Street
                                    Boston, MA  02110

                                    Address for Notices:

                                    Fleet National Bank
                                    100 Federal Street
                                    Media & Entertainment Group (MA\DE 10009D)
                                    Boston, Massachusetts  02110
                                    Attention:  Ms. Lisa M. Pellow
                                    Telecopier:  (617) 434-8426
   121
                                     -113-

                                    SYNDICATION AGENT:

                                    THE BANK OF NEW YORK

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

                                    Lending Office for all Loans:

                                    Bank of New York
                                    One Wall Street, 16th Floor
                                    New York, NY  10286

                                    Address for Notices:

                                    Bank of New York
                                    One Wall Street, 16th Floor
                                    New York, NY  10286
                                    Attention:  Ms. Kristen E. Talaber
                                    Telecopier:  212-635-8593
   122
                                     -114-

                                    LENDERS:

                                    FLEET NATIONAL BANK

                                    By:
                                       -----------------------------------------
                                         Title:  Managing Director

                                    Address for Notices:

                                    Fleet National Bank
                                    100 Federal Street
                                    Boston, Massachusetts  02110
                                    Attention:  Ms Lisa M. Pellow
                                    Media & Entertainment Group (MA\DE 10009D)
                                    Telecopier:  (617) 434-8426
   123
                                     -115-

                                    THE BANK OF NEW YORK

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

                                    Lending Office for all Loans:
                                    ----------------------------

                                    Bank of New York
                                    One Wall Street, 16th Floor
                                    New York, NY  10286

                                    Address for Notices:

                                    Bank of New York
                                    One Wall Street, 16th Floor
                                    New York, NY  10286
                                    Attention:  Ms. Kristen E. Talaber
                                    Telecopier:  212-635-8593
   124
                                     -116-

                                    UNION BANK OF CALIFORNIA, N.A.

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

                                    Lending Office for all Loans:

                                    Union Bank of California, N.A.
                                    445 South Figueroa Street
                                    G 16-075
                                    Los Angeles, CA  90071

                                    Address for all Notices:

                                    Union Bank of California, N.A.
                                    445 South Figueroa Street
                                    G 16-075
                                    Los Angeles, CA  90071
                                    Attention:  Ms. Lena Bryant
                                    Telecopier:  213-236-5747
   125
                                     -117-

                                    ALLFIRST BANK

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

                                    Lending Office for all Loans:

                                    Allfirst Bank
                                    25 South Charles Street, 18th Floor
                                    Baltimore, MD  21201

                                    Address for Notices:

                                    Allfirst Bank
                                    25 South Charles Street, 18th Floor
                                    Baltimore, MD  21201
                                    Attention:  Tim Knabe
                                    Telecopier:
   126
                                      -118-

                                    BANK OF SCOTLAND

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

                                    Lending Office for all Loans:

                                    Bank of Scotland
                                    565 Fifth Avenue
                                    New York NY 10017

                                    Address for Notices:

                                    Bank of Scotland
                                    One Post Office Square
                                    Suite 3750
                                    Boston, MA  02109
                                    Attention:  Mr. Bill Boland
                                    Telecopier:  617-426-1353
   127
                                     -119-

                                    NATIONAL CITY BANK OF
                                      MICHIGAN/ILLINOIS

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

                                    Lending Office for all Loans:

                                    National City Bank of Michigan/Illinois
                                    One National City Parkway
                                    Kalamazoo, MI 49009

                                    Address for Notices:

                                    National City Bank of Michigan/Illinois
                                    1001 South Worth Street
                                    Locator:  R-J4D-4H
                                    Birmingham, MI 48009
                                    Attention:  Mr. Eric A. Safran
                                    Telecopier:  248-901-2221
   128
                                     -120-

                                    BANK OF MONTREAL

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

                                    Lending Office for all Loans:

                                    Client Services
                                    Bank of Montreal, Chicago
                                    115 South LaSalle Street
                                    Chicago, IL 60603

                                    Address for Notices:

                                    Bank of Montreal
                                    430 Park Avenue
                                    New York, NY 10022
                                    Attention:  Mr. Mike Andres
                                    Telecopier:  212-605-1648
   129
                                     -121-

                                    CITIZENS BANK OF MASSACHUSETTS,
                                       A MASSACHUSETTS BANK

                                    By:
                                       -----------------------------------------

                                    Lending Office for all Loans:
                                    Citizens Bank of Massachusetts,
                                       a Massachusetts Bank

                                    53 State Street, 8th Floor
                                    Boston, MA  02109

                                    Address for Notices:

                                    Citizens Bank of Massachusetts
                                    A Massachusetts Bank
                                    53 State Street, 8th Floor
                                    Boston, MA  02109
                                    Attention:  Ms. Wendy Andrus
                                    Telecopier:  617-227-8854
   130
                                     -122-

                                    SUNTRUST BANK

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

                                    Lending Office for all Loans:

                                    SunTrust Bank
                                    200 South Orange Avenue
                                    Orlando, Florida 32801

                                    Address for Notices:

                                    SunTrust Bank
                                    200 South Orange Avenue
                                    Orlando, Florida 32801
                                    Mail Code 1109
                                    Attention:  Ms. Stacy Lewis
                                    Telecopier:  407-237-5126
   131
                                     -123-

                                    MICHIGAN NATIONAL BANK

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

                                    Lending Office for all Loans:

                                    Michigan National Bank
                                    Specialty Industries
                                    2777 Inkster Road
                                    MC 1036
                                    Farmington Hills, MI  48334

                                    Address for Notices:

                                    Michigan National Bank
                                    Specialty Industries
                                    27777 Inkster Road
                                    MC 1036
                                    Farmington Hills, MI  48334
                                    Attention:  Mr. Eric Haege
                                    Telecopier:  248-473-4345
   132
                                     -124-

                                    FIRSTAR BANK, N.A.

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

                                    Lending Office for all Loans:

                                    Firstar Bank
                                    7th & Washington; SL-TW-12MP
                                    St. Louis, MO 63101

                                    Address for Notices:

                                    Firstar Bank
                                    7th & Washington; SL-TW-12MP
                                    St. Louis, MO 63101
                                    Attention:  Mr. Christian Bugyis
                                    Telecopier:  314-418-8292
   133
                                      -125-

For purposes of Section 13.14 only:

COLLATERAL TRUSTEE:

FLEET NATIONAL BANK

By:
   ---------------------------------
     Lisa M. Pellow, Managing Director

   1
Exhibit 23 - Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-59424, 33-79366 and 333-51837) pertaining to the Saga
Communications, Inc. 1992 Stock Option Plan, the Registration Statement (Form
S-8 No. 333-28611) pertaining to the Saga Communications, Inc. 1997 Non-Employee
Director Stock Option Plan, the Registration Statement (Form S-8 No. 333-63321)
pertaining to the Saga Communications, Inc. Employee 401(k) Savings and
Investment Plan, and the Registration Statement (Form S-8 No. 333-85535)
pertaining to the Saga Communications, Inc. Employee Stock Purchase Plan of our
report dated February 16, 2001 except for Notes 3 and 14, as to which the date
is March 28, 2001, with respect to the consolidated financial statements and
schedule of Saga Communications, Inc. included in the Annual Report (Form 10-K)
for the year ended December 31, 2000.

                                                /S/ Ernst & Young LLP
                                                --------------------------------
                                                Ernst & Young LLP

Detroit, Michigan
March 29, 2001

                                      -43-